ECB and BoJ Release Report on Distributed Ledger Technology
ECB and Bank of Japan (BoJ) released the outcome of their joint research on distributed ledger technology (DLT) in a report titled, "Payment systems: liquidity saving mechanisms in a distributed ledger environment." This joint research project called “Stella” was launched in December 2016 and it studies the possible use of DLT for financial market infrastructures.
Both BoJ and ECB, in their capacity as providers of market infrastructure services, are exploring DLTs. Their joint research is based on experimental work with the technology and contributes to the ongoing broader debate concerning the usability of DLTs for financial market infrastructures. Depending on technological developments and implementation models, this technology could increase efficiency, for example, by facilitating the automation of recordkeeping and streamlining complex processes. The technology could also lead to improvements in safety and resilience to a range of non-financial risks. The key findings of the joint analysis are as follows:
DLT-based solutions could meet the performance needs of a Real-Time Gross Settlement (RTGS) system. Within the restricted test environment, both average and peak payment traffic consistent with that of BOJ-NET and TARGET2 (the RTGS systems of the two central banks) was processed without difficulty.
DLT performance is affected by network size and distance between nodes.
DLT solutions have the potential to strengthen resilience and reliability.
While the test series produced promising results, it should be taken into account that no direct conclusions can be drawn from the test setup with respect to a potential usage in production. Given the relative immaturity of the technology, DLT is not a solution for large-scale applications like BOJ-NET and TARGET2 at this stage of development. A DLT is a set of tools for recording data, such as asset holdings or financial transactions; it allows a network of computers to verify and store updates without a single central management system.
Related Link: Joint Report (PDF)
Keywords: Europe, Asia Pacific, Japan, PMI, DLT, BOJ-NET, Target2, ECB, BoJ
Previous Article
EC Standards on Disclosure of Encumbered and Unencumbered AssetsRelated Articles
BIS and Central Banks Experiment with GenAI to Assess Climate Risks
A recent report from the Bank for International Settlements (BIS) Innovation Hub details Project Gaia, a collaboration between the BIS Innovation Hub Eurosystem Center and certain central banks in Europe
Nearly 25% G-SIBs Commit to Adopting TNFD Nature-Related Disclosures
Nature-related risks are increasing in severity and frequency, affecting businesses, capital providers, financial systems, and economies.
Singapore to Mandate Climate Disclosures from FY2025
Singapore recently took a significant step toward turning climate ambition into action, with the introduction of mandatory climate-related disclosures for listed and large non-listed companies
SEC Finalizes Climate-Related Disclosures Rule
The U.S. Securities and Exchange Commission (SEC) has finalized the long-awaited rule that mandates climate-related disclosures for domestic and foreign publicly listed companies in the U.S.
EBA Proposes Standards Related to Standardized Credit Risk Approach
The European Banking Authority (EBA) has been taking significant steps toward implementing the Basel III framework and strengthening the regulatory framework for credit institutions in the EU
US Regulators Release Stress Test Scenarios for Banks
The U.S. regulators recently released baseline and severely adverse scenarios, along with other details, for stress testing the banks in 2024. The relevant U.S. banking regulators are the Federal Reserve Bank (FED), the Federal Deposit Insurance Corporation (FDIC), and the Office of the Comptroller of the Currency (OCC).
Asian Governments Aim for Interoperability in AI Governance Frameworks
The regulatory landscape for artificial intelligence (AI), including the generative kind, is evolving rapidly, with governments and regulators aiming to address the challenges and opportunities presented by this transformative technology.
EBA Proposes Operational Risk Standards Under Final Basel III Package
The European Union (EU) has been working on the final elements of Basel III standards, with endorsement of the Banking Package and the publication of the European Banking Authority (EBA) roadmap on Basel III implementation in December 2023.
EFRAG Proposes XBRL Taxonomy and Standard for Listed SMEs Under ESRS
The European Financial Reporting Advisory Group (EFRAG), which plays a crucial role in shaping corporate reporting standards in European Union (EU), is seeking comments, until May 21, 2024, on the Exposure Draft ESRS for listed SMEs.
ECB to Expand Climate Change Work in 2024-2025
Banking regulators worldwide are increasingly focusing on addressing, monitoring, and supervising the institutions' exposure to climate and environmental risks.
