Committee on Payments and Market Infrastructures Publishes Analytical Framework of Distributed Ledger Technology
The Committee on Payments and Market Infrastructures published a report on distributed ledger technology in payment, clearing and settlement. In the context of payment, clearing and settlement, DLT enables entities to carry out transactions without relying on a central entity to maintain a single ledger. Financial market infrastructures are entrusted by their participants with maintaining a central ledger and, in some cases, managing certain risks on behalf of participants. It has therefore been commented that DLT could reduce the reliance on a central ledger managed by a FMI.
The objective of the report is to provide central banks and authorities with an analytical framework for assessing DLT arrangements, focusing on those that involve restricted ledgers where access is limited to approved users only. The framework analyzes the arrangement (e.g. functionality, nature and the key factors for effective implementation), its potential efficiencies (speed of end-to-end processing, cost of processing, speed and transparency in reconciliation, cost of credit and liquidity management and the efficiencies of automated contract tools) and safety concerns (operational and security risk, settlement issues, legal risk, governance and data protection).
The European Securities and Markets Authority published a Report on the application of Distributed Ledger Technology to the securities markets on February 7, 2017. ESMA concluded that the development of DLT is still at an early stage and that it is too early to assess the changes that DLT may bring to formulate an appropriate regulatory response at this time. ESMA will maintain a watching brief over this area as the technology and its uses develop.
View the report.
View ESMA's report.