Swiss National Bank Chairman: Blockchain and distributed ledgers are disrupting the financial industry

Yesterday, Thomas Jordan, President and Chairman of the Board of Directors of the Swiss National Bank, opened the Sibos conference in Switzerland ^[1] with a speech on how blockchain and distributed ledgers will disrupt the financial system.

At the conference, which brought together about 8,000 financial industry professionals, Jordan mentioned centralization as a way to provide security and efficiency in the banking industry, and he recounted the history of central clearing houses in the 1940s and the Six Interbank Clearing System (SIC) in 1987.

Jordan said the Swiss National Bank is now discussing with market participants, regulators and other central banks what to do next with the advent of blockchain and distributed ledgers.

Regarding blockchain and distributed ledger technology, Jordan said:

“Such a system could render the reconciliation of transaction and balance data between banks and third-party systems obsolete. The paradigm seems to have flipped, with power now dispersed (decentralized) rather than centralized (centralized)”

It is reported that in addition to serving as the president of the Swiss National Bank, Jordan is also a member of the board of directors of the Bank for International Settlements (BIS) in Basel and the manager of the International Monetary Fund (IMF) in Switzerland.

“The SNB has a neutral approach to technologies underlying the financial market infrastructure,” Jordan said. “It is assessing the impact of these innovations on the existing infrastructure.”

Blockchain Hybrid

However, Jordan added in his speech that he does not think all authoritarianism will disappear.

For example, he described existing financial market research institutions as “already highly competitive,” with traditional centralized systems meeting strict security standards and being continually improved.

Jordan doesn’t think distributed ledgers will completely replace the financial industry, and he described a “hybrid scenario” in which secure messaging is done via distributed ledgers. He even talked about the possibility of central banks issuing currency via blockchain.

Jordan said:

“Ultimately, we will likely see new technologies coexist or blend with (existing financial market technologies).”

Swift joins blockchain research camp

Following Jordan’s keynote, Swift CEO Gottfried Leibbrandt gave the audience another way blockchain technology can be built into traditional financial infrastructure.

Specifically, he said Swift’s Global Payments Initiative (GPI), is considering adopting blockchain.

According to Leibbrandt, the original GPI design was to make payments faster and more transparent by creating a new service layer agreement (SLA). To date, the Global Payments Initiative (GPI) has signed up 80 financial institutions, an increase of about 45% compared to the beginning of this year.

While the new service layer agreement (SLA) is designed to simplify cross-border payments, Leibbrandt said Swift is always exploring new technological solutions.

He concluded:

“Who knows, some of this may be enabled by blockchain, and we are certainly looking at that underlying technology, as well as other technologies, to continually enhance our services.”

Notes (↵ returns to text)

1. SIBOS (SWIFT International Banker's Operation Seminar) is a landmark annual international conference for the financial services industry organized by SWIFT, which has an important international influence in the financial services field. The SIBOS Annual Conference is an annual international conference organized by the Society for Worldwide Interbank Financial Telecommunication (SWIFT) and attended by SWIFT member banks and partners (manufacturers). Exhibiting at the SIBOS Annual Conference can fully display the style of the bank, build a platform for communication with global financial peers, and understand the development trends of global banking products and services. Peers can also discuss global financial hotspots. ↵