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.
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
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
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.
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.
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.