Ravi Menon: Economic possibilities of blockchain technology Keynote address by Mr Ravi Menon, Managing Director of the Monetary Authority of Singapore, at the Global Blockchain Business Conference, Singapore, 9 October 2017. * * * Honourable Chief Minister Chandrababu Naidu Distinguished guests, ladies and gentlemen, good morning. Andhra Pradesh and Singapore I am delighted to be here in Andhra Pradesh – the land of the Tiruppati temple, Carnatic music, Kuchipudi dance, and of course, the charming sea town of Vishakapatnam. I am grateful to Chief Minister Chandrababu Naidu for his kind invitation to speak at this conference. Andhra Pradesh and Singapore share in common a modern outlook. We both believe in the value of innovation for economic growth and harnessing the power of technology for the common good. That Andhra Pradesh is organising a global conference on the topic of blockchains shows its progressive nature. It is also a tribute to the vision of Chief Minister Chandrababu Naidu, who has inspired an IT revolution in Andhra Pradesh. Little wonder that Andhra Pradesh and Singapore have forged good relations and have been working closely together. The Andhra Pradesh government has appointed a Singapore consortium to develop the new capital city of Amaravati. The Andhra Pradesh government and the Monetary Authority of Singapore (MAS) signed a FinTech cooperation agreement in October last year. A delegation of more than 10 FinTech startups from Singapore attended the FinTech Valley Vizag Spring Conference in March this year. Establishing trust in a decentralised way Trust underpins all economic transactions.

But the effect can be to prolong the economic pain for everyone by reducing spending, and therefore amplifying the effect on incomes and output in the economy. The evidence, across countries, recessions (and US states) is compelling: build-up of household debt means an economy is exposed to more severe recessions (Chart 1). Chart 1 Household debt growth in the boom and the economic severity of the subsequent bust: across US states, countries and time for GDP and unemployment  Source: David Aikman, Jonathan Bridges, Anil Kashyap and Caspar Siegert, ‘Would macroprudential regulation have prevented the last crisis?’, Bank of England Staff Working Paper No. 747, August 2018. Notes: State level household debt statistics (left hand panel) from Federal Reserve Bank of New York; GDP data from Bureau of Economic Analysis (BEA); unemployment data from Bureau of Labour Statistics. Change in household debt to GDP ratio from 2004 to 2007 on x-axis, economic performance from 2007 to 2010 on y-axis. International data (middle and right panels) uses Bridges et al. (2017) dataset: household debt data from Bank of International Settlements “Long series on total credit and domestic bank credit to the private non-financial sector”; real GDP and unemployment data from the OECD, the Global Financial Database and national statistics websites. Middle panel shows experience across 27 advanced economies in the Global Financial Crisis, using same dates as U.S. state panel. Right hand panel is for recession episodes in G10 countries from 1960 to 2004 (i.e. Great Recession not included).