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Central Bank Of Brazil Considers Blockchain Technology For Payment Settlements

Banco Central do Brasil eying on Blockchain Technology for settlement system

A new technical research paper recently released by The Central Bank of Brazil evaluates blockchain use cases and reviews a few of the available platforms to establish working prototypes of a minimal Real Time Gross Settlement System (RTGS).

To comprehend and analyze the potentials of Blockchain technology and further explore its applicability and shortcomings, the bank has assorted a study group. The work was carried out in two phases:

The first step of the first phase comprised identification of use cases inside the central bank, next step was to choose one of the use cases and a platform for prototyping and final step being producing a minimal proof of concept using it.

The second phase involved analyzing contending blockchain platforms making use of the selected use case as a benchmark.

In a clarification, The Banco Central do Brasil revealed that its blockchain efforts are distinctive and the research intends to develop a minimal funds transfer system to the financial sector under circumstances where complete main RTGS meltdown occurs. Like others, its endeavor does not include building a substitute or providing a prime settlement system.

Also Read: The Scope of Blockchain Technology in the Banking Sector

As per reports:

In the case of its catastrophic failure, RTGS members would be unable to send (or receive) funds to (from) each other, leading to a complete financial halt. … In this context, the Alternative System for Transactions Settlement (SALT) is a conceptual system for a contingent solution that would be able to immediately replace core functionalities of the main Brazilian RTGS in case of its full collapse.”

Sources reveal that the preliminary design of this system would be a permissioned blockchain with the central bank and financial institutions as the validating nodes.

After investigations, SALT was deemed the ideal candidate: its functional requirements are considered rather simple and straight forward”, the report revealed.

Read more articles about how Blockchain Technology is getting integrated into the Banking System worldwide in our  BLOCKCHAIN SECTION.”

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