The Dutch Central Bank has disclosed its plans to develop a blockchain-based digital currency. The issue of a state-supported analogue of bitcoin is among the main bank’s priorities for the rest of this year.
The annual report of the Dutch Central Bank also suggests the possible name of the future digital money unit – DNBCoin. According to the document, it will look like a “prototype of a blockchain-based currency.” The introduction of the cryptocurrency is expected to increase transparency, security and availability of electronic payments.
The section which contains the information about DNBCoin is entitled “Goals for 2016”. Thus, the creation of Central Bank’s proprietary cryptocurrency seems to be considered by the Dutch government as an urgent and important task. Yet, the report provides no further details on the upcoming project.
Another section of the report mentions, that the Dutch Central Bank regards blockchain as a technology with a potential to improve banking business processes.
“The blockchain technology looks promising. This innovation deserves special attention. It is used since 2009 in the virtual currencies turnover, such as bitcoin. Blockchain works with distributed ledgers, using a network of computers around the world. <...> The potential advantages of this infrastructure are low costs, high speed and transparency of transactions.”
The report of the Dutch Central Bank matches the current trend: regulators of many countries have recently expressed an interest in cryptocurrency technologies, including the central banks of Canada, Australia and China. In February, the Bank of England announced that the researchers at University College London developed, in accordance with the regulator’s request, a centralised cryptocurrency RSCoin based on the distributed ledger technology. Unlike bitcoin, RSCoin allows the central bank to carry out full control over its functionality.
According to Simon Lelieveldt, a Dutch banking consultant, central banks are looking for a permanent digital alternative to physical cash money. As he notes in his article, “previously, central banks were keen on getting rid of cash as an inefficient payment method… The policy line now is that for availability and financial inclusion reasons cash still needs to be around as a payment mechanism.”
Lelieveldt is confident that with their turn to new financial technologies central banks are no longer trying to eliminate cash from circulation, but are seeking to digitalise it.