The Barclays CBDC Hackathon hosted nine teams addressing six key CBDC challenges. Lloyds Bank was awarded for its novel approach to the competition?

Lloyds Bank tops Barclays CBDC Hackathon. Source: depositphotos.com

The Barclays CBDC Hackathon 2022 took place between September 27-28. It sought to address the potential risk of fragmentation in payment markets and retail deposits with retail CBDC design.?

Participants should have connected to Barclays’ simulation of a central bank, Payment Interface Providers (PIPs), commercial banks, and other ecosystem services. It was based on the Bank of England’s (BoE) platform model for retail UK CBDC provision.

The participating teams included IBM, Lloyds Banking Group, Mastercard, Industria, REGnosys, Rethink Ledgers, UST, SDK.finance, and Barclays (although the latter was not eligible for awards).

The teams had various technologies at their disposal (Corda, Ethereum, Java, DAML, etc) to solve the main challenges:

• Deposit physical cash into a CBDC account
• Transfer value between two CBDC accounts
• Transfer value from a CBDC account to a commercial bank account
• Pay at the merchant website using CBDC
• Crowdfunding via multiple debits and a single credit

Lloyds Banking Group was awarded first place in the competition for its novel approach. Thus, it added a stretch solution to offer a ‘safe settlement’ mechanism leveraging smart contracts and QR codes. Lloyds also rejected the BoE’s premise and proposed that by merging distributed ledger technology with regulated commercial bank money, the same outcomes can be achieved without disruptions to the credit supply.?

Other teams’ stretch ideas included services of offline payments, security layers, CBDC ‘cards’ for financial inclusion, and cross-border settlement.

The Ukrainian fintech SDK.finance took out second place in the competition, despite being forced to work remotely due to the ongoing war. The team managed to complete all six challenges and deliver a pre-recorded youtube demo of their solution.

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