executives of major European central banks said that if central banks around the world want to issue central bank digital currencies (CBDC), they do not actually need to use blockchain technology.
Swiss National Bank Vice Chairman Thomas Moser and Deutsche Bundesbank's Martin Diehl (Martin Diehl) discussed the central bank at the "European Blockchain Convention Virtual 2020 Conference" held on September 21 Regarding the digital currency issue, they all seem to think that the central bank's digital currency, including the People's Bank of China's proposed "digital renminbi", does not need to use blockchain technology.
Thomas Moser said that when the project has no centralized participants, the blockchain can play the role of a "trusting party", which is also the main use case of blockchain technology. The executive said:
"For example, Bitcoin, I think it is a good use case for blockchain technology."
But in the case of central bank digital currency, the central bank provides "trust", so when the central bank intervenes, there is no need to use blockchain technology. Thomas Moser added:
"In fact, if you have a central bank, it means there is a centralized participant, and if you trust this centralized participant, then there is no need to use the blockchain."
Thomas Moser has previously stated that the Swiss National Bank Committee will decide next year whether to issue a wholesale central bank digital currency (for financial institutions only), but will not issue a retail central bank digital currency (for the general public), because its benefits cannot hide costs and risk. However, according to Thomas Moser's latest disclosure, the Swiss National Bank is about to release a working paper, which will propose a retail central bank digital currency plan that does not include blockchain technology. According to Thomas Moser, the proposed project will protect transaction privacy by using blind signature technology instead of blockchain. (Golden Finance Note: The blind signature technology allows the message to be blinded first, and then the signer can sign the blinded message. Finally, the message owner removes the blind factor from the signature to obtain the signer’s signature on the original message.)
Martin Dier, head of payment system analysis at the Deutsche Bundesbank, also believes that the central bank's digital currency does not require blockchain technology. He cited the "digital yuan" issued by the People's Bank of China and the Swedish electronic krona, two major central bank digital currencies, and said Neither the Riksbank nor the People's Bank of China seem to use blockchain, so blockchain is not necessary.
Martin Deere also pointed out that it does not make sense to implement a public or permission-free blockchain for the central bank’s digital currency system, because public blockchains mainly provide networks for mainstream cryptocurrencies such as Bitcoin (BTC) and Ethereum ( ETH ). The government cannot own it, and the public chain will be completely open to anyone to join and participate.
Martin Deere finally emphasized:
"For me, it is impossible to use permission-free blockchain for official blockchain transactions."
In addition to the Swiss and German central banks, Christina Segal-Knowles, executive director of the Bank of England’s financial market infrastructure, also stated that the new crown virus epidemic has accelerated the development of central bank digital currencies and exacerbated the shrinking trend of existing cash usage, prompting millions of people to switch to non-exclusive cash payment. The Bank of England has published a potential discussion paper on central bank digital currencies, whose uses may include cutting cross-border payment costs such as remittances.
It is worth mentioning that as early as the 2020 online consensus conference held in May of this year, ECB executive Yves Mersch (Yves Mersch) said that they are studying the central bank digital currency, because one allows everyone to use The retail central bank digital currency will be a game changer. At that time, Yves Mosch hinted that the European Central Bank's digital currency may be a circulating digital currency but it is not expected to use blockchain technology.
Part of this article is compiled from cointelegraph