Blockchain cannot meet the very high demands of a financial market infrastructure, the Netherlands central bank stated.
However, De Nederlandsche Bank (DNB) finds technology promising and continues to invest in its study.
Analysts at De Nederlandsche Bank (DNB) concluded that Distributed Ledger Technology (DLT) is not suitable for the current financial and payment infrastructure due to its inadequate processing of large volumes of transactions and the ability to scale.
By way of experiment, DNB has developed and evaluated four prototypes with DLT called Dukaton over the past three years. The goal was to accumulate knowledge and to check whether the technology is useful for improving payments and securities traffic.
The prototypes show that the blockchain solutions tested currently can not meet the high demands of financial market infrastructures (FMI). Requirements for FMIs are safety, reliability, efficiency, payment finality (legal certainty), authorization, resilience, availability, capacity, scalability, costs and sustainability. These requirements are high because FMIs play a central role in payment and securities transactions.
Because of the testing, DNB acknowledged that the blockсhain can increase the stability of the financial infrastructure to external attacks. However, this advantage is offset by the complexities of "scalability, power, and efficiency."
"The current payment systems are very efficient, can handle large volumes and provide the legal certainty of payment. The blockchain solutions tested show that they are not sufficiently efficient, with regard to costs and energy consumption, and they can not handle large numbers of transactions,” DNB wrote in a blog post.
At the same time, the bank finds the blockchain technology interesting and promising. In addition, it will meet all the requirements for FMIs in the future. That is why DNB emphasizes that it will continue to invest in further development of applications and conduct experiments with the blockchain.
By Ekaterina Ulyanova