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Blockchain and Financial Market Innovation

Author

Listed:
  • Rebecca Lewis
  • John McPartland
  • Rajeev Ranjan

Abstract

Blockchain technology is likely to be a key source of future financial market innovation. It allows the creation of immutable records of transactions accessible by all participants in a network. A blockchain database is made up of a number of blocks “chained” together through a reference in each block to the previous block. Each block records one or more transactions, which are essentially changes in the listed owner of assets. New blocks are added to the existing chain through a consensus mechanism in which members of the blockchain network confirm transactions as valid. While all are in the early stages of development, there are many promising applications of blockchain technology in financial markets. This paper seeks to give the reader an overview of what the technology is, how it works, and some potential applications for and challenges posed by blockchain technology.

Suggested Citation

  • Rebecca Lewis & John McPartland & Rajeev Ranjan, 2017. "Blockchain and Financial Market Innovation," Policy Discussion Paper Series 93559, Federal Reserve Bank of Chicago.
    • Handle: RePEc:fip:fedhpd:93559
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    Citations

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    Cited by:

    1. Randy Priem, 2020. "Distributed ledger technology for securities clearing and settlement: benefits, risks, and regulatory implications," Financial Innovation, Springer;Southwestern University of Finance and Economics, vol. 6(1), pages 1-25, December.
    2. Yi-Hsiang Lu & Ching-Chiang Yeh & Yu-Mei Kuo, 2024. "Exploring the critical factors affecting the adoption of blockchain: Taiwan’s banking industry," Financial Innovation, Springer;Southwestern University of Finance and Economics, vol. 10(1), pages 1-25, December.
    3. Chang, Victor & Baudier, Patricia & Zhang, Hui & Xu, Qianwen & Zhang, Jingqi & Arami, Mitra, 2020. "How Blockchain can impact financial services – The overview, challenges and recommendations from expert interviewees," Technological Forecasting and Social Change, Elsevier, vol. 158(C).
    4. Bai, Chunguang & Zhu, Qingyun & Sarkis, Joseph, 2021. "Joint blockchain service vendor-platform selection using social network relationships: A multi-provider multi-user decision perspective," International Journal of Production Economics, Elsevier, vol. 238(C).
    5. Mathieu Lesueur-Cazé & Laurent Bironneau & Thierry Morvan, 2021. "L'émergence des blockchain au sein des chaînes logistiques : apports conceptuels de la théorie des coûts de transaction," Post-Print hal-04084181, HAL.
    6. Morteza Alaeddini & Philippe Madiès & Paul J. Reaidy & Julie Dugdale, 2023. "Interbank money market concerns and actors’ strategies—A systematic review of 21st century literature," Journal of Economic Surveys, Wiley Blackwell, vol. 37(2), pages 573-654, April.
    7. Chunyi Lu & Zhuoqi Teng & Yu Gao & Renhong Wu & Md. Alamgir Hossain & Yuantao Fang, 2022. "Analysis of Early Warning of RMB Exchange Rate Fluctuation and Value at Risk Measurement Based on Deep Learning," Computational Economics, Springer;Society for Computational Economics, vol. 59(4), pages 1501-1524, April.

    More about this item

    Keywords

    Blockchain; Cryptocurrency; Financial Market;
    All these keywords.

    JEL classification:

    • D53 - Microeconomics - - General Equilibrium and Disequilibrium - - - Financial Markets
    • G32 - Financial Economics - - Corporate Finance and Governance - - - Financing Policy; Financial Risk and Risk Management; Capital and Ownership Structure; Value of Firms; Goodwill
    • Q55 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Environmental Economics: Technological Innovation

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