The buzz around blockchain and distributed ledger technologies seen for the most part of 2015 has led to the creation of various consortiums and collaborations. Since the beginning of this year, the discussions in this area are increasingly focusing on the experiments being conducted by various market participants.

Not only tech companies and financial institutions, but even central banks have jumped on the blockchain bandwagon. The central bank of Russia has already established a Working Group on the analysis of advanced technologies and innovations in the financial market, with focus on the study of distributed technologies such as blockchain, and other payment technologies.

The European Central Bank seems to be the latest entrant in this space. In a speech, Yves Mersch, Member of the Executive Board of the ECB, at Deutsche Bank Transaction Bankers' Forum 2016, said that the ECB has launched some experimental work with distributed ledger technologies (DLTs).

“From a central bank perspective, in the context of our strategic reflections on the future of Eurosystem’s market infrastructures, we are certainly open to new technologies and, like many market players, have launched some experimental work with DLT”, Mersch said.

Approaching the discussion of DLT from a central bank perspective, he discussed the implications of the use of DLT as financial market infrastructure for the central bank. Mersch emphasized on the need to arrive at a common understanding on how the adoption of DLT could potentially affect the overseen and supervised entities and their business models, and on how reporting and accounting could be affected.

“Bringing our Eurosystem market infrastructures on DLT automatically means bringing central bank money on DLT. This may have implications on the central bank functions which go beyond the operational and technical sphere. It is therefore important to structure the discussion along the lines of who could access the central bank ledger”, he said.

Further noting standardisation and interoperability as “key issues” for DLT, Mersch said that the Eurosystem aims to ensure that technological innovation does not lead to a disruption or re-fragmentation in the market. To that end, he said that the ECB recently had a workshop which suggested that the involvement of the Eurosystem in the industry’s discussion regarding the usage of DLT would be welcome.

“[T]he Eurosystem stands ready to help the industry co-ordinate its efforts to work on standardisation and interoperability both in the payments and in the post-trade domain”, he added. “It goes without saying that when accessing the DLT network, the right level of access and data protection requirements have to be respected.”