The central bank of Brazil has released a new technical research paper that explores blockchain use cases and examines some of the available platforms to develop working prototypes of a minimal Real Time Gross Settlement System (RTGS), CoinDesk reported.
The bank formed a study group to evaluate and analyze the blockchain technology and further understand both its applicability and shortcomings. The work was split into two phases – the first phase which involved identifying use cases inside the central bank, selecting one of the use cases and a platform for prototyping; and producing a minimal proof of concept using it; and the second phase which involved analyzing competing blockchain platforms using the selected use case as a benchmark.
The Banco Central do Brasil clarified that unlike blockchain efforts by other central banks, its research aimed to create a minimal funds transfer system to the financial sector in case of a complete main RTGS meltdown. It did not aim to build a substitute or provide a main settlement system.
The report states:
“In the case of its catastrophic failure, RTGS members would be unable to send (or receive) funds to (from) each other, leading to a complete financial halt. ... In this context, the Alternative System for Transactions Settlement (SALT) is a conceptual system for a contingent solution that would be able to immediately replace core functionalities of the main Brazilian RTGS in case of its full collapse."
According to the authors, the initial design of this system would be a permissioned blockchain network where financial institutions and the central bank are validating nodes.
“After investigations, SALT was deemed the ideal candidate: its functional requirements are considered rather simple and straight forward”, the report said.
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