Researchers at the European Central Bank (ECB) have revealed a new investigation report on the influence of distributed ledger technological know-how (DLT) on the harmonization of put up-trade settlement systems.
Released by the Advisory Team on Market Infrastructures for Securities and Collateral late very last week, the 134-page report examines the technology’s doable result on a assortment of solutions that contact the securities settlement process. It further discusses the implications in the parts of collateral administration, asset servicing and information reporting.
Potentially most notably, the ECB – echoing sentiments expressed beforehand by the Bank of England – prompt that in a future industry where distributed ledgers work along with legacy software package, each systems will require to be in a position to converse as necessary.
The report states:
“If DLT and non-DLT answers are to coexist, interoperability in between the two approaches demands to be ensured. There may be a require to deliver ad hoc matching fields where a participant retains each a DLT and non-DLT account.”
That preference for interoperability was showcased in April when the Bank of England unveiled that, whilst it would not still use the tech as the basis for its upcoming Real-Time Gross Settlement (RTGS) method, it nonetheless designs to make it appropriate for future developments.
Beyond the interoperability drive, the ECB report suggests that in the function that good contracts – self-executing items of code tied to ailments on a blockchain – are more broadly utilized, financial information requirements this sort of as ISO 20022 may require changing to account for their individual options
“The likely use of DLTs might have appreciable implications for EU financial industry integration. In individual, the industry may want to look at ISO 20022 extension into good contract initiation and coding, as properly as DLT-certain ideas,” the report states.
The analyze notably will come on the heels of a joint release from the ECB and the Bank of Japan early very last thirty day period, when the two central banking companies reported that they would (at the very least for now) pass on using the technological know-how for some of their generation solutions.
ECB sign impression by way of Shutterstock