“Big Four” professional services firm Deloitte, proposes a new concept of “state-backed cryptocurrency” that would combine the best attributes of the technology of cryptocurrencies with the features of an established fiat currency under the sponsorship of a central bank.
“With the potential to reduce costs, reduce errors, speed the transfer of money, balance privacy with anonymity, and do it without the day-to-day operational need for a centralized organization, whether commercial or federal, the result could truly be transformational,” Deloitte writes in a short paper.
“The result very well may just be a new method of handling payments that would revolutionize the current system.”
The foundation of a state-sponsored cryptocurrency would very much be like bitcoin, the firm said. However, the proposed concept would attribute particular roles to the different shareholders.
A central bank would issue the currency, control supply, and regulate the processors (miners) of the distributed ledger. Meanwhile, banks would act as custodians and validate transactions through mining.
“A constant revenue stream” generated from validating and processing the ledger’s transactions, combined with a regulatory push, “might encourage banks to accept their transformed role in the new ecosystem,” Deloitte writes.
Unlike today’s cryptocurrencies, a state-backed crypto would be a digital representation of an existing fiat currency. This suggests that “a crypto-dollar would also need to have the same legal tender status as paper currency.”
Deloitte’s “State-Sponsored Cryptocurrency,” follows similar concepts previously outlined notably by Citi. In late-2014, the banking giant responded to the UK’s Treasury’s call for information on digital currency, advising the government to consider creating its own digital currency.
In the same lines as Deloitte, Citi’s Treasury and Trade Services Technology and Innovation Team, cited the advantages of a government-backed digital currency:
“The greatest benefits of digital currencies can be realized through the government issuing a digital form of legal tender. This currency would be less expensive, more efficient and provide greater transparency than current physical legal tender or electronic methods.”
Additionally, IBM is reportedly holding informal discussions with a number of central banks, including the US Federal Reserve, to build a new digital cash and payment system based on blockchain technology.
Interviewed in March by Reuters, a person close to the matter told the media outlet:
“We are at a tipping point right now. It’s making a lot more sense for some type of digital cash in the system, that not only saves our government money, but also is a lot more convenient and secure for individuals to use.”
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