It is the second research report released by the partnership called Project Stella. It was aimed at finding how Distributed Ledger Technology (DTL) can be used in a multitude of forms of securities transactions.
In their first report, the Central Banks remained cautious about the novelty and risks associated with blockchcain and DTL.
However, with the advancements made to the technology in the meantime, Stella Project now seems positive towards the adoption of a securities settlement method called “Delivery versus Payment (DvP)”.
The report summarizes the settlement method by explaining that it occurs when operating systems “link the transfer of two assets in such a way as to ensure that the transfer of one asset occurs if and only if the transfer of the other asset also occurs.”
“DvP could be conceptually and technically designed in a DLT environment with cash and securities on the same ledger (single-ledger DvP) or on separate ones (cross-ledger DvP),” the statement reads.
Cross-ledger DvP is made possible by using cross-chain atomic swaps. An atomic swap is the process that allows transfers of value from one blockchain to another. This is the main objective pursued by the Lightning Network, which will be fully implemented to the Bitcoin and Litecoin blockchain.
On March 27, the Bank of England announced that it would use blockchain for real time gross settlements.