Population Scale UK CBDC Adoption Agent based Model (UK CBDC ABM)

#(1) A web-based population scale UK CBDC Adoption Agent-based Model (ABM) that can track the payment habits of 52 million UK adults is being built based on granular ONS decile level income and expenditure data (see Figure, attached). This provides policy makers with simulation tools to make robust design choices through in-depth scenario analyses for a sustainable growth rate for CBDC adoption (Phase 1), while mitigating systemic risks of runs on commercial banks (Phase 2).

#(2) The switch from card payments to CBDC is problematic due to the widespread (over 70%) use of card payments with efficient contactless options. We use an innovative model of switching costs and network effects to simulate UK CBDC adoption.

#(3) Machine learning optimization algorithms for CBDC adoption rates will help identify which income cohorts of consumers to target by payment providers and also the SME merchants who can incentivize their consumers to switch to CBDC by transferring to them merchant fees savings on card payments.

#(4) A mobile and web-based APP for UK SME merchants will be developed for this large cohort to be instrumental in bringing about a tipping point in UK CBDC adoption.