The Federal Reserve has convened a working group on distributed ledger technology, commonly known as blockchain, to review its uses for financial services and issue a report later this year, Fed Governor Lael Brainard said on Friday. Speaking to an international finance meeting in Washington, D.C., she emphasized that the working group is looking at how blockchain can improve the efficiency of the payments system without compromising public confidence.
“We are paying close attention to distributed ledger technology, or blockchain, recognizing this may represent the most significant development in many years in payments, clearing, and settlement,” she said. “We will work together to foster socially beneficial innovation, while insisting that risks are thoroughly understood, managed, and controlled.”
During the question-and-answer period following her speech, Brainard expressed skepticism about proposals on Capitol Hill and elsewhere to foster innovation through regulatory “greenhouses” or “sandboxes” that ease compliance concerns. “Sandboxes have been used in a more forward-leaning way as a sort of safe harbor, and I think that’s premature,” she said. “It will take some time for broader payments applications, for instance.”