Distributed ledger technology (DLT) has the potential to become an important part of the financial market infrastructure, a Swiss National Bank (SNB) official said recently.
In a recent speech, Andréa M. Maechler, Member of the Governing Board of the (SNB), said that DLT could considerably transform areas such as securities settlement and cross-border payments.
“One of DLT’s key characteristics is that it makes verified information available to a large number of parties simultaneously. It is therefore particularly appealing in the case of complex processes where coordination is required across a whole range of participants. This is the case in the securities business, which comprises a network of many different participants trading, settling and managing securities,” Maechler said, adding that “…potential uses of DLT are also being envisaged in the field of cross-border payments.”
However, she emphasized that although initial experiments have been promising, there is still a long way to go before market-ready DLT solutions become a reality.
Regarding the technology’s possible implementation in RTGS, Maechler said that DLT does not yet meet the requirements expected of the RTGS systems in terms of scalability, data security, and reliability.
Central Bank Digital Currency
Maechler believes that digital central bank money would lead to “incalculable risks” and hardly any advantages. She said:
“Digital central bank money for the general public is not necessary to ensure an efficient system for cashless retail payments. It would deliver scarcely any advantages, but would give rise to incalculable risks with regard to financial stability by calling into question the tried-and-tested two-tier system.”
