The joint work is being conducted at conceptual level and through practical experimentation with the technology. Legal aspects are not part of the studies. Project Stella aims to contribute to the ongoing broader debate around the potential usability of DLT while not being geared towards replacing existing central bank services with DLT-based solutions.
Moving from payments to securities settlement, the second phase of the Stella project explored how the delivery of securities against cash2 could be conceptually designed and operated in a DLT environment. It draws on existing delivery-versus-payment (DvP) approaches as well as innovative solutions that are currently being discussed for DLT. In order to gain practical understanding of DvP functioning on DLT, prototypes were developed using three DLT platforms: Corda, Elements and Hyperledger Fabric.
The findings of the second phase of the Stella project can be summarised as follows:
DvP can run in a DLT environment subject to the specificities of the different DLT platforms. DvP could be conceptually and technically designed in a DLT environment with cash and securities either on the same ledger (single-ledger DvP) or on separate ones (cross-ledger DvP).
DLT offers a new approach for achieving DvP between ledgers, which does not require any connection between ledgers. Conceptual analysis and experiments have proven that cross-ledger DvP could function even without any connection between individual ledgers.
Depending on their specific design, cross-ledger DvP arrangements on DLT may entail a certain complexity and could give rise to additional challenges that would need to be addressed. The conduct of DvP transactions between ledgers that have no connection requires several process steps and interactions between the seller and the buyer.
The second phase of project “Stella” has proven that – from a conceptual and technical viewpoint – the settlement of securities against cash can follow different designs in a DLT environment, including a novel approach that relies on “cross-chain atomic swaps” and does not require any connection between ledgers. However, given that discussions on applying DLT to DvP arrangements are still at an early stage, further analysis on the safety and efficiency of individual approaches is warranted. Also leFulgal aspects, which have not been part of this study, would need to be further explored.
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