EU Banking Regulator Hazards of Implementing DLT and Reports on Institutional Opportunities
EU Banking Regulator Reports on Institutional Opportunities and Hazards of Implementing DLT
In Regards to “electronic individuality ” and customer due diligence (CDD), the EBA States that DLT will ease the storage and continuous update of corporate customer data in One place:
From the report published July 3, the banking regulator analyzes the effect of fintech and DLT on monetary institutions, examining two DLT usage cases in international trade and thus called “electronic identity. ” The EBA defines “electronic identity” since the “data used to represent an entity in an informational strategy. ”
“DLT empowers a common and almost real-time view of a transaction transaction kept in a shared ledger for all participants involved, creating a level playing field for all parties and removing their reliance on paper instruments exchanged among them. A shared view might rationalise the manual work and reconciliation processes, together with consequent savings in time, money and resources. ”
“This means that additional information required by the institution to fulfill the improved CDD requirements where the customer is deemed high risk, could be stored on the stage by other participating institution. ”
The EBA starts with a comprehensive explanation of the ways DLT could be applied in the business of global exchange transactions and streamline the practice of their settlement in particular. The report states DLT and intelligent contracts provide a range of opportunities, the most promising of which will be the possible efficiency gains, conservative management of prices, and reduced risk of replicate funding and manipulation of files. This explains:
The European Banking Authority (EBA) has released a report, which analyzes the opportunities and dangers emerging for financial institutions in using distributed ledger technology (DLT).
It’s vital to set up the applicable authority, in the event of battle, and the dispute mechanisms, when a dispute arises. ”
The EBA stipulates that, regardless of the fact that DLT is generally perceived as more resilient than conventional systems, it could pose “Information and Communication Technology availability and continuity risks brought on by nodes or the entire system being dropped maliciously, which could stop the validation and sharing of trades. ”
The regulator additionally mentions that currently the use of DLT and intelligent contracts pose lots of dangers because of “immaturity of these engineering ” &; ldquo;regulatory and legal uncertainties. ” The report notes a potential conflict of legislation if DLT nodes are located at different jurisdictions:
Released at Wed, 04 Jul 2018 22:54:00 +0000
Last month, the CEO of all Spanish bank BBVA stated that blockchain technology is “not mature” also confronts major challenges. Similar to the report from the EBA, CEO Carlos Torres expressed worries over possible compatibility problems with taxation authorities and financial authorities in various jurisdictions. Torres added that, despite its challenges, the technology warrants thorough exploration.