London needs to embrace blockchain post-Brexit for the next 'Big Bang moment'

Kay Swinburne MEP: Britain must "embrace" blockchain post-Brexit to help the City "stay relevant."
Blockchain, a distributed ledger technology, was first developed to underpin bitcoin but now has potential in everything from mainstream finance to healthcare.
Swinburne, a senior Tory MEP, calls for the FCA and the Bank of England to embrace the new technology.

LONDON — An influential British MEP believes the UK needs to embrace blockchain technology post-Brexit in order to help the City of London "stay relevant."

Kay Swinburne MEP told Business Insider: "For me, this whole distributed ledger technology, we have to embrace it.

"The UK post-Brexit: how does the City of London stay relevant? The City of London stays relevant by suddenly becoming the proponents of the new technologies and not just patching existing systems to make them work post-Brexit, actually leapfrogging."

Blockchain, also known as distributed ledger technology, is the name for the next-generation database technology first developed to underpin the digital currency bitcoin.

The technology allows for the creation of a shared database, meaning all parties see the same version. It uses complex cryptography and group authentication to police the editing of the ledger. The technology has almost endless applications for other industries and processes that involve a trusted middleman or central authority — everything from recording births to trading securities.

Banks and trading businesses are particularly keen to adopt blockchain, as its inbuilt security and trust checks can cut out middlemen in processes like settlement and clearing. This, in turn, cuts down costs. Santander estimated in a 2015 report that the technology could save banks as much as $20 billion.

Kay Swinburne MEP. "We have a unique opportunity to actually make our markets more efficient using the new platforms," Conservative MEP Swinburne told BI.

She compared it the potential of distributed ledger technology in the UK to the "Big Bang" of the 1980s, when a wave of financial deregulation led to an explosion of activity in the City.

"I am not a natural risk taker but I genuinely think this is the UK’s opportunity, as it did with the Big Bang moment in the 1980s, this is it’s moment to leapfrog."

Swinburne is one of the UK's most senior MEPs and has been called the "architect of Mifid II" for her central role in drafting the European financial regulation, which came into force in January. A former banker, she is the most senior British legislator on the EU's influential Economic and Monetary Committee.

"I want to see not just the FCA, I want to see the Bank of England, embrace [distributed ledger technology]," Swinburne said. "I want them to be the first central bank to open up and say, maybe the monetary policy of the future doesn’t involve issuing notes all the time, maybe it involves other alternative payment systems."

The FCA is developing several proof of concepts involving blockchain technology and Bank of England Governor Mark Carney has said the technology has the potential to "transform" payments, clearing, and settlement.

Swinburne said: "We’ve got proof of concept of DLT in so many areas. It now needs to be scaled up. We’ve got to take some risks. We have the opportunity to really make a difference in a way that I don’t think Europe post-Brexit is going to be able to do.

"We need to start opening up our minds as to how we leapfrog. The conservative status quo is now too risky with Brexit. We need to leapfrog to stay relevant. The City needs to stay relevant."

Swinburne voted to remain in the EU but has since said she would now vote to leave because she is concerned about the union becoming "a more centralised system."

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