The Bank of Canada will issue the outcome of its experiment with a payment system based on the technology behind the bitcoin cryptocurrency. Carolyn Wilkins, senior deputy governor of the Bank of Canada, said “the aim of generating the model was to see what profits the blockchain technology could provide and where the risks might lie”. Payment processing was between the Bank of Canada and R3, a New York-based research consortium that includes all of Canada’s major banks, also worked on the project. Blockchain grants consumers to administer secure negotiations with each other without the need for third party approval or central authority, unlike traditional electronic funds transmissions.
The Bank of Canada had been working with commercial banks to establish the experimental interbank payment operations. A slide from a demonstration viewed by Reuters at the time programmed the banks in the experiment would agree cash collateral in a pool that the Bank of Canada would convert into a digital version. The digital currency would then be used as a medium of exchange and could be converted back to cash. However, national currencies are center to financial stability and the transmission mechanism for monetary approach. With bitcoin and other cryptocurrencies, it turned out to be still more of a commodity rather than a money itself as a fundamental means of transacting for people in this room. Virtual currencies and electronic cash in general was still of interest to the bank because it could in a future scenario change the ability of central banks to control short-term interest rates relying on how the cash was valued.