20 October 2017

Fed paying close attention to 'significant' blockchain

12 October 2016  |  9361 views  |  0 Wall street sign

Distributed ledger technology may be the "most significant development in many years" for payments, clearing and settlement, according to a Federal Reserve governor who says that the central bank will publish its own blockchain paper later this year.

In a speech, Lael Brainard says the Fed is "paying close attention" to DLT, recognising its potential to transform the way financial market participants transfer, store, and maintain ownership records of digitised assets.

Financial services firms around the world are rushing to test how they can use blockchain technology in everything from cross-border payments to trade finance to securities clearing and settlement. With most of the industry still on the proof-of-concept stage, carrying out simple experiments, Brainard says that full scale rollouts are still probably years away, although she notes that this may change.

With the industry in a particularly innovative period, she says firms need to stick to the guardrails that have been developed over many years, adding: "We expect the private sector to bear important responsibility for developing and deploying new financial technologies in a safe and sound manner, even as we all seek an innovative and efficient payment system over the long run."

Says the speech: "Like many new financial technologies, distributed ledgers could ameliorate or exacerbate traditional financial risks. What matters to us as policymakers and regulators is not only whether the migration to a new technological platform increases or reduces risks, but also whether risks are rendered more or less opaque, and how they are distributed among and between financial intermediaries and end users.

Brainard also used the speech to note that the new business models associated with blockchain might make the traditional US model of regulators licensing firms outmoded. The New York State Department of Financial Services' new BitLicense, and the fact that a distributed ledger company received Federal Reserve Bank of New York approval for participation in the National Settlement Service are examples of possible ways forward.

Meanwhile, the Fed will publishes its DLT research paper this year, summarising its findings and continue to talk to finance firms, technologists and academics.

Comments: (0)

Comment on this story (membership required)

Finextra news in your inbox

For Finextra's free daily newsletter, breaking news flashes and weekly jobs board: sign up now

Related stories

ANZ and Wells Fargo test distributed ledger tech for correspondent banking

ANZ and Wells Fargo test distributed ledger tech for correspondent banking

10 October 2016  |  18641 views  |  0 comments | 39 tweets | 50 linkedin
Banks ready for real-world blockchain

Banks ready for real-world blockchain

29 September 2016  |  13411 views  |  0 comments | 28 tweets | 33 linkedin
Distributed ledger technology could damage financial market integration - ECB

Distributed ledger technology could damage financial market integration - ECB

26 September 2016  |  9813 views  |  0 comments | 16 tweets | 10 linkedin
Finextra paper explores blockchain as an enabler of operational resilience

Finextra paper explores blockchain as an enabler of operational resilience

25 July 2016  |  9220 views  |  0 comments | 12 tweets | 11 linkedin
House of Lords asks BofE deputy governor: Time for 'Britcoin'?

House of Lords asks BofE deputy governor: Time for 'Britcoin'?

15 July 2016  |  8201 views  |  0 comments | 12 tweets | 6 linkedin
2016 Wall Street blockchain investment to top $1bn

2016 Wall Street blockchain investment to top $1bn

24 June 2016  |  14213 views  |  0 comments | 28 tweets | 15 linkedin
Fed Governor warns of unintended consequences of distributed ledger adoption

Fed Governor warns of unintended consequences of distributed ledger adoption

15 April 2016  |  8069 views  |  0 comments | 10 tweets | 15 linkedin

Related company news

 

Related blogs

Create a blog about this story (membership required)
visit www.capgemini.com visit www.niceactimize.com

Top topics

Most viewed Most shared
Ripple looks to drive bank adoption with $300m XRP rebate programmeRipple looks to drive bank adoption with $...
16028 views comments | 12 tweets | 4 linkedin
satelliteGates Foundation backs Ripple collaboratio...
8259 views comments | 13 tweets | 10 linkedin
HSBC partners Bud for open banking trialHSBC partners Bud for open banking trial
7620 views comments | 20 tweets | 26 linkedin
IBM uses blockchain to improve cross-border payments processingIBM uses blockchain to improve cross-borde...
7253 views comments | 9 tweets | 17 linkedin
Sibos 2017: API or the highwaySibos 2017: API or the highway
6563 views comments | 10 tweets | 21 linkedin

Featured job

Competitive
London, UK (or flexible)

Find your next job