But financial services is just the beginning; the OECD forum highlighted just how widespread blockchain applications will be.
Just like the arrival of the personal computer eventually spread across all sectors to vastly improve productivity, blockchain is set to manage the movement of value across supply chains in the transport and infrastructure sectors, and fields as diverse as energy distribution, identity, accounting, health and education.
It’s appealing because the technology allows time-stamped information to be shared in a distributed network, and it is trustworthy because it cannot easily be altered and does not require an intermediary to validate it.
It was clear from the Paris proceedings that there are still plenty of concerns about the impact decentralised payments technologies will have in financial services.
French Finance Minister Bruno Le Maire said France refuses to support the development of Libra in Europe, because it will endanger the monetary sovereignty of states and undermine the fight against financing terrorism.
But shortly after those comments were made, Libra Association chief operating officer Bertrand Perez said Libra recognises it won’t be able to launch a payments system without addressing regulators’ “serious and important” questions. “We want to show the world what is in the box,” he said.
Perez remains confident Libra will launch next year and he said the Swiss financial regulator had last week indicated Libra would be able to pursue a payment system license in Switzerland.
The Swiss are a “very reputable and serious” financial regulator who would ensure Libra is properly audited and meets contemporary standards, he said, suggesting France or other sovereign nations may not be able to stop the Libra snowball racing, even if they wanted to.
Eric Santor, an adviser to the governor of the Bank of Canada on digitalisation, made the strong point that, regardless of Libra, distributed ledgers are already impacting all aspects of central banking. The technology is real and requires central banks to move fast and understand it, he said.
A key motivator should be to ensure that the financial system is able to respond to the demands of a whole new generation of digital natives, who will expect their applications to work seamlessly across borders and sectors.
Regulators are also being pushed into the new world of decentralised computer architecture by the global investment banks; for example, Deutsche Bank has just joined the JPMorgan Chase-led Interbank Information Network (IIN), which has grown to 320 banks swapping information on global payments over blockchain.
In a new paper titled Blockchain Now and Tomorrow, presented to the OECD event, the European Commission said it was preparing for a world where distributed ledgers carry money, insurance policies, contracts, land titles, medical and educational records, birth and marriage certificates, and facilitate the buying and selling of goods.
“Blockchain is now one of the technologies which is anticipated to have a profound impact over the next 10 to 15 years,” the commission said.
The OECD’s work to ensure governments are ready for this tsunami is being overseen by Greg Medcraft, the former Australian Securities Investment Commission (ASIC) chairman, who is now director of the OECD’s Directorate for Financial and Enterprise Affairs, which recently set up a Blockchain Policy Centre.
Regulators are keen to avoid the mistakes of the original internet, which struggles to safeguard data and falls victim to the proliferation of costly cyberattacks.
MIT Media Lab lecturer David Shrier, the co-author of a framework he’s calling the “internet of trusted data”, spoke to the forum about new data architecture using blockchain where “authority is distributed among many trusted actors, so that compromise of one or even a few authorities does not destroy the system security consensus”.
Another message from the OECD forum was the importance of monitoring the intersection of blockchain with other emerging technologies, especially artificial intelligence.
“It is from their intersection that the most profound and transformational technological developments will emerge,” OECD Secretary-General Angel Gurría said.