Jim Cunha, senior vice president of the Federal Reserve Bank of Boston, has said that distributed ledger technology (DLT) could “fundamentally change” many areas of financial services.
In an article on the Boston Fed’s website, Cunha spelled out that innovations using the technology might bring advantages in payments and beyond, saying.
“DLT has the potential to fundamentally change many areas of financial services, payments being just one. Change is also very possible in securities (sales and post trade processing), derivatives, trade finance, and supply chain to name a few.”
The Fed has been exploring cryptocurrencies since 2011, and DLT for the past four years, according to Cunha. “We want to understand how [DLT] can impact the payment industry, since our mission is to ensure the efficiency, safety, and accessibility of payments in the U.S.,” Cunha noted.
However, while there are applications of DLT in the cross-border payments space, most work in that area is occurring outside the U.S, he said, adding: “So I think there is more potential for change there, but who knows what the future holds back home.”
Cunha, who helps run one of the 12 branches that make up the U.S. Federal Reserve central banking system, continued to explain that the institution has been testing various technologies in the field of payments. And while new technologies, such as data analytics, AI and machine learning, are already disrupting aspects of the financial ecosystem, it is important to find the “right business case,” he said.
Earlier this month, Cunha told a fintech conference hosted by the Federal Reserve Bank of Philadelphia that blockchain technology will “wake up Swift and other middlemen”. He further described the Fed’s initiative to educate monetary policymakers, payments experts and regulatory specialists on the risks and potentials of blockchain technology.