FINTECH: Betting on blockchain

Advancements in financial technology are opening up new opportunities for fast-growing Asian companies to finance trade and expansion, but pose new challenges for the region’s regulators. The most promising new technology to arrive in the financial sector is undoubtedly the blockchain, or distributed ledger technology, where a secure record of transactions is kept in ‘blocks’ of data and protected by cryptography.

How can blockchain technology help power Asian development, and are Asia’s central banks ready to embrace virtual assets? The technology can allow automated verification between parties in a supply chain, reduce the need for intermediaries in a trade financing, or power smart contracts that execute themselves. Commercial banks are already looking to use DLT to streamline their anti-money laundering checks and automate some transactions. Stock exchanges are studying its use for securities settlement.

The  Asian Development Bank has so far been quiet on the topic of blockchain technology or virtual currencies, but the 2018 annual meetings promise to change that. Discussions on the future of finance feature high on the agenda, and ADB President Takehiko Nakao is due to debate the topic in a joint seminar with the IMF and the Philippines central bank on May 3.

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