Governance in systems based on distributed ledger technology (DLT): a comparative study

Ellen Naudts, Timothy Aerts, Leonard Franken and Aimo Pieterse

Working Papers from DNB

Abstract: The (experimental) use of DLT is growing, also in the financial sector. DLT systems themselves advocate the fact that they use (consensus) algorithms and cryptography to create a leaderless system (horizontal). How is it possible to ensure that decisions in these DLT systems are in the interest of all stakeholders and the public interest, including supervisory authorities? Given the popularity of the Bitcoin and Ethereum blockchains, for example, it is not inconceivable that a part of the FMI will be based on a public DLT system in the future. It is therefore important to gain a better understanding of the governance of such DLT systems, and what the risks are for FIs when using DLT. This paper compares the governance of financial institutions (FIs) and financial market infrastructures (FMIs) on the one hand with the governance of systems based on distributed ledger technology (DLT systems), on the other, to discover how they differ, and where potential risks and benefits lie for their future use, also in the financial markets. We answer two questions: i) What are the differences in governance between traditional FIs, FMIs and DLT systems? and ii) What are the consequences of decentralized governance of DLT systems for supervisory authorities?

Keywords: Comparative study of governance in DLT systems; Managerial and operational governance; Horizontal and vertical governance; tipping point; Public DLT Systems and Private DLT Systems (search for similar items in EconPapers)
JEL-codes: G3 M15 M41 (search for similar items in EconPapers)
Date: 2021-06
New Economics Papers: this item is included in nep-pay
References: View complete reference list from CitEc
Citations: View citations in EconPapers (2)

Downloads: (external link)
https://www.dnb.nl/media/ji0pza2a/working_paper_no-_718.pdf

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:dnb:dnbwpp:718

Access Statistics for this paper

More papers in Working Papers from DNB Contact information at EDIRC.
Bibliographic data for series maintained by DNB ().