Biggest central bank identifies the possibilities that digital currencies can bring to payment ecosystem
Published By: Eunice Gettys on January 29, 2017 09:01 am EST
Federal Reserve has released a report on Distributed Ledger Technology (DLT) that emphasizes on its possible impact on future payments ecosystem. Faster Payments Task Force in its report analyzed the changing trends of how people make payments, which includes role of digital currencies.
The Federal Reserve has assembled a Task Force which researches on alternative approaches toward different payment systems. Understandably, safer, faster, and cheaper ways are being looked at as DLT is growing amongst several payment companies.
The author of the report said: “An important goal of this paper is to examine how this technology might be used in the area of payments, clearing, and settlement and to identify both the opportunities and challenges facing its practical implementation and possible long-term adoption.”
The report states that the digital currencies have great potential to instantly change the landscape of the payment system if adopted by at least one of the central banks. Entrepreneurs and investors in the fintech industry have no doubts over the solutions the technology can provide, as the only thing standing in its way are the central banks and regulators.
DLT or Blockchain can allow the transactions to be recorded and verified on a decentralized ledger ran by a network of computers. That means in case of a server crash, other computers would carry the information which eliminates the dependence of a centralized transaction bookkeeping.
The report came after the Federal Reserve Governor, Lael Brainard, expressed interest in tech with an intention of in-depth research. The researchers interviewed over 30 representatives that have already started to innovate in fintech. According to the report, it includes a passing reference to digital-based economies. Other central banks such as European Central Bank (ECB) and Bank of England are also exploring the possibilities this technology can bring.
However, part-two of the report is expected to be released in the mid-year. The second report will provide the solutions on how to integrate the technology in the US at a national level