News from the Bank of Canada, TMX Group, and Payments Canada demonstrated that blockchain technology is a feasible method of conducting securities settlements, thanks to previously successful testing. The proof of concept purportedly shows that both central bank assets and cash can be tokenized, allowing for instant, end-to-end equity settlement.
According to a press release published late last week, Payments Canada, a non-profit that facilitates financial transactions, announced success in its collaborative blockchain effort. Reportedly, the results demonstrate the feasibility of leveraging blockchain technology for “instantaneous equity settlement.”
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Project Jasper, the collaborative research initiative, brings together Canada’s central bank, Payments Canada, and TMX Group, the operator of the Toronto Stock Exchange. The project also has involvement from both Accenture and R3, which conducted previous work on a proof of concept leveraging distributed ledger technology. Ultimately, Project Jasper looks to investigate how blockchain technology could potentially upgrade current financial methods in Canada. “This shows that it is possible to deliver payments in a way that has never been done before – by directly swapping cash from buyers to sellers, resulting in instant settlements,” said Gerry Gaetz, president and CEO of Payments Canada, when discussing the proof of concept. Gaetz further added that success in demonstrating instantaneous equity settlement using blockchain and adjacent technologies is part of a growing trend regarding blockchain’s potential impact on the world of finance. “We continue to see how the application of distributed ledger technology can help extend the vision of payments innovation in Canada and potentially, one day, help promote financial market integration, both nationally and internationally,” he said.
As Reuters reported, the use of blockchain technology to settle securities transactions is not yet guaranteed to lead to cost savings, at least according to Bank of Canada Senior Special Director, Scott Hendry.“We’re still uncertain after doing this work that there are significant savings possible for participants,” he said at a payments conference in Toronto on May 10th. “It’s not clear that all the participant dealers and banks are going to get a significant benefit out of this settlement system.”Regardless, the ambitious investigative project is set to publish a white paper detailing its complete findings later this year.Project Jasper is yet another instance of traditional financial institutions paying increasing attention to blockchain technology. While blockchain serves to facilitate digital currencies like Bitcoin and Ethereum, the technology also has the potential to revolutionize several aspects of traditional financial practices.Interested in trading digital currencies? Coinsquare is Canada’s most secure platform for buying and selling Bitcoin, Litecoin, and other digital currencies.
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