Writing in an op-ed revealed by The Globe and Mail, Bank of Canada senior deputy governor Carolyn Wilkins wrote that whereas the tech may underpin such a system “one day”, points that offered themselves throughout its Project Jasper initiative showcased the “many hurdles to overcome”. The central financial institution unveiled its work with the tech final summer time.
She went on to jot down:
“The bottom line is that a stand-alone DLT wholesale system is unlikely to match the efficiency and net benefits of a centralized system. In fact, at its heart, there exists a fundamental inconsistency or tension between a centralized wholesale interbank payment system, as we have now, and the decentralization inherent in DLT.”
Among these obstacles: privateness. Wilkins wrote that, whereas a privateness resolution was later integrated into the ledger system, “the fix made the system susceptible to the risk of a single point of failure” – a state of affairs that she argued wasn’t in keeping with some of the tech’s core traits.
The quantity of transactions the system may course of additionally proved problematic, based on Wilkins.
“Another hurdle was scalability, which is still an issue in some versions of DLT. While other versions can achieve greater transaction rates by moving away from a fully decentralized framework, this can reduce resiliency and lessen some of the expected potential cost savings,” she wrote.
Her op-ed included new particulars from the initiative’s development – Wilkins wrote about Project Jasper in February – whereas additionally noting that not less than some of its parts may very well be utilized elsewhere.
“There are a host of further avenues that may be worth exploring, and these sorts of experiments offer a collaborative way forward to do just that,” she wrote. “Our present view is that the biggest net benefits, if any, would likely lie in the interaction of a DLT-based wholesale payments system with broader financial market infrastructure.”
Wilkins went on to conclude:
“While these represent opportunities further down the road, Canada’s payments system needs to be modernized in the short term. Though it won’t involve distributed ledgers, it will involve a lot of innovation and collaboration.”
Canada flag picture through Shutterstock