Much heralded blockchain technology will not create a revolutionary shake up in the financial sector anytime soon, a top Bank of England official has declared.
The distributed ledger technology has a way to go to become to be as revolutionary as some are predicting, according to Andrew Hauser, the executive director of banking, payments and financial resilience at the central bank said today.
"There is no likelihood of such an extreme revolution occurring any time soon," he said.
"Much more work is needed across a whole range of issues, including: speed and scaleability; confidentiality protections; developing common protocols; integrating cash and securities movements; and establishing regulatory and legal norms."
However, the technology has "scope for less ambitious but still potentially transformational applications in specific markets", he said in a speech, particularly those "where current infrastructure is less well developed".
The Bank of England deputy governor Ben Broadbent told a group of Lords earlier this year that it was thinking about how digital central bank cash and distributed ledgers would work technically and last week issued a consultation paper as part of its review into the Real-Time Gross Settlements (RTGS) system, which is used to transfer money among banks
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Outlining plans for a new RTGS system, its said that it should work with a range of new technologies being used in the private sector, including distributed ledgers if or when it achieved "critical mass" but the central bank said it would continue to explore the technology.
"The resilience characteristics of the distributed ledger in particular are potentially highly attractive from a financial stability perspective. It is however unlikely that this technology will prove sufficiently mature to form the core of the next generation of RTGS itself," the report said.
UBS, Santander, Deutsche Bank, BNY Mellon and Icap are working together on a Utility Settlement Coin, to facilitate "a new model for digital central bank cash".