John Cunliff: “Using blockchain for settlements is too problematic”

The Deputy Governor of the Bank of England considers it inappropriate to use blockchain technology for trading and financial settlements, as this involves many risks.

This issue was raised by Jon Cunliffe at a conference organized by the Association of European Financial Markets (AFME). Using the latest technology for payments and settlements will not be able to provide the same level of security as the traditional financial system, the official says. Instant settlements mean that cash and securities should be available already at the time of the transaction. Therefore, it is not clear how blockchain-based platforms can be used alongside existing technologies, Cunliff doubts:

“Now there is simply no time to identify or correct the errors that can arise when introducing blockchain into the financial sector. In addition, we do not need to conduct instant settlements in international markets.”

However, many companies do not agree with Cunliff’s opinion, as stock and bond transactions are settled within approximately two business days. There is a risk that significant market fluctuations may occur in the interim period. So, a few months ago, the Nigerian Stock Exchange NGX announced that it plans to integrate blockchain by next year to conduct fast and secure transactions in the stock market.

John Cunliffe is suspicious not only of blockchain, but also of cryptocurrencies. Earlier, he compared them with the dot-com boom, so he suggested regulating the crypto industry by analogy with traditional finance.