Digital pound working groups

What are the use cases for offline payments and how would that influence design of the digital pound?

• What constitutes an offline payment and is it feasible to implement offline payments in CBDC?
• What risks would offline payment create and how can those be mitigated?
• How could offline payment functionality improve financial inclusion?
• What are other use cases for CBDC offline payments?
• As part of digital pound design, should offline payments functionality be developed as part of the core offering, developed as an overlay service, or not included?

What would merchants need from a digital pound design?

• What are the range of factors that would influence whether merchants accept digital pound payments alongside other payment methods?
• What are the options for enabling in-store acceptance of digital pounds (eg existing POS devices, QR codes) and what are their relative advantages or disadvantages?
• What are the requirements for enabling e-commerce acceptance of digital pounds?
• What account functionality would help merchants to manage any corporate limits on digital pound holdings?
• What issues might arise from digital pounds for retailers’ day-to-day payments and cash treasury management, and how might those be addressed?
• What are the potential scenarios for retailers running their own PIP or ESIP services?

How could we ensure privacy for individual users of a digital pound while maximising its potential benefits and use cases?

Privacy in this context means the protection of users' data (personal data and transaction data), and ensuring that users have control and visibility over who can process their data and for what purposes. As noted in the 2023 Consultation Paper, privacy is different from anonymity. The digital pound would not be anonymous because the ability to identify and verify users is needed to prevent financial crime. The Government and the Bank of England have committed that they would not access users' personal data in a digital pound ecosystem. If a digital pound were to be launched in future, primary legislation would need to be introduced first and this would guarantee users' privacy. Additionally, the Bank is exploring technological solutions to prevent it from being able to access personal data via the core ledger.

For the purposes of this work, "users" are the individuals using a digital pound, and this RFI seeks to explore the varying levels of privacy that a user would have towards the different private sector parties in the ecosystem, including the private sector wallet providers, the merchants, and potentially more participants in the payments processing chain. With this in mind, please provide comments on the following questions:

• Is there a range of levels and types of privacy that could be offered in a digital pound ecosystem that remains within the principles set out in the Consultation Paper?
• If so, what are the advantages and disadvantages of different options to the full range of actors in a digital pound ecosystem?
• How and where do existing legal and regulatory safeguards pose a challenge to different levels of privacy?
• How much and what kind of information should users have about how their data is used in a digital pound ecosystem, and what impact will this have on merchants and other participants processing payments?
• What are the main considerations for the introduction of tiered wallets, enabling consumers to choose different levels of privacy depending on access to services?

Working groups will be asked to work together to consider the topics in the RFIs in further detail. They may also be asked to present their work to the Bank of England and HM Treasury’s CBDC Engagement Forum. The Bank and HM Treasury expect to gain valuable insight from the work of these groups but are not bound by any recommendations the groups may make.

We expect to nominate one member of the working groups to be leader and will ask them to coordinate the work of the group. Working groups would have flexibility as to their ways of working: we would expect them to gather regularly, up to the delivery point of the presentation. A member of Bank or HM Treasury staff will attend those meetings in an observer capacity and is not expected to lead or contribute to the output. We would expect that a time commitment would be needed for each member of the working groups, so applicants/nominees should ensure they have appropriate capacity before applying.

Whilst the working groups are separate from the Engagement Forum, we expect working group members to comply with the sections on conflicts of interest, competition law and information-sharing in the Engagement Forum Terms of Reference.

The Bank and HM Treasury do not expect to publish either submissions made in response to the RFI, nor the outputs of the working groups – only a summarised description of the Engagement Forum discussion of the working groups’ conclusions, as is the case with the Engagement Forum’s published minutes today.

Members of the working groups grant the Bank and HM Treasury a perpetual, irrevocable, non-attributable, non-exclusive, royalty-free, worldwide and sub-licensable licence, to use the outputs of the working groups to further both authorities’ work on a UK CBDC where relevant including, in relation to facilitating the potential adoption of a CBDC.

Should the Bank wish to further develop particular ideas or outputs from the working groups, it is required to comply with public procurement law and shall not be fettered in its discretion to seek and enter into appropriate commercial agreements accordingly.

Participation in these working groups is conditional upon acceptance of these conditions.

The Bank and HM Treasury will collect the name, email address, professional information and opinions from individuals who submit a response to this request for information. The Bank and HM Treasury may also collect this information from individuals or organisations who nominate an individual to be called upon for further discussion of the topic to which their response relates. The Bank and HM Treasury will also collect views, opinions and further personal data where this is shared either verbally or in writing by individuals participating in the temporary working groups. 

Where the Bank and HM Treasury process personal data for the purposes of forming working groups, they will use the information for the purpose of reviewing and assessing responses, to communicate with members of the working groups, and to advance the purpose of the working groups. This may include sharing responses, which may include personal data, with other members of the working group where necessary for this purpose. Further, this may include sharing responses from organisations who have not been selected to participate.

The Bank and HM Treasury will process personal data to facilitate dialogue around the potential adoption of a CBDC in the UK and inform our work in this area, which is both in the public interest and in the exercise of official authority.

The Bank and HM Treasury are joint controllers (within the meaning of data protection law) for certain processing activities, including the selection of members, the facilitation and coordination of working group meetings, and reviewing findings and producing outputs. For certain other activities, the Bank and HM Treasury are separate controllers with respect to their own processing of personal data in connection with the working groups and requests for information responses.

Personal data will be retained for so long as is necessary to facilitate the working group or otherwise in accordance with the Bank’s or HM Treasury’s applicable information retention policies, which are available upon request from HM Treasury and the Bank. You can request that we no longer use your personal data by writing to the Bank or HM Treasury as applicable.

The Bank uses a third party provider, WorldAPP Inc, based in the United States, to provide the KeySurvey online tool that captures responses to this request for information. Where personal data is transferred to the United States, a mechanism recognised by UK data protection law is used to ensure appropriate safeguards are in place (standard contractual clauses or international data transfer agreement). For more information about WorldAPP Inc’s security practices and privacy policy visit keysurvey.com/privacy-policy/. Where the Bank or HM Treasury uses an online meeting service provider to host meetings, then the privacy statement of that service provider will apply.

Further information about how the Bank processes personal data is set out in the Bank’s Privacy Notice.

Further information about how HM Treasury processes personal data is set out in HM Treasury’s Personal Information Charter.

You have a number of rights under data protection law. To contact the Bank or HM Treasury about those rights, including making a request for the personal data the Bank or HM Treasury holds about you, please see the Bank’s and HM Treasury’s Privacy Notices above. Each organisation’s Data Protection Officer can be contacted via the details above. You can also report concerns to the Information Commissioner’s Office, the regulatory authority for data protection in the UK.