The European Banking Administration (EBA) Published a Report on the Advantages and Risks of DLT Technology
The financial regulator of the European Union published a report related to the advantages and risks of the distributed ledger technology DLT used in finance. Document discusses the growing trend of financial technologies. The European Banking Administration (EBA) has put forward two cases of using blockacain technology in the banking sector, including trade finance and identity.
The report details how smart contracts and DLTs can be used in the case of cross-border transactions. Note that the European Banking Administration (EBA) praises this technology and believes that it will solve many problems.
The report says:
"A number of opportunities emerge from the use of DLT and smart contracts for trade finance. The most promising are the potential efficiency gains, cost reduction, and lower risk of duplicate financing and loss or manipulation of documents."
At the same time, the European Banking Authority (EBA) believes that the new technology still faces potential risks, since the applicable law, to date, remains uncertain. Thus, a conflict of interest may arise between DLT nodes that are located in different jurisdictions.
The regulator also noted:
"For example, a digitally signed contract might not be enforceable in all the jurisdictions. It is essential to establish the applicable jurisdiction, in case of conflict, and the dispute mechanisms, when a dispute arises. "
The publication of the report of the European Banking Authority (EBA) occurred at a time when a group of European banks announced that they were able to complete the first financial transaction Live Blockchain, using the platform we_trade blockchain.
In another report, the financial regulator also said that the DLT can potentially optimize the ID verification process in due diligence of European bank customers.