Banca IMI Researcher: Blockchain Won't Work if Banks Don't Change

The head of interest rate and credit models at Banca IMI has penned a new paper on blockchain tech.

AccessTimeIconApr 13, 2016 at 3:40 p.m. UTC
Updated Aug 18, 2021 at 4:45 p.m. UTC

Presented By Icon

Election 2024 coverage presented by

Stand with crypto

The head of interest rate and credit models at Banca IMI, an investment banking and capital markets subsidiary of Intesa Sanpaolo, has penned a new paper on blockchain technology.

Dedicated to spotlighting "real business cases" for the technology, Massimo Morini’s report argues that the lesson that should be learned from cryptocurrencies such as bitcoin is that traditional financial business model needs to be reformed, not just improved.

  • Bitcoin Mining in the U.S. Will Become 'a Lot More Decentralized': Core Scientific CEO
    13:18
    Bitcoin Mining in the U.S. Will Become 'a Lot More Decentralized': Core Scientific CEO
  • Binance to Discontinue Its Nigerian Naira Services After Government Scrutiny
    05:10
    Binance to Discontinue Its Nigerian Naira Services After Government Scrutiny
  • The first video of the year 2024
    04:07
    The first video of the year 2024
  • The last regression video of the year 3.67.0
    40:07
    The last regression video of the year 3.67.0
  • Morini writes:

    "One crucial misunderstanding here is the idea that blockchain technology can be exported to financial markets as they are to make them more efficient. This is meaningless; blockchain technology was created to change some trust-based business processes to make them less reliant on trust; without structural changes in this direction the best of blockchain technology is lost and just the inefficiencies are left."

    Morini goes on to argue that the financial industry must now be prepared to use trust in a "totally different way" and to reimagine existing business processes.

    Still, he acknowledges that its efficiencies are not needed in all markets, stating that the financial industry needs to emphasize use cases where risks are outweighed by the cost savings of having less reconciliation and faster settlement. Morini highlights over-the-counter derivatives as an instance of such a market, and analyzes both current and theoretical approaches to its design.

    Morini goes on to conclude that new business models based on distributed accounting and blockchain-based smart contracts will require additional regulatory clarity to scale, and that digital currencies or assets will need to be convertible with central bank accounts or at financial institutions.

    However, he suggested such changes could come quickly, concluding:

    "Legal and regulatory status could come earlier than expected if regulators see advantages in an architecture which is more transparent and creates less risk than most of the current solutions."

    For more details, read the full report here.

    Blueprint image via Shutterstock

    Disclosure

    Please note that our privacy policy, terms of use, cookies, and do not sell my personal information have been updated.

    CoinDesk is an award-winning media outlet that covers the cryptocurrency industry. Its journalists abide by a strict set of editorial policies. CoinDesk has adopted a set of principles aimed at ensuring the integrity, editorial independence and freedom from bias of its publications. CoinDesk is part of the Bullish group, which owns and invests in digital asset businesses and digital assets. CoinDesk employees, including journalists, may receive Bullish group equity-based compensation. Bullish was incubated by technology investor Block.one.


    Learn more about Consensus 2024, CoinDesk's longest-running and most influential event that brings together all sides of crypto, blockchain and Web3. Head to consensus.coindesk.com to register and buy your pass now.



    Read more about