DLT Banking

Definition ∞ DLT Banking refers to the application of Distributed Ledger Technology, such as blockchain, to traditional banking operations and services. This involves using DLT for tasks like payment processing, settlement, record-keeping, and issuance of digital assets or tokenized securities. The aim is to enhance efficiency, reduce costs, and improve transparency and security in financial transactions. It represents an evolution of financial infrastructure, leveraging decentralized and immutable ledgers.
Context ∞ The state of DLT Banking is a significant area of research and pilot programs among central banks and commercial financial institutions worldwide. Its situation involves exploring the potential benefits of DLT for wholesale payments, cross-border transactions, and the creation of central bank digital currencies. A critical debate centers on the scalability, interoperability, and regulatory implications of integrating DLT into existing financial systems. News often reports on central bank digital currency initiatives or interbank DLT projects.