Blockchains, Distributed Ledgers and Funds Transfer: An Overview

The report examines the application of Distributed Ledger Technology (DLT) to improve fund transfers in emerging markets, distinguishing between public DLT (like Bitcoin) for consumer remittances and private DLT for inter-institutional clearing and settlement. It argues that while public DLT can bypass traditional intermediaries, it faces hurdles in liquidity and 'costs at the edge'. Conversely, private DLT offers a more secure and scalable model for financial institutions to settle obligations domestically or internationally, potentially reducing entry barriers and enhancing KYC/AML processes.

• Distributed Ledger Technology (DLT) can lower the cost of remittances, accelerate settlement speed, and reduce settlement risk. It also has the potential to lower entry barriers for financial institutions and improve the interoperability of financial instruments.
• Public DLT, specifically Bitcoin, can serve as a decentralized payment system and public accounting tool for those lacking traditional bank documentation. However, its effectiveness for peer-to-peer remittances is severely limited by 'costs at the edge'—the high cost and effort required to use cryptocurrency-fiat exchanges.
• Private DLT models for inter-organisational clearing and settlement are considered more secure, scalable, and less expensive to implement than traditional centralized systems. They may also encounter less political resistance than centralized Real Time Gross Settlement (RTGS) switches.
• DLT can enhance regulatory oversight for Anti-Money Laundering (AML) and Know Your Customer (KYC) processes. Its transparency and traceability allow for a shift from traditional gate-keeping to continuous review of ledger entries to identify misbehaviour.
• DLT can act as a real-time store for identity information and dynamically changing attributes like creditworthiness, which helps overcome barriers to credit decision-making. However, this requires development in line with national laws and security standards to ensure trust.
• The use of 'sterling-linked coins' on a blockchain could ensure the integrity of international aid by preventing funds from being spent on inappropriate items, though the 'last mile' of delivery often requires conversion to local cash or mobile money, which removes the protocol's traceability.

APA

FSD Africa (2017). Blockchains, Distributed Ledgers and Funds Transfer: An Overview. https://fsdafrica.org/wp-content/uploads/2025/05/Blockchains-02.08.2017.pdf

Chicago

FSD Africa. Blockchains, Distributed Ledgers and Funds Transfer: An Overview. 2017. https://fsdafrica.org/wp-content/uploads/2025/05/Blockchains-02.08.2017.pdf.

Wikipedia

{{cite report |author=FSD Africa |title=Blockchains, Distributed Ledgers and Funds Transfer: An Overview |date=August 2017 |url=https://fsdafrica.org/wp-content/uploads/2025/05/Blockchains-02.08.2017.pdf |access-date=17 August 2026 |via=Climate Insights Directory}}

BibTeX

@techreport{fsdafrica2017blockchains, author = {{FSD Africa}}, title = {{Blockchains, Distributed Ledgers and Funds Transfer: An Overview}}, institution = {FSD Africa}, year = {2017}, month = aug, url = {https://fsdafrica.org/wp-content/uploads/2025/05/Blockchains-02.08.2017.pdf}, urldate = {2026-08-17}, note = {Indexed by Climate Insights Directory} }