2016年-SWIFT环球同业银行金融电讯_What_blockchain_might_and_might_not_do_for_CSDs_3页_278kb

Summary of "What blockchain might and might not do for CSDs"

Core Content

The document explores the potential impact of blockchain technology on Central Securities Depositories (CSDs) and other financial market infrastructures (FMIs), focusing on both opportunities and challenges. It highlights the growing interest in blockchain, particularly in the context of the financial industry's shift toward more secure and efficient systems.

Main Views

• Blockchain is not a passing trend: Despite initial hype, blockchain has gained serious consideration from financial institutions, with significant investment expected in the coming years.
• Potential benefits for CSDs:
  • Resilience against cyber threats: DLT's distributed nature reduces the risk of single points of failure, making it more secure.
  • Transparency: Permissioned blockchains allow all participants to have full visibility into transactions, enhancing auditability.
  • Fraud prevention: Open verification processes in blockchain networks make fraudulent activities more difficult.
  • RegTech possibilities: Regulators could use blockchain to monitor markets in real-time and enforce rules more efficiently.
• Challenges in adoption:
  • Theoretical benefits: While the advantages of blockchain are promising, they remain largely theoretical at this stage.
  • High transition costs: Moving from existing systems to blockchain requires extensive planning, coordination, and investment.
  • Interoperability issues: Connecting different distributed ledger systems will require new standards and protocols.
  • Regulatory concerns: There is a cautious approach from regulators due to the novelty and risks associated with blockchain technology.

Key Information

• Investment in blockchain: Aite Group estimates that capital markets firms will spend US$130 million on blockchain projects in 2016, rising to US$400 million by 2019.
• CSDs and blockchain: CSDs are exploring blockchain's potential to revolutionise their operations, particularly in asset delivery and settlement.
• T2S as a reference: The TARGET2-Securities project is seen as a possible parallel to blockchain adoption, though it is still in progress and not fully implemented.
• Permissioned vs. permissionless: Most CSDs will use permissioned blockchains, which require KYC procedures and maintain user identity, unlike the anonymous nature of Bitcoin-based systems.
• Regulatory framework: The CPMI and IOSCO guidance on cyber resilience has influenced how CSDs are adapting their operations and compliance strategies.
• Cautious approach: CSDs are expected to adopt a measured and cautious approach to blockchain due to the risks and complexity of transitioning to a new technology.

Conclusion

While blockchain presents a compelling vision for the future of CSDs, its adoption is not imminent. The technology's potential for resilience, transparency, and fraud prevention is significant, but the practical challenges of implementation, transition costs, and regulatory uncertainty mean that CSDs will likely proceed with caution. The document suggests that the broader impact of blockchain may be a renewed focus on network effects and interoperability standards, rather than a wholesale switch to the technology.