IBM has held informal discussions with a number of central banks about the creation of a blockchain-based digital cash and payment system for major currencies, according to a report by Reuters.
The objective is to allow people to transfer cash or make payments instantaneously using this technology without a bank or clearing party involved, saving on transaction costs, says the wire, citing a source familiar the plans.
The transactions would be in an open ledger of a specific country’s currency such as the dollar or euro, said the source, who declined to be identified because of a lack of authorisation to discuss the project in public.
“When somebody wants to transact in the system, instead of you trying to acquire a bitcoin, you simply say, here are some US dollars,” the source said. “It’s sort of a bitcoin but without the bitcoin.”
Both the Bank of England and the Federal Reserve have openly discussed the concept of adopting the backbone technology of the bitcoin crypto-currency as a means of creating state-backed digital currencies.
In February, the Bank of England said that the distributed ledger technology that bitcoin relies on “may have considerable promise. This raises the question of whether central banks should themselves make use of such technology to issue digital currencies.”
Earlier in the month, a senior researcher at the Federal Reserve Bank of St Louis floated the idea of a government-backed ‘Fedcoin’ that uses a bitcoin-style protocol but the US dollar as the monetary object, combining the best of cryptocurrencies and cash.
According to Reuters, if central banks approve the concept, IBM will build the infrastructure to test the idea.