Bank of Canada Official Says Blockchain Not More Effective Than Central Bank Systems Right Now

Bank of Canada

An official from the Bank of Canada (BOC) recently questioned the effectivity and security of using blockchain tech in the banking industry at a conference in South Korea.

In a presentation at the 2018 G20 Global Financial Stability Conference in Seoul, James Chapman, a senior research director at the BOC’s funds management and banking department, also said that cryptocurrency represents both a new opportunity and a threat to the financial market.

Chapman also updated the audience on the progress of Project Jasper, the BOC’s proof-of-concept payment system that utilizes distributed ledger technology (DLT) to operate.

Chapman was quoted by local media saying that:

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

Despite being in its third testing phase since February of this year, The BoC does not seem sold on Jasper’s technology. Chapman continued, saying of the project that:

“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.”

His remarks were also echoed by execs at Ripple, the startup notable for the development and installation of blockchain-based alternative settlement systems for banks. This week, in an interview with Reuters, Ripple’s chief cryptographer, David Schwartz told the interviewer that its payment system “is not a distributed ledger.”

This was reinforced by Marcus Treacher, Ripple’s Senior VP, who said that feedback from banks says that “you can’t put the whole world on a blockchain.”

(Photo Credit: Bank of Canada)

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