The ECB would look into whether distributed ledger technology (DLT) a joint collection of data that can be used to protect and verify any type of transaction could be accepted as the market foundation of the euro zone’s system of central financial institution.
“From a central bank perspective, in the context of our strategic reflections on the future of the Eurosystem’s market infrastructures, we are certainly open to new technologies and, like many market players, have launched some experimental work with DLT. It is clear that we have a lot of more thinking to do on DLT-related questions and their policy implications.” Mersch said.
The ‘blockchain’ technology was first used to support digital currency bitcoin but has since been proven or even accepted by some entrepreneurs and financial institution for other intentions, such as trading or sharing data.
Broker ICAP said earlier this year it had become the first to distribute data on trades to customers using this technology and 40 of the world’s biggest financial institutions, including HSBC and Citi, had also tested a system for trading fixed income based on it. The Bank for International Settlements published late last year said this technology could reduce the need for intermediaries such as banks and settlement houses and even pose a “hypothetical challenge” to central financial institutions.