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Bank of Canada says won't use blockchain for interbank payment system

Stock MarketsMay 25, 2017 11:40
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© Reuters. Bank of Canada says won't use blockchain for interbank payment system

By Solarina Ho

TORONTO, May 25 (Reuters) - The Bank of Canada said on Thursday that its experiment with blockchain, or distributed ledger technology, showed it is currently not compatible with operating the country's centralized interbank payment systems.

The Bank's conclusion, published in a column in The Globe and Mail newspaper, comes after a year-long experiment in partnership with Payments Canada, which is responsible for the country's clearing and settlement infrastructure, and Canada's largest banks.

"The bottom line is that a stand-alone DLT wholesale system is unlikely to match the efficiency and net benefits of a centralized system," wrote Carolyn Wilkins, senior deputy governor of the Bank of Canada, and Gerry Gaetz, Payments Canada president.

"At its heart, there exists a fundamental inconsistency or tension between a centralized wholesale interbank payment system, as we have now, and the decentralization inherent in DLT."

Payments Canada clears a daily average of more than C$175 billion ($130.42 billion) through the wholesale interbank payment system, which is overseen by the Bank of Canada.

Blockchain, the technology that underpins digital currencies such as bitcoin, is a distributed record of data or transactions maintained by a network of computers without the need for approval from a central authority.

Bank of Canada says won't use blockchain for interbank payment system
 

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