Bank of Canada trials blockchain project to settle stocks
A Bank of Canada report has demonstrated that distributed ledger technology (DLT) can be used to clear and settle stocks.
The report is based on the latest results from Project Jasper, a collaborative research initiative between Payments Canada, the Bank of Canada and TMX group, that experimented with an integrated securities and payment settlement platform based on DLT.
The project involved a hands-on exploration of settlement and payment interactions in a private distributed ledger network by building and testing a proof-of-concept (POC) system designed to be integrated with existing market infrastructure.
The aim was to use a distributed ledger to swap cash from buyers to sellers on whilst preserving privacy for market participants.
Securities and cash were brought on the ledger through the issuance of digital depository receipts by the Canadian Depository for Securities and Bank of Canada, allowing participants to settle simulated securities against simulated central bank cash on the ledger.
National Bank of Canada said processing times were significantly improved, risks were reduced and customer relationships were strengthened.
Scott Hendry, Bank of Canada’s senior special director of financial technology, said: “DLT is a promising technology that has the potential to reduce costs for participants and open new opportunities. Work remains to be done to determine how it can be set up to maximize the benefits for the whole financial system.”
John Lee, TMX’s managing director of enterprise innovation and product development, added: “Project Jasper findings offer critical insight to understanding how we can adapt as an industry to a rapidly evolving global financial ecosystem.”