Jon Cunliffe – Time To Consider Distributed Ledger Technology

According to Jon Cunliffe – Bank of England Deputy Governor – the Distributed Ledger Technology (DTL) will be examined in the FMI Sandbox premiers in 2023. He also said that using blockchain-based technology to offer instantaneous trading and settlement in all financial markets is a challenge.

He pointed out that the Instantaneous settlement requires all cash and securities must be processed and transacted in real-time without an intermediate risk identification procedure. He was concerned about whether blockchain-based platforms could work well with each other to handle the verification requirements in the traditional financial market or not.

Jon Cunliffe also reiterated March 2024 Deadline would be a challenge for all policymakers. The proposed rules to introduce T+1 from the end of March 2024 for many financial aspects such as market, liquidity risks, unsettled transactions,…

The DLT application in trading and settlement of trades is also a great concentration. Jon Cunliffe said that DLT speed is the key factor that affects instantaneous settlement as it reduces the risks of drastic market movements at the time of processing transactions.

“The development of instantaneous settlement also poses challenges for the management of liquidity as it requires all cash and securities to be in place at the time a trade is struck […] though I should stress that it [settlement] need not be instantaneous or decentralized.”

“It is very difficult to see how risks can be managed to the right level without a legal entity accountable for the services provided and responsible for the proper functioning of the system,” he said. In the future, the Bank of England could build its own DLT to settle the real-time systems for transactions.

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