Chain CEO: Central banks should speed up blockchain exploration

Rage Review : On June 1, 90 representatives from global central banks discussed blockchain at the Federal Reserve's Washington headquarters, a scale that can be said to be unprecedented. Adam Ludwin, CEO of blockchain startup Chain, was the keynote speaker at the conference. He answered various sharp questions from central bank representatives, expressed his expectations for central bank activities, and pointed out that central banks should speed up the development of blockchain. Janet Yellen, chairman of the Federal Reserve, who was also a participant, has reached a consensus on this.

Translation: Annie_Xu

Last week, Adam Ludwin, CEO of blockchain startup Chain, gave a blockchain keynote speech at the Federal Reserve's Washington headquarters. The attendees were representatives from 90 global central banks, including Fed Chair Janet Yellen, the International Monetary Fund (IMF), the World Bank, and the Bank for International Settlements. His message to everyone was: pay attention to digital ledgers - a technology that supporters believe can greatly change the way global money flows.

Adam Ludwin

Adam Ludwin said in his blockchain keynote speech at the International Conference on Policy Challenges for the Financial Sector at the Federal Reserve headquarters:

"You should run towards this opportunity."

Ludwin briefly introduced how blockchain works and the history of the Bitcoin digital currency, the most famous blockchain application that originated from the 2009 financial crisis. The potential of the technology has attracted the attention of Wall Street executives because it can speed up existing transactions and free up billions of dollars in assets. Bankers should issue digital versions of traditional fiat currencies.

Excellent opportunity

Ludwin told the venue:

"The best opportunity you should seize is to work towards issuing bank digital currency." Government support played a key role in the development of the Internet and microprocessors; the same is true for blockchain. "During the infrastructure construction phase, governments often play a key role as technology pioneers or supporters."

Responding to the central banker’s “tough” questions, Ludwin added:

"They're not thinking about challenging it, they're thinking about 'what does it mean'."

A string of thefts has given banks new reasons to look to blockchain, including the $81 million theft from Bangladesh’s central bank in February, the $12 million theft at Ecuador’s Banco Comercial last year, and the $1.1 million theft that was thwarted by a Vietnamese bank. All of these thefts took place over the internet, some using the SWIFT messaging system.

Blockchain can help prevent these crimes because, unlike SWIFT, a banking system on blockchain has no single point of failure because the system runs on all interconnected computers simultaneously.

Bearer Instruments

The meeting took place in the Fed's Eccles Building, where the Federal Open Markets Committee decides monetary policy and changes interest rates. The walls of the meeting room were decorated with framed currency, Ludwin said.

“We are surrounded by bearer notes that have become works of art,” he said, so it was natural for him to demonstrate the power of digitization while pulling out his phone to send a bitcoin to Wikipedia.

"That was probably the first time someone used Bitcoin in the Federal Reserve building, and I sent out $10 in Bitcoin. In the United States, $10 is called a Hamilton because in 1791, then-Treasury Secretary Alexander Hamilton persuaded Congress to create the First Bank of the United States."

Ludwin solemnly told the bankers that their problem now is not how digital currency can improve the existing financial system, but how the central bank decides to do it. They can operate the digital network themselves, issue digital assets, issue products and services on the network, or just observe how the network works.

As a specific example, he said leveraged credit products such as repurchase agreements, commercial paper and money market funds are inherently suitable for blockchain.

“These are the areas where the central bank has the least control over the economy, the shadow banking sector.” If banks and their clients conduct these transactions on the blockchain, they can gain a deeper and more transparent understanding; because all transactions are recorded on the blockchain, they cannot be tampered with, and anyone on the network can view the records at any time, including regulators.

Ludwin said Yellen had reached such a consensus; but Fed spokesman David Skidmore declined to comment.