Monday , February 17 2020
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Distributed Ledger Technology, Blockchain and Central Banks: RBI economists perspective

Summary:
The Feb-2020 RBI Bulletin has a superb article on the topic. It is written by Nalin Priyaranjan, Mohua Roy and Sarat Dha: Distributed Ledger Technology (DLT) and blockchain have developed considerably in features and complexity to offer solutions to various industries including the financial sector. Some central banks have undertaken pilot projects to study and understand DLT and explore the potential benefits for their operations and the financial systems. So far most of these projects have been experimental in nature to explore the viability of conducting inter-bank settlements, settlement of digital assets and tokens and cross-border payments across DLT platforms with functionalities of the existing system. In the Indian context, increasing support from the Reserve Bank of India

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The Feb-2020 RBI Bulletin has a superb article on the topic. It is written by Nalin Priyaranjan, Mohua Roy and Sarat Dha:

Distributed Ledger Technology (DLT) and blockchain have developed considerably in features and complexity to offer solutions to various industries including the financial sector. Some central banks have undertaken pilot projects to study and understand DLT and explore the potential benefits for their operations and the financial systems. So far most of these projects have been experimental in nature to explore the viability of conducting inter-bank settlements, settlement of digital assets and tokens and cross-border payments across DLT platforms with functionalities of the existing system.

In the Indian context, increasing support from the Reserve Bank of India and the Government of India for innovations and emerging technologies through regulatory sandbox and various other schemes would pave the way for the new economy, enriched with technology centric growth momentum.

The short paper explains key ideas behind blockchain and DLTs nicely:

The terms DLT and blockchain are often used interchangeably. However, it is important to understand the distinction. Blockchain, a linearly connected chain of blocks, is a specific type of DLT, whereas DLT is a decentralised ledger, which may not be a linear chain, among various participants who agree on a common state of the ledger and validates the new information/transactions and updates the ledger. Thus, all blockchains are DLT; however, all DLT platforms are not blockchains (Chart 1). A DLT is not a blockchain if the distributed ledger is not in the form of linearly connected blocks.

Lot of other stuff as well..

Amol Agrawal
I am currently pursuing my PhD in economics. I have work-ex of nearly 10 years with most of those years spent figuring economic research in Mumbai’s financial sector.

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