##termediation of banks and even central banks, with state currencies being replaced by decentralized digital currencies. i see this as highly unlikely. people have not widely embraced digital currencies like bitcoin because these currencies cannot outshine the competition when it comes to serving as a store of value and a medium of exchange. national authorities will want to run their own monetary policy, and so the most that could happen is that national currencies and digital m. tompkins and a. olivares, “ clearing and settlement systems from around the world : a qualitative analysis, ” staff discussion paper no. 2016 – 14, bank of canada, 2016. max weber, one of the founders of modern sociology, described double - entry bookkeeping as an essential element of a modern economy in his 1904 book, the protestant ethic and the spirit of capitalism ( london : routledge, 2001 ). the economist joseph schumpeter makes a similar claim in his 1942 book, capitalism, socialism and democracy ( new york : harper perennial, 1975 ). bis central bankers ’ speeches currencies coexist. the bank of canada is studying digital currencies closely because of our role in issuing the nation ’ s currency and the implications these currencies could have for monetary policy and financial stability. like many other central banks, we are also researching the conceptual merits of issuing electronic money ourselves. 8 in fact, the potential for dlt is actually stronger for applications outside of digital currencies. we have seen test cases related to payments and post - trade processes, including the clearing and settlement of financial instruments such as repos, bonds, derivatives and equities. 9 one interesting application is in the syndicated loan market, where loans can take up to 20 days to go through the clearing and settlement process. dlt could reduce this to about seven days by providing a secure database that all participants share across a distributed private network. 10 looking at a single source of information would help reduce disagreements and make it easier to comply with legal requirements, speeding up the process at every stage. we may also see applications in areas such as trade finance and supply chains, where information cuts across jurisdictions and is difficult to centralize. one estimate suggests dlt could enable banks to save as much as $ 20 billion a year in global back - office costs if applied to cross - border payments, securities trading and regulatory compliance. 11 so it is easy to see why private

fintech will likely entail more of an evolution than a revolution. this is because incumbent financial institutions will adapt, new players will join the financial ecosystem and those with strong business models will survive. and the most fundamentally transformative technology so far – dlt – still has important hurdles to clear. innovations may solve some current problems, but they could also create new ones. the regulatory framework needs to adapt so that the door is not opened to unmanaged financial and operational risks, unchecked critical dependencies within our financial system and moral hazard. promoting financial stability is a core function of the bank of canada, and we take a system - wide perspective when we monitor risks. there is a lot of hard work ahead, and we need to get on with it. by working together, we can unlock the full promise of fintech to ensure a smooth evolution to tomorrow ’ s financial system – safe, sound and serving the people who rely on it. for a discussion of some possible effects, see d. andolfatto, “ monetary policy implications of blockchain technology, ” 1 may 2016. see, for example, w. e. weber, “ a bitcoin standard : lessons from the gold standard, ” staff working paper no. 2016 – 14, bank of canada, 2016 ; n. gandal and h. halaburda “ competition in the cryptocurrency market, ” staff working paper no. 2014 – 33, bank of canada, 2014 ; j. chiu and t. - n. wong, “ on the essentiality of e - money, ” staff working paper no. 2015 – 43, bank of canada, 2015. bis central bankers ’ speeches