Decoding What Fed Governors Really Think About Bitcoin and Blockchain

Federal Reserve Board Governor Lael Brainard praised the potential of blockchain technology in a recent speech, while also indirectly talking about Bitcoin. Is Brainard really avoiding Bitcoin? Or is this just a rallying cry for the Fed to rally the banking industry against Bitcoin, a decentralized, peer-to-peer, open monetary system?

The Federal Reserve talks lightly about Bitcoin and praises blockchain

On April 14, at the Institute of International Finance (IIF) blockchain roundtable in Washington, D.C., Federal Reserve Governor Lael Brainard gave a speech on blockchain (distributed ledger) technology.

Throughout the speech, titled “Distributed Ledger Technology for Payment, Clearing and Settlement Scenarios,” Brainard highlighted the potential benefits of distributed ledger technology, noting that it can address “significant frictions” in the clearing and settlement process and reduce “intermediary steps.”

During her speech, Brainard mentioned Bitcoin three times (or more), however, she only said that Bitcoin “inspired” the creation of distributed ledger technology. “Distributed ledger technology and related protocols… were initially inspired by Bitcoin and their potential important applications in payment, clearing and settlement in wholesale markets,” she said.

(Photo: Federal Reserve Board Governor Lael Brainard)

Decoding the Fed Governor's Speech

For the average person to understand what a Fed governor really thinks in her speech, we must translate her mysterious words into a popular version. For example:

"At the Federal Reserve, we approach these issues from the perspective of policymakers protecting the public's interest in the safety and security of core banking institutions, financial stability, particularly as it relates to wholesale financial markets, and the safety and efficiency of the payment system."

[Note: “Public interest” may not be very public here, as it relates directly to the welfare of “financial markets” and “security of the payment system.” That is, arguably, privatizing the Federal Reserve itself.]

Translation: We will do everything in our power to ensure that nothing can threaten our systems .

“At the extreme end of the spectrum, distributed ledger technology can be seen as providing a broader realm where financial actors can transact directly with other financial actors, without the need for cross-border middlemen, and almost instantly trade assets.”

Translation: Our system is completely replaceable by an alternative, decentralized, peer-to-peer, open-access system .

“Today, many industry players are experimenting with the use of distributed ledger technology in controlled, permissioned environments. If some of these experiments are successful, scaling them will be a key challenge.”

Translation: If private networks succeed, we still need to figure out how to prevent the public from joining an open monetary system like Bitcoin .

“It will be critical to research how distributed ledger technology and legacy systems can interoperate.”

Translation: If we want to compete with new technologies (blockchain), we need to unite .

“If their security and integrity can be proven and their potential benefits are in the public interest, we should take note of the potential benefits of these new technologies and be prepared to make the necessary adjustments,” Brainard concluded.

Do you trust the Federal Reserve? Can distributed ledger technology make the financial industry more transparent? Share your thoughts.

Original article: https://news.bitcoin.com/federal-reserve-on-bitcoin/
By Allen Scott
Translation: Overnight porridge
Source (translation): Babbitt Information (http://www.8btc.com/bitcoin-core-latest-version)