Blockchain technology to develop intraday market solution
01 November 2018 London
Image: Shutterstock
Blockchain technology could be used to develop an intraday market solution, a research paper written by R3 in conjunction with Finteum and Baringa found.
The intraday market solution could be used to help financial institutions to better manage their intraday cash flows.
This would enable more efficient use of capital, faster payments, and operating costs.
The paper noted that in a payment or capital markets context, blockchain can facilitate immediate settlement and reconciliation on-ledger—a network of nodes interacting directly can streamline counterparty interactions.
However, there are some challenges, which could slow the widespread adoption of blockchain technology for intraday liquidity cases, the paper warned.
There needs to be a careful thought given to the degree of decentralisation employed and this needs to find a pragmatic balance for the industry, it was advised in the paper.
According to the paper, in many cases, industries require a pragmatic architecture that strikes the right balance between avoiding reliance on a centralised entity and ensuring each entity has sufficient decision-making power, autonomy and accountability.
It was highlighted in the paper that new methods of cash management are emerging daily, and bank technologies must consider whether their retrospective liquidity management capabilities are sufficiently aligned with active management practices.
The paper concluded that among the enabling technologies for the possibilities, blockchain provides a particularly attractive solution.
This is because securely shared data records across multiple parties can enable re-engineering of the related business processes rather than an incremental enhancement.
The intraday market solution could be used to help financial institutions to better manage their intraday cash flows.
This would enable more efficient use of capital, faster payments, and operating costs.
The paper noted that in a payment or capital markets context, blockchain can facilitate immediate settlement and reconciliation on-ledger—a network of nodes interacting directly can streamline counterparty interactions.
However, there are some challenges, which could slow the widespread adoption of blockchain technology for intraday liquidity cases, the paper warned.
There needs to be a careful thought given to the degree of decentralisation employed and this needs to find a pragmatic balance for the industry, it was advised in the paper.
According to the paper, in many cases, industries require a pragmatic architecture that strikes the right balance between avoiding reliance on a centralised entity and ensuring each entity has sufficient decision-making power, autonomy and accountability.
It was highlighted in the paper that new methods of cash management are emerging daily, and bank technologies must consider whether their retrospective liquidity management capabilities are sufficiently aligned with active management practices.
The paper concluded that among the enabling technologies for the possibilities, blockchain provides a particularly attractive solution.
This is because securely shared data records across multiple parties can enable re-engineering of the related business processes rather than an incremental enhancement.
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