The European Central Bank: DLT’s good as long it doesn’t fragment data

The central bank of the European Union welcomes blockchain solutions and distributed ledger technological benefits, but warns that injudicious uses of the DLT would lead to fragmentation. The new report by this organization has been published on the ECB’s official website and titled The Potential Impact of DLTs on Securities Post-Trading Harmonisation and on the Wider EU Financial Market Integration.

The said fragmentation, the ECB tells, may emerge when the newly-opened DLT services will not interoperate with older structures or with each other. One can say that the European Central Bank calls for an intermodal financial system, similar to how modern city transport experts recommend the city authorities to develop both private and public transport systems, so that one would not replace or hamper the development of another.

Trading, clearing and other financial activities held in a “post-trade environment where the accounts of different DLT networks would merely coexist without interoperating is not an optimal outcome”, stress the authors of the report. Imagine a group of states separated by huge concrete walls from each other – this will give a better understanding of what the ECB foresees.

With all this in mind, the mutual harmonization should become a priority number one for DLT financial developers, the research concludes.