The application of distributed ledger technology (DLT) could lead to increased market fragmentation across member states, according to the president of the European Central Bank (ECB).
Addressing the European Parliament in Brussels, Mario Draghi warned of the risks associated with applying the technology to infrastructures including clearing and settlement.
“Given the rapid pace of development in this field, there is a need to constantly monitor and assess potential new or more pronounced risks resulting from the application of new technology such as DLTs to payment, clearing and settlement infrastructures in particular,” he said.
“One such possible risk is an increase in market fragmentation if different DLT approaches were to become firmly established in parallel in different member states.
“Moreover, the Eurosystem oversight framework has to remain effective if we are to discharge our responsibility in this new environment.”
A swathe of new developments has seen the potential of blockchain return to the industry’s agenda. Last week, blockchain consortium R3 secured $107 million in a fundraising round from 40 major institutions.
The funding round represents the largest blockchain investment to date and included institutions such as Barclays, Bank of America Merrill Lynch, HSBC, BNY Mellon, Citi, BNP Paribas and Deutsche Bank.
Other industry participants have also cast doubt on issues linked with the technology.