BPI: Monitoring proposal for blockchain-based financial markets

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An economist at the Bank for International Settlements (BPI) has recently proposed new ways to monitor financial risks through the use of distributed recording technology (DLT).

Un work document written by Raphael Auer, an economist at the BPI, suggests that blockchain and DLT technology, along with asset tokenization, provide new ways for control agencies to monitor financial risks.

According to Auer, blockchain technology allows the decentralized trade of asset-backed tokens, as well as the resolution of financial problems through smart self-execution contracts.

Technology also opens up the possibility for "integrated supervision," a regulatory framework that allows regulators to automatically monitor a tokenized market by reading the distributed record, "thereby reducing the need for companies to actively collect, verify and deliver data." .

However, for this to happen, regulators need to ensure that the registered market data is reliable. To this end, Auer proposes a design for a "distributed and authorized market in which the" blocks "of financial contracts are verified by third parties".

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