Trend DLT and smart contracts improving financial efficiency under governance

Summary

In the short term, the report expects distributed ledger technology and programmable smart contracts to make the financial system more efficient and resilient. The reason given is their straightforward structure, but this depends on effective governance being in place. According to the report, distributed ledgers enable secure, transparent and decentralised finance at lower cost because intermediaries no longer have to take part in exchanges. The blockchain, the most common form, underpins cryptoassets such as Bitcoin, Ether and Tether. Blockchain technology, however, requires a high level of expertise to build and maintain, and weak digital literacy among businesses and regulators could hold back the UK's ability to benefit from it.