Bank of Canada tests blockchain, will not issue digital money

Bank of Canada tests blockchain, will not issue digital money

- in All News, Cryptocurrencies
bank of canada

Bank of Canada, the country’s central bank, said it is studying and testing the blockchain technology for possible use in interbank payments. The proof of concept experiment was carried out in partnership with the US R3 CEV blockchain conglomerate unifying 45 global financial companies, Canadian commercial banks and the operator of Canada’s payment and settlement infrastructure Payments Canada.

The bank’s Senior Deputy Gov. Carolyn Wilkins, quoted by The Wall Street Journal, however stressed the bank would not issue digital money and would not conduct tests with public money.

“The Bank’s goal in these projects is solely to better understand the technology firsthand,” Ms. Wilkins said. “Other frameworks need to be investigated, and there are many hurdles that need to be cleared before such a system would ever be ready for prime time.” She added that many central banks are investigating similar questions.

The blockchain technology is a type of distributed ledger system, mostly used for generating and recording transactions with cryptocurrencies such as bitcoin. It, however, can be applied to public online ledgers seen as a cheaper, more transparent, secure and efficient alternative to the current global financial system and in many other industries, such as healthcare. Banks could use the technologies to better track the movement of funds and countering money laundering.

Bank of Canada is by far not the first central bank to look into the blockchain. Russia’s central bank also formed a committee to explore the technology’s opportunities, even though it is generally against bitcoin. At the same time, Japan is making the first steps towards “legalizing” the cryptocurrencies, while EU’s European Securities and Markets Authority (ESMA) said it is looking into distributed ledger technology.

Meanwhile, the interest in blockchain is not limited solely to central banks and national governments, but is widely explored by private banks such as Santander, which recently tested real payments, and global financial services providers like Deloitte.

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