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The future of European financial market infrastructure: A business case for distributed ledger technology?
Journal of Securities Operations & Custody,
9
(1),
38-46
(2017)
Abstract
Technological innovation in general, and distributed ledger technology (DLT) in particular, could become a game changer in the financial sector. Market infrastructures, which are the backbone of financial markets, need to adequately respond to technological advances and the resulting change in user needs and expectations. This paper discusses the potential impact of DLT on European financial markets and the potential scenarios of DLT adoption. Furthermore, it analyses the Eurosystem’s strategic considerations for the future of its market infrastructure and how change is embraced. Finally, it examines whether DLT could prove to be an integral part of the Eurosystem’s evolving market infrastructure and what other functions of the European Central Bank (ECB) could be affected by market actors adopting DLT.
Keywords: distributed ledger technology; blockchain; smart contacts; technological innovation; disruptive potential; European financial markets; market infrastructure; T2S
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Author's Biography
Dirk Bullmann coordinates FinTech work inside the European Central Bank (ECB) with a focus on market infrastructures. Since 2014, he has been adviser to the ECB Director General Market Infrastructure and Payments. He joined the ECB in 2000, and worked in the areas of payment system operations and collateral policy issues. He also was the Secretary of the Eurosystem/ ESCB Payment and Settlement Systems Committee (PSSC). In 2010, he joined the ECB’s T2S Programme Office where he inter alia acted as adviser to the T2S Board Chairman.
Andrea Pinna is a market infrastructure expert in the Directorate General Market Infrastructure and Payments of the European Central Bank (ECB) where he specialises in the impact of innovation on collateral, payments and the post-trading of securities transactions. He joined the ECB to analyse the impact of FinTech on financial market infrastructures in 2015. His current focus is on the analysis of distributed ledger technologies (DLTs) and their potential impact on market participants and central bank activities, particularly concerning the integration of European financial markets. Before joining the ECB, Andrea was assistant professor of international financial markets and carried out his academic research in the fields of theoretical and empirical market microstructure applied to both the interbank and the stock markets.
