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Moody's: Blockchain can bring benefits to the financial industry and beyond, given time

Blockchain technology has the potential to improve the efficiency and security of transactions and record keeping across a variety of mainstream processes and regulated industries. However, experts generally agree that wide implementation of the technology is still some time away, says Moody's Investors Service.

In a new report, Moody's found that many companies are assessing how blockchain technology could affect their businesses and identified over 120 ongoing projects among the issuers that it rates. These span investments and partnerships with start-ups to internal projects and industry collaborations.

Moody's said the technology has applications in sectors ranging from capital markets and trade finance, healthcare and energy, to government taxation. For instance, the technology could potentially be applied to capital markets to eliminate the need for reconciling various ledgers by providing a shared and synchronized blockchain among participants.

"There is significant enthusiasm for the potential of the technology, but there is still a limited track record of large-scale blockchain implementation in a regulated environment, and many hurdles lie ahead before we see widespread applications," said Robard Williams, Senior Vice President at Moody's.

Among the challenges are the compatibility of blockchain technology with existing systems, the need for the development of industry standards and questions around regulatory treatment of the technology.

However, Moody's believes that the efficiency benefits in terms of speed, cost, security and reliability, as well as the auditability of processes will continue to drive development and investments. Longer-term, credit implications for rated issuers will depend on whether the positives in terms of more streamlined processes and reduced costs outweigh the negatives in terms of the potential to create competitive pressure from incumbents and new entrants that improve processes by leveraging blockchain technology.

The report "Credit Strategy -- Blockchain Technology: Robust, Cost-effective Applications Key to Unlocking Blockchain's Potential Credit Benefits" can be viewed at

Mercredi 31 Août 2016