EBA spoke about the blockchain in the financial entities

The European Banking Authority (EBA) published this Friday the document which presents the advantages and disadvantages of the use of blockchain in financial institutions.

This body aims to determine the structural weaknesses that the European financial system can have, as well as find ways to solve them.

Technology is a tool that can increase the efficiency of the entities and also improve the ability to manage the budget. This will have many benefits in terms of the plans followed by central banks to prevent capital flight.

“A lack of adequate governance could have a negative impact that leads to operational and reputation risks,” explained the EBA with respect to the risks of using the blockchain.

Another disadvantage of using this technology is that it could create a dependency of external providers by financial institutions.

Likewise, an increase in operational risk could be generated due to the complexity and novelty of the technology, for which there is not enough personnel currently trained.

Finally, the EBA ensures that the balance of risks and benefits should be taken into account individually by each institution, so that they can decide whether or not to use the blockchain and the new financial technologies.

K. Tovar

Source: Ledgers Insights

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