‘ECB to experiment with technology behind bitcoin’
FRANKFURT: The European Central Bank is doing “experimental work” with the same ledger technology that underpins virtual currency bitcoin but it needs further research before considering adopting it, an ECB executive board member said on Monday.
Yves Mersch said the ECB would look into whether distributed ledger technology (DLT) – a shared database that can be used to secure and validate any type of transaction – could be adopted as the market infrastructure of the euro zone’s system of central banks.
“From a central bank perspective, in the context of our strategic reflections on the future of the Eurosystem’s market infrastructures, we are certainly open to new technologies and, like many market players, have launched some experimental work with DLT,” Mersch said.
He added: “It is clear that we have a lot of more thinking to do on DLT-related questions and their policy implications.”
The ‘blockchain’ technology was first used to support virtual currency bitcoin but has since been tested or even adopted by some brokers and banks for other purposes, such as trading or sharing data.
Broker ICAP said earlier this year it had become the first to distribute data on trades to customers using this technology and 40 of the world’s biggest banks, including HSBC and Citi, had also tested a system for trading fixed income based on it.
A report by the Bank for International Settlements published late last year said this technology could reduce the need for intermediaries such as banks and settlement houses and even pose a “hypothetical challenge” to central banks.