Wednesday, April 24, 2019

Over 40 Central Banks Plan To Adopt Blockchain Technology

A report by the World Economic Forum, published on Wednesday shows that over 40 Central banks globally are interested in adopting blockchain technology to improve their efficiency.

Central Banks Eyes Blockchain Tech

The report by the World Economic Forum explains how apex banks of countries are examining what blockchain technology could be used for – an experiment with central bank digital currencies (CBDCs).

Ashley Lannquist, a project lead in blockchain and distributed ledger technology at the World Economic Forum and the primary author of the report noted that it is very much a case that several central banks are interested in blockchain technology adoption. Also, Lannquist said at least 44 different central banks are exploring, researching or actively experimenting with blockchain technology.

Also, Lannquist noted that “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.” She further said, at the moment the banks still have to navigate a lot of technical and policy issues before adoption.

The technical issues according to Lannquist has to do with the institutions ensuring that the new system works as intended and whether there is a preservation of data accurately. The policy issues have to do with the monetary policies of the central banks which needs to be studied to avoid unintended consequences according to Lannquist.

Meanwhile, Lannquist stated that she expects a couple of central banks to issue central bank digital currency in a few years, especially now that a few are already planning to that effect.

Using Blockchain Technology To Aid Banking System Efficiency

An example of central banks that plans to adopt the blockchain tech is the national bank of Cambodia. The bank intends to incorporate blockchain technology for its national payment system by the end of the year.

According to the report, the bank is adopting the technology to serve its underbanked or unbanked populace and also aid the efficiency of its banking system. Perhaps, the most surprising thing 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 ten banks.

Also, the Bank of France has adopted Ethereum with smart contracts and a private Ethereum implementation. Lannquist emphasized on this, saying “It’s one of the first production deployments of ethereum in the world and it was by a central bank.”

Meanwhile, the World Economic Forum has been facilitating communication between central banks and also linking institutions with the blockchain tech community according to Lannquist.

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