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In a revelation on Wednesday, the Bank of Canada – Canada’s central bank – said that it is developing a digital currency called CAD-Coin, in collaboration with Canadian banks and New York-based blockchain startup R3.
In a private presentation during the payments industry conference Payments Panorama in Calgary, the Bank of Canada revealed it is developing a digital equivalent of the Canadian dollar called CAD-Coin.
Five of the biggest Canadian banks – Bank of Montreal, Canadian Imperial Bank of Commerce (CIBC), RBC, Toronto-Dominion Bank and Scotiabank are revealed to be participants, by Forbes.
All five banks are members of the blockchain consortium R3CEV, led by R3. The blockchain startup is offering its blockchain platform to run testing and development of CAD-Coin.
While details surrounding the digital currency are currently scarce, a slide obtained by Forbes from an attendee at the presentation outlined a process wherein participants pledge cash into a Central Bank controlled account. The cash would then be converted to its equivalent in CAD-coin. Trusted parties would then be able to transact with the digital currency on the platform.
Notably, the registry and the blockchain would be owned and controlled by the Central bank, giving it the authority to destroy CAD-Coins when the digital currency is converted back to cash collateral.
Carolyn Wilkins, senior deputy governor of the Bank of Canada, added that the blockchain endeavor is one of the bank’s “many fintech research projects”. The aim with CAD-Coin is to build a “wholesale interbank payment system” using blockchain technology, Wilkins revealed. While developing a proof-of-concept distributed ledger is key, she revealed that none of the Bank’s fintech forays include any concept of issuing digital currencies for the general public.
In statements, she 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 be ever be ready for prime time.
Featured image from Shutterstock.