Carolyn Wilkins, the Senior Deputy Governor of the (BOC) Bank of Canada recently proposed that individuals are feeling as though they were offered a raw deal by both private and public institutions. She made this proposal as she was explaining the increased interest in currencies and crypto-assets that is being demonstrated by many individuals.
The statements were made during her open-minded presentation on DLT (Distributed Ledger Technologies) which was prefaced by a quotation from a cover with a cryptocurrency theme. Her talk revolved around how distributed ledger technologies are currently affecting, and may in future affect how the Bank of Canada goes about discharging its duties.
This was in line with the BOC’s role of being a socially mindful lender as well as a monetary policy developer. Carolyn went as far as promising that there was a possibility of introducing an asset backed by the Central Bank of Canada.
In her presentation, she focused on points which she viewed as ironies that are abounding in the cryptocurrency world. She stated that bitcoin mining has actually become very concentrated. This is due to the fact that there are very few mining pools in existence. In addition, bitcoin has also shifted the need for individuals to engage trust, as opposed to completely eliminating it.
Carolyn added that programmers possess immense power, although they do not always shoulder the responsibility that comes with having great power. She also highlighted the fact that lack of a money-creation faculty often tends to harm tokens and cryptocurrencies. By stating this, she was using the academic approach which seeks to explain the relationship between inflation and supply—one which is not always straightforward.
According to her understanding, a trilemma came into view pertaining to three very important aspects that are normally attributed to DLT technologies. Based on what she stated, it is not possible for a DLT to simultaneously satisfy all these three aspects: 1) decentralization, 2) Efficiency, and 3) possess correct ledger entries.
Introduction Of A Canadian Coin?
Based on what Wilkins said, it can be understood to mean that the Bank of Canada is, or has been experimenting using Jasper—this is a toy interbank payments systems. It is mainly used to test blockchain implementations for use in interbank payment systems, cross-border payments, securities, and in posting trade settlements of cash.
The central bank has tested the system using Corda from R3 as well as using Ethereum. A report released by CryptoGlobe indicate that the findings from these tests were not as revolutionary as earlier anticipated.
Wilkins expounded this by stating that as far as integrating blockchain technology into the Bank of Canada’s payment systems was concerned, there was always going to be a centralized side. Any payments being made using the technology will need to pass through the banks’ books as it already has centralized systems in place.
Despite the various concerns that were raised during her presentation, Carolyn remained excited and optimistic about what the future had in store for distributed ledger technologies. She commented by saying that a crypto-asset issued by a Central Bank would remain to be a very big social question.