DLT not yet delightful for Canada’s payment system plan
The results from phase two of Canada’s plan for a blockchain-powered interbank payment system reveal that it still faces many obstacles.
The Bank of Canada, Payments Canada, R3 and seven commercial banks, have disclosed their report from Project Jasper, an experimental wholesale interbank payment system.
First launched in 2015, the results so far show that, “despite progress made, underpinning an entire wholesale payments system with DLT [distributed ledger technology] still faces many hurdles”.
“The bottom line is that a stand-alone DLT wholesale system is unlikely to match the efficiency and net benefits of a centralised system,” says Carolyn Wilkins, senior deputy governor of the Bank of Canada. “At its heart, there exists a fundamental inconsistency between a centralised wholesale interbank payment system and the decentralisation inherent in DLT.”
This work leaves open a host of areas for future research, such as exploring the integration between Project Jasper and other types of DLT-based financial market infrastructures. The parties involved say that joint efforts between the public and private sector offer a way forward to do just that.
Last year, a public consultation carried out by Payments Canada showed the nation’s payments space needed to be more flexible and have secure systems to promote innovation.
Also, last month, CGI, SIA and VocaLink were fighting it out to win the contract for Payments Canada’s new core clearing and settlement system. The latter has invited the three suppliers to participate in a competitive procurement process for the country’s new system, called Lynx.