The technology itself does not yet meet the requirements expected of the RTGS systems in terms of scalability, data security and reliability. Modern RTGS systems such as SIC are already demonstrably efficient and crisis-resilient. In this area, a payment system not only has to prove its efficiency; the reliability of the RTGS systems is also absolutely crucial for the stability of the financial system. New technologies therefore have to meet very high standards in this respect. However, it is quite possible that DLT may take hold in other areas. If DLT were to become established in the securities business, for example, these systems would be linked to the reliable foundation in some manner or other. It is hard to envisage DLT-based system environments developing in isolation. So the next question is what form the coexistence of new DLT solutions and conventional RTGS systems might take. There are different scenarios. One possibility would be a simple technical interface between the DLT system and the existing RTGS system, as illustrated on the slide 6. Payment instructions would be exchanged via this interface, in much the same way as the current solution between SECOM and SIC. However, direct delivery-versuspayment settlement would require certain adjustments, for example to the opening times and participant structure of both systems. A second and more far-reaching possibility would be to integrate the cash leg into the DLTbased infrastructure.
This is the case in the securities business, which comprises a network of many different participants trading, settling and managing securities. Examples of these market participants – brokers, banks, settlement service providers and custodians – are shown on the slide 3. With every transaction, a wide array of booking information has to be reconciled bilaterally between the parties involved (slide 4). For example, banks have to reconcile and monitor their securities holdings at custodians against their own internal accounts. The coordination requires considerable effort, which in turn leads to high operating costs. DLT could help in this regard by ensuring that all of the involved parties have the same information at the same time. The slide 5 illustrates this step. Thanks to the synchronised distribution of information, the aforementioned, highly complex reconciliation would no longer be necessary. The potential for efficiency gains is indeed considerable, which is why extensive research is now being conducted in this area. And innovations that enhance the efficiency of the financial system or the economy as a whole are certainly worthy of closer inspection. The Australian Securities Exchange ASX, for example, has recently announced that it is to use DLT in redeveloping its core system for clearing and settling of equity transactions and recording shareholdings. In addition to the securities business, potential uses of DLT are also being envisaged in the field of cross-border payments. The latter are slow, costly and lacking in transparency compared with domestic payment transactions, and so the potential for efficiency gains is particularly high.