US Federal Reserve Board of Governors member Lael Brainard issued new remarks this week on the potential of blockchain technology and distributed ledgers to impact the US financial markets. In remarks given at a blockchain roundtable held by the Institute of International Finance ( IIF ), Brainard praised the emerging technology while cautioning that the financial industry should be careful not to undermine confidence in the world’s financial markets through its attempts to investigate its potential.
Brainard further offered encouragement and words of caution to regulators, who she stated have the responsibility to help maintain this balance between public and private interests.
Brainard said: "Regulators should seek to analyze the implications of technology developments through constructive and timely engagement. We should be attentive to the potential benefits of these new technologies, and prepared to make the necessary regulatory adjustments if their safety and integrity is proven and their potential benefits found to be in the public interest." In her remarks, the former under secretary of the Treasury for International Affairs noted the increasing frequency of blockchain technology trials, noting what she considers the key challenges and considerations facing their development and large deployment.
For example, Brainard said that the interoperability of distributed ledgers both with other versions of the technology and legacy systems would be “critical” as would who maintains the rights to access these databases.
"New and highly fragmented ‘shared systems’ may create unintended consequences even as they aim to address problems created by today’s siloed operations," she said.
Brainard ended by indicating that the Federal Reserve would seek to continue to engage industry stakeholders and regulatory colleagues on issues facing the technology’s development.
The comments follow speeches from a variety of domestic and international regulators, who are increasingly voicing their opinions on the technology and its adoption. In recent weeks, representatives of the […]
