The Netherlands central bank finds blockchain unfit for the financial markets infrastructure as it is unable to meet the high requirements of this space. After developing and experimenting with various prototypes of Distributed Ledger Technology, the bank believes this “interesting and promising” technology can meet these needs in future.
“Technology behind Bitcoin, the blockchain, interesting and promising”
The central bank of Netherlands has experimented with blockchain technology and find it unfit for the financial market infrastructure (FMI) for the time being. In its latest bulletin, Dutch’s central bank found many shortcomings viz. “inadequate capacity, inefficiency due to high energy consumption and lack of complete certainty about having paid a payment.”
However, DNB also finds blockchain, the technology behind Bitcoin interesting and promising that can meet FMI requirements in future.
According to the report, blockchain technology has been able to increase the resilience of the financial market against the external attacks. But again, this can be achieved only at the expense of capacity and efficiency.
Over the past 3 years, the bank developed and further evaluated four prototypes by utilizing Distributed Ledger Technology (DLT). With the code name Dukaton, the aim was to build knowledge and test the extent it can be useful in improving the payment and securities traffic.
The FMIs have a list of requirements viz. “safety, reliability, efficiency, payment finality (legal security), authorization, resilience, availability, capacity, scalability, costs and sustainability.” FMI being the central point in payment and security transactions, these requirements are extremely high.
Blockchain unable to meet high requirements of FMI
The prototypes revealed that blockchain solutions so tested are unable to meet these high demands for now.