Here’s how to reap blockchain benefits in capital markets

Here’s how to reap blockchain benefits in capital markets

May 7, 2021 1 By The Sun Monitor
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New York – The World Economic Forum released Thursday a new study detailing how to reap blockchain benefits in capital markets.

Across the capital markets’ ecosystem, institutions are facing a combination of intensified competitive dynamics and accelerating technology advancements, presenting opportunities and challenges both to incumbents and new entrants.

DLT

The report, Digital Assets, Distributed Ledger Technology, and the Future of Capital Markets does not offer an all-encompassing solution. But it underlined how to positively impact costs, market liquidity and balance sheet capacity while reducing the complexity, opacity and fragmentation of capital markets.

Written in partnership with the Boston Consulting Group (BCG), the report relied on nearly 200 interviews and eight global workshops with capital market incumbent players, new entrants, regulators and governments.

It presents use cases from equity markets, debt markets, securitized products, derivatives, securities financing and asset management.
The Distributed Technology Ledger (DLT) can address real challenges and inefficiencies in some markets by providing a trusted, shared source of truth between market participants.

No agreed path

However, the future is uncertain as there is no agreed path for market-wide adoption.

What’s more, as institutions still decide where to invest, varying strategies create tensions.

The report calls for a balance between innovation and market safeguards through standardization, the breaking down of silos and regulatory engagement.

According to the authors, fundamentally transforming markets will require new ways of thinking and working across the industry.

“Following several years of intense hype, examples of use cases where inefficiencies and challenges are being solved with blockchain are starting to emerge across capital markets,” said Matthew Blake, Head of the Future of Financial Services, World Economic Forum.

“With the future for blockchain in financial services still being defined, a nuanced look at the opportunities this technology offers right now is particularly important for the financial services industry.”

“Distributed ledger technology has come of age as it begins to enhance efficiencies, reduce operating costs and create new business models in capital markets, but the use cases and solutions are respective to each asset class,” said Kaj Burchardi, Managing Director, BCG Platinion.

“Whilst this makes sense from a commercial perspective, it has led to a complex patchwork of initiatives.”

To adopt DLT, he said, the capital markets have to “require cross-institutional alignment to realize the game-changing market opportunities it can offer.” (amm/ PR)

PHOTO: Pixabay

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