TORONTO (Reuters) - The Bank of Canada will in the coming months publish the results of its experiment with a payments system based on the technology behind the bitcoin virtual currency, a senior central bank official said on Wednesday.
The purpose of building the prototype was to see what benefits the blockchain technology could provide and where the risks might lie, Carolyn Wilkins, senior deputy governor of the Bank of Canada, said.
Payments Canada and R3, a New York-based research consortium that includes all of Canada’s major banks, also worked on the project, she said.
“It’s been a very useful exercise and we’ll be publishing the results sometime in the next few months,” Wilkins said at a conference hosted by the Ontario Securities Commission.
Blockchain allows users to conduct secure transactions with each other without the need for middlemen or central oversight, unlike traditional electronic funds transfers.
Wilkins said in June that the Bank of Canada had been working with commercial banks to build the experimental interbank payment system.
A slide from a presentation viewed by Reuters at the time showed the banks in the experiment would pledge 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.
Wilkins said on Wednesday the experiment used a “wholesale digital currency.”
Nonetheless, national currencies are core to financial stability and the transmission mechanism for monetary policy, she said.
“What we saw with bitcoin and others is really it turned out to be still more of a commodity rather than a money itself,” Wilkins said. “As a fundamental means of transacting for people in this room, it’s just not there.”
Wilkins said digital currencies and electronic money 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 depending on how the money was used.
Reporting by Alastair Sharp; Writing by Leah Schnurr; Editing by Leslie Adler