The Bank of Canada has revealed it is studying the technology underlying the digital currency bitcoin, conducting one of the first known tests by a major central bank about how it could use the system known as blockchain.
The central bank confirmed the experiment dealing in interbank payments in a statement from
Bank of Canada initiates blockchain technology exploration
Senior Deputy Gov. Carolyn Wilkins. It stressed, however, that it has no plans to issue a digitized Canadian dollar or conduct tests dealing with public money – according to an article in the WSJ.
The Bank of Canada, in conjunction with New York-based startup R3 CEV, said it has taken part in a “proof of concept” experiment using blockchain technology, which is a so-called distributed-ledger system that is billed as being more open, transparent and flexible than existing databases widely used in banking.
Others involved in the project included Payments Canada, which owns and operates the country’s payment-clearing and settlement infrastructure, and Canadian commercial banks.
“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.
Indeed, many central banks in recent months have been exploring blockchain technology, in particular the Bank of England. A March speech by the bank’s deputy governor, Ben Broadbent, explored the likely ramifications of a digital pound.
Ms. Wilkins is scheduled to give a speech Friday to Payments Canada.
The U.S. Federal Reserve doesn’t have an official stance on blockchain technology, but it has taken note of it. A conference earlier this month for central bankers at the Fed’s Washington headquarters focused on blockchain. Chairwoman Janet Yellen addressed the conference and encouraged the participants to learn as much as they can about the new technology.
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