Blockchain’s ‘Embedded Supervision’ Could Allow For Easier And Faster Compliance: BIS Economist
Raphael Auer, an important economist of the Bank for International Settlements (BIS), has recently devised a new low-cost solution for compliance in the financial market. The BIS, which is known as the central bank of all central banks, has an interest in the stability of the world economy and has been recently interested in the blockchain, too.
The Economist has called this new method “embedded supervision” and affirmed that this new way of being compliant is different from regulatory technology and supervisory technology. Auer is the principal economist of the monetary department of the BIS, so his paper will possibly be read by several important people in the market.
He affirmed on the paper that the current compliance procedures are very expensive. They include gathering all the data and delivering it to a lot of people. With embedded supervision, however, the cost of checking and distributing the data would be drastically lowered. This, he affirmed, would be important to keep the process cheap, private and trustworthy.
This new technique uses machine learning to monitor the industry and automate the process. This reduces the need that companies have to actively work on collecting and sending the data, as the algorithm will do most of the work for them. According to Auer, some countries such as Lithuania are already using this kind of solution.
It is also important to see that this is not the first time that Auer publishes a study on blockchain technology. He also published one related to proof of work algorithms and showed some of its inefficiencies.