The Central Bank of Brazil (BCB) has begun sharing data with other national supervisory bodies via distributed ledger technology on a private blockchain platform. The move intends to strengthen information exchange between Brazilian regulatory authorities by using blockchain technology. At first, the platform will be used to exchange data related to financial institutions authorization procedures. The blockchain-based platform will be called PIER, or Information Integration Platform for Regulators. The platform was designed by the Brazilian Central Bank’s IT department and is planned to be operational by the end of 2018.
BCB wants to provide a bigger degree of security
The selection of blockchain technology was a result of its unique capacity to provide a horizontal network of information-sharing between regulators that will be connected to PIER. Aristedes Cavalcante, the deputy head of the bank’s IT department, explained that
“as the blockchain platform records every data request using cryptographic signatures, it is possible to certify at any moment the authorship, and that no entity has tampered with the data, and thus guaranteeing information authenticity.”
For that reason, blockchain technology was chosen by Brazil’s Central Bank because of its ability to ensure a degree of security that would be out of reach if the bank were to rely on other platforms.
PIER will enable the data exchange between the Central Bank and other regulators, like the National Pension Funds Authority, the Security and Exchange Commission of Brazil, and the Superintendence of Private Insurance. Regulators will use PIER to share data on sanctioning processes, the conduct of financial institutions’ officers, and the control of corporate entities under the jurisdiction of the central bank.
The Central Bank notes that among the advantages of blockchain technology is that data cannot be deleted once it has already been recorded on the ledger. It encourages the immediate provision of information on demand, and each regulator will be able to determine which data will be available on the network. At any moment, any regulator that is a participant in the network will be able to grant access to any information that it may believe is of mutual interest among the other regulators.
Central banks around the world are doubtful
However, despite the Brazilian Central Bank’s move to introduce blockchain technology, big central banks have generally expressed concerns about the blockchain. In fact, big banks such as Russia’s central bank, the Bank of Canada, and the Dutch central bank have raised concerns over the integration of blockchain technology into the finance sector.
Blockchain and the finance sector appear to be a burgeoning area for disagreement, as after the most recent G20 meeting, finance ministers from the 20 advanced economies highlighted the potential of blockchain to renovate and revitalize elements of the finance sector.
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