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Cryptocurrencies

Germany's Central Bank explores DLT potential for payments

Friday 22 September 2017 | 09:23 AM CET

Deutsche Bundesbank has explored the potential of distributed ledger technology (DLT) for the financial sector in a new report.

The report focuses on the potential impact of the technology on payments and securities settlement. The bank considers that the tech can offer a number of benefits on account of the distributed storage of data, which can eliminate reconciliation processes associated with complex work-sharing value added chains. Furthermore, DLT might also improve transparency and potentially offer superior protection against cyber-attacks.

Nevertheless, the financial institution sees little potential of DLT to be implemented in the field of individual and retail payments, particularly in the Euro area, where they believe that systems have been already optimised for fast transfers and require a minimum of reconciliation. However, beyond the Euro area the DLT technology has more potential for payments, where transactions often take longer as more intermediaries are involved.

In addition, the authors also explored the concept of central bank issued digital currency (CBDC), and concluded that currently there is no realistic prospect of central bank-issued digital currency being rolled out in the foreseeable future.

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