Bank of Canada's DLT Trial Shows Instant Securities Settlement Possible

The latest "Project Jasper" blockchain trials have shown that distributed ledgers are effective at automating securities settlements in real-time, according to Bank of Canada and two partners on the project.

Announced in October 2017, the latest stage of the research effort moved on from its previous focus on payments to a proof-of-concept for "an integrated securities and payment settlement platform," CoinDesk reported at the time.

Working alongside the central bank were TMX Group, the financial services firm that operates the Toronto Stock Exchange, and Payments Canada, a non-profit that operates the primary payment channels within the country.

Now, a Reuters report published on Friday indicates that the three partners have found that, following tests of the platform, both assets and money can be tokenized and exchanged instantly, the report says.

Gerry Gaetz, president and CEO of Payments Canada, was quoted as saying:

“This shows that it is possible to deliver payments in a way that has never been done before – by directly swapping cash from buyers to sellers, resulting in instant settlements.”

There is a caveat, however. While blockchain is often touted as a way for enterprises to cut costs by removing middlemen and bringing in new efficiencies, the partners indicated that using the tech to settle securities transactions may not be such a money-saver.

Scott Hendry, senior special director at Bank of Canada, was quoted by Reuters as telling conference attendees yesterday:

“We’re still uncertain after doing this work that there are significant savings possible for participants. It’s not clear that all the participant dealers and banks are going to get a significant benefit out of this settlement system.”

Bank of Canada image via Shutterstock

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Daniel Palmer

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