The Bank of Canada is Canada’s central bank and responsible for promoting the economic and financial welfare of Canada, or in other words, is responsible for formulating Canada’s monetary policy, and for the promotion of a safe and sound financial system within Canada.
Most recently, the Bank of Canada has made headlines as it incrementally increases the benchmark interest rates to try to curb the higher than expected inflation rates in the country.
Alongside its daily operations however, the Bank of Canada has recently partnered with Multiverse Computing, a quantum software company based out of Spain, with offices in Toronto, for a different kind of project. Multiverse is a start-up company dedicated to finance and producing quantum and quantum inspired solutions to some of the most important problems in the financial industry. Enrique Lizaso Ph.D, co-founder and CEO of Multiverse Computing, differentiated the company from others in the quantum space, stating that, “While other firms are focused on improving the fundamental hardware and software components of quantum computers, we are keenly focused on leveraging the most advanced quantum devices available now to deliver near-term value for the financial sector.”
Undoubtedly based on its reputation and keen specialization in finance and quantum computing, the start-up company has been engaged by the Bank of Canada to build a program from scratch that can perform simulations on the adoption of cryptocurrency as a payment method.
This move places Canada as the first of the G7 countries to address the question of whether cryptocurrency and flat currency can coexist using quantum computers.
The collaboration endeavoured to test the power of quantum computing on cases that are otherwise difficult or near impossible to solve using classical computing techniques and in this respect, chose to model eight to ten-person networks of non-financial companies using cryptocurrency as a means of payment. Multiverse engaged in extensive research to develop a deep understanding of interactions that can take place in payments networks and how companies might adopt different forms of payment (i.e. cryptocurrency alongside bank transfers and other financial instruments). The model, using D-Wave’s annealing quantum computer, encoded every possible combination within the up-to ten-player network (that’s about 290 possible network configurations!), and according to Sam Mugel, CTO at Multiverse computing, “The results of the simulation are very intriguing and insightful as stakeholders consider further research in the domain. Thanks to the algorithm we developed together with our partners at the Bank of Canada, we have been able to model a complex system reliably and accurately given the current state of quantum computing capabilities.”
Although Multiverse’s research is only in the proof-of-concept stage, the Bank of Canada is optimistic that this collaboration will help provide new insight into economic problems by carrying out these complex simulations on quantum hardware. Particularly relevant, the researchers have observed that in some industries, cryptocurrencies could share payment markets with traditional bank transfers and cash-like instruments. These empirical observations however will ultimately depend on how and if financial and non-financial institutions choose to adopt cryptocurrency.