global geopolitics

The technical specifications for retail digital currency establish that the power to condition, cap and suspend payment is a design choice rather than an unavoidable consequence of digitisation

Editorial Analysis | November 2026

Project Rosalind was a collaboration between the Bank for International Settlements Innovation Hub and the Bank of England, and its stated purpose was to explore how a retail central bank digital currency could deliver core functionality through an application programming interface layer that connects public and private infrastructures (Bank for International Settlements, 2023). The project developed a prototype with thirty-three API endpoints in six functional categories, and it tested those endpoints against more than thirty use cases identified by public and private sector collaborators. The programmability category included ten APIs designed to provide a basic set of programmable features, including two-party locks, three-party locks and hash time-lock contracts that allow a payer to restrict the conditions under which a payment can be released (Bank for International Settlements, 2023). The technical documentation describes these mechanisms in the neutral language of functionality, and the political question that they raise is whether the capacity to condition payment should exist at all and who should control it.

The locking mechanisms are not inherently sinister, because conditional payment has legitimate applications in escrow, trade finance, subscription services and consumer protection. A two-party lock allows a payer to ensure that funds are released only when a counterparty delivers a good or performs a service, and a three-party lock introduces an arbiter who can resolve disputes. The same mechanism can be configured to release funds only when a recipient satisfies a criterion that the issuer defines, and the criterion need not be related to the transaction itself. A payment could be restricted to goods deemed environmentally sustainable, or to vendors who meet labour standards, or to recipients who have completed a health requirement. The technical capacity is neutral, and the political question is whether the authority to set the criteria should be exercised by central banks, by governments, by private payment service providers, or by some combination that is accountable to the public.

The European Central Bank’s approach to the digital euro illustrates how holding limits and programmability interact within a legislative framework. The draft regulation provides that an unrestricted use of the digital euro as a store of value could endanger financial stability and undermine the capacity of credit institutions to provide credit to the economy, and it therefore empowers the central bank to define quantitative limits on the digital euro holdings of natural persons (European Parliament, 2026). The legislation also provides for instruments to limit conversion of other categories of funds into digital euro within a specified timeframe, and it requires the central bank to assess the impact of such limits at member-state level before setting them. The justification is macroprudential rather than political, and the effect is to establish a legal architecture in which the quantity of money that an individual may hold is determined administratively rather than by the individual’s own decisions.

Holding limits are not the same as programmability, and the relationship between the two deserves careful attention because it reveals the logic of the emerging system. A holding limit caps the quantity of digital currency that a person may accumulate, while programmability conditions the purposes for which that currency may be used. Together they constitute a system in which the issuer determines both how much money a person may hold and what that money may do. The draft regulation states that legal persons should not maintain digital euro holdings except temporarily as payees, which means that businesses would be required to convert incoming digital euro into commercial bank deposits within a specified period (European Parliament, 2026). The effect is to create a two-tier system in which central bank money is available to individuals within limits while the bulk of commercial activity continues to operate through private bank liabilities.

The architectural choices embedded in these documents reflect a particular conception of the relationship between the state, the individual and the payment system. The individual is treated as a holder of a capped quantity of central bank liability rather than as a sovereign participant in a monetary system, and the state is treated as the authority that determines the parameters within which that holding may be used. The conception is not authoritarian in intent, because the stated objectives are financial stability and monetary sovereignty, and the mechanisms it establishes are nonetheless the mechanisms through which administrative discretion over individual access to money is exercised. The difference between a system in which access to money is a right and a system in which it is a privilege conditioned by administrative criteria is not a difference in the technology but a difference in the legal and political framework within which the technology operates.

The privatisation of the payment interface adds a further layer of discretion, because the entities that provide wallets and process transactions are frequently private firms whose terms of service govern the conditions under which access is provided. The digital euro regulation requires payment service providers to offer basic services including payment, account and support functions, and it permits them to develop additional services such as conditional payment transactions (European Parliament, 2026). The provision of those services is subject to contractual terms that the provider determines, and the user’s remedy for a denial of service is a private law claim rather than a public law right. The result is a system in which the public infrastructure of money is mediated by private contracts that few users read and fewer still can contest.

The most consequential feature of the emerging architecture is not any single mechanism but the cumulative effect of multiple mechanisms operating together. A holding limit determines how much money a person may keep, a programmable lock determines what that money may buy, an identity wallet determines who may access the account, and a private contract determines the terms under which the service is provided. Each element is justifiable in isolation, and together they constitute a system in which the conditions of economic life are determined by administrative and contractual decisions rather than by legal rights. The company town’s scrip was a crude instrument by comparison, because it operated through a single employer in a geographically bounded space, while the contemporary architecture operates through multiple institutions across an entire economy.

Authored By: Global GeoPolitics

Thank you for visiting. This is a reader-supported publication. If you believe journalism should serve the public, not the powerful, and you’re in a position to help, becoming a PAID SUBSCRIBER truly makes a difference. Alternatively you can support by way of a cup of coffee:

https://buymeacoffee.com/ggtv |

https://ko-fi.com/globalgeopolitics |

Bitcoin: 3NiK8BoRZnkwJSHZSekuXKFizGPopkE7

References

Bank for International Settlements (2023) Project Rosalind: Building API Prototypes for Retail CBDC Ecosystem Innovation. London: BIS Innovation Hub.

European Parliament (2026) Report on the Proposal for a Regulation of the European Parliament and of the Council on the Establishment of the Digital Euro, A10-0185/2026. Brussels: European Parliament.