Antony Jenkins was asked:
What do you think about blockchain?
When you have a banking system, which is basically a set of intermediaries, what those intermediaries do at any point in time is they cluster risk. Now, itâ€™s not that the risk is created or destroyed. Itâ€™s simply clustered in one place. When itâ€™s clustered in one place, you then have to hold a lot of capital against the fact that this risk may crystalize one day. Classically in banking, we leave our money in our banking account, and the bank lends that money out to somebody. If the bank doesnâ€™t get repaid, that risk crystalizes, but we still want to get our money out, so the bank has to hold capital to buffer against that risk.
If you imagine a world in which weâ€™re all connected by some distributed ledger technology, thereâ€™s no need for those central counterparties. Thereâ€™s no need for the capital that sits in the middle, and all the friction that goes with moving in between those counterparties. You can imagine a world where you have essentially frictionless banking. You donâ€™t eliminate risk, because risk is always there. But you eliminate the clustering of risk and that capital behind the cluster and the things that go with it.