Bank of Canada explores blockchain-based payment transfer system
The Bank of Canada said that it is experimenting a blockchain-based payment transfer system in partnership with R3 CEV, a consortium of major global banks, and the Canadian Payments Association.
The Canadian central bank said that they are studying the technology to create an interbank payment system to replace existing legacy systems.
The bank said it is also experimenting with digital currency called CAD-COIN, SiliconANGLE reported.
The digital currency will be used to transfer payments between banks.
Bank of Canada Senior Deputy Governor Carolyn Wilkins said: "One of the bank's many fintech research projects, discussed earlier this week by a panel at the Payments Panaroma conference, is to build a proof of concept wholesale interbank payment system using a distributed ledger, in conjunction with Payments Canada, R3 and Canadian banks.
"Experiments we are undertaking with DLT, such as this one, are confined to interbank payments systems."
Wilkins said that the central bank is working with commercial banks to set up the experimental interbank payment system, Reuters reported.
Wilkins added: "The Bank's goal in these projects is solely to better understand the technology first-hand. Other frameworks need to be investigated, and there are many hurdles that need to be cleared before such a system would ever be ready for prime time.
"None of our experiments are to develop central-bank issued e-money? for use by the general public. These are still conceptual research questions that are being investigated by many central banks."
Blockchains, which are online ledgers to record transactions, have gained prominence following the growing popularity for the digital currency bitcoin.
Distributed ledger technology is expected to help in completing financial transactions with greater speed, security, cost-efficiency and transparency compared to the existing system.
Image: Bank of Canada Headquarters, Ottawa. Photo courtesy of Wladyslaw/Wikipedia.