United Kingdom-based blockchain firm L3COS has submitted a proposal to the Bank of England, or BoE, for a blockchain-based operating system to power a central bank-issued digital currency, or CBDC.
L3COS described the proposal as a response to the consultation document on CBDC published by BoE in March — which identified several benefits and challenges associated with central bank virtual currencies and invited feedback from technology providers, financial institutions, and academics.
Blockchain firm pitches CBDC system to BoE
In an article published by U.K.-based outlet Verdict on June 12, L3COS founder and chief executive Zurab Ashvil proclaimed that the firm’s platform can facilitate the creation of a CBDC for household and business payments.
Asheville argued for the benefits that an immutable and transparent digital ledger offers to the government, asserting that a CBDC would render “fraud, money laundering or other black-market financing impossible.”
Ashvil added:
“Commercial banks and other financial institutions will benefit from the Real-Time Gross Settlement System, or RTGS, that is built into the L3COS ecosystem,”
Coronavirus may hasten CBDC discussions
Despite L3COS’ enthusiasm for a BoE-issued CBDC, the central bank emphasized that it had “not yet made a decision on whether to introduce CBDC” in its March report.
However, the depths of the coronavirus-induced global crisis have renewed CBDC discussions among many policymakers, with BoE digital currencies team manager, Ben Dyson, asserting that it is “the right time for us to be thinking about the future of money” during a webinar in April.
That same month, ING economists Carlo Cocuzzo and Teunis Brosens also concluded that “CBDC will be a more likely option post-COVID-19,” stating:
“The bigger role of governments and the close cooperation between them and the financial sector in combating the economic fallout will guide discussions about CBDC in the context of the role the financial sector has in serving society.”
US position on CBDC unclear
Recent discussions surrounding a digital dollar in the United States have re-stoked CBDC discourse worldwide.
The recent appointment of Coinbase’s former legal head and architect of the USD Coin stablecoin, Brian Brooks, to the top position of the Office of the Comptroller of the Currency had sparked speculation that the U.S. may be quickly exploring the digitization of the dollar.
However, the position of the United States is still unclear, with persistent warnings concerning the impact CBDC may have on commercial banks being voiced by high-ranking officials.
China emerges as global leader in CBDC
U.S. research into CBDC may also be taking place from a defensive perspective regarding China — who have made rapid progress toward issuing a digital yuan in recent years.
Speaking to Cointelegraph, Ledger Vault’s head of APAC region, Glenn Woo, emphasized the speed with which a local CBDC could be rolled out on top of existing infrastructure in China, stating: “Domestically, it could be deployed really quickly and widely used, and people won’t necessarily know what has changed.”
Looking beyond China’s borders, Woo predicts that China’s regional trading partners will be encouraged and offered incentives in exchange for using its CBDC for trade financing and settlement.
Elsewhere, many governments are making moves to trial CBDC, with the Bank of Ghana’s first deputy governor recently reaffirming the institution’s commitment to piloting a state-issued digital currency.