Published Wednesday, a new report by the World Economic Forum analyzes how different central banks are either examining what blockchain can be used for or are outright experimenting with central bank digital currencies (CBDCs).
According to a January 2019 report by the Bank for International Settlements (BIS) in Basel, Switzerland, at least 40 central banks around the world are currently, or soon will be, researching and experimenting with central bank digital currency (CBDC).
Including but not limited to CBDC, central banks are researching and experimenting with at least 10 specific use cases for blockchain and DLT, exploring where they can potentially unlock new possibilities and improve inefficient processes.
While central banks across continents are conducting several research projects and pilots with blockchain technology, the degree of depth, progress and interest across efforts varies greatly. In rare cases, such as with the Bank of France, the central bank has already fully deployed blockchain technology.
“It’s very much the case that several central banks are looking at this,” said Ashley Lannquist, a project lead in blockchain and distributed ledger technology at the World Economic Forum and the primary author of the report.
She counted at least 44 different central banks that are exploring, researching or actively experimenting with blockchain technology, with an eye to potentially issue a digital currency in the eventual future.
“Pilot and experimentation work thus far on this subject has yielded some mixed results, some optimistic results, and the summary of where we are right now is that central banks are proceeding with caution, yet highly involved in research,” Lannquist told CoinDesk.
At present, these banks have to navigate a host of technical and policy issues, she said. On the technical side, the institutions need to ensure that their new systems work as intended and whether they are preserving data accurately.
Other questions pertain to the policy aspects, including a central bank’s monetary policy. These issues need to be studied to avoid any unintended consequences, Lannquist said.
Those caveats aside, present trends bode well for CBDCs, she said:
“I’d say in the next couple years, speculating towards the future and being a bit conservative, I would expect a couple central banks to issue a central bank digital currency and that’s because we know that at least a few are.”
The National Bank of Cambodia, for example, plans to incorporate blockchain technology for its national payments system by the end of this year.
As Lannquist’s report notes, the bank is looking to tackle two issues: many of the nation’s residents are underbanked or unbanked entirely, and the banking system itself is not very efficient.
“They currently have a very fragmented domestic payment system and many [residents] are unbanked,” she said. “Instead of using the bank they use private payment apps that don’t even use the bank so they sometimes can’t pay each other.”
The new blockchain-based payments system may serve to unite some of these disparate payment apps, providing more efficient payment and settlement services to Cambodia’s residents, Lannquist said.
What’s perhaps most surprising about Cambodia’s plans is the fact that the bank is not going to start with a pilot program, but rather a large-scale deployment with 10 banks.
Banking 4.0 – „how was the experience for you”
„So many people are coming here to Bucharest, people that I see and interact on linkedin and now I get the change to meet them in person. It was like being to the Football World Cup but this was the World Cup on linkedin in payments and open banking.”
Many more interesting quotes in the video below:
