Estonian National Bank main building
Estonian National Bank main building located in the city center in Tallinn, Estonia, photographed on May 20, 2020. M.Pakats/Shutterstock

The central bank of Estonia, Eesti Pank, is launching a new research project to investigate the viability of Central Bank Digital Currency (CBDC), the bank said in a press release on Friday.

According to the announcement, technology companies SW7 Group and Guardtime will be assisting the Estonian bank to determine if the Keyless Signature Infrastructure (KSI) Blockchain able to support a CBDC. The blockchain, developed by Guardtime, already plays a “core” part of the country’s e-government infrastructure.

The head of Eesti Pank’s Payment Systems Department, Rainer Old, said in a statement:

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“Estonia’s unique wealth of experience provides a good impetus to launch a project with technology companies SW7 and Guardtime to explore technological opportunities. The latter is Estonia’s long-term cooperation partner in the field of the blockchain and a complete top in the world in its field.”

In addition to gauging KSI Blockchain’s potential, the project will also look into new payment solutions, which could be made possible with the country’s e-government solutions and electronic IDs. The bank further stated that the project will last for two years, and will be conducted in several phases, the first of which will focus on building a scalable, practical and secure platform. Old said:

“As a small central bank, Eesti Pank carefully chooses which development projects of euro area central banks we can make a meaningful contribution to. Over the years, Estonia has developed unique know-how on how to maintain a secure, private and efficient e-government.”

According to the bank, the project was started in response to a decision taken by the Governing Council of the European Central Bank last month, which called for a “coordinated research into the benefits and drawbacks of issuing central bank digital currency”.

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