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Bank of England and PricewaterhouseCoopers partner to explore putting fiat currency on a blockchain

PriceWaterhouseCooper’s (PwC) Digital Technologies team [announced]( a major project with the Bank of England on Friday. The partners described a concerned effort to see if they can make fiat currencies like the British Pound Sterling work over a blockchain.

PriceWaterhouseCooper’s (PwC) Digital Technologies team announced a major project with the Bank of England on Friday. The partners described a concerted effort to see if they can make fiat currencies like the British Pound Sterling work over a blockchain.

The experiment created a proof of concept cryptocurrency that offered a “single shared view of transactions,” explained PwC in a release, “allowing every participant simultaneous access to a shared view of information.”

nick bouch“This is a significant piece of work and PwC are very excited to have been able to support the Bank in developing their first DLT Proof of Concept, which will enable the Bank to gain a better awareness of DL from both a technology and policy perspective.”

  • Nick Bouch, PwC financial services data leader and partner

On the same day the Bank of England’s governor, Mark Carney, announced that the Bank is “examining how the technology behind bitcoin can improve central banking services, and is at the early stages of examining a digital currency.” The digital currency aspect is only one of the uses for their experimentation, however, and settlement systems appear to be the main focus of their initial explorations. “The prospect of a central bank digital currency for the UK, in my view, [is] still some way off,” Carney said.

No more specific details about the inner workings of the blockchain that they created were given, only that the partnership resulted in a successful exploration of the potential opportunities and challenges of using distributed ledger technology for payments and settlement.

The news of their partnership comes at a time when many governments are starting to show demand for blockchain-based fiat currency. The Bank of Canada is the latest to claim that they are considering using blockchains for their own currency, which they are calling ‘CAD-Coin.’


Several other major banks including the Royal bank of Canada, the Bank of Montreal, CIBC, Scotiabank and TD Bank, are involved in the project, as is the banking consortium startup R3CEV. For now CAD-coin remains in the experimental stage only.

Coincidentally, Canada was also the first government to attempt to create a digital currency that citizens could trade with each other, although it wasn’t using an actual blockchain. In 2012 the Royal Canadian Mint developed a USB drive-based currency called the “Mint chip,” but they never perfected it. By 2014, the Canadian government scrapped the program and sold all of the hardware for it at auction.

On the day before Canada announced their CAD-coin, the largest Japanese financial group announced a similar program that is further along, although the official word is that it is still in testing and isn’t officially in production yet. Mitsubishi UFJ is building a digital Yen on a blockchain that is to be used on a swipe card, modeled after the popular Suica swipe cards that they use there to pay train fares.

The Dutch central bank, De Nederlandsche Bank, released an annual reporton 16 March in which they speak of “DNBCoin,” their own "prototype coin based on blockchain technology." Their report discussed how blockchain tech could improve their core business, but gave no details on the project’s release or full objectives, other than putting it in a section marked "aims for 2016."

The historic first instance of a government giving their approval to use a blockchain-based fiat currency occurred near the end of February in Barbados. Caribbean bitcoin exchange Bitt launcheda mobile wallet complete with a digitized version of the Barbadian dollar, using the Bitcoin blockchain to keep track of this digital fiat currency. Impressively, this digital Barbadian Dollar has the full backing of the Central Bank of Barbados, a first of it’s kind for Bitcoin.

The bitcoin exchange has even received $16 million USD in fundingfrom’s CEO Patrick Byrne, with the goal of modernizing trade in a region of the world whose money has been balkanized. Getting Barbadians to adopt the new form of currency is an ongoing process which has yet to gain much ground.

Friday’s news is unique in that such large players as the Bank of England and PwC have partnered together, but independently, each has been heavily involved in blockchain research before.

The Bank of England has made the news consistently since early 2013 weighing in its’ opinions on blockchain technology, from the time that they speculated about creating a digital currency themselves, to another time when they considered the harm cryptocurrency would do to the lending industry. Mostly, however, they have talked about and experimented at great length with the Real-Time Settlement aspects of cryptocurrency.

220px Bank of England.svg"In the first part of 2016 the Bank will seek input from a wide range of stakeholders, before consulting formally on a small number of alternative ways forward later in the year. By the end of 2016 the Bank will have agreed a blueprint for high-value sterling settlement in the years ahead, with technological development of that blueprint beginning in 2017."
— – Bank of England News Release

In fact, the former executive director of the Bank of England, Sir David Walker left the bank in December to become the chairman of the board at blockchain startup SETL which competes with R3 CEV, although it is primarily focused on settlement.

PwC, one of the four largest professional services firms on Earth, has been hard at work studying blockchain technology for years. The firm released a series of reports outlining the benefits of the tech, and in January opened an office in Northern Ireland for the Digital Technologies team, dedicated  “to exploit and commercialise blockchain, the technology that powers the crypto-currency, Bitcoin.” It would be difficult to find a more suitable partner for the Bank of England to work with during their attempt to put the Pound on a blockchain.

The British megabank’s Chief Information Officer, Rob Elsey, was optimistic about the outcome of the tests and hinted that they’ll be able to deploy similar fiat-over-blockchain networks much faster next time.

Robert Elsey“This Proof of Concept brought to life the core features of distributed ledgers, greatly enhancing the Bank’s understanding of DLT. With PwC’s support, the Bank’s developers used the latest techniques and software to deliver this POC and have gained further skills that will enable additional rapid Proof of Concepts in the future.”
— – Rob Elsey, Bank of England Chief Information Officer


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