Eesti Pank, Estonia's central bank, has launched a "multi-year" research project into digital currency.
The project aims to determine whether the KSI Blockchain, already deployed in the Estonian government's e-initiatives, is suitable for launching a central bank digital currency (CBDC) to work alongside cash.
Guardtime, one of the developers of KSI Blockchain, and the SW7 Group, a London-based tech startup, both would work with the central bank on the research project.
"Guardtime is the Estonian government's long-term blockchain partner and is a global leader in its field," said Rainer Olt, head of the payment and settlement systems department of Eesti Pank.
The project will run in multiple phases and is initially planned to last for around two years. "The first phase will determine how to architect a scalable, practically useable, and cryptographically secure platform to meet the needs of a central bank digital currency, including stringent requirements for speed, security, privacy and resilience," said the central bank.
The news follows last week's report on digital euro by the European Central Bank, which encouraged research into the benefits and drawbacks of issuing CBDCs across the bloc.