Minutes of the CBDC Engagement Forum - November 2024

Minutes

Date: 28 November 2024

Item 1: Welcome and introduction

The Chairs welcomed members to this meeting of the Engagement Forum.

Clare Roberts (HM Treasury) noted changes to chairing, with Clare and Tom Mutton (Bank of England) taking over as co-chairs from Gwyneth Nurse (HM Treasury) and Sarah Breeden (Bank of England). Clare highlighted this was due to the Bank and HM Treasury entering a more detailed phase of design work on the digital pound, and noted the continued interest of Gwyneth and Sarah in the work of the Engagement Forum on the overall strategic direction of the design phase.

Item 2: Progress in 2024

Clare Roberts highlighted the recent publication of the Government’s National Payments Vision, which confirms the Bank and HM Treasury will continue with the ongoing digital pound design phase. Clare outlined that the governance of the digital pound project will continue as before, via the Digital Pound Taskforce, and that engagement on the design phase will continue via existing fora.

Diana Carrasco Vime (Bank of England) gave members an overview of the Bank’s work in 2024 since the publication of the consultation paper response and provided a forward look on the work in 2025. Diana noted that the Bank would shortly publish a progress update on digital pound project work which would outline this in more detail.

Item 3: Presentation – Retailer Needs Working Group

The Working Group co-chairs presented the findings and recommendations of the group as set out in its final report, noting:

• There are a range of digital pound features which could provide benefits to consumers in innovation, privacy, and inclusion. These are via design features including conditional payments, self-custody wallets, tiered KYC processes, and strong recourse processes.
• That the digital pound could provide cost, setup efficiency, and operational benefits to merchants via design features including the ability for merchants to hold the digital pound and initiate B2B payments, and conditional payments functionality.
• The importance of the public sector’s role in driving adoption via encouraging demand and promotion rather than mandating acceptance. A key example given was that of the role of TfL in promoting contactless payments, helping to drive consumer and retailer adoption in different settings.
• The distinction between pull factors for retailers and consumers in store vs e-commerce, with a smooth checkout experience being important in ecommerce scenarios, while prioritising user interface and Point of Sale interoperability in store.
• The need for the digital pound to support B2B functionality, in order to address current frictions in UK retailer payments via automated escrow. The digital pound could allow for stronger integration between supply chain processes and payment methods.
• The primary challenges facing digital pound adoption from a merchant-perspective could include ensuring strong performance at all levels of payment volume, operational costs (for example those incurred in the case of capped merchant holdings), security and network connectivity, and how processes such as refunds could be managed.

The Working Group co-chairs thanked the working group for their important contributions and presentations and opened for questions from Engagement Forum members.

One member noted the utility of smart contracts between supply chains and merchants, positing that this could be particularly impactful in reducing friction in this process for small businesses.

Another member queried whether the Working Group or the Bank had been following the ECB’s work on B2B payments for the digital euro. The Working Group co-chairs and the Bank confirmed that they were following developments closely. The Bank noted the challenge of balancing utility of the digital pound with the Bank’s other objectives for financial stability.

One member asked for further reflections on the role of the public sector in driving adoption, and on consumer inclusivity. The Working Group co-chairs reiterated the importance of supporting acceptance without mandating it, noting the framework and digital pound ecosystem should be strong enough to drive adoption on its own. They also noted the importance of self-custody wallets as a value add which does not currently exist in UK payments.

One member noted the need for strong public sector partners which will collaborate, echoing the example of TfL and contactless implementation. He also noted the potential impact of deferred payments on existing industries such as the payments invoicing industry, and asked whether conditional payments functionality would be a feature delivered via the core infrastructure or by wallet providers. The working group co-chairs noted this functionality would likely need to be rolled out by the wallet providers.

Another member highlighted the higher payments fees of small merchants in comparison to larger retailers, noting any way the D£ could support greater fungibility would be very helpful.

One member queried what the Bank & HM Treasury see as priority use cases. The Bank noted strong internal investment in making public digital infrastructure better, as well as improving payments for small businesses and stimulating growth and innovation. They noted the desire to test some of these use cases in a collaborative way.

Item 4: AOB and member updates

The Chairs thanked members for attending this meeting and said there would be another Engagement Forum meeting in early 2025. One member highlighted work their organisation had ongoing related to CBDC and the global financial architecture, which would be published shortly.

Attendees

Tom Mutton - Bank of England 
Diana Carrasco Vime - Bank of England
Clare Roberts – HM Treasury

Members

Adam Jackson, Director of Policy, Innovate Finance 
Arvin Abraham, Partner, Goodwin Procter
David Grunwald, Group Director of Innovation & Partnerships, NatWest 
David McPhee, Chief Policy and Engagement Officer, PayUK
Diego Ballon Ossio, Partner, Clifford Chance (alternate)
Etay Katz, Partner, Ashurst LLP 
Fran Boait, Co-Executive Director, Positive Money 
Harry Newman, Head of Market Initiatives EMEA, SWIFT
Hugo Coelho, Head of Digital Policy and Regulation, Cambridge Centre for Alternative Finance (alternate)
Ian Stuart, CEO, HSBC Europe
Jennifer Burnside, Group Regulatory Policy Director, Lloyds Banking Group (alternate)

Jorn Lambert, Chief Digital Officer, MasterCard
Martin McTague, National Policy Chair, Federation of Small Businesses 
Muir Mathesion, CFO, Nationwide Building Society
Natasha de Teran, Member of the Financial Services Consumer Panel 
Rhiannon Butterfield, Principal, Payments, Innovation and Resilience, UK Finance
Ruth Wandhofer, Member, PSR Panel

Non-member attendees

Arena Fernandez de Bobadilla Amoros, Head of Digital Regulatory Initiatives - Payments Acceptance and Experience, Amazon
Chole Croft-Baker, Head of Payments, Marks & Spencer

Apologies

Arunan Tharamarajah, Head of European Banking and Payments, Wise
Bryan Zheng, Executive Director, Cambridge Centre for Alternative Finance (sent alternate)
Charlotte Hogg, CEO, Visa Europe
Diana Layfield, President EMEA Partnerships, Google
Jana Mackintosh, Managing Director Payments & Innovation, UK Finance (sent alternate)
Mick McAteer, Founder and co-Director, The Financial Inclusion Centre
Nabil Manji, Senior Vice President, Head of Crypto & Web3, Worldpay
Neha Narula, Director of the Digital Currency Initiative, MIT
Paul Bances, Head of Global Market Development of Blockchain, Cryptocurrency, and Digital Currencies, PayPal 
Simon Coles, Chief Technology Officer, Paypoint
Simon Gaysford, Founder & Director, Frontier Economics (sent alternate)
Simon Gleeson, Partner, Clifford Chance (sent alternate)
Tracy McDermott CBE, Group Head, Conduct, Financial Crime and Compliance, Standard Chartered Bank
William Chalmers, CFO, Lloyds Banking Group (sent alternate)