It is unlikely that Canada`s Central Bank will launch a wholesale payment system that relies solely on distributed ledger technology (DLT), as one of
It is unlikely that Canada`s Central Bank will launch a wholesale payment system that relies solely on distributed ledger technology (DLT), as one of the bank`s senior officials said.
“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.”, as the senior deputy governor of the Bank of Canada, Carolyn Wilkins, wrote in a collaborative article (written along with the president of Payments Canada, Gerry Gaetz) published at The Globe and Mail (theglobeandmail.com).
“At the end of the day, interbank systems must be safe, secure, efficient and resilient, and they must meet all international standards. DLT-based platforms are just not there yet.”, she explained.
As the experts elaborated, there were several important challenges like the need for privacy and scalability.
Despite of the problem, there is need to continue exploring the field.
“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. 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.”, as the article noted.
Canada`s payment system needs to be modernized in the short term. While modernization will not rely on distributed ledgers, it will involve innovation and collaboration, as Wilkins and Gaetz speculated in the article.