EC Report Explores Application and Challenges of Blockchain Technology
The Joint Research Center of EC published a report exploring the challenges and impact of distributed ledger technologies. The report "Blockchain now and tomorrow" offers an in-depth and practical understanding of blockchain and how the technology can be used in various sectors in the future. The report helps policymakers and industry understand not only the latest trends in blockchain technology but how trust can be built between different stakeholders.
The report provides multidimensional insights into the state of blockchain technology by identifying ongoing and upcoming transformations in a range of sectors and setting out an anticipatory approach for further exploration. Moving beyond the hype and debunking some of its controversies, the report is intended to offer both an in-depth and practical understanding of blockchain and its possible applications. The report explains that blockchain technology is still at the embryonic stage and facing many challenges, such as performance and scalability, energy consumption, data privacy, integration with legacy infrastructures, or interoperability between different blockchains. Still, based on a limited set of proven use cases, blockchain often entails additional risks and barriers for firms, businesses, and organizations piloting it or interested in its deployment.
The report also highlights that policymakers and regulators need to progress in assessing whether existing policies and laws are fit for purpose or if new frameworks will be required. Pressing discussions include, for instance, the legal classification of tokens and coins, validity of smart contracts, applicable jurisdictions, consumer and investor protection, enforcement of anti-money laundering requirements, and data protection and privacy safeguards. Furthermore, the development of blockchain should be connected to existing digitization initiatives and programs to avoid overlaps and to maximize impact. Blockchains will be complementary or will work together with other key digital technologies, such as artificial intelligence, the "internet of things," data analytics, cloud computing, robotics, and additive manufacturing. As an emerging technology, blockchain requires the multiplication of use cases to test its added value in specific applications and sectors.
Further support and funding for pilots and experimentation spaces must bring together a range of stakeholders from universities, research centers, industry, small and medium enterprises, and start-ups. Blockchain is the technology behind bitcoin and other cryptocurrencies, but it has the potential to transform the ways to exchange a much wider range of assets. It could enable the secure transfer of money, contracts, land titles, data, services and other assets digitally, with few or no intermediaries. In February 2018, EC had launched the EU Blockchain Observatory and Forum with the support of the European Parliament to highlight key developments of the blockchain technology, promote European actors, and reinforce European engagement with multiple stakeholders involved in blockchain activities.
Related Links
- Press Release
- Report
- Overview of Joint Research Center (PDF)
- Blockchain Factsheet
- EU Blockchain Observatory and Forum
Keywords: International, Europe, EU, Banking, Securities, Insurance, Fintech, Regtech, Blockchain, Distributed Ledger Technology, EC
Previous Article
EBA Communication on Brexit Preparations of Financial InstitutionsRelated Articles
EBA Analyzes Impact of Unwind Mechanism of Liquidity Coverage Ratio
EBA published a report analyzing the impact of the unwind mechanism of the liquidity coverage ratio (LCR) for a sample of European banks over a three-year period, from the end of 2016 to the first quarter of 2020.
ECB Outlines Views on Possible Changes to AnaCredit Rule and TLTROs
In response to questions from a member of the European Parliament, the ECB President Christine Lagarde issued a letter clarifying the possibility of amending the AnaCredit Regulation and making targeted longer-term refinancing operations (TLTROs) dependent on the climate-related impact of bank loans.
IASB Begins First Phase of Post-Implementation Review of IFRS 9
IASB started the post-implementation review of the classification and measurement requirements in IFRS 9 on financial instruments and added the review as a project to its work plan.
FSB Report Examines Progress in Resolvability of Systemic Institutions
FSB published a report that examines progress in implementing policy measures to enhance the resolvability of systemically important financial institutions.
EBA Benchmarks National Insolvency Frameworks Across EU
EBA published a report on the benchmarking of national loan enforcement frameworks across 27 EU member states, in response to the call for advice from EC.
FSB Reports Assess Impact of Pandemic on Financial Stability
FSB published a letter from its Chair Randal K. Quarles, along with two reports exploring various aspects of the market turmoil resulting from the COVID-19 event.
RBNZ Consults on Implementation of Capital Review Changes
RBNZ launched a consultation on the details for implementing the final Capital Review decisions announced in December 2019.
IASB Announces Andreas Barckow as the New Chair from July 2021
The Trustees of the IFRS Foundation, which are responsible for the governance and oversight of IASB, have announced the appointment of Dr. Andreas Barckow as the IASB Chair, effective July 2021.
HKMA Consults on Capital Rules for Bank Equity Investments in Funds
HKMA issued a letter to consult the banking industry on a full set of proposed draft amendments to the Banking (Capital) Rules for implementing the Basel standard on capital requirements for banks’ equity investments in funds in Hong Kong.
ESRB Supports Extension of Macro-Prudential Measure by Swedish FSA
ESRB published an opinion assessing the decision of Swedish Financial Supervisory Authority (FSA) to extend the application period of a stricter measure for residential mortgage lending, in accordance with Article 458 of the Capital Requirements Regulation (CRR).
