As per J. Christopher Giancarlo, the Chairman of the United States Commodity Futures Trading Commission (CFTC) asserts that blockchain technology could have been a “far faster, better-informed, and more calibrated regulatory intervention” in response to the 2008 financial crisis.
Giancarlo delivered a speech entitled “The New Futurism: 21st Century Financial Markets, Technology, and Regulation” at the Commissione Nazionale per le Societa e la Borsa (CONSOB) in Rome, Italy on June 3, wherein these remarks were made.
Devoting his first part of his speech to reflections on the blockchain, Giancarlo referred to the 2008 financial crisis and aftermath of the crises. Being a senior executive on Wall Street at GFI Group at the time, he noted things from his vantage point. GFI operated a trading platform listing credit default swaps, making the firm at the very epicenter of systemic risk.
Giancarlo commented that if the regulators have had access to blockchain-powered real-time trading ledgers of large Wall Street banks then, the complex and cumbersome task of having to “assemble piecemeal data to recreate complex, individual trading portfolios” would have been simplified, benefiting their process of handling of the crisis. He continued:
“What a difference it would have made a decade ago if blockchain technology on a private distributed ledger accessible to regulators had been the informational foundation of Wall Street’s derivatives exposures. At a minimum, it would certainly have allowed for far faster, better-informed, and more calibrated regulatory intervention instead of the disorganized response that unfortunately ensued.”
The chairman underscored that 2008 would have significantly benefited from access to real-time distributed ledgers (DLT). The use cases of DLT can be further boosted by implementing innovative cognitive computing capabilities, so as to identify the “anomalies in market-wide trade activity and diverging counterparty exposures” that point to a heightened risk of bank failure.
He went on to predict that blockchain will have a “broad and lasting impact” across a range of applications, including “payments, banking, securities settlement, title recording, cybersecurity, and trade reporting and analysis.”
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Image source – CFTC Twitter
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