U.S. Federal Reserve Explores The Potential of Blockchain, Lacks Vision
Federal Reserve Chair Janet Yellen emphasized At the Commonwealth Club in San Francisco the importance of the Blockchain and hinted that the Fed is exploring the potential of the technology.
At the Commonwealth Club in San Francisco, the Federal Reserve Chair Janet Yellen discussed a variety of economic issues and financial solutions to lead the United States economy in coming years. Among the many topics that were brought up, Yellen emphasized the importance of Blockchain and hinted that the Fed is exploring the potential of the technology.
Ed Wasserman, Dean of the Graduate School of Journalism at UC Berkeley and the event moderator, led the interview with Yellen to address various technological solutions that have the capacity of drastically improving the current financial infrastructure.
Later in the interview, Wasserman asked Yellen about Blockchain technology and the benefit of utilizing the Blockchain in the traditional realm of finance.
In response, Yellen stated:
“It is a very important new technology that could have implications for the way in which transactions are handled throughout the financial system. We are looking at it in terms of its promise in some of the technologies that we use ourselves and many financial institutions are looking at it. It could make a big difference to the way in which transactions are cleared and settled in the global economy.”
Overgeneralized statement on Blockchain
Over the past two years, the Fed and other government organizations have made several positive remarks on Blockchain technology. Yet, as seen in the statement of Yellen, none of the institutions that are exploring Blockchain technology have presented a specific roadmap or an explanation as to how Blockchain technology can be used.
Such ambiguity of strategy and implementation with a complex and sophisticated technology like the Blockchain will significantly delay the demonstration of the Blockchain’s potential in the financial industry.
Yellen reaffirmed that many financial banks and institutions are looking into Blockchain to settle transactions. The Bitcoin Blockchain, which the technology originates from, prioritizes the settlement of transactions. However, the bank Blockchain networks or enterprise-grade Blockchains as many companies like to refer to do not have a focus on transaction settlement. They look into a wide range of applications such as trade finance, asset clearance, stock exchange, amongst many more.
Research institutions such as Greenwich Associates have revealed that over $1 bln is being spent on Blockchain development annually by banks, financial organizations and research firms.
However, the lack of clear vision when it comes to the implementation and utilization of Blockchain has prevented Blockchain technology from being commercialized and introduced to the general public for the interests of billions of the global financial industry’s consumer base.