IMF Working Papers

Consensus mechanisms underpin the effective operation of blockchains by ensuring a single consistent and honest ledger. The design and implementation of these consensus mechanisms can improve or impede the ability of regulatory and supervisory authorities to achieve their objectives and mandates. This paper provides an update to the Fintech Note Blockchain Consensus Mechanisms: A Primer for Supervisors (2022) by reviewing the growth of existing consensus mechanisms, exploring new consensus mechanisms, and the development of layer 2 protocols. It is a non-technical and accessible note to provide supervisors a broad understanding of the technology within their remits.