South African Bank Report: Blockchain can create a new era of monetary policy (Download the full report)

South Africa’s FirstRand Bank has published a report on the world’s major central banks and their progress in blockchain research (download the full text of the Coin Library). The report shows that blockchain technology can create a “new era” in monetary policy.

The report, titled "The Advent of Crypto Banking," examines central bank-issued digital currencies in detail. This week, the European Central Bank announced a collaboration with the Bank of Japan to study the concept of digital currencies, and is expected to publish a related research report next year.

At present, the progress of the Bank of England in this regard is relatively prominent. The Bank of England is actively exploring a new digital currency based on blockchain technology. In addition, in June this year, the Bank of Canada announced its digital currency prototype " CAD-Coin ".

FirstRand Bank's research report deeply analyzes the central bank's digital currency structure and gives this system a new name - "sovereign主权区块链", because once this system takes effect, it can become an officially recognized management model.

The report states:

Once the sovereign blockchain system creates a central bank cryptocurrency, the securities, stocks, derivatives, and even real estate and vehicle registration information of other financial institutions will be transferred to this sovereign blockchain system. In this way, the central bank can conduct real-time supervision of the assets created by commercial banks.

Another advantage of this sovereign blockchain is that it can leverage the transparency of the system to drive tax compliance, the report said. That is, smart contracts could be used to collect taxes in real time.

The application of smart contracts in blockchain can completely reform the tax collection model. Such a system can collect taxes at the same time as the transaction occurs, switching from traditional 'post-transaction taxation' to 'real-time taxation'.

While the report is still at a conceptual stage, it points out that if blockchain technology is deployed in a way that fully matches the functions of a central bank, then such a system will definitely have a more far-reaching impact.

The reform of various service models is undoubted. We are in a new era of financial services reform.