Bank of Canada Experimenting With Blockchain-Type TechnologyTheophilos Argitis and Doug Alexander
The Bank of Canada is running experiments on interbank payment systems using blockchain-type technology to better understand how it works.
The central bank has no plans to issue any digital currency for public use, Senior Deputy Governor Carolyn Wilkins said in an e-mailed statement. Blockchain refers to the technology that underpins distributed ledgers, which are used for verifying and recording transactions for digital currencies such as bitcoin.
One of the central bank’s research projects “is to build a proof of concept wholesale interbank payment system using a distributed ledger,” Wilkins said. “The Bank’s goal in these projects is solely to better understand the technology first-hand.”
The Bank of Canada is undertaking the project along with the nation’s largest commercial lenders, Payments Canada and the R3 consortium, a group of more than 40 banks including Barclays Plc and JPMorgan Chase & Co., which is working on ways to use blockchain for money transfers, record keeping and other back-end functions.
“All the banks should be looking at these technologies because what we’re talking about here is removing friction in the system, and that benefits everybody,” Chris Brodersen, research lead for North America Capital Markets at Accenture, said in an interview.
Public online ledgers are now seen as having the potential to reshape the global financial system and possibly other industries.
Canada’s central bank could use such technology to better track the movement of funds, which could help in areas such as countering money laundering, Brodersen said. Most major central banks have been looking into the technology to determine what it may mean for currencies, and how it could be used to make financial systems function more efficiently.
“These are still conceptual research questions that are being investigated by many central banks,” Wilkins said.
(Updates with Broderson comment in fifth paragraph.)
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