Annex I. List of DLT Experiments and Research in Payments and Settlements

Large-value Payment Systems

  • Project Jasper (Phase 1) (Canada)

  • Project Jasper (Phase 2) (Canada)

  • Project Khokha (South Africa)

  • Project Stella (Phase 1) (Euro Area/Japan)

  • Project Ubin (Phase 1) (Singapore)

  • Project Ubin (Phase 2) (Singapore)

  • Project Inthanon (Phase 1) (Thailand)

  • Project Salt (Brazil)

Securities Settlement Systems

  • Project Blockbaster (Germany)

  • Project by Depository Trust and Clearing Corporation (United States)

  • Project ASX replacement of CHESS (Australia)

  • Project Jasper (Phase 3) (Canada)

  • Project Stella (Phase 2) (Euro Area/Japan)

  • Project Ubin (Phase 3) (Singapore)

  • Project Inthanon (Phase 2) (Thailand)

Cross-Border Payment Arrangements

  • CLSNet foreign exchange netting service (United States)

  • SWIFT DLT research (Belgium)

  • Utility Settlement Coin (Switzerland)

  • JPM Coin (United States)

  • Project Jasper (Phase 4)—Project Ubin (Phase 4) (Canada, Singapore)

  • Cross-border interbank settlements (Canada, United Kingdom, Singapore)

  • Project Stella (Phase 3) (Euro Area/Japan)

  • Project Inthanon (Phase 3)—LionRock (Thailand, Hong Kong)

Annex II. Distributed Ledger Technology Protocols

  • Bitcoin DLT protocol was defined in 2008 (Naka-moto 2008). It was the first token-based DLT protocol. It is based on a so-called “proof-of-work” protocol used by “miners.” Anonymous or pseudonymous miners compete to solve an encryption task for adding a new block to the public block-chained transaction database. Double spending is controlled by accepting only the first instance of the next transaction generated by a bitcoin node—that is, it considers that all transactions sent by a node are sequentially numbered. Because the miners in the network are unknown, it is impossible to control to what extent they collaborate, which increases the risk for so-called 51 percent abuse of mining power (Ali and Barrdear 2014). In the Bitcoin protocol, the transaction database is public. Because users’ Bitcoin account addresses are pseudonymous, it is possible to identify all transactions belonging to a person once the pseudonym is revealed, for example, in connection with a transfer request.

  • Digital Asset Platform is developed by the US company Digital Asset (Digital Asset 2016). It contains the Digital Asset Modeling Language for the management of contracts and contract transactions using a private contract store and a global sync log.

  • Elements is a blockchain platform developed from Bitcoin that is provided by the private company Blockstream. It supports transaction confidentiality and PvP- and DvP-type cross-ledger transfers.

  • Ethereum is an open-source DLT protocol for smart contracts, which is today maintained by the nonprofit organization Enterprise Ethereum Alliance.

  • Hyperledger Fabric is an open-source protocol from Linux Foundation’s Hyperledger Initiative that is based on smart contracts. Validation nodes validate transactions. The validating nodes are assigned validation tasks, and the other validating nodes can audit the results of other validating nodes. The validation process is thereby efficient, but users need to trust the validator nodes. All nodes, user and validation nodes, need to be recognized by a DLT network membership service. Privacy is ensured toward other nodes, but the membership service will know the identity of all other nodes.

  • Quorum is an Ethereum-based enterprise-focused DLT environment for smart co,ntracts with improvements in the following areas: “network and peer permissions management, enhanced transaction and contract privacy, voting-based consensus mechanisms, and better performance,” as reported by the Blockchain Council. J.P. Morgan facilitated the creation of Quorum.

  • R3/Corda is an open-source protocol developed especially for the financial industry by the R3 consortium established by major international financial institutions (Brown 2018; Hearn 2016). It can run both transaction accounts and smart contracts. Unlike other DLT solutions, it has only bilateral transaction histories and therefore no common transaction database. Transactions are validated by the sending and receiving nodes and specialized notary nodes. The task of the notary node is to hinder double spending. Validation is a rapid process. Participants need to trust the notary node(s). The notary node will see all transactions and its processing speed and accuracy will affect the network. Any security problems within the notary node can jeopardize the whole network. Because of its structure, it will require different kinds of backup solutions for sufficient resiliency compared with other DLT networks.

  • Sequence is protocol provided by Chain (a private US company) for managing account balances based on tokens in a ledger-as-a-service environment.

  • Zilliqa is a DLT protocol employed by the Anquan Capital (public company in Singapore) blockchain platform, and it is closely related to the Elastico DLT protocol. Both use “sharding” to share mining activities among subgroups of miners, which facilitate parallel processing. This feature increases the scalability of this protocol considerably to be close to linear with increased volumes.


  • Ali, Robleh, John Barrdear, Roger Clews, and James South-gate. 2014. “Te Economics of Digital Currencies.” Bank of England Quarterly Bulletin 54 (3): 27686.

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  • Bank of Canada and Monetary Authority of Singapore (BOC and MAS). 2019. “Jasper-Ubin Design Paper: Enabling Cross-Border High Value Transfer Using Distributed Ledger Technologies.” Accenture, Dublin.

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  • Bank of Canada, Bank of England, and Monetary Authority of Singapore (BOC, BOE, and MAS). 2018. “Cross-Border Interbank Payments and Settlements: Emerging Opportunities for Digital Transformation.” KPMG Services Pte. Ltd.

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  • Brown, Richard Gendal. 2018. “Te Corda Platform: An Introduction.” May 2018 (accessed March 2, 2019).

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  • Committee on Payment and Settlement Systems (CPSS). 1996. “Settlement Risk in Foreign Exchange Transactions.” Bank for International Settlements, Basel.

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  • Committee on Payment and Market Infrastructures (CPMI). 2017. “Distributed Ledger Technology in Payment, Clearing, and Settlement.” Bank for International Settlements, Basel.

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  • Committee on Payment and Market Infrastructures. 2019. “Wholesale Digital Tokens.” Bank for International Settlements, Basel.

  • Digital Asset Holdings LLC. 2016. “The Digital Asset Platform: Non-technical White Paper.” December 2016 (accessed on February 9, 2019).

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  • Galati, Gabriele. 2002. “Settlement Risk in Foreign Exchange Markets and CLS Bank.” BIS Quarterly Review (December).

  • Hearn, Mike. 2016. “Corda: A Distributed Ledger.” November 29, 2016 (accessed on March 2, 2019).

  • International Monetary Fund (IMF). 2018. “Belgium Financial System Stability Assessment.” Country Report No. 18/67, Washington, DC.

  • International Monetary Fund (IMF). 2019a. “Australia Financial Sector Assessment Program: Technical Note—Supervision, Oversight, and Resolution Planning of Financial Market Infrastructures.” IMF Country Report No. 19/52, Washington, DC.

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  • International Monetary Fund (IMF). 2019b. “Fin-tech: The Experience So Far.” IMF Policy Paper, June, Washington, DC.

  • International Monetary Fund (IMF). 2019c. “Singapore Financial Sector Assessment Program: Detailed Assessment of Observance—CPSS-IOSCO Principles for Financial Market Infrastructures.” IMF Country Report No. 19/255, Washington, DC.

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  • International Monetary Fund (IMF). 2019d. “Switzerland Financial Sector Assessment Program: Technical Note— Supervision and Oversight of Financial Market Infrastructures.” IMF Country Report No. 19/190, Washington, DC.

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  • International Monetary Fund (IMF). 2020. “Canada Financial Sector Assessment Program: Technical Note—Oversight of Financial Market Infrastructures and Fintech Development.” IMF Country Report No. 20/22, Washington, DC.

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  • Leinonen, Harry, and Kimmo Soramäki. 1999. “Optimizing Liquidity Usage and Settlement Speed in Payment Systems.” Bank of Finland Discussion Papers 16/1999, Helsinki.

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  • Nakamoto, Satoshi. 2008. “Bitcoin: A Peer-to-Peer Electronic Cash System.” (Accessed February 4, 2019).

  • Society for Worldwide Interbank Financial Telecommunication (SWIFT). 2016. “SWIFT on Distributed Ledger Technologies: Delivering an Industry Standard Platform through Community Collaboration.” SWIFT SCRL, La Hulpe, Belgium.

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This note draws on IMF (2019a), which was prepared in the context of the Bali Fintech Agenda.


Annex I includes a list of the experiments and research projects. The stock-taking exercise is based on the availability of public information. Retail payment applications are not in the scope of this note.


See CPMI (2017). DLT refers to the processes and related technologies that enable nodes in a network (or arrangement) to securely propose, validate, and record state changes (or updates) to a synchronized ledger that is distributed across the network’s nodes.


Annex II includes a list of DLT protocols.


See CPMI (2017) for a description of cryptographic tools and consensus mechanisms that determine how a ledger distributed across multiple nodes could have varying roles and permissions.


Smart contract is a computer protocol that allows the programming of logic or conditionality into an asset or transaction, usually associated with DLT applications.


Troughput refers to intraday deadlines by which banks need to send a proportion of the value of their day’s payments to a payment system.


DvP refers to a link between a securities transfer system and a funds transfer system that ensures that delivery occurs if and only if payment occurs.


None of the projects published any detailed cost-benefit-analysis of a DLT implementation scenario, although it is expected that within the ASX project such analysis has probably been made for the strategic decision to become the first DLT production environment within securities settlement systems.


In correspondent banking, nostro accounts refer to accounts held by a customer bank on the books of another bank acting as a service provider.


PvP is a mechanism in a foreign exchange settlement system that ensures that a final transfer of one currency occurs if and only if a final transfer of the other currency or currencies takes place.


CLSNet is a platform operated by CLS Bank International (established in 2002), which is a US-regulated financial institution that provides foreign exchange netting and settlement services through the operation of a PvP settlement service that mitigates settlement risk for foreign exchange transactions.


Finality International (Finality) is a consortium of 15 major institutions that envisioned the creation of a tokenized settlement asset that has finality, multicurrency (US dollar, British pound, euro, Canadian dollar, and Japanese yen), and interoperability features.


The global interbank large-value community is rather limited, with only some major banks in each country, many of which are subsidiaries of international banks operating in several countries.


As of December 2019, the Financial Stability Board’s work program for 2020 has included the development of a road map to enhance cross-border payment systems.


Some FMIs already provide cross-border services, including CLS Bank International, Euroclear Bank, Clearstream Banking Luxembourg, TARGET2, LCH, and others.


The upper bound of liquidity refers to the amount of liquidity that must be available to participants for immediate settlement throughout the day. Any additional liquidity above the upper bound remains idle on participants’ settlement accounts for the whole day. See Leinonen and Soramäki (1999).


The Bank of Finland’s simulation model is used frequently. For details, see https://www.suomenpankki.f/en/financial-stability/bof -pss2-simulator/.


Traditional deferred net settlement systems have mostly operated batch-based using end-of-day settlement or faster delivery mechanisms with separate settlement periods.


Most securities settlement systems operate on T+2 or T+3 basis.


A contrary view is that DLT transactions could be technically validated if one of more nodes are inactive.


In permissionless DLT arrangements that rely on consensus processes, the ability of participants to revise ledger transactions gives rise to probabilistic settlement because there may never be a settlement finality.


See Galati (2002). Herstatt risk is also referred to as foreign exchange settlement risk, cross-currency settlement risk, or principal risk (CPSS 1996). It is the risk that one party to a foreign exchange transaction will pay the currency it sold but not receive the currency it bought.


For permissioned DLT, however, most node validators or a specific node with higher rights could fork the chain from a previous block, reversing the transaction.


From a technical standpoint, nodes contain a log or ledger that is common across all nodes of a DLT system instead of actual funds.


DvD refers to a link between two securities transfer (settlement) systems that ensures that a delivery occurs if and only if another delivery occurs and vice versa.


DLT might be implemented in traditional centralized systems with multilateral net settlements, but this is a special case, in which PFMI requirements would be applied similarly as for any multilateral payment and settlement system.


The PFMI, footnote 5, notes that the definition of FMIs excludes bilateral relationships between financial institutions and their customers, such as traditional correspondent banking.


For illustration, distributed Financial Market Infrastructures have recently been coined as a new service offering by some market participants.

Distributed Ledger Technology Experiments in Payments and Settlements
Author: Mr. Ghiath Shabsigh, Mr. Tanai Khiaonarong, and Mr. Harry Leinonen