This technology could be a game-changer for long-term investors
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In a nutshell, Blockchain is a technology that enables the collaborative creation of digitally distributed ledgers. The latter are asset data bases that can be shared across a network of multiple sites, geographies or institutions. All participants in the network have their own identical copy of the ledger concerned.*
According to Swiss Re's experts, using Blockchain technology in financial market transactions would have several advantages . Firstly, it could boost operational efficiency and support financial innovation. Secondly, it would increase transparency, including on legal claims and, as such, strengthen investor rights. Thirdly, it would support a stable and resilient financial market infrastructure and facilitate recycling long-term assets into the real economy. Blockchain technology, when applied on a broader scale, could thus support economic growth.
A move towards a modern, Blockchain-like financial market infrastructure system would potentially not only save costs, but could also generate significant productivity gains. For asset managers and long-term investors in particular, Blockchain technology offers many benefits. These include (much) faster payments and settlement times, lower settlement and counterparty risks, cheaper transactions without compromising security, as well as strengthened transparency and investor rights.
*According to a report published by the chief scientific advisor to the UK government, December 2015