Reports Reveal Most Reserve Banks Don’t Want to Use Actual Blockchain for Digital Currencies

Reports Reveal Most Reserve Banks Don’t Want to Use Actual Blockchain for Digital Currencies

Blockchain
May 18, 2020 Komal Joshi
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Reserve banks in 46 countries are currently investigating or contemplating developing a central bank digital currency (CBDC) by utilizing a permissioned (or private) distributed ledger technology (DLT)-based platform. This is according to a lately issued survey from UK-based journal Central Banking. The publication is reportedly backed by the Bank of International Settlements (BIS) and the
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Reserve banks in 46 countries are currently investigating or contemplating developing a central bank digital currency (CBDC) by utilizing a permissioned (or private) distributed ledger technology (DLT)-based platform. This is according to a lately issued survey from UK-based journal Central Banking.

The publication is reportedly backed by the Bank of International Settlements (BIS) and the European Central Bank (ECB). According to its newest report, 65% of professionals reacting to a survey declared they had actively been examining and analyzing the available data on CBDCs.

The survey conducted in February 2020, shows that only one reserve bank stated they’d be utilizing an original blockchain as the underlying data structure and technology for executing a CBDC.

Named as a “small African central bank” in the survey, one institution stated it would apply a blockchain only if it were “found to be the best available platform.”

Central Banking’s survey did not explain why reserve banks may not desire to utilize an original blockchain to issue CBDCs.

Nevertheless, one of the banks reportedly stated it was not certain about whether a blockchain could offer adequate security levels and whether it would be scalable.

Although most reserve banks stated they wouldn’t apply a blockchain for CBDCs, approximately 71% of respondents affirmed that they would contemplate developing a CBDC on some other type of DLT network.

The survey revealed that most reserve banks currently investigating CBDCs don’t have any solid plans to launch a central bank virtual currency.

The survey also recorded that the Bank of England (BoE) had issued a CBDC paper in March 2020. The bank’s discussion paper had recognized that there are real advantages to utilizing DLT networks. Nevertheless, the BoE had also warned that these technologies would require significant changes to the existing financial infrastructure and that many institutions might not yet be able to handle these types of upgrades.

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