Welcome to Project New Era by the Digital FMI Consortium.
We have entered a New Era for Money

The world is undergoing a financial revolution from which there is no turning back. With the advent of blockchain technology, digital assets are ushering in a new era for money, with transformative impacts on consumers, businesses, financial institutions and states, from the conduct of commerce - both online and offline - to the provision of financial services and government support.


Near-instant, low-cost payment settlement and the enhanced automation of programmable payments will unlock vast commercial and societal benefits for all market participants. This real-time synchronisation of business and payment processes enable radical new business models and reimagined consumer experiences. For governments, offline payment capability can also enable the digital financial inclusion of those without internet access, the less tech savvy and disadvantaged, empowering the most vulnerable segments in society. As digital assets emerge as the new innovation frontier in financial services, politicians must take bold policy decisions now to future-proof the sector in their respective economies.


Project New Era is a pioneering, cross-industry pilot of the Digital FMI Consortium, an industry initiative founded by leaders of the financial services industry in the UK, under the coordination of Dutch financial infrastructure industry body, paywith.glass SIG (Special Interest Group), UK's The Payments Association, with Boston Consulting Group as its official consulting partner, Rosa & Roubini as Macroeconomic Advisors and Farrant Group providing strategic communications. The pilot is focused on real-world testing to evaluate a future digital currency ecosystem that includes the coexistence of existing forms of money, regulated cryptoassets and stablecoins, and Central Bank Digital Currencies (CBDC) in the UK.

The objectives of the pilot are threefold:


1. Testing purpose-built technology infrastructure to resolve open technical questions and topics of debate in the market through intelligent, inclusive design;


2. Validating key use cases highlighted in the Green Paper, pressure-testing value potential, and providing data to market participants on drivers for user adoption;


3. Providing inputs to inform regulation and policy, informing central banks and regulators to take decisions on how best to deploy a CBDC  that incorporate multiple feedback loops from all industry stakeholders (such as options for commercial bank liability);


A two-phase project


Phase one of the pilot culminated in the publication of a Green Paper in February 2022, co-developed by over a dozen business leaders from across the financial services ecosystem. The paper explores the digital currency landscape, details core design considerations and proposes closer public-private collaboration in order to address key challenges, macroeconomic risks and open questions around CBDCs.


Preparation for phase two of the pilot is now underway, with the formation of the cross-industry Digital FMI Consortium, to conduct a commercial pilot on the purpose-built underlying technology infrastructure, validate high potential use-cases (including retail payments and tokenisation-as-a-service among others) and provide empirical inputs to policymakers and regulators on future design considerations for CBDC and stablecoin regulation.


The pilot will be conducted under a cautious and progressive framework that features the use of a stablecoin asset – ‘dSterling’ – for the purposes of testing, serving to provide crucial insights for stablecoin and retail CBDC development. Within the scope of the pilot, primary objectives also include engagement with the UK House of Lords (HoL), UK House of Commons (HoC), Her Majesty’s Treasury (HMT), The Bank of England (BoE), the Financial Conduct Authority (FCA) and the Payments Systems Regulator (PSR) to inform them of progress and learnings in order for these stakeholders to incorporate into their decisions around the Stablecoin and CBDC ecosystem in the UK.


The UK is seeking to lead the world


On 4th April this year, the UK government announced moves that will see stablecoins recognised as a valid form of payment as part of wider plans to make Britain a global hub for crypto-asset technology and investment. The United Kingdom has an historic opportunity to secure its leading global position in financial services and payments. By taking advantage of regulatory divergence from the European Union, the UK can be a first-mover amongst leading western economies to shape a national digital currency ecosystem. The Green Paper encourages government and central banks to drive the process and seize this unique opportunity via an active public-private partnership.


Currently, 89 countries (representing over 90 percent of global GDP) are exploring paths towards a CBDC, while 9 countries have now fully launched a digital currency. The US has already drafted a bill that will explore bringing stablecoins into the regulatory fold, while President Biden’s recent Executive Order will accelerate research into a Digital Dollar. The European Central Bank (ECB) has also provided a clear signal of intent to the market, with Fabio Panetta remarking that a Digital Euro is “likely to become a necessity”. The ECB is moving fast to engaging with the market on a Digital Euro and already issued various tenders to work on multiple aspects of the future design considerations of the Digital Euro.


Early adopters of CBDC are proactively shaping the role of digital money in their economies to unlock payment efficiencies, drive innovation and protect the sovereignty of national currencies. China’s vastly expanding e-CNY is the most developed CBDC initiative in the world, with ~260m wallets now registered and set to transform domestic retail payments following adoption at the Winter Olympics. Full CBDC implementations also exist in The Bahamas and Nigeria, while Russia and India have both confirmed CBDC trials in 2022.


Exploring and implementing best practice in the UK will foster a market environment that attracts future investment and drives cutting-edge innovation. This will include coexistence between existing and new forms of money, interoperability between existing and future payments and financial market infrastructure, all enabled through careful tech choices including a hybrid model of Distributed Ledger Technology (DLT) and traditional finance (TradFi).


Together with ongoing advancements to existing payments systems, a future-proof financial technology landscape would confer a significant competitive advantage to the UK’s financial market and payments infrastructure globally, a critical enabler to power economic growth in the coming decades.


Mitigating the risks


However, there remain valid concerns surrounding CBDCs, especially pertaining to security, privacy and private sector bank disintermediation, amongst others. Project New Era shares these concerns, and therefore intends to communicate openly and transparently about the pilot’s findings concerning the relative costs and benefits of both stablecoin adoption and a retail CBDC.


It is no secret that CBDCs can differ widely in their operational scope, technical infrastructure, and political and economic externalities. If effectively implemented and appropriately governed, their benefits can include increased domestic and international transaction speed, reduced transaction costs, the efficacy afforded by programmable payments and enhanced capabilities through which to fight fraud and financial crime. CBDCs could also reduce common barriers to financial inclusion, helping low-income and under-banked individuals. Other major benefits could include significant enhancements to government disbursements (benefits payments, helicopter payments, real-time monetary policy implementations etc.).


The successful adoption of stablecoins might serve to illustrate further practical benefits that could be accrued through the implementation of a retail CBDC, but the pilot might equally find that such steps are neither necessary nor desirable. The pilot’s overriding ambition is to explore best practice options and make recommendations that will enable the UK to lead the world in digital financial market infrastructure (dFMI). As such it does not harbour any foregone conclusions, and any recommendations issued upon its completion will be based exclusively on the data generated throughout its duration.


A proud history of innovation


The United Kingdom has a proud history of invention and innovation. When Tim Berners-Lee invented the World Wide Web in 1989 to meet the demand for automated information-sharing between scientists in universities and institutes around the world, he did not anticipate that his creation would profoundly and permanently change the way we live and interact to this day.


The emergence of digital currencies represents the biggest technological revolution since then, the final step in the full digital transformation of the global financial system and the biggest transformation the industry has faced in more than 300 years. Today, the global race for the future of money is well underway, and we couldn’t be more excited to be leading the UK’s ambition to set the pace.


However, the case for change needs to be strong and deliver radical benefits to the businesses and consumers alike. The pilot will seek to establish an industry-wide perspective on the societal, commercial and other benefits that a future digital currency ecosystem could deliver in the UK, enabled through Stablecoins and CBDCs.