Unlocking the Potential of Distributed Ledger Technology: A Pathway for Traditional Finance to Save Billions Each Year

The Global Financial Markets Association asserts that more focus from regulators is essential regarding the developments in distributed ledger technology (DLT).

Utilizing distributed ledger technology in traditional financial markets could potentially lead to savings upwards of $100 billion annually, according to findings from the Global Financial Markets Association (GFMA). new report Insights from the GFMA shed light on the need for regulators to acknowledge the benefits of DLT more seriously.

In a report published on May 16, the lobbying group for traditional finance, together with Boston Consulting Group and other partners, encouraged authorities and traditional financial players to dive deeper into the advantages that DLT might offer.

A blockchain serves as a decentralized ledger that meticulously logs and monitors transactions and digital data. Adam Farkas, the CEO of GFMA, highlighted that DLT has the potential to foster growth and innovation. innovation It's important not to overlook the existing regulatory frameworks and resilience measures, as they are crucial to the overall function of financial markets.

The report highlighted that by adopting distributed ledgers, a staggering $100 billion could be saved in collateral management within the derivatives and lending sectors; furthermore, employing smart contracts could potentially cut operational costs by $20 billion annually, enhancing the efficiency of clearing and settlement processes.

About DLT

Areas such as clearing and settling transactions stand to benefit the most from DLT, also highlighting asset custody and servicing as significant beneficiaries.

While the impact of this technology in primary markets and secondary trading is deemed less pronounced, the advent of tokenization could yield improved risk management and a more robust framework, according to Boston Consulting Group research. Euroclear, a major European securities clearing firm with assets totaling approximately $40.9 trillion, has been actively pursuing DLT integration for its settlement processes, announcing on March 23 its commitment to modernizing its financial operations with DLT. liquidity A national blockchain training center is in the works, aiming to equip half a million professionals with the necessary skills. Nevertheless, it's still premature to fully incorporate DLT into the current financial frameworks. In November 2022, the Australian Securities Exchange embarked on a project to refresh its 25-year-old clearing and settlement systems using DLT, which generated a significant financial gap of $170 million.

Citi's latest report projects that the global market for tokenized blockchain-based assets could balloon to an astonishing $5 trillion by the year 2030. abandoned its plans Bain & Company Teams Up with OpenAI to Deploy its AI Solutions to Clients

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