Since bitcoin became famous,blockchain has become one of the hottest technology waiting to be adopted across industries. The banking and financial sector are leading the race by working overtime on the blockchain technology based applications to handle Fiat currency and conventional financial instruments.
The Central Bank of Netherlands, De Nederlandsche Bank has now made plans for creating its own digital currency. The bank has made a vague mention of its plans in its annual report. According to the bank’s plans, it will be working on what it calls as a prototype coin based on blockchain technology.
The banking sector is already actively participating in the development of blockchain based network linking the branches across the world. They intend to use this network for fund transfer operations, which is currently being carried out on SWIFT network. Banks currently have to pay transaction charges for using the SWIFT network and it generally takes a couple of days or weeks before the recipient gains access to the money.
The new blockchain based network will allow banks to transfer funds within minutes between the branches belonging to partner banks situated anywhere in the world. In addition, the banks can also save a lot of money on regulatory compliance by using blockchain technology.
The central banks also realize the importance of digital currency and blockchain technology. If the central banks start issuing digital currency as a legal tender instead of banknotes and coins, they can reduce expenditure on maintaining the liquidity. It will also allow the banks to regulate interest rate more efficiently. Apart from Netherlands, the central banks of the People’s Republic of China, Bank of England and even the Reserve Bank of Australia are considering to implement a digital form of legal tender.