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BIS reports on risks and rewards of blockchain tech

First Published 28th February 2017

Bank for International Settlements - Committee on Payments and Market Infrastructures: Distributed ledger in payment, clearing and settlement - an analytical framework.

Benoît Cœuré, European Central Bank

Benoît Cœuré, European Central Bank

Central banks and other authorities should weigh the risks of using blockchain and other distributed ledger technology (DLT) in payment, clearing and settlement against potential cost and efficiency savings offered by the technology, says a report by the Committee on Payments and Market Infrastructures.

The report aims to help central banks and other authorities review and analyse the use of DLT in the "financial plumbing" which underpins the smooth operation of financial markets. The report focuses on the implications of the technology for efficiency and safety and for the broader financial market. It contains a set of key questions that may be useful to authorities and others to consider when looking at DLT arrangements.

"Distributed technology could become a game changer for payment, clearing and settlement activities if fintech companies and financial institutions can leverage the technology to meet demanding legal, operational and risk management requirements," said Committee chair Benoît Cœuré, who is also a Member of the Executive Board of the European Central Bank.

"Central banks have traditionally played an important catalyst role in payments and settlements. This report will help central banks, other authorities and the public identify the risks as well as the benefits associated with the emerging technology, which could be the basis for next-generation systems."

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