Did market reformers miss the opportunity to establish a more secure technology infrastructure before the crisis of 2008?
By Dan Barnes
"To be sure, the benefits of
derivatives, both to individual institutions and to the
financial system and the economy as a whole, could be
diminished, and financial instability could result, if the
risks associated with their use are not managed effectively. Of
particular importance is the management of counterparty credit
Alan Greenspan, then chairman of
the Federal Reserve Bank of New York (The Fed), May 5
The industry challenges
that distributed ledger technologies might solve can be traced
back to an industry crisis that came to a head ten years ago.
At the time the derivatives industry was booming - according to
the Bank for International Settlements (BIS) the size of the
global over-the-counter (OTC) derivatives markets reached a
notional principal value of $221 trillion in June 2004 having
risen by 121% since 2001, far surpassing the 38% recorded over
the previous three years.
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