The Bank of Estonia has launched a multi-year project in collaboration with the technology companies Guardtime and The SW7 Group to research how technologically suitable the Estonian e-government core technology is for operating a central bank digital currency.
A central bank digital currency would in theory give people and companies a new way to deposit and use money alongside their accounts at commercial banks and cash.
It would be similar to cash, as both are a claim on the central bank, meaning the central bank directly backs up the value of the money, the Bank of Estonia said in a statement.
The rapid development of financial services and technology has led customers to change their payment habits, prompting several central banks to start research into technologies that could be suitable for use in digital currencies.
Following a decision taken last week by the Governing Council of the European Central Bank, the central banks of the euro area will carry out coordinated research into the benefits and drawbacks of issuing central bank digital currency and possible digital currency solutions.
Read more: ERR.EE