According to a report, Canada’s central bank will publish the results of its experiment with a blockchain-powered payments system. While the experiment utilized an in-house digital currency, one senior central bank official dismissed bitcoin “as a commodity rather than a money itself.”
A Reuters report revealed that details of the prototype tested by the Bank of Canada that used bitcoin’s underlying technology, blockchain, will be published, according to senior deputy governor Carolyn Wilkins.
Wilkins, who was speaking at a conference hosted by the Ontario Securities Commission, stated:
It’s been a very useful exercise and we’ll be publishing the results sometime in the next few months.
Wilkins also revealed that New York-based blockchain startup R3 was involved. So too was Payments Canada, the operator of a clearing and settlements platform in the country.
First revealed in June 2016 (seeds of which were sown as early as November 2014) , the Bank of Canada confirmed that it was working on a digital currency called CAD-Coin, in collaboration with a handful of the biggest Canadian banks and R3. CAD-Coin, as it was coined, would be the digital equivalent of the Canadian dollar.
CAD-Coins are generated when participants (the banks) pledge cash into a Central Bank controlled account. The banking regulator and authority would then convert the cash into its digital equivalent in CAD-coin, which can then be used by trusted parties to transact on a blockchain platform.
Significantly, the Bank of Canada will also own and control the blockchain, which enables the authority to destroy CAD-Coins when the digital token is converted back to cash.
The idea behind CAD-Coin was to build a “wholesale interbank payment system”, Wilkins stated at the time.
Speaking on Wednesday, Wilkins described the CAD-Coin experiment as a “wholesale digital currency”, this time.
Bitcoin – ‘More a Commodity than Money’
Wilkins further added that national, central-bank issued currencies play a significant role in financial stability and function as a ‘transmission mechanism for monetary policy.’
In quotes reported by Reuters, Wilkins, who addressed attendees at the conference, made her distinction between national currencies and bitcoin – the cryptocurrency that plausibly served as the template for the CAD-Coin experiment.
What we saw with bitcoin and others is really it turned out to be still more of a commodity rather than a money itself. AS a fundamental means of transacting for people in this room, it’s just not there.
Image from Shutterstock and Bank of Canada.