Blockchain becomes the theme of the Federal Reserve’s 16th Annual Financial Industry Policy Conference

Author: ManjiMasha

The three-day 16th annual Financial Policy Conference was held in Washington, D.C. earlier this month. The conference brought together central banks from around the world and the theme of the conference was fintech. The conference mainly discussed blockchain technology, digital currency (Bitcoin) and other prospects.

The conference was jointly organized by the Federal Reserve, the World Bank, and the International Monetary Fund. The first day of the conference was held at the headquarters of the Federal Reserve (Marriner Eccles Building). Fed Chair Janet Yellen gave an introductory speech, and Adam Ludwin, co-founder and CEO of the Bitcoin-based startup Chain, gave a keynote speech.

The Fed chairman noted that central bankers generally don’t like the word “disruption,” but that doesn’t mean fear. Technology has played a big role in solving problems in the financial system in the past, so he encouraged bankers to learn everything about this new technology.

Janet Yellen, Chair of the Federal Reserve

Details of how financial networks based on Bitcoin work were sprinkled throughout Ludwin’s presentation. Ludwin was particularly concerned with central bank-issued digital currencies—like the digital dollar backed by the Federal Reserve—that could be used in such a system. Ludwin also claimed that this would lead to a truly global financial system that is more transparent than it is today. “Soon, ‘cross-border payments’ will make as much sense as ‘cross-border mail,’” Ludwin said in his presentation. Chain is working with Nasdaq OMX to build a settlement platform for the securities market. The platform, called Linq, was listed on Nasdaq’s private securities market in December.

Adam Ludwin, co-founder and CEO of Chain

Essentially, blockchain provides what is known as a "new medium" for money, which is a digital bearer security. During his presentation, Ludwin demonstrated this functionality by sending a small donation to Wikipedia. "Now that I've sent it, we've done it," Ludwin said. "The funds are transferred to the Internet. It's like I'm handing over cash."

Ludwin stressed: "This new media will give the central bank unprecedented capabilities to review transactions. We can monitor compliance in real time and can also answer questions about collateral ownership and re-hypothecation. The root of these problems lies in the system that was running in 2007." This will give the central bank new perspectives in processing transactions and have a greater impact on the shadow banking system (referring to real estate loans being processed into securities and traded into capital) that it currently lacks.

JPM compiled from

The Wall Street Journal, Blockchain Technology Gets a Hearing Insider the Fed`s Headquarters, by Paul Vigna.