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XINHUA NEWS SERVICE REPORTS FROM THE AFRICAN CONTINENT

 
 
Block chain technology could boost
Kenya’s financial sector: bankers 

NAIROBI (Xinhua) -- Block chain technology could boost Kenya’s financial sector, the banker’s lobby said on Thursday.

Jared Osoro, the director of research and policy at the kenya bankers association, told a crypto currency forum in Nairobi that the financial sector has a very centralized payment system for the settlement of transactions.

“Block chain technology presents a huge opportunity to increase efficiency of the payment system by reducing the duration of the payment cycle through the use of decentralized databases,” Osoro said.

Osoro said block chain could reduce the settlement time for securities transactions and with faster settlement, less money needs to be set aside to cover credit and settlement risks—just as collateral is not needed for a cash transaction.

He added that by using conventional systems, domestic transfers of money between banks are dependent on payment systems operated by central banks.

He observed that currently international transfers may involve other commercial banks between the sender’s and the receiver’s banks and these transactions can take several days.

The director of research and policy said that block chain technology can also have a positive impact on the trading of securities at the stock exchange.

Osoro said the settling of security exchange transactions under the current centralized payment system can take two to three days and requires additional players, including custodians, clearinghouses, and central securities depositories.

Morever, he added that until the transactions have been settled, financial institutions must set aside significant amounts of cash or other liquid assets to cover their positions if someone along the line does not pay.

Osoro observed that block-chain’s distributed ledgers system enables the verification and recording transactions on a peer-to-peer basis without a central authority.

“The result is that it has disrupted the basic tenet of payment systems which have one central, independent, and trusted bookkeeper that stores and validates all transactions which is a role often played by central banks,” he added.

He noted that with block chain technology everyone on the internet can validate and record transactions in their own copy of the ledger which improves the efficiency of the financial sector.

John Walubengo, member of the national task force on block chain and artificial intelligence, said block chain technology can also be used to secure transactions in the property sector by providing a digital, unforgettable proof of ownership along with a complete record of the chain of possession.

Walubengo noted that block chain is the underlying technology that has led to the development of cryptocurrencies.

“However, digital currencies are rapidly evolving and remain highly speculative financial assets with lots of risks due to their price volatility,” he said.

He added that cryptocurrencies are susceptible to money laundering and use for financing of terror activities due to their anonymous nature.

He said the more preferred policy direction is to develop a regulatory framework on the players on the cryptocurrency space rather than regulating the crypto currency itself.

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