Estonian central bank to conduct research into digital currencies

The Bank of Estonia (Eesti Pank) announced a study into digital currencies. Its aim is to explore the possibilities for creating an infrastructure that, among other things, could support payment solutions using new technologies.

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Estonia has, over the years, developed a unique expertise in keeping a secure, private and efficient e-government running.

Now we will study with @Guardtime whether Estonia’s e-government core technology is technically suitable for operating central bank digital money.https://t.co/zaAjsjlcAR

— Eesti Pank (@EestiPank) October 2, 2020

The project’s partners are technology companies SW7 Group and Guardtime. As part of it, the compatibility of a blockchain-based solution for a signature infrastructure without code (KSI) with virtual currencies will be tested.

Participants in the project are exploring new payment solutions that could, in principle, be implemented using electronic IDs and other capabilities of Estonia’s e-government.

The regulator did not specify which technologies would be used.

The KSI blockchain solution is already used in Estonia’s e-government services.

The announced project is scheduled for two years and comprises several phases. In the first phase, the feasibility of creating a scalable and secure platform that would have practical applications and meet the requirements for digital money will be studied.

Earlier, Estonian authorities had considered creating Estcoin – a euro-pegged national digital currency. In the summer of 2018, those plans were scrapped after criticism from former European Central Bank president Mario Draghi and other senior figures in the banking sector.

Earlier this week the ECB presented a report on the possible issuance of a digital euro, which it regards as the electronic form of a central bank digital currency (CBDC) for ‘facilitating payments quickly, simply and securely’.

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