Bank of England and BIS pilot building APIs for retail CBDC

Project Rosalind is an experiment exploring application programming interfaces (APIs) for retail central bank digital currency (CBDC).

The project is based on a two-tier model representing a public private partnership. At the centre of this architecture is an API layer, which connects public and private infrastructures.

The API layer offers a set of standardised functionalities to enable different systems to interoperate.

The project explored how central banks could address the need for a universal and extensible API layer for retail CBDC payments.

Collaborating with the private sector, the project also explored what the building blocks of a CBDC ecosystem would be and how the APIs could support innovation.

How was the project run

The project developed a prototype API layer, with 33 API endpoints in six functional categories. The design and functionalities of the APIs were tested and validated through more than 30 use cases identified and explored by public and private sector collaborators.

The API could work with different central bank ledger designs to facilitate payments.

The project found that the design of the API layer must be consistent with, and implement the requirements of, the wider privacy model for a CBDC.

APIs can support offline payments in CBDC but there are a range of challenges involved in delivering offline functionality.

The project also highlighted several areas for further exploration, including how the API might allow the ecosystem to share user and payments data in a privacy-preserving way, the trade-off between extensibility and consistency and the need to define the operational roles and responsibilities of all participants in the ecosystem.

Project Rosalind has demonstrated that a well designed API layer could work with different private sector applications and central bank ledger designs and that a set of simple and standardised API functionalities could support a diverse range of use cases.

The completed initiative, a joint experiment run by the BIS Innovation Hub London Centre and the Bank of England around central bank digital currencies (CBDCs), developed 33 API functionalities and explored more than 30 retail CBDC use cases.

These use cases covered a broad range of domains for individuals and businesses, such as peer-to-peer transfers, retail payments for goods and services and small-value business transactions.

A diverse range of payment options were tested, such as making retail CBDC payments online, in stores and offline, with the use of NFC and via interactions with point-of-sale, QR codes, mobile phones, smartcards, biometric devices and smart assistants.

Some of the use cases also explored private sector programmability and micropayments.

The project looked at how a universal and extensible API layer could be developed to connect central bank and private sector infrastructures, facilitate payments in CBDCs and support innovation.

The project also experimented with and provided valuable lessons on many key aspects of a retail CBDC system, such as API design, privacy models, security, standards, offline payments, private sector programmability, and ecosystem roles and responsibilities.

“The Rosalind experiment has advanced central bank innovation in two key areas: by exploring how an API layer could support a retail CBDC system and how it could facilitate safe and secure CBDC payments through a range of different use cases,” says Francesca Hopwood Road, Head of the BIS Innovation Hub London Centre.

“Active collaboration with the public and private sectors to identify and explore these use cases has been at the heart of this. We believe that Rosalind can make a significant contribution to how organisations across the globe are thinking about and engaging with the design of retail CBDC systems.”

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