Chain CEO Adam Ludwin urges central bankers to embrace blockchain

Adam Ludwin, the CEO of blockchain infrastructure provider Chain, is calling on central bankers to get on board with distributed ledger technology, reported Bloomberg.

“You should be running toward this opportunity,” Ludwin said in a keynote speech last Wednesday at the International Conference on Policy Challenges for the Financial Sector at the Federal Reserve in Washington.

His audience included central bankers from 90 countries, including Federal Reserve Chair Janet Yellen, as well as representatives from the International Monetary Fund, World Bank and Bank for International Settlements.

Ludwin also said bankers should issue digital forms of traditional, fiat currency.

“The real golden opportunity, the thing you should be working toward, is central bank digital currency,” he told his audience, as reported by Bloomberg. The development of the Internet and microprocessors received critical government support. That’s where blockchain is now, Ludwin said. “At the infrastructure stage it’s almost always the government that plays a leading role as the creator or backer of the technology.”

The question bankers face is not how digital currencies can support the current financial system, but what role central banks choose to play, Ludwin said in his speech. He said they can administer the digital networks themselves, issue and hold digital assets, develop products and services to run on those networks or simply monitor them.

For example, the growth in leveraged credit products such as commercial paper, money market funds and repurchase agreements are a good fit to be moved to a blockchain, Ludwin said, noting “that’s were central banks have the least ability to direct the economy.” If banks and their clients conducted such transactions on a blockchain, it would provide central bankers new insight and transparency. That’s because every transaction on a blockchain is recorded, immutable and viewable by anyone on the network at any time, including regulators.

In an interview with Bloomberg, Ludwin said the conference was held in the Fed’s Eccles Building, whose walls bear framed currencies like the antique U.S. $10,000 bill. “We’re surrounded by these bearer instruments that have become art.”

Ludwin decided to demonstrate the power of digital during the presentation, taking out his phone and making a bitcoin donation to Wikipedia.

“That was probably the first time bitcoin was used from the Federal Reserve,” he said, adding that he sent a “Hamilton,” referring to the $10 bill. It was deliberate: Treasury Secretary Alexander Hamilton persuaded Congress to launch the First Bank of the United States in 1791.

Ludwin told Bloomberg central bankers asked “sharp” questions on his topic. “Their minds went not to challenge it, their minds went to ‘What does this mean?’” Asked how did Yellen seem to take it all in, Ludwin said: “She got it.”

Logo – Via press section of Chain’s website