New report highlights findings of third phase of Bank of Canada’s blockchain-focused ‘Project Jasper’

The Bank of Canada (BoC), Payments Canada, R3, TMX group, and Accenture have released a report on the results of the third phase of Project Jasper, a collaborative blockchain research initiative.

The central bank, Payments Canada, R3, and TMX group came together for the project back in 2016. The previous phases of the project focused on exploring the potential of distributed ledger technology (DLT) for clearing and settlement of high-value interbank cash payments. The latest phase explored an integrated payments and securities infrastructure.

Jasper III focused on exploring settlement and payment interactions in a private distributed ledger network by building and testing a proof-of-concept (POC) system designed to be integrated with existing market infrastructure. The PoC was delivered by Accenture, leveraging R3's Corda DLT platform. In May 2018, the project partners presented initial findings from the research at the Payments Canada SUMMIT.

They have now published a report on the findings of the third phase, which demonstrates the feasibility of clearing and settlement of securities using DLT.

Securities and cash were brought on ledger through the issuance of digital depository receipts (DDRs) by the Canadian Depository for Securities and the Bank of Canada respectively, allowing POC participants to settle simulated securities against simulated central bank cash on the distributed ledger.

John Velissarios, Accenture’s Blockchain Technology & Security Lead, said that the third phase showed that it is possible to deliver payments by directly swapping cash from buyers to sellers and proved that DLT “can be used for clearing and settlement of securities and could play an important role in promoting financial market integration.”

“The PoC allowed clearing and “delivery versus payment” settlement —and when more broadly implemented, would reduce counterparty risk and free up collateral— demonstrating that it is possible to complete post-trade settlement of netted and novated transactions on a DLT platform, while preserving privacy for market participants and their transactions,” the official release said.

Commenting on the findings, Scott Hendry, Bank of Canada Senior Special Director, Financial Technology, emphasized that further work in this area is required to “determine how it can be set up to maximize the benefits for the whole financial system.”