More than ten years after the Global Financial Crisis (GFC), the world is engulfed in a pandemic that arguably has triggered the worst recession since the Great Depression. In the aftermath of the GFC, sweeping regulatory reforms were introduced with a view to enhancing financial stability. In accordance with the notion of the regulatory since-curve, the implementation phase has seen a significant watering down and many commentators think that the reforms have not gone far enough.
In the face of the COVID-19 crisis, the governments and central banks of the most affected countries have swiftly launched vast fiscal and monetary stimulus and rescue packages. No longer perceived as the problem, financial firms play an important role in channeling the government/central bank-provided liquidity to small and medium sized enterprises. However, depending on the pace of the economic recovery, financial institutions will inevitably face an increasing level of losses putting pressure on their solvency status, which, over time, is likely to result in renewed fragility in the financial sector.
In two workshops, we seek to explore whether and to what extent technological innovation, in particular distributed ledger technology (DLT) and Blockchain, may contribute to a more competitive, inclusive and stable financial system in a post-COVID-19 world, whilst at the same time potentially introducing new fragilities in various forms. As John Kenneth Galbraith has remarked: ‘A constant in the history of money is that every remedy is reliably a source of new abuse.’
To tackle these issues, an interdisciplinary approach is required that draws on the expertise of computer scientists, financial regulators, lawyers and financial market participants.
The workshops are part of the project The Too-Big-to-Fail Problem and the Blockchain Solution, generously funded by the British Academy in form of a British Academy Mid-Career Fellowship awarded to Professor Michael Anderson Schillig.
Please see below the recording of the first workshop: