The Bank of England reaches out for opinions on testing trials for retail central bank digital currencies (CBDCs) within the wholesale sector.
Bank of England to Explore Wholesale Central Bank Digital Currency and Synchronisation Solutions
The Bank of England has announced plans to conduct trials in 2025 focused on wholesale central bank money (W-CBM), including wholesale central bank digital currency (wCBDC) and synchronisation solutions. The trials aim to test new payment technologies and settlement mechanisms for financial institutions, with a focus on improving settlement efficiency, increasing resilience, and enabling real-time synchronisation of payments and securities settlement between multiple parties in wholesale financial markets.
The trials will address settlements of high-value wholesale payments using digital and synchronisation technologies, compatible with the UK's real-time high-value payment system CHAPS but looking beyond into digital currency formats for wholesale use. The primary focus will be on wCBDC, allowing wholesale participants to transfer central bank money in digital form, alongside mechanisms to synchronise payment and securities settlement transactions to reduce settlement risk and improve efficiency.
Financial institutions and market infrastructures are the primary targets of these trials. The aim is to provide secure, immediate, and reliable payments settlement, improving over systems like CHAPS by adding programmability and direct synchronisation with securities (delivery versus payment).
The Bank's broader research and experimental agenda in 2025 reflects ongoing evaluation of digital money solutions, but with caution. Recent developments show that the retail digital pound project is under reassessment due to rapid private sector advancements. However, wholesale trials continue to explore next-generation settlement possibilities.
In addition to the wCBDC trials, the Bank will test interoperability with global initiatives such as BIS Project Agora for cross-border payments. The UK is also testing tokenized deposits through the Regulated Liability Network initiative. The Bank has published a discussion paper on innovation in money and payments, aiming to gather feedback for planned wholesale central bank money trials.
The trials will include delivery versus payment (DvP) and settlement of primary bond issuance transactions, secondary market transactions, and digital securities transactions. They will also involve payment versus payment (PvP) cases. The Bank is interested in respondents' particular use cases for these tests.
The Bank of England is running Project Meridian with the BIS Innovation Hub, which enabled a digital real estate transaction to settle via connectivity with the RTGS. They are also running Project Meridian FX with the European Central Bank. The Bank is concerned about the potential future use of stablecoins in the wholesale market, considering the risks posed by wholesale stablecoin use to be an order of magnitude greater than the risks of retail use cases.
Governor Andrew Bailey of the Bank of England has expressed the need for policymakers to be humble and accept that their assessments may become outdated quickly, given the pace of change and innovation.
[1] Source: Bank of England press release [2] Source: Bank of England discussion paper on innovation in money and payments [5] Source: Bank of England statement by Governor Andrew Bailey on the pace of change and innovation
- The Bank of England's trials in 2025 will focus on wholesale central bank digital currency (wCBDC) and synchronisation solutions, aiming to improve the efficiency and resilience of settlement systems in the financial industry, utilizing technology like blockchain.
- The trials will explore new payment technologies and mechanisms for wholesale participants, including delivery versus payment (DvP) and settlement of primary bond issuance transactions, secondary market transactions, and digital securities transactions, with a potential focus on stablecoins in the wholesale market.
- The Bank of England is collaborating with the Bank for International Settlements (BIS) on projects such as Project Meridian and Project Meridian FX, aiming to enable digital real estate transactions and foreign exchange settlements, respectively.
- Governor Andrew Bailey of the Bank of England has emphasized the importance of policymakers being humble and remaining open to updating their assessments, given the rapid pace of change and innovation in the finance and technology sectors.
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