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Estonia’s Central Bank Joins The CBDC ‘Bandwagon’

Estonia’s Central Bank, Eesti Pank, is the latest monetary authority to debut research into the potential of CBDCs within its jurisdiction. The bank announced on October 2 that it had launched a research program that will look further into the building and deploying a CBDC for Estonians. This development comes barely a week since the EU moved to trademark ‘digital euro’ as the region embarks on broader CBDC research.

According to the announcement, they will collaborate with tech firms Guardtime and SW7 group towards the CBDC initiative. Notably, Estonia is one of the blockchain-advanced countries and currently leverages the Keyless Signature Infrastructure (KSI) blockchain to provide its netizens e-government services.

The research will now look into whether the KSI ecosystem can run an Eesti Pank backed CBDC. Also, possible electronic payment solutions that can be integrated with Estonia’s e-ID and e-government portals. However, there are no specifications on which particular technology is limited or should be used in the newly launched Eesti Pank CBDC research project.

It will be rolled in several phases, with the timeline set at around two years. The initial phase of Estonia’s CBDC research project will pay attention to building a scalable, secure, and practical ecosystem that is up to standard in terms of holding digital assets. Concurrently, the research is expected to feature resilience, privacy, security, and speed. Eesti Pank’s head of Payment Systems, Rainer Olt, has expressed optimism on this milestone;

“OVER THE YEARS, ESTONIA HAS DEVELOPED UNIQUE KNOW-HOW TO MAINTAIN SECURE, PRIVATE, AND EFFICIENT E-GOVERNMENT. ESTONIA’S UNIQUE WEALTH OF EXPERIENCE PROVIDES A GOOD IMPETUS TO LAUNCH A PROJECT WITH TECHNOLOGY COMPANIES SW7 AND GUARDTIME TO EXPLORE TECHNOLOGICAL OPPORTUNITIES.”

Estonia joining the CBDC bandwagon, progress in this area seems inevitable despite a slack by leading economies like the U.S. The last few months have been particularly eventful; in fact, China may have already taken an early lead with the launch of a digital yuan pilot. This PBoC backed CBDC is dubbed DC/EP’ and has been a topic of debate given its potential of disrupting the dollar and euro in global trading markets. Although, it’s still in the early stages, and only so much can be predicted given the rate of development in crypto

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