blockchain in the financial markets efficiency, regulation ... · accessing the capital markets...
TRANSCRIPT
![Page 1: Blockchain in the Financial Markets Efficiency, Regulation ... · Accessing the Capital Markets Other Experts Auditors General Public Lawyers Issuers Investors “The Wisdom of Crowds”](https://reader030.vdocuments.us/reader030/viewer/2022041119/5f305daaf808bf3e5125ec4a/html5/thumbnails/1.jpg)
Blockchain in the Financial Markets – Efficiency,
Regulation, and Old Wine in New Bottles
Charles K. Whitehead
![Page 2: Blockchain in the Financial Markets Efficiency, Regulation ... · Accessing the Capital Markets Other Experts Auditors General Public Lawyers Issuers Investors “The Wisdom of Crowds”](https://reader030.vdocuments.us/reader030/viewer/2022041119/5f305daaf808bf3e5125ec4a/html5/thumbnails/2.jpg)
Consumers
Borrowers
Suppliers
Depositors
Bank
Financial Intermediation
![Page 3: Blockchain in the Financial Markets Efficiency, Regulation ... · Accessing the Capital Markets Other Experts Auditors General Public Lawyers Issuers Investors “The Wisdom of Crowds”](https://reader030.vdocuments.us/reader030/viewer/2022041119/5f305daaf808bf3e5125ec4a/html5/thumbnails/3.jpg)
Consumers
Borrowers
Suppliers
Depositors
Bank
Financial Intermediation
• Accumulate and transfer capital at lower cost
• e.g., deposits, insurance policies (asset transformation)
• Manage risk-bearing
• e.g., delegated monitoring, pooling
![Page 4: Blockchain in the Financial Markets Efficiency, Regulation ... · Accessing the Capital Markets Other Experts Auditors General Public Lawyers Issuers Investors “The Wisdom of Crowds”](https://reader030.vdocuments.us/reader030/viewer/2022041119/5f305daaf808bf3e5125ec4a/html5/thumbnails/4.jpg)
Consumers
Borrowers
Suppliers
Depositors
Bank
Financial Intermediation
• Costs of Intermediation
• Informational Asymmetry and Agency Problems
• e.g., depositors/policyholders vs. shareholders
• Systemic Risk
• e.g., bank run
![Page 5: Blockchain in the Financial Markets Efficiency, Regulation ... · Accessing the Capital Markets Other Experts Auditors General Public Lawyers Issuers Investors “The Wisdom of Crowds”](https://reader030.vdocuments.us/reader030/viewer/2022041119/5f305daaf808bf3e5125ec4a/html5/thumbnails/5.jpg)
Consumers
Borrowers
Suppliers
Depositors
Bank
Financial Intermediation
![Page 6: Blockchain in the Financial Markets Efficiency, Regulation ... · Accessing the Capital Markets Other Experts Auditors General Public Lawyers Issuers Investors “The Wisdom of Crowds”](https://reader030.vdocuments.us/reader030/viewer/2022041119/5f305daaf808bf3e5125ec4a/html5/thumbnails/6.jpg)
Consumers
Borrowers
Suppliers
Depositors
Bank
Financial Intermediation
Borrowers Finance
Company MMF
CP
Investors
Lower
Costs
![Page 7: Blockchain in the Financial Markets Efficiency, Regulation ... · Accessing the Capital Markets Other Experts Auditors General Public Lawyers Issuers Investors “The Wisdom of Crowds”](https://reader030.vdocuments.us/reader030/viewer/2022041119/5f305daaf808bf3e5125ec4a/html5/thumbnails/7.jpg)
Traditional Intermediation
Capital Markets
Financial Intermediation
Lower
Costs
Regulated Intermediaries
Unregulated/Less
Regulated Entities
![Page 8: Blockchain in the Financial Markets Efficiency, Regulation ... · Accessing the Capital Markets Other Experts Auditors General Public Lawyers Issuers Investors “The Wisdom of Crowds”](https://reader030.vdocuments.us/reader030/viewer/2022041119/5f305daaf808bf3e5125ec4a/html5/thumbnails/8.jpg)
Blockchain
A blockchain is an internet-based, shared, distributed ledger of transactions that are verified by participants, sometimes called “nodes,” through an internet network.
1 2
3
4
5 6
![Page 9: Blockchain in the Financial Markets Efficiency, Regulation ... · Accessing the Capital Markets Other Experts Auditors General Public Lawyers Issuers Investors “The Wisdom of Crowds”](https://reader030.vdocuments.us/reader030/viewer/2022041119/5f305daaf808bf3e5125ec4a/html5/thumbnails/9.jpg)
Blockchain
A blockchain is an internet-based, shared, distributed ledger of transactions that are verified by participants, sometimes
called “nodes,” through an internet network.
• Consensus mechanism (among thousands of decentralized nodes) means that decisions can be created,
implemented, and evaluated without the need for a central authority/intermediary.
• The use of hash algorithms and the consensus mechanism make it practically impossible to alter blockchain data
after a block has been validated.
• Blockchain transactions rely on cryptographic technology to protect the security of sensitive data; in addition, a
blockchain can be public, private, or some combination (e.g., only some admitted, but the information is
transparent, or anyone is admitted, but some information is private).
Plus
• “Smart contracts” – software programs that execute certain transactions/decisions; perhaps subject to specified
events or preconditions.
![Page 10: Blockchain in the Financial Markets Efficiency, Regulation ... · Accessing the Capital Markets Other Experts Auditors General Public Lawyers Issuers Investors “The Wisdom of Crowds”](https://reader030.vdocuments.us/reader030/viewer/2022041119/5f305daaf808bf3e5125ec4a/html5/thumbnails/10.jpg)
Consumers
Borrowers
Suppliers
Depositors
Bank
Financial Intermediation
Borrowers Finance
Company MMF
CP
Investors
Lower
Costs
![Page 11: Blockchain in the Financial Markets Efficiency, Regulation ... · Accessing the Capital Markets Other Experts Auditors General Public Lawyers Issuers Investors “The Wisdom of Crowds”](https://reader030.vdocuments.us/reader030/viewer/2022041119/5f305daaf808bf3e5125ec4a/html5/thumbnails/11.jpg)
Consumers
Borrowers
Suppliers
Depositors
Bank
Financial Disintermediation
Borrowers Finance
Company MMF
CP
Investors
Borrowers Investors
Lower
Costs
![Page 12: Blockchain in the Financial Markets Efficiency, Regulation ... · Accessing the Capital Markets Other Experts Auditors General Public Lawyers Issuers Investors “The Wisdom of Crowds”](https://reader030.vdocuments.us/reader030/viewer/2022041119/5f305daaf808bf3e5125ec4a/html5/thumbnails/12.jpg)
Financial Disintermediation
![Page 13: Blockchain in the Financial Markets Efficiency, Regulation ... · Accessing the Capital Markets Other Experts Auditors General Public Lawyers Issuers Investors “The Wisdom of Crowds”](https://reader030.vdocuments.us/reader030/viewer/2022041119/5f305daaf808bf3e5125ec4a/html5/thumbnails/13.jpg)
B2B2C Intermediation
![Page 14: Blockchain in the Financial Markets Efficiency, Regulation ... · Accessing the Capital Markets Other Experts Auditors General Public Lawyers Issuers Investors “The Wisdom of Crowds”](https://reader030.vdocuments.us/reader030/viewer/2022041119/5f305daaf808bf3e5125ec4a/html5/thumbnails/14.jpg)
B2B2C Intermediation
$
$
$
![Page 15: Blockchain in the Financial Markets Efficiency, Regulation ... · Accessing the Capital Markets Other Experts Auditors General Public Lawyers Issuers Investors “The Wisdom of Crowds”](https://reader030.vdocuments.us/reader030/viewer/2022041119/5f305daaf808bf3e5125ec4a/html5/thumbnails/15.jpg)
B2B2C Disintermediation
$
$
$
![Page 16: Blockchain in the Financial Markets Efficiency, Regulation ... · Accessing the Capital Markets Other Experts Auditors General Public Lawyers Issuers Investors “The Wisdom of Crowds”](https://reader030.vdocuments.us/reader030/viewer/2022041119/5f305daaf808bf3e5125ec4a/html5/thumbnails/16.jpg)
B2B2C Disintermediation
$
$
$
![Page 17: Blockchain in the Financial Markets Efficiency, Regulation ... · Accessing the Capital Markets Other Experts Auditors General Public Lawyers Issuers Investors “The Wisdom of Crowds”](https://reader030.vdocuments.us/reader030/viewer/2022041119/5f305daaf808bf3e5125ec4a/html5/thumbnails/17.jpg)
Consumers
Issuers
Suppliers
Investors
Gatekeepers
Accessing the Capital Markets
![Page 18: Blockchain in the Financial Markets Efficiency, Regulation ... · Accessing the Capital Markets Other Experts Auditors General Public Lawyers Issuers Investors “The Wisdom of Crowds”](https://reader030.vdocuments.us/reader030/viewer/2022041119/5f305daaf808bf3e5125ec4a/html5/thumbnails/18.jpg)
Consumers
Issuers
Suppliers
Investors
Gatekeepers
Accessing the Capital Markets
Underwriters
Lawyers
Auditors
Other Experts
![Page 19: Blockchain in the Financial Markets Efficiency, Regulation ... · Accessing the Capital Markets Other Experts Auditors General Public Lawyers Issuers Investors “The Wisdom of Crowds”](https://reader030.vdocuments.us/reader030/viewer/2022041119/5f305daaf808bf3e5125ec4a/html5/thumbnails/19.jpg)
Consumers
Issuers
Suppliers
Investors
Gatekeepers
Accessing the Capital Markets
Underwriters
Lawyers
Auditors
Other Experts
$ $ $ $
![Page 20: Blockchain in the Financial Markets Efficiency, Regulation ... · Accessing the Capital Markets Other Experts Auditors General Public Lawyers Issuers Investors “The Wisdom of Crowds”](https://reader030.vdocuments.us/reader030/viewer/2022041119/5f305daaf808bf3e5125ec4a/html5/thumbnails/20.jpg)
Consumers
Issuers
Suppliers
Investors
Gatekeepers
Accessing the Capital Markets
Underwriters
Lawyers
Auditors
Other Experts
$ $
![Page 21: Blockchain in the Financial Markets Efficiency, Regulation ... · Accessing the Capital Markets Other Experts Auditors General Public Lawyers Issuers Investors “The Wisdom of Crowds”](https://reader030.vdocuments.us/reader030/viewer/2022041119/5f305daaf808bf3e5125ec4a/html5/thumbnails/21.jpg)
Consumers
Issuers
Suppliers
Investors
Gatekeepers
Accessing the Capital Markets
Other Experts
Auditors
General Public
Lawyers
Issuers Investors
“The Wisdom of Crowds”
![Page 22: Blockchain in the Financial Markets Efficiency, Regulation ... · Accessing the Capital Markets Other Experts Auditors General Public Lawyers Issuers Investors “The Wisdom of Crowds”](https://reader030.vdocuments.us/reader030/viewer/2022041119/5f305daaf808bf3e5125ec4a/html5/thumbnails/22.jpg)
Blockchain in the Financial Markets – Efficiency,
Regulation, and Old Wine in New Bottles
Charles K. Whitehead