Estonia’s Central Bank has launched research into whether its e-government technology can operate digital currency.
Head of Payment and Settlement Systems at Eesti Pank, Rainer Olt said the multi-year project would determine how suitable the KSI Blockchain, a core technology of e-government in Estonia, was for supporting the digital money infrastructure of a central bank.
“The project will also examine new payment solutions that could be made possible by using digital ID and other e-government technologies,” Mr Olt said.
The Baltic nation, with a population of just 1.3 million, is widely seen as a global leader in digital government.
It promotes itself as being the first country in the world to use blockchain, a digital ledger of transactions, at a national level.
KSI (which stands for Keyless Signatures Infrastructure) is a blockchain technology created in the country 13 years ago.
Mr Olt said Estonia had unique know-how in running a digital government that prioritised security, privacy and efficiency.
“This experience provides good grounds for launching a project to explore the technological frontiers of digital money,” he said.
“The research will run in multiple phases and is initially planned to last for about two years.”
He said the first phase would determine how to design a scalable, practically useable and cryptographically secure platform to meet the needs of a digital currency, including stringent requirements for speed, security, privacy and resilience.
“The project is the first practical example in a new strategic direction in which Eesti Pank will look for ways to co-operate with the private sector on research topics that will encourage the development of the country’s financial and payments markets,” Mr Olt said.
Meanwhile, the European Central Bank has launched a public consultation on whether to progress plans for a potential digital euro.
Tallinn, 10 October 2020
