More than 40 Central Banks are Mulling the Use of Blockchain Technology

The World Economic Forum on Wednesday published a new report revealing that over 40 Central banks across the globe are either experimenting or considering the use of blockchain technology for a number of purposes including issuing of Central Bank Digital Currencies (CBDCs). The lead author of the report Ashley Lannquist said that many central banks are looking at floating their own digital currencies and this is one of the reasons why the interest of the banks have augmented in the blockchain technology. According to her estimation, around 44 central banks across the world are exploring and experimenting with blockchain with an eye to come up with their own digital currencies in the future. The results of all these experiments are mixed in nature, but some of the experimentation has really yielded positive results, Lannquist added. As of now, these central banks have to go through a lot of policy, regulatory, and technical issues. As far as the trend for the CBDCs is concerned, it is looking quite optimistic with some of the central banks have already made their mind to launch their own digital currency in the future.

For instance, take the National Bank of Cambodia which has announced the incorporation of blockchain technology and the system will become fully operational by the end of 2019. According to the report, the banking system in Cambodia is plagued with two issues: the underbanked population and inefficient banking system. Many residents in the country do not have a bank account, and the overall domestic payments are highly fragmented. Application of the blockchain technology will help the National Bank to address the problem of under banking and high fragmentation, thereby helping the system to provide more efficient settlement services to the country’s residents. The program will start at a large scale level with involvement of more than 10 banks and unlike many others; the country will skip the pilot phase to directly go for mass implementation of the blockchain.

The report quoted another example from France which is already using the Ethereum; making it one of the first countries in the world to effectively implement blockchain and that too by its central bank. For now, most of the central banks are experimenting with blockchain technology without revealing much of the information to avoid undue concerns about regulatory concerns and technicalities.

However, the most important thing according to Lannquist is that central banks should start coming up with the conclusion whether the blockchain technology is useful for them or not. More swift the revelations of these conclusions, better it is for the blockchain technology to grown especially in terms of receiving more research and exploration from associated stakeholders. When Lannquist was asked about the question whether banks will implement CBDCs, she replied that the use of CBDCs wouldn’t be widespread as the current payment system adopted by the central banks is quite efficient, and there is no strong need for them to have CBDCs. That said the digital currencies could be really useful for the residents who regularly send payments overseas.