The Bank for International Settlements (BIS) provided its own vision of the technical organization of the future financial system, the main element of which should be unified ledger technology.
Agustín Carstens, General Manager of the BIS, published an article “Finternet: the financial system for the future,” in which he described in detail the concept of unified ledger technology. According to the GM of the Bank for International Settlements, the future financial system will be based on unified ledgers.
The article outlines the general concept of the technology and the main problems of the current financial system that it has the potential to eliminate, namely:
- speed up the transaction process;
- improve regulatory capabilities;
- increase the level of privacy, etc.
In his opinion, among the main advantages of a unified ledger will be the ability to eliminate dependence on disparate private databases, overcome the limitations associated with different technical standards and management methods, and obviate the need to use third-party messaging systems. This will make the financial system more flexible and productive.
It should be noted that the term “unified ledger” doesn’t imply the creation of a single database — the document refers to a number of separate unified ledgers that will interact with each other online, as well as exchange information with the broader financial system outside the global network through applications.
The concept described involves the use of tokenized assets, including payment instruments, to enable smart contracts. Moreover, the system assumes the presence of a management node that will ensure the tokenization process and monitor compliance with regulatory requirements. What’s remarkable, the document doesn’t mention blockchain or DLT.
A few weeks ago, a similar system was described by representatives of SWIFT, presenting their own concept of a universal shared ledger for transactions with digital assets. Similar projects are currently being developed by the IMF, the Federal Reserve Bank of New York, the Monetary Authority of Singapore, and a number of large financial corporations.
