MINDSMITH, a tech think tank, carried out a semantic analysis of the publications of 191 central banks. According to the study, 74% of the central banks globally are interested in blockchain technology. Among the leaders are the US Federal Reserve, the Bank of England and the European Central Bank.
Among the most discussed use cases are central bank digital currencies (retail and wholesale), interbank securities settlement and data exchange platforms.
9 central banks account for more than half of all blockchain mentions
Semantic analysis of 367 official websites of 191 central banks revealed interest in blockchain technology among 127 (74%) central banks of the world. As of January 2021, 127 central banks mentioned blockchain technology 4408 times in their publications.
9 central banks account for more than half of all blockchain mentions by central banks. The undisputed leaders are the US Federal Reserve System, the Bank of England and the European Central Bank.
“Central banks around the world are actively adopting blockchain technology. The «blockchain arms race» has spread to the main financial regulators, and following the high status of players, the scale of global changes has grown, reaching the level of transformation of the financial system’s foundations, such as creation of central bank digital currencies.»
Ruslan Yusufov, MINDSMITH Managing Partner
Central banks of the USA and Europe are among the leaders
The TOP-10 leading central banks in terms of the number of mentions of blockchain technology on the corresponding official websites includes: US Federal Reserve, Bank of England, European Central Bank, Bank of Lithuania, Banco de Portugal, Bank of Thailand, Central Bank of Tunisia, Deutsche Bundesbank, Monetary Authority of Singapore, as well as De Nederlandsche Bank.
The central banks of the world, interested in one way or another in blockchain technology, together account for about 75% of world GDP and 67% of the world’s population.
“The Bank of Russia is actively increasing its interest in blockchain technology: from issuing mortgages on a blockchain platform to developing the concept of a digital ruble. The Bank of Russia not the only central bank expressing high interest in blockchain. Today, a set of best practices is rapidly developing among central banks. Their application for making informed decisions is the most effective way to develop successful blockchain projects at the state level.»
Gleb Borisov, MINDSMITH Chief Analyst
We have identified 7 scenarios of blockchain application by central banks
Blockchain technology, due to the breadth of the range of applications, is of interest to the central banks globally for a number of reasons. Blockchain technology and digital currencies based on it are challenging the fundamentals of the monetary system, and central banks face the threat that individuals will be able to store, spend and move value without relying on national currencies. This poses a significant threat to the role that central banks play in monetary policy, and it is therefore not surprising that blockchain projects are gaining ground in central banks around the world.
“Blockchain as a universal technology has found the widest application among central banks. While they are primarily focused on central bank digital currencies, the key potential for blockchain application among central banks lies at the intersection of a number of use cases. Largely for this reason, studying global best practices is the first step in introducing innovative technologies.»
Ruslan Yusufov, MINDSMITH Managing Partner
Based on published studies and reports on the official websites of central banks, we carried out review of existing blockchain use cases, which are being investigated by at least one central bank.
Retail central bank digital currency
Central bank-issued digital currency that is widely available for consumer use. Serves as a complement or substitute for physical cash and alternative to traditional bank deposits.
Wholesale central bank digital currency
Central bank-issued digital currency that is available only for commercial banks and clearing houses.
Interbank securities settlement
An application of wholesale central bank digital currency, enabling the rapid interbank clearing and settlement of securities.
Payment system resilience mechanism
The use of blockchain in a primary or back-up domestic interbank payment and settlement system to ensure the safety of data and the continuity of operation.
Bond issuance and lifecycle management
The use of blockchain in the bond auction, issuance, or other lifecycle processes.
KYC and AML
KYC/AML processes that leverage blockchain to track and share relevant customer payment and identity information to streamline processes.
Data exchange platforms
The use of blockchain to create alternative systems for information and data sharing between or within related government institutions and regulators.
In order to conduct a systematic analysis of the central banks' activity in application of blockchain technology and digital currencies of central banks, the materials of the relevant publications were obtained through the analysis of primary sources. Based on the list of the official websites of the central banks issued by the Bank for International Reports, a database of the central banks' websites was compiled. In order to eliminate the possible distortion of search results due to the lack of an English version of a central bank website or the poor elaboration of such, both the main domains and the English versions of the sites were collected for each central bank. The final sample included 191 central banks and 365 official central bank websites.
Then, in order to search for all relevant publications of central banks, a semantic core on the topic of "Blockchain" was formed, including sets of relevant terms. Using a search extension, a search, calculation and cataloging of references by central banks' publications relevant to the topics in question were carried out.
In addition, in order to highlight the unique publications of central banks, duplicate publications were identified in the final database, and these publications were attributed to the central banks, which chronologically were the first to publish the marked publications.
MINDSMITH focuses on complex studies, intensive trainings and strategic consulting in the field of high technologies. The company was founded in 2018 as a tech think tank.
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