At the start of this year, I wrote a post speculating that 2021 may be the year of dFMI. Happily, there has been some significant progress on this front, such as the creation of an Omnibus Account Structure by the Bank of England and a clarification of the usage of ECB technical accounts paving the way for pre-funded payment systems. However, nearly three quarters of the way through the year, I admit I may have missed an important stage of evolution: the speed of stablecoin acceptance!
In this third article in a series, we examine some methods for creating tokenized assets on a blockchain and set out some of the necessary prerequisites. Cryptocurrency was lauded as a way to control the supply and issuance of a medium of exchange without a third party. Making transparent the supply and issuance of this currency decouples it from unforeseen political events, such as quantitative easing.
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In this second of a series posts, we explore how a distributed Financial Market Infrastructure (dFMI), a Financial Market Infrastructure (FMI) based on a blockchain protocol, could have a system of governance that satisfies the relevant legal and regulatory frameworks and takes advantage of the improved economic mechanism features that blockchain can offer.
A major appeal of Blockchain, more generically described as “Distributed Ledger Technology” (DLT), from the perspective of financial market participants has been the promise of simpler and less risky operational processes. But this is only a part of its full potential and misses an even bigger story: how DLT will enable a big disruptive shift in the shape of financial market structure.