The Bank of Canada and enterprise software firm R3 have released a white paper on Project Jasper – a Canadian experiment with distributed ledger technology (DLT) for domestic interbank payments settlement.

The paper describes the project’s findings to date and details the development of a proof-of-concept DLT design for interbank settlement. It said that project explored two distinct DLT platforms — an Ethereum platform and an R3 Corda platform.

Launched in 2016, the project has completed two phases. In the second phase, the team built a liquidity-saving mechanism (LSM) in the form of a central queue on top of the latter platform to help economize on liquidity and promote smooth intraday flow of payment transactions across the platform.

“The analysis thus far is suggestive that DLT platforms that employ a “proof-of-work” consensus protocol, as was built in Phase 1, do not deliver the necessary settlement finality and low operational risk expected of core settlement systems. Phase 2, however, built a distributed ledger system that employed an alternative consensus model on the basis of a “notary node” that could deliver improvements in regard to settlement finality, scalability and privacy,” the authors said.

However, they said that much analysis is still to be completed. The team will continue to work on improving the ability of a DLT platform to observe the international Principles for Financial Market Infrastructures (PFMIs) that must be met by a distributed ledger wholesale interbank payments settlement system.

The paper concluded saying:

“It is also possible that a cash-based settlement-solution system such as Jasper could prove to be the core upon which other distributed ledger platforms can be built to perform tasks such as settlement of financial asset transactions, manage syndicated loans and support trade finance. If such an ecosystem for payment and settlement can be fully realized, there could be significant benefits for the whole financial sector and the economy overall.”

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