According to Cipollone, more than 60% of banks in the European Union are studying and experimenting with distributed ledger technology (DLT) and another 22% are already using it. However, while DLT makes it possible to achieve financial integration, it does not guarantee it, Cipollone said at a symposium organized by the German central bank. On the contrary.
Non-interoperable technology ecosystems in each country, shaped by different national regulatory regimes, create isolated pools of asset liquidity, further increasing fragmentation; DLTs are currently used mainly for asset #issuance , but expanding their use to negotiation, settlement and storage on a single platform This would reduce costs and enable 24/7 operations. It is not only investors who will benefit from the increased use of DLTs:
Our primary goal in this changing landscape is to ensure that central bank funds, the safest and most liquid settlement asset, remain the cornerstone of stability in the tokenized DLT-backed capital market.
A single #ledger is one in which cash and assets are held on a single platform. The concept has been endorsed by the Bank for International Settlements and central banks and has attracted the attention of many organizations, including SWIFT and JPMorgan. However, it may not be a panacea.
While European e-books will promote financial stability and integration, they also risk stifling innovation, especially in narrow application areas. For traditional finance, Cipollone says, it is better to utilize the flexibility offered by competing DLT platforms.
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