Blockchain technology is already reshaping financial services, with developers worldwide working tirelessly to trial new applications and use cases throughout the industry.
Analysts view financial services, including payments and intrabank settlement, to be amongst the clearest practical implementations of distributed ledger technology.
The former chairman of the Federal Reserve, Ben Bernanke has become the latest high profile name to lend credibility to the emerging technology and its applications in finance.
Addressing the Ripple Swell conference in Toronto this week, Bernanke sounded a bullish note, while discussing how blockchain technology could reduce the cost and administration of sending payments between banks.
As part of his presentation to delegates, the former chairman explained the process of sending a payment between international banks, citing the example of money sent from a German institution to a US institution, to highlight the complexity and administration involved.
Turning his focus to blockchain, and how new technologies could help in future, Bernanke said of payments “…it’s an obvious area where new technologies like blockchain or these electronic currencies can be used to improve the process.”
He went further by namechecking Ripple directly, the cryptocurrency which is specifically designed to facilitate lower cost, faster transactions between banks and their customers.
His comments come at a time of increasing development in the blockchain space, with startups, development consortiums and research groups testing the boundaries of the technology with new proofs-of-concept models.
As distinct from cryptocurrencies like bitcoin, which Bernanke said worked counter to the interests of regulators, Bernanke thinks blockchain technology and blockchain businesses will ultimately be embraced by governments, as a mechanism for making finance in particular more efficient.
Bernanke also spoke about cryptocurrencies more broadly, and about whether their rise might come to affect monetary policy. He wasn’t so sure.
“It could be a lack of imagination, but I don’t think monetary policy has changed that much. Central banks are supportive of these new technologies because they’ll improve the payment system … but it won’t affect the ability of the Fed to require a certain amount of reserves of affect interest rates.”