European Central Banks: CBDC don’t need blockchain

You don’t always need a blockhain, especially not with CBDCs.

According to senior executives at major European central banks, digital central bank currencies, or CBDCs for short , do not need blockchain technology

Thomas Moser, a deputy member of the board of directors of the Swiss National Bank, and Martin Diehl from the Deutsche Bundesbank spoke about the status of CBDCs at the European Blockchain Convention Virtual 2020 on September 21.

During the online panel discussion, Diehl and Moser agreed that global CBDC projects, such as China’s digital yuan , would not require blockchain. They gave a number of reasons for doing this.

Moser said the primary use cases for blockchain would be about building trust when a project doesn’t have a central body. „Bitconi, for example, is a very good use case for blockchain in my opinion,“ said the senior employee.

However, he also stated that a central bank would make the use of blockchain superfluous, as trust would be provided by a central body:

But if you have a central bank, that’s the central body. And if you trust this central body, then in my opinion there is no reason to use a blockchain. “

The executive also said that the Swiss National Bank will soon publish a working paper that will address a CBDC for retail without blockchain. According to Moser, the upcoming project will protect a key element in cash transactions , namely transaction data protection , by using technology with blind signatures instead of a blockchain.

Diehl, the head of payment system analysis at the Deutsche Bundesbank, explained that blockchain technology is not necessary for a CBDC. He cited two important CBDC projects as examples. Namely the Chinese, digital yuan and the Swedish e-krona . „Neither the Swedish Riksbank nor the People’s Bank of China apparently use a blockchain, so a blockchain is not a must,“ said the director.

Diehl also said there was no point in implementing public or permission-free blockchains for CBDC systems. Public blockchains, which provide a network for large cryptocurrencies such as Bitcoin ( BTC ) and Ether ( ETH ), cannot belong to any central party and anyone is completely free to join the network. „Permission-free blockchains that are used for official blockchain transactions are inconceivable for me,“ said Diehl.