The future of central banks could be either on an open, permissionless blockchain or a closed, permissioned distributed ledger, according to a paper released today by bank consortium R3. That is, assuming anything changes at all.
As more and more central banks around the world reveal details about their interest in blockchain and other distributed ledgers, the very real possibility of central banks decentralizing is being seriously studied by academics.
In conversation with CoinDesk, report author and chair in economics at the University of California Santa Barbara, Rod Garratt, detailed the impact he believes blockchain and other distributed ledgers could have if implemented by central banks.
"What really distinguishes the idea of this sort of central bank digital currency is the idea that, while it may be generated on the central bank balance sheet, it can transact off the central bank's balance sheet."
Currently, most central banks inject new currency into the economy through a number of monetary policy actions, including buying government bonds that, in turn, supply securities dealers with cash.
According to the report, banks were identified by a public address in this early CAD-coin implementation, but live transactions would have required much more information, including a complete list mapping the names of banks to public addresses in the distributed ledger.
"With CAD-coin, the central bank again acts as the gateway to conversion from central bank money to CAD-coin, but privacy at conversion is not required. In fact, it is quite the opposite. Central banks typically have the authority to monitor payments transactions in their role as overseer of a systemically important financial market infrastructure, so complete privacy is not a reasonable objective."
Last June, the Federal Reserve co-hosted representatives from 90 central banks gathered in Washington DC to discuss the possible network effects of moving global currency to a blockchain or distributed ledger.
The adoption of a CAD-coin style currency by the Bank of Canada or elsewhere could be inhibited by uncertainty among some banks that others will follow suit - a crucial component of the potential efficiencies that Garratt suggests could be freed up by moving fiat money to a distributed ledger.
Already, a number of global central banks have publicly expressed interest in fiat currency issued on a blockchain, while at least one company, eCurrency, has been established for the sole purpose of helping central banks digitize their currencies.
Decentralizing Central Banks: How R3 Envisions the Future of Fiat
gepubliceerd op Apr 5, 2017
by Coindesk | gepubliceerd op Coinage
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