Getting their hands dirty with distributed ledger technology
A small team of developers at the Boston Fed want to know what DLT can do for the Federal Reserve
Like many of us, Paul Brassil takes his work home on the weekends. He studies the rapidly changing FinTech industry, experiments with his own distributed ledger node on his personal Cloud environment, and even teaches his kids how cryptocurrencies and distributed ledger technologies could disrupt a number of industries in the coming decade. Then on Monday, the vice president and head of the Boston Fed’s IT function returns to the office and checks in with the team of developers he helped assemble to study the “technology” in distributed ledger technology and what it could mean for the Federal Reserve System and, more broadly, the financial sector.
“We feel to fundamentally understand [the technology], you have to explore it first-hand. Our primary experiment has been to create a replica of a particular function of the general ledger platform that we manage for the Federal Reserve System,” said Brassil, referring to the Fed’s core accounting system that is managed by the Boston Reserve Bank. “Although this work will not advance beyond a proof-of-concept, it has been enormously educational and we’re still learning.”
Last year, Brassil and colleagues set out to test potential use cases for DLT—assembling a group from different Boston Fed business areas comprising expertise in app development, information security, and underlying advanced infrastructures. The team tested several DLT platforms before settling on Hyperledger Fabric, due to its advanced capabilities and partnership potential.
Today, team members Aniruddha Sinha, Smitha Narreddi, Tuan Bui, Chuck Buhecker, and Michael Nealand are focused on the latest industry research, coding, and investigating the newest version of the Fabric.
“We are a collaborative, self-managed group with a keen interest in this technology,” said Sinha, an 11-year Boston Fed veteran who works as a software architect in the Bank’s central accounting function in addition to his DLT efforts. “We’re encouraged to work together in an entrepreneurial way to advance the Bank and System’s technical understanding of this evolving technology.”
The Boston Fed is one of many Federal Reserve Banks looking at DLT, the results of which are shared and discussed via several System working groups. Brassil also acknowledged the info-sharing taking place among FinTech organizations and depository institutions across New England, which he called key to ultimately ensuring the safety and soundness of the financial system.
“You might not think of the Fed as being on the cutting edge of technology, but in fact the institution has always used the latest innovations available to carry out its enormous set of responsibilities,” said Brassil. “From mission-critical wholesale and retail payment platforms, to highly integrated systems for the U.S. Treasury, and advanced utilization of big data and data analytics in our research functions—the Fed runs on advanced technologies. Right now we’re trying to figure out how to harness this new technology—and guard against the inevitable pitfalls.”