types of systems for the daily operation of the markets. given this backdrop, it is important to give promising technologies the serious consideration they merit, seek to understand their opportunities and risks, and actively engage in dialogue about their potential uses and evolution. at the federal reserve, we approach these issues from the perspective of policymakers safeguarding the public interest in safe and sound core banking institutions, financial stability, particularly as it pertains to the wholesale financial markets, and the security and efficiency of the payment system. distributed ledger technology was introduced for the transfer and record - keeping of bitcoin and other digital currencies. the essential advantage of the technology is that it provides a credible way to transfer an asset without the need for trust in intermediaries or counterparties, much like a physical cash transaction. to do that, a transfer process must be able to credibly confirm that a sender of an asset is the owner and has enough of the asset to make the transfer to the receiver. this requires a secure system or protocol to transfer assets ( the rails ), protection against assets being transferred twice ( the so - called double spend problem ), and an immutable record of asset ownership that can be automatically and securely updated ( the ledger ). the tokenization of digital assets can facilitate the transfer process. the genuinely innovative aspect of the technology combines a number of different core elements that support the transfer process and recordkeeping : • peer - to - peer networking and distributed data storage provide multiple copies of a single ledger across participants in the system so that all participants have a shared history of all transactions in the system. • cryptography, in the form of hashes and digital signatures, provides a secure way to initiate a transaction that helps verify ownership and the availability of the asset for transfer. • consensus algorithms provide a process for transactions to be confirmed and added to the single ledger. while bitcoin was originally associated with the concept of a universally available, publicly shared digital ledger technology without any central authority, many of the use cases that are bis central bankers ’ speeches currently under development and discussion rely on " permissioned " ledgers in which only permitted, known participants can validate transactions. these in turn can be either public or private in terms of access to the ledger. the resulting internet of value holds out the promise of addressing important frictions and reducing intermediation steps in the clearing and settlement process. for example, in crossborder payments, faster processing and reduced costs relative to

. so those are some of the key lessons we can draw from our experiences of the past few decades. in canada, we have tried to apply these lessons to our own economic situation. and i would argue that doing so has helped us handle economic shocks better recently than in the past. now, if we apply the principle of trust that is behind those lessons to our international financial institutions, we can get some idea of how these institutions might evolve to better work for the global economy. game theorists will tell you that the best results come when the players see each other ’ s behaviour and learn from it. put simply, actions speak louder than words. we have already seen the gatt evolve into the wto, which establishes the ground rules for international trade and calls to account those countries that are not playing by the rules. such an institution is essential if we are to reduce the frequency of “ lose - lose ” trade disputes i mentioned earlier. but for the wto to go further, as it should, it is clear that progress needs to be made in the areas of greatest interest to the poorer nations. after all, the current round of talks is supposed to be the “ development round. ” so it is incumbent on us in the developed world to “ do the right thing, ” and overcome domestic political difficulties to open our markets in areas such as agriculture and textiles. recently, we have seen the imf take steps to strengthen its surveillance function. these steps should be supported. countries should strive to meet the highest standards for data dissemination and should welcome assessments of their economies and financial systems. only when all the players have complete trust in the numbers - whether they are part of a nation ’ s economic statistics or a firm ’ s balance sheet - will investments be made most efficiently and effectively. the imf ’ s other role, for which it is perhaps better known, is as provider of emergency liquidity. by the end of the 1990s, the fund had increasingly found itself providing financial assistance many times in excess of a country ’ s quota, in situations where sustainability, not a lack of liquidity, appeared to be the real issue. this is problematic, for a number of reasons. perhaps most importantly, when debtors or creditors presume that there will be large official bailouts, there is the possibility of “ moral hazard. ” this is a case where policy - makers have not provided the incentives for debtors and creditors to do the right thing. in recent years, the bank of canada