PBOC Research Official : Blockchain will Play a Significant Role in Regtech
Sun Guofeng, director general of the People’s Bank of China’s research institute,pointed out at a blockchain-themed seminar that blockchain is one of the most important innovative technologies that stimulate fintech’s growth，the Xinhua-run Economic Information Daily reported on December 26.
He emphasized that we should separate blockchain technology from virtual currencies and ICO(Initial Coin Offering), and this technology could be used in multiple scenarios, among which RegTech is a significant one.
The senior Chinese researcher divides the fintech evolution into three stages: at the first stage, the introduction of new technologies leads to the arrival of fintech which features inclusive regulations, that is, encouraging innovation; At the second stage, ‘fake’ fintech startups have emerged along with the developmengt of financial technology. These kind of startups, in fact, still focus on traditional business, and even carry out some businesses purely for evading regulation. The second stage of supervision is characterized by “strong supervision”; As entered the third stage, technology and finance will be further integrated to reshape the financial landscape and better serve real economy. Regulation of this stage is marked by the use of RegTech to strengthen supervision.
He believed that blockchain’s disruptive features—decentralized, open, unaltered—-could be widely used in payment and settlement, credit checks, proof of stake and securities transactions, among others.
“Blockchains can also be applied in RegTech.China’s financial risks are partly derived from shadow banking. Leveraging on blockchain technology can change the process of submitting and generating traditional financial data so as to improve the authenticity of business data.What’s more,it empowers the regulatory authorities to generate regulatory data automatically and to form regulatory judgments.”Sun said.
He added that blockchain would play a critical role in RegTech in the future as it helped regulators effectively improve information transparency, while significantly reduce the cost of repeated construction of infrastructure, resulting in a safer, more timely and more stable financial regulatory system. Meanwhile, the timely and accurate basic information would relieve the watchdog from verifying the authenticity of information, enabling them to devote more energy to analyzing financial regulation status quo and judging systemic risks building up in the financial system .
While expressing the promising prospect of blockchain, Sun also put forward three questions around this technology: scalability, privacy protection , and upgrade in the repair mechanism. Therefore, he urged the public to actively explore blockchain application, while at the same time preventing financial risks.