Many central banks have been researching Distributed Ledger Technology (DLT), including Project Jasper in Canada, the Project Ubin in Singapore and Project Stella in Japan. This continued interest reflects a growing interest in adding DLT to central bank payment systems. In 2019, the Federal Reserve Board conducted an experiment called the FooWire project based on a DLT platform. The goal of this project was to evaluate the potential of technology payments from a research perspective.
Observations and Findings
The four high-level takeaways from the FooWire project include:
1. DLT is a viable technology for certain payment uses
1. DLT is a viable technology for certain payment uses
Using Fabric, the team was able to create a functional payment system, and a typical transaction took approximately 10 seconds to settle. This is slow in comparison to the real-time payment systems that settle payments instantly as received.
2. DLT networks can be implemented relatively quickly
With the use of extensive online documentation, the team was able to establish its settlement platform quickly. Upon installing a sample network, the team discovered that building its own development network was simpler than expected.
3. Writing smart contracts was relatively easy in Fabric
The prepackaged smart contract was less complex than expected, and lent itself to rapid prototyping.
4. Fabric offers a range of extended capabilities, including some with associated tradeoffs.
Fabric offers a modular framework which allows developers to easily modify the platform and add functionality.
Using Fabric as a representative platform, FooWire was able to explore the potential application of DLT for payments and the potential payment uses. Organisations are able to leverage these technologies to stand up functional settlement systems and customised in terms of their functionality. The Federal Reserve continues to research these technologies and their capabilities to help identify the associated risks and weaknesses.
