Federal Reserve governor Lael Brainard delivered a speech on blockchain today, remarking that the technology could have a major impact on the financial system.
Brainard's speech, delivered to at the Institute of International Finance in Washington, D.C., represents what may be the US central bank’s strongest words on blockchain to date. She detailed developments from a Federal Reserve-guided working group that is focused on financial innovation, an effort that, in part, is looking at the question of using the tech in next-generation payment and settlement systems.
At the same time, Brainard echoed past comments from other Fed officials regarding its watch-and-research approach, telling attendees:
“We are paying close attention to distributed ledger technology, or blockchain, recognizing this may represent the most significant development in many years in payments, clearing, and settlement.”
Brainard’s comments come just over a week after Fed chair Janet Yellen, appearing before a US House of Representatives panel, remarked that the technology could have a “significant impact” on the financial system. At the time, she said that the central bank was “trying to understand” digital currencies and other blockchain applications.
Brainard’s speech explored various use cases of the technology in finance, as well as touching on what the Fed sees as potential risks that could result from broadening adoption.
“Like many new financial technologies, distributed ledgers could ameliorate or exacerbate traditional financial risks,” she said.
Brainard went on to say that the Fed would publish a research paper on the subject of blockchain later this year. Further, she indicated that the central bank would continue to meet and discuss the technology with both private and public sector stakeholders.
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