FinTech
On October 7, 2016, as part of remarks delivered at an Institute of International Finance panel on blockchain, US Federal Reserve Board Governor Lael Brainard addressed distributed ledger technology, noting that this technology may represent the most significant development in many years in payments, clearing and settlement. Brainard highlighted the payments system as an important area of oversight, noting that the Federal Reserve Board wants to maintain public confidence in the payments system, while supporting innovation that provides broadly shared benefits to the public over time, including through the reduction of unnecessary frictions, costs and delays.
Among other things, Brainard discussed several use cases that the Federal Reserve Board has explored in its discussions with industry stakeholders in order to illustrate the potential of distributed ledger technologies, as well as the considerations that are important to the Federal Reserve Board in its assessment of benefits and risks. Regarding risk associated with the use of distributed ledgers, Brainard stated that, "[w]hat 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 noted that going forward, the Federal Reserve Board will deepen its engagement with a range of financial institutions and other stakeholders to refine its understanding of the new technologies, and will focus specifically on is responsibilities for the payments system, as well as its oversight of financial market intermediaries. The Federal Reserve Board also expects to publish a research paper later this year that summarizes some of the key findings from its industry engagement on this topic thus far.
Governor Brainard's remarks are available at:
https://www.federalreserve.gov/newsevents/speech/brainard20161007a.htm.
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