Standard Chartered explores blockchain viability
Standard Chartered has compiled a report questioning whether blockchain could disrupt the European Central Bank’s (ECB) Target2Securities (T2S) project.
T2S aims to standardise European cross-border trade settlement by integrating securities and cash accounts onto a single IT platform.
Not only blockchain could play a material role in this project, some analysts suggest, but it could even replace it.
Standard Chartered agrees that “blockchain’s benefits, such as real-time settlement capability, reducing counterparty risk and enhanced automation, could certainly disrupt T2S”.
However, it adds that it is yet unclear if it could cope with European markets’ high transaction volumes. These, according to the ECB estimates, will reach 4.7 million transactions on a daily basis with a value of approximately €10-15 trillion.
By contrast, daily transactional volumes in Bitcoin total around 250,000 with a value of $257 million.
There are other challenges too, warns Standard Chartered, such as integration with legacy technologies – “the costs of getting this wrong could be high”.
Also, blockchain must prove that it is secure from cyber-attacks.
“Nobody can deny that blockchain has the potential to impact markets globally, including emerging economies which are in the early stages of developing their market infrastructures,” Standard Chartered concedes.
“But distributed ledger technology – should it truly take off – is likely to take years to come into fruition, simply because it will require harmonised standards and regulation agreed by the industry securities services industry, regulators and governments.
“The scale of this challenge should not be underestimated.”
