Fed governor says blockchain technology shows 'considerable promise'

ISTANBUL

US Federal Reserve Governor Christopher Waller said Thursday that blockchain technology shows "considerable promise" as the private sector could come up with new ways to conduct transactions.

"A blockchain is ultimately a type of distributed database that can be used to record data, including asset ownership and transactions in the asset," he told during his speech in Sarasota, Florida. "To date, blockchain has primarily served as the ledger of record for crypto-assets, but it may be suitable to play a similar role for traditional assets, such as securities and derivatives,"

Waller said some private companies have executed foreign-exchange trades using blockchain technology with smart contracts to improve efficiencies.

He added that parties of those transactions may also have more flexibility as to when the transactions settle, which in turn has the potential to create additional capital and liquidity efficiency.

"Blockchain can offer fast or even near-real time transfers on a 24/7/365 basis, which, among other things, allows parties precise control over settlement times and in some cases, can enhance efficiencies and reduce liquidity risks," he told.

Waller said the US central bank's FedNow service, which is set to begin operations in July, does not rely on blockchain but it will provide safe and efficient instant payment services in real time.