Federal Reserve Governor Brainard Advises Regulators to be ‘Attentive” to Blockchain Technology

Federal Reserve Governor Lael Brainard delivered remarks last week on the potential of distributed ledger technology.

Her speech, “The Use of Distributed Ledger Technologies in Payment, Clearing, and Settlement,” explored the impact of blockchain on the U.S. financial markets. Brainard highlighted the potential innovation this emerging technology could bring to payment, clearing, and settlement activities, while also emphasizing the need to carefully analyze potential risks associated with distributed ledger technology.

Governor Brainard focused on safety, integrity and financial stability, stressing that these are critical and long-standing public policy objectives of the Federal Reserve.

According to Governor Brainard, the fundamental threshold test for new technologies will be whether they can be deployed and operated safely, with the requisite high degree of operational and financial integrity, security, and resilience across a wide range of adverse scenarios. Regulators and the public need to know that if adverse scenarios do occur, there will be robust management and governance to respond effectively.

The challenges associated with blockchain technology moving forward were also highlighted. These included scaling and achieving diffusion as well as determining how different technologies interoperate with each other.

Brainard indicated that the Federal Reserve will continue to seek to engage industry stakeholders and regulatory colleagues on issues facing blockchain technology development.

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