Public crypto networks as financial market infrastructures
Abstract
The design of financial instruments and processes is contingent on the infrastructure supporting them. Blockchain technology, as utilised by public crypto networks such as Ethereum, represents a novel type of payment and settlement infrastructure that gives rise to a new generation of solutions. This paper discusses the key properties of this technology, including immediacy, omni-asset capability, programmability and its ability to flatten the financial architecture (disintermediation). We illustrate the distinctive products these features make possible, and have the potential to disrupt current payment and capital market systems. We discuss the utility of blockchain technology in private (permissioned) networks. Finally, we revisit the risks of public crypto networks and their mitigants. This article is also included in the Business & Management Collection which can be accessed at http://hstalks/business.
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Author's Biography
Ulrich Bindseil is the former Director General of Market Infrastructures and Payments at the European Central Bank (ECB), and prior to this, the ECB’s Director General of Market Operations. Ulrich has written a number of articles and books on central banking, including ’Monetary Policy Operations and the Financial System’ (Oxford University Press, 2014) and ’Central Banking Before 1800 — A Rehabilitation’ (Oxford University Press, 2019).
Omid Malekan is an adjunct professor at Columbia Business School, where he lectures on blockchain and cryptocurrency. He is the author of two books on the subject, the most recent being ‘Re-Architecting Trust’ (2022). He has been working as an adviser in the cryptocurrency industry for the past eight years.
