CBDCs: New Report Confirms Most Reserve Banks Don’t Want to Use an Actual Blockchain to Issue Digital Currencies

Reserve banks in 46 countries are currently exploring or considering developing a central bank digital currency (CBDC) by using a permissioned (or private) distributed ledger technology (DLT)-based platform. This, according to a recently published survey from UK-based journal Central Banking.

The publication is reportedly supported by the Bank of International Settlements (BIS) and the European Central Bank (ECB). According to its latest report, 65% of professionals responding to a survey claimed they had actively been researching and studying the available information on CBDCs.

The survey, which was conducted in February 2020, reveals that only one reserve bank said they’d be using an actual blockchain as the underlying data structure and technology for implementing a CBDC.

Described as a “small African central bank” in the survey, one institution said it would use a  blockchain only if it was “found to be the best available platform.”

Central Banking’s survey did not provide details regarding why reserve banks may not want to use an actual blockchain to issue CBDCs.

However, one of the banks reportedly said it was not confident about whether a blockchain could provide adequate levels of security and whether it would be scalable.

Although most reserve banks said they won’t use a blockchain for CBDCs, around 71% of respondents confirmed that they would consider developing a CBDC on some other type of DLT network.

The survey revealed that most of the reserve banks currently researching CBDCs don’t have any concrete plans to actually launch a central bank virtual currency.

The survey also noted that the Bank of England (BoE) had published a CBDC paper in March 2020. The bank’s discussion paper had acknowledged that there are real benefits of using DLT networks. However, the BoE had also cautioned that these technologies would require major changes to the existing financial infrastructure, and that many institutions might not yet be prepared to handle these types of upgrades.

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