The deployment of blockchain technology is being investigated by central banks globally, with the European Central Bank (ECB) being the most recent example.
Multiparty computation, which the central bank has been working with, has the potential to sustain the future of the whole European economy.
Nigel Smart, the company’s chief academic officer, notes that the European Central Bank (ECB) and Zama recently finished a blockchain experiment for the CBDC.
During the FHE Summit 2024 panel discussion, he stated:
“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.”
To reduce the chance that they won’t have enough money to pay their debts, banks go through a procedure known as liquidity matching that matches their assets and outflows with their liabilities.
Zama’s Smart claims that liquidity matching is still tricky for numerous parties trading on the same blockchain network. He clarified:
“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.”
Renowned cryptographer Smart is developing Fully Homomorphic Encryption (FHE) systems at Zama for blockchain and artificial intelligence (AI).
Computations on encrypted data can be done without first decrypting, thanks to FHE-based encryption.
Beginning in March, Zama successfully raised $73 million in a Series A fundraising round to advance the company’s FHE stack and provide developers with additional resources to create data privacy solutions.
The Finnish economy could be supported by multiparty computation (MPC), which allows several parties to share data for computing without disclosing the actual data.
Although Zama’s MPC-based experiment with the ECB was successful, it will still take time to sustain the entire European economy. He declared:
“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.”
He continued by saying that the financial industry is increasingly investigating MPC technology, which may result in further applications for big financial organizations.
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