According to the report “Central Coins may not need Blockchain”

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October 29, 2018 by
According to the report “Central Coins may not need Blockchain”

According to a new joint report from the IBM Blockchain and the Official Monetary and Financial Institutions Forum (OMFIF), an independent think tank for central banking and economic policy, 21 central banks from around the world who were surveyed on their sentiments against the distributed ledger technologies. The central bank issued digital currencies (CBCDs) and whether a blockchain is even necessary for a central bank to issue some digital currency.

The authors also noted that the participants in the survey were overwhelmingly believe that a “wholesale CBDC should be issued by the central bank and denominated in the domestic sovereign currency, with which it holds almost a 1:1 parity in value,” while they added in their statement that it must be “fully backed by the central bank’s reserves.”

In the report, the issues of central bank issued digital currencies are defined and discussed at great length. There is one of the most central questions discussed is how these CBDCs should be issued, and whether they would even need a blockchain to be deployed.

“It may not be essential to apply blockchain to these currencies (CBDCs) since central banks as the ledger keepers and are considered sufficiently trustworthy already” according to the report and in sharp contrast, it widely helps trust I the crypto community.

There are 61% of central banks surveyed said that deploying a blockchain “may not be necessary” due to the few efficiency gains were seen while the trails with the blockchain based system, according to the reports.

Ironically, bitcoin gained and emerged a massive popularity as the first cryptocurrency largely as a result of the lack of trust in the way of government and central bank handled money. The things were later gone on with the sentiment voiced by Lael Brained from the US Federal Reserve Board of Governors who usually appears to capture the attitude held by most of the central bankers around the world toward CBDCs. Later, she said that “Digital token for wholesale payments and some aspects of distributed ledger technology, and the key technologies underlying cryptocurrencies and it may hold promise for strengthening traditional financial instruments and markets.”

According to some study reported earlier, countries such as China and Sweden are already studying how central bank digital currencies can complement and even replace physical notes and coins as both countries seek towards the cashless future. There are many researchers says that the countries also seek toward the cashless future.

The governor of Sweden’s central Riksbank, Stefan Ingves explained that he always support the creation of a digital version of the Swedish krona, but they also stated that it is reasonable for various banks to continue to handle their money. While adding that for any emergency preparedness reasons, “we need notes and coins that work without electricity” and he also added in his statement that “A ban on cash goes against the public perception of what money is and what banks do.”

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