Featured Product

    BOJ and ECB Report on Phase 4 of Research on DLT Under Project Stella

    February 12, 2020

    BOJ and ECB have released outcome of the phase 4 of their joint research on distributed ledger technology, or DLT, under Project Stella. The phase 4 of Project Stella outlines the fundamental features for ensuring the confidentiality of transactions and assesses whether auditing could be done effectively even when confidentiality is ensured. The results can be used as a starting point for choosing privacy enhancing technologies or techniques (PETs) and designing auditing processes for transactions.

    Over the past years, a number of solutions have been developed to cater to the privacy and confidentiality aspects that arise as a result of the sharing of transaction information in distributed ledgers. These solutions focus, for example, on limiting access to information by unauthorized parties and are generally known as PETs. The use of PETs may pose challenges, however, when third parties need to view and interpret the transaction for auditing purposes. To ensure accountability, the level of auditability aimed for in payment and settlement systems based on distributed ledger technology should be similar to that in centralized systems. This is applicable regardless of the different types of settlement assets, including stablecoins, central bank digital currency, and others.

    Against this background, Stella phase 4 explores—through conceptual studies and practical experimentation—how confidentiality and auditability could be balanced in a distributed ledger environment. It assesses the way in which PETs would ensure confidentiality as well as the arrangements that accommodate effective auditing for transactions in a financial market infrastructure based on distributed ledger technology. Stella phase 4 proposes that the auditability of transactions in a financial market infrastructure based on distributed technology using PETs can be assessed from the key perspectives of accessibility to necessary information, reliability of the obtained information, and efficiency of the auditing process. Additionally, Stella phase 4 raises points for further consideration when expanding the discussion on balancing confidentiality and the auditability of transactions for practical application:

    • It notes that the reliance on a trusted source could pose single point of failure risks for the network.
    • When multiple PETs are used in combination, there could be a trade-off between enhancing confidentiality and effective auditability.
    • When the model accommodates multiple payment and settlement systems as well as multi-tiered payment systems, it would be necessary to coordinate different standards and processes between systems.
    • The inclusion of end-users may increase the complexity of managing the confidentiality of end-user information and necessitate the creation of appropriate standards to determine the transactions to be audited.

    Keywords: Asia Pacific, Europe, Japan, Banking, Insurance, Securities, PMI, FMI, Project Stella, Fintech, Blockchain, Distributed Ledger Technology, EU

    Related Articles
    News

    US Agencies Issue Several Regulatory and Reporting Updates

    The Board of Governors of the Federal Reserve System (FED) adopted the final rule on Adjustable Interest Rate (LIBOR) Act.

    January 04, 2023 WebPage Regulatory News
    News

    ECB Issues Multiple Reports and Regulatory Updates for Banks

    The European Central Bank (ECB) published an updated list of supervised entities, a report on the supervision of less significant institutions (LSIs), a statement on macro-prudential policy.

    January 01, 2023 WebPage Regulatory News
    News

    HKMA Keeps List of D-SIBs Unchanged, Makes Other Announcements

    The Hong Kong Monetary Authority (HKMA) published a circular on the prudential treatment of crypto-asset exposures, an update on the status of transition to new interest rate benchmarks.

    December 30, 2022 WebPage Regulatory News
    News

    EU Issues FAQs on Taxonomy Regulation, Rules Under CRD, FICOD and SFDR

    The European Commission (EC) adopted the standards addressing supervisory reporting of risk concentrations and intra-group transactions, benchmarking of internal approaches, and authorization of credit institutions.

    December 29, 2022 WebPage Regulatory News
    News

    CBIRC Revises Measures on Corporate Governance Supervision

    The China Banking and Insurance Regulatory Commission (CBIRC) issued rules to manage the risk of off-balance sheet business of commercial banks and rules on corporate governance of financial institutions.

    December 29, 2022 WebPage Regulatory News
    News

    HKMA Publications Address Sustainability Issues in Financial Sector

    The Hong Kong Monetary Authority (HKMA) made announcements to address sustainability issues in the financial sector.

    December 23, 2022 WebPage Regulatory News
    News

    EBA Updates Address Basel and NPL Requirements for Banks

    The European Banking Authority (EBA) published regulatory standards on identification of a group of connected clients (GCC) as well as updated the lists of identified financial conglomerates.

    December 22, 2022 WebPage Regulatory News
    News

    ESMA Publishes 2022 ESEF XBRL Taxonomy and Conformance Suite

    The General Board of the European Systemic Risk Board (ESRB), at its December meeting, issued an updated risk assessment via the quarterly risk dashboard and held discussions on key policy priorities to address the systemic risks in the European Union.

    December 22, 2022 WebPage Regulatory News
    News

    FCA Sets up ESG Committee, Imposes Penalties, and Issues Other Updates

    The Financial Conduct Authority (FCA) is seeking comments, until December 21, 2022, on the draft guidance for firms to support existing mortgage borrowers.

    December 20, 2022 WebPage Regulatory News
    News

    FSB Reports Assess NBFI Sector and Progress on LIBOR Transition

    The Financial Stability Board (FSB) published a report that assesses progress on the transition from the Interbank Offered Rates, or IBORs, to overnight risk-free rates as well as a report that assesses global trends in the non-bank financial intermediation (NBFI) sector.

    December 20, 2022 WebPage Regulatory News
    RESULTS 1 - 10 OF 8697