Do Central Banks care about Blockchain? – Q4 CAPITAL
During the last centuries, for most of us, the concept of money and banking was associated with state-owned institutions, central banks, privately owned banks, international payment systems and financial markets that are run and controlled by the financial elite.
The inception of the cryptocurrencies within the last decade, or, more intensively, during the past couple of years, has disturbed these beliefs and financial traditions. Cryptocurrencies, first of which was Bitcoin, brought peer-to- peer payment system that is absent of central governing authority. In contrary, the Bitcoin blockchain is owned and controlled by anyone that has desire and Internet tools to participate and run the network.
A concept of having a payment system ‘that would allow online payments to be sent directly from one party to another without going through a financial institution’ (Satoshi Nakamoto) has stirred waters, sparking various anarchic ideas of the new world governance and financial markets.
Many have dismissed the technological features of inventions such as Bitcoin, and instead focused on the notion that no independent currency would be able to exist if governance and regulators consider this illegal. This notion trusts in governance concept that the global financial system is organised by governments, central banks, Federal Reserve, investment banks, international payment organisations and other well-established participants of the financial markets.
So, unless the governments and banking authorities enable such innovations, such as blockchain and cryptocurrencies, no innovative initiatives would be able to materialize.
Except, that the international governing bodies, financial institutions and Central Banks have been long exploring and testing the technologies of blockchain and digital currencies. The International Monetary Fund (IMF) has been writing reports about blockchain and the rise of digital currencies for multiple years now, and have even also launched its own ‘educational coin’ to test how it works.
The European Central Bank (ECB) has an internal Innovation Lab, so do many other Central Banks, in order to understand how blockchain and the Distributed Ledger Technology (DLT) functions. On 9th of September 2019, The Lithuanian Central Bank has revealed the progress of its LB Chain blockchain sandbox — the first regulated initiative in Europe that attracted a lot of attention.
There is also a EURO Chain- World’s first Central Bank blockchain initiative.
The ECB is very active in this field. The organisation that unites, regulates all Central Banks in Europe and sets the tone for the financial whole continent- is continuously organising hackatons, assesses the infrastructure, tests intergovernmental payment transfers using the DLT.
The ECB has even set up a joint DLT initiative with the Bank of Japan. The European central bank governing body says that is not the time to build walls, and in contrary, rather assess whether the current infrastructure is fit for purpose, being united and open when it comes to innovation.
There are strong indicators that governing organisations and central banks are testing various forms of digital currencies.
Europe is following its united currency- Euro- plan. If the future of money is digital- clearly, the infrastructure and concepts have to be ready for that.
Will it be a digital Euro, governed by the ECB, or will the concept of money be transformed by technology?
Will initiatives such as Libra change the role of Central Banks?
This and other questions AGNE Q will aim to answer in subsequent blogs.
Thank you for reading,
AGNE Q
Published at Sun, 15 Sep 2019 16:49:53 +0000
Bitcoin Pic Of The Moment
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By trendingtopics on 2019-03-27 17:32:06
