Bank

Central banks worldwide are increasingly exploring blockchain technology adoption, with the European Central Bank (ECB) being the latest example.
The ECB recently completed a blockchain experiment for its <a href="https://cointelegraph.com/learn/what-are-cbdcs-a-beginners-guide-to-central-bank-digital-currencies">central bank digital currency (CBDC)</a>&nbsp;with Zama,&nbsp;according to the firm's chief academic officer, Nigel Smart.
He said during a panel discussion at FHE Summit 2024:
<blockquote data-ct-non-breakable="true">
 “We did one with the European Central Bank on liquidity matching. […] And a number of applications on CBDCs have been actually to remove the central bank out of the equation and replace it with a blockchain.” 
</blockquote>
Liquidity matching refers to the process of banks ensuring that their financial inflows and assets are aligned with their outflows and liabilities, to avoid the risk of not having enough funds to meet financial obligations.
Related: <a href="https://cointelegraph.com/news/north-carolina-governor-vetoes-cbdc-ban-bill">North Carolina’s CBDC ban bill vetoed by governor</a>
<h2 data-ct-non-breakable="true" id="blockchain-based-liquidity-matching-the-most-pressing-concern">Blockchain-based liquidity matching: The most pressing concern</h2>
However, liquidity matching remains a challenge for multiple parties transacting on the same blockchain network, according to Zama’s Smart. He explained:
<blockquote data-ct-non-breakable="true">
 “Then the issue is if you have multiple entities on the blockchain and it's all encrypted stuff, how do you do liquidity matching? That’s a really big issue.”
</blockquote>
Smart, who is also a prominent cryptographer, is building fully homomorphic encryption (FHE) solutions for blockchain and <a href="https://cointelegraph.com/news/a-brief-history-of-artificial-intelligence">artificial intelligence</a>&nbsp;at Zama.
FHE-based encryption enables computations to be performed on encrypted data without decrypting it.
Zama secured a $73 million Series A funding round at the beginning of March&nbsp;to further develop the firm's FHE stack and offer developers more tools to build data privacy solutions.
<figure data-ct-non-breakable="true">
 <img src="https://s3.cointelegraph.com/uploads/2024-07/5c5184d8-b97b-46b5-98bc-7b4598f4fe28.png" alt="European Central Bank is exploring blockchain and MPC technology" title="">
 <figcaption style="text-align: center;">
 &nbsp;Source: <a href="https://x.com/zama_fhe/status/1765727386480320771" target="_blank" rel="noopener nofollow">Zama</a>
 </figcaption>
</figure>
Related: <a href="https://cointelegraph.com/news/crypto-remove-friction-next-billion-users-coinbase">Crypto needs to remove friction for the next billion users: Coinbase</a>
<h2 data-ct-non-breakable="true" id="multiparty-computation-can-support-the-entire-finnish-economy">Multiparty computation can support the entire Finnish economy</h2>
<a href="https://cointelegraph.com/innovation-circle/multiparty-computation-mpc-its-effects-on-blockchain-innovation">Multiparty computation (MPC)</a> — which enables multiple parties to share data for computing without revealing the actual data — can theoretically support the entire Finnish economy.
Zama’s Smart revealed that the MPC-based experiment with the ECB proved successful, but supporting the entire European economy will still take time.&nbsp;He said:
<blockquote data-ct-non-breakable="true">
 “We did an experiment with the European Central Bank where we essentially ran the Finnish economy through an MPC engine, and we could keep track. We could actually keep up with Finland, which is good, but not on the European scale yet.”
</blockquote>
He added that the financial sector is increasingly exploring MPC technology, which could bring more use cases to large financial institutions.
Magazine: <a href="https://cointelegraph.com/magazine/cbdcs-kryptonite-for-crypto/">Are CBDCs kryptonite for crypto?</a>

European Central Bank is exploring blockchain and MPC technology

Table of Contents

Cointelegraph

Other articles published on Jul 10, 2024

Bitcoin mining stocks are crawling back, but gains could be brief

MoonBag Staking Rewards Eclipse BNB & FET: Staking 88% APY And More

Bitcoin Price Hovers Near $58,000 as Altcoins Start to Recover

BONK Price Is Expected To Hit A 50% Surge: Is It Sustainable?

Doja Cat's X Account Hacked: $1.63M Lost in Crypto Scam

German Government Actively Manages Bitcoin Holdings

Join our free newsletter for daily crypto updates!