Prof Louvieris and Dr Perry awarded 750k EPSRC grant for 'Smart Money' project
Smart Money is a research project that investigates how Central Banks would introduce their own digital currencies, with a focus on using the Digital Ledger (DL) as an underlying infrastructure. Unlike current digital currencies – such as BitCoin, Ether, Dash, or Ripple – these would be issued as national ‘fiat’ currencies, for example, in the case of the UK, as a digital form of £ sterling. This is of value to central banks, but also to a variety of other institutions and end-users, because DL-based digital currencies offer opportunities for money transfers to be shared, tracked, visualised and analysed.
Our aim is to assess the feasibility of a how a fully auditable, tamper-proof, responsible smart governance system will make all stakeholders accountable for their data access and processing activities, whilst ensuring the protection of data and individual privacy. Moreover, access to rich payment transaction data will allow banks to perform economic forecasting and risk management in real-time and precision-targeting by patterns of spending.
This development has a huge potential value in offering tools for economic stability and resilience, both at a national level, e.g. to assess aggregate exposure to bank debt, or at an institutional level (such as within a bank), e.g. to assess worrying levels of consumer debt by customer group. It could also be used to directly assess the economic impacts of government policy, for example by the Office of National Statistics in examining patterns of spending, and GCHQ in mining patterns of financial traffic for national security.
Who to involve, how they would want this data made available for access, what the economic value and cost of running DL enabled CBiDC services is, and how citizens and civil society groups find it to be socially acceptable are all research questions being investigated. This will be conducted through research activities exploring how the financial architecture and models, information content and structure, and information presentation will impact on the value, use, interpretation, and application in forecasting of the financial and economic content available from the DL.