The Bank of Canada, the Canadian Payments Association and the Royal Bank of Canada have disclosed their experiments with a digital fiat currency CAD-COIN at Payments Panorama in Calgary.

The news comes from Kyle Kemper, the executive director of the Bitcoin Alliance Canada, who posted a photo of a slide presenting the way the distributed ledger platform underpinning CAD-Coin is supposed to work:

1. Participants pledge T1 cash collateral into a special pooled account held by Central Bank

2. Central Bank converts cash collateral to generate CAD-COIN

3. Central Bank transfers CAD-COIN to fund participants’ accounts

4. Identifiable, trusted counterparts exchange assets on the CAD-COIN platform

5. Participants redeem CAD-COIN for T1 cash collateral

6. Central Bank destroys redeemed CAD-COIN.

More details on the experiment are expected to be revealed soon by the senior deputy governor of the Bank of Canada Carolyn Wilkins.

According to the sources quoted by Forbes, the banks referred to as “the big five”, i.e. Bank of Montreal, Canadian Imperial Bank of Commerce (CIBC), RBC, Toronto-Dominion Bank (TD Bank) and Scotiabank have been involved in the experiment, which is generally overseen by the global blockchain consortium R3. Kyle Kemper called the experiment the first stage of the banks’ “blockchain-ification”.

Last autumn Chain’s CEO Adam Ludwin, answering to the question on how governments could help the development of the blockchain technology, said that they should “issue dollars on the blockchain.” After his statement was met by laughing, he claimed in a year’s time the reaction would be different.

Maria Rudina