Former Bank of England (BoE) official: Bank of England digital currency will eventually take on many different "hybrid" forms

Editor's note: Original title was "Central Bank Officials: Blockchain Can Improve the Global Financial System"

Source: CointelegraphChina

On March 7, three currency and cryptocurrency experts discussed the challenges and prospects of the central bank's digital currency issuance at the Massachusetts Institute of Technology (MIT) Bitcoin 2020 Expo. Panelists acknowledged that blockchain technology can improve the existing global currency system, however, they believe that there are still major challenges in terms of blockchain privacy, interoperability, and scalability.

IMF officials: central banks should not rush to adopt blockchain  

International Monetary Fund (IMF) economist Sonja Davidovic has warned central banks not to rush to implement a blockchain system without first properly reviewing technology.

She stated:

"What we are seeing is a phenomenon of hype, and people will quickly switch to choosing technology just because of its popularity."

"Blockchain is indeed the case. As a result of this, we have seen central banks directly involved without testing the technology to verify the concept, selecting suppliers through an open tender process, and an appropriate process for public consultation. " Although the central bank has access to a range of distributed systems, Davidovich said no system has shown strong privacy and interoperability. The IMF official added that central banks face increased risks in implementing these technologies because they typically outsource development to third-party companies.

"This is the weakest link. You can have a secure system, but if someone with an operating system clicks on a phishing email or a security hole that can be exploited illegally, then your most powerful system will not help Safety."

Can the blockchain system support trillions of transactions?

Roble Ali, a scientist at the MIT Digital Currency Initiative and a former Bank of England official, predicts that the central bank ’s digital currency will eventually take on many different “hybrid” forms .

"You may end up seeing a mixed solution. I don't think every central bank will choose the same system. How they interact will be key, so you can classify them as a single system."

Bob Bench, director of applied financial technology research at the Federal Reserve Bank in Boston, asserts that cryptocurrencies such as Bitcoin cannot be scaled to meet the needs of the central bank.

"BTC is very interesting because it is primarily transaction value. However, if you are trying to create a central bank currency for retail use, such as China, which created 40 trillion transactions last year via WeChat alone, then you need a way to A currency that transfers value over time and can be realized quickly without crashing. "

Despite acknowledging the potential role of blockchain, the Fed official urged central banks to consider including "full conviction and trust in government currencies" as a risk factor for blockchain.

Alipay WeChat becomes part of digital central bank reserves

Becky added that with the People's Bank of China starting to directly provide financial support for these two platforms from June 2019, Alipay and WeChat have become the reserves of global digital central banks.

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