Blockchain Isn’t Any More Effective than the Central Bank System, Bank of Canada Says

A Bank of Canada (BoC) official isn’t convinced that blockchain tech is more effective than the current central bank system.

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Photo from the Toronto Star

During the 2018 G20 Global Financial Stability Conference held in Seoul, South Korea, an official from the BoC had questioned whether or not blockchain technology was better for the banking industry in terms of effectiveness and security.

Along with his comments on blockchain tech, BoC’s Fund Management and Banking Department Senior Research Director James Chapman also recognizes cryptocurrency assets as “a new opportunity and a threat to the financial market.”

Chapman commented:

“Digital currencies based on smart contracts have high resilience and eliminate information asymmetry.”

The BoC is currently at its third testing phase of its Project Jasper—its proof-of-concept payment system that uses distributed ledger tech (DLT) like blockchain. Despite being so far off in its testing and development, the bank does not seem very much impressed with blockchain tech.

“At this time, there is no cost-saving effect compared to the existing central bank system. Hacking and other operational risks are likely to occur,” says Chapman.

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