October 2, 2020//-Guardtime, the leading global technology company that designs and implements unique solutions to provide cryptographic proofs of correctness, welcomes today’s announcements on the Digital Euro from the European Central Bank (ECB) (link) and the Bank of Estonia (link).
The ECB has announced that it is intensifying its work on a digital Euro. Estonia, a world leader in digital government, is contributing to the ECB’s process with research into the suitability of Estonia’s KSI Blockchain for the operation of a full-scale retail CBDC.
Guardtime, which develops the KSI Blockchain and is supporting Eesti Pank’s research, is in talks with several central banks over the possible development of their own digital currencies.
It says there is an increasing sense of a ‘race to the moon’ regarding central banks launching their own digital currencies, because this could radically enhance countries’ and currencies’ positions on the global economic stage. It says first movers in this space, such as China, could win long-term geopolitical advantages.
Mike Gault, CEO Guardtime said: “Decentralized digital currencies like bitcoin are becoming more popular, and many central banks are beginning to realise they need to develop their own versions, or they will miss out on the evolution of money.
“Added to this, the COVID-19 crisis has amplified the focus from central banks on this area and accelerated the development of CBDCs by years.
Lockdowns have limited physical interactions and reduced the use of physical cash. In the EU for example, e-commerce sales increased by roughly 20% between February and June, despite total retail sales falling.
There is also a real concern regarding the potential for paper money to transmit viruses. Research reveals the average European banknote hosts around 26,000 colonies of bacteria.
“There are currently up to 20 digital currency projects led by central banks, and China is one of the country’s leading the way. Last month it announced a pilot project of its digital Yuan in four cities. If it introduces a successful central digital currency to streamline trade and reduce risk, China could become the world’s trade banker, as well as its factory.”
“The real breakthrough comes from a retail CBDC, giving individuals and businesses direct access to central bank-backed assets in a form that is both more secure and easier to use than existing forms of e-money.”
Guardtime believes the introduction of central bank digital currencies could upend the global economic order. This technology could bring a multitude of benefits such as more efficient trade, greater financial access for millions of people, and a reduction in crime.
But there are important technological barriers to overcome regarding scalability and security, and it is on these points that Guardtime is in discussion with some central banks.
Mike Gault Guardtime added: “The next few months and years will be fascinating to observe which nations are able to launch CBDCs that are scalable, secure and efficient. The benefits for those that achieve this first will be huge.”
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