Currencies

China capital curbs reflect buyer’s remorse over market reforms

Last year the reformist head of China’s central bank convinced his Communist party bosses to give market forces a bigger say in setting the renminbi’s daily “reference rate” against the US dollar. In return, Zhou Xiaochuan assured his more conservative party colleagues that the redback would finally secure coveted recognition as an official reserve currency […]

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Capital Markets

Mnuchin expected to be Trump’s Treasury secretary

Donald Trump has chosen Steven Mnuchin as his Treasury secretary, US media outlets reported on Tuesday, positioning the former Goldman Sachs banker to be the latest Wall Street veteran to receive a top administration post. Mr Mnuchin chairs both Dune Capital Management and Dune Entertainment Partners and has been a longtime business associate of Mr […]

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Banks

Financial system more vulnerable after Trump victory, says BoE

The US election outcome has “reinforced existing vulnerabilities” in the financial system, the Bank of England has warned, adding that the outlook for financial stability in the UK remains challenging. The BoE said on Wednesday that vulnerabilities that were already considered “elevated” have worsened since its last report on financial stability in July, in the […]

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Currencies

China stock market unfazed by falling renminbi

China’s renminbi slump has companies and individuals alike scrambling to move capital overseas, but it has not damped the enthusiasm of China’s equity investors. The Shanghai Composite, which tracks stocks on the mainland’s biggest exchange, has been gradually rising since May. That is the opposite of what happened in August 2015 after China’s surprise renminbi […]

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Financial

Hard-hit online lender CAN Capital makes executive changes

The biggest online lender to small businesses in the US has pulled down the shutters and put its top managers on a leave of absence, in the latest blow to an industry grappling with mounting fears over credit quality. Atlanta-based CAN Capital said on Tuesday that it had replaced a trio of senior executives, after […]

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Categorized | Banks, Financial

Accenture pioneers blockchain editing


Posted on September 19, 2016

Blockchain PICN©iStock

Accenture is courting controversy in the blockchain community by patenting a technique for editing information stored using the nascent technology in a move designed to make it more commercially viable.

By allowing a central administrator to amend or delete information stored on a blockchain, the consultancy says that its prototype — to be unveiled on Tuesday — will make the technology more attractive to the financial services industry.

    However, to many diehard fans of the technology underpinning the cryptocurrency bitcoin, the move threatens one of its founding principles: that a blockchain should be an immutable ledger of events without the need for a central authority.

    Blockchain technology is a complex set of algorithms and cryptography created to allow bitcoins to be traded and verified electronically over a widely distributed network of computers without a central ledger.

    Having initially been sceptical about it because of worries over fraud, big banks are now exploring how they can exploit the technology to speed up back-office settlement systems and free billions in capital tied up supporting trades on global markets.

    Richard Lumb, global head of financial services at Accenture, told the Financial Times that financial institutions and regulators would need a means to quickly correct errors on the blockchain before using it in securities markets. He gave the example of a “fat finger” trading error, or a trade assigned to the wrong counterparty.

    This prototype allows you expunge a record completely and we think that will be needed by corporates and regulators

    – Richard Lumb, Accenture

    “What we are talking about is adapting the blockchain to the corporate world and how do we make it pragmatic and useful for the financial services sector,” he said. “This prototype allows you expunge a record completely and we think that will be needed by corporates and regulators.”

    He drew a distinction between the need for an editing function on the invitation-only, “permissioned” blockchains that most banks are looking at establishing and the open, “permissionless” blockchains, such as bitcoin, where immutability is a key feature.

    Accenture and Giuseppe Ateniese, a professor at the Stevens Institute of Technology in New Jersey, have filed a patent for their technology in the US and Europe. It uses a technique called the “chameleon hash” to add a type of padlock between units in a blockchain that allows an administrator with the key to unlock and edit them.

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    Mr Lumb said the prototype would have provided a quick solution to the problem of how to recover the more than $50m stolen this year from the DAO, a crowdsourced venture capital fund using the Ether cryptocurrency.

    Blythe Masters, the former JPMorgan banker running Digital Asset Holdings, a blockchain specialist, has reviewed Accenture’s prototype. “Accenture’s approach is one of several options in the toolbox,” said Ms Masters. “But we think it is innovative and can strike the right balance between preserving blockchain’s key features and adapting it for real-world requirements within some permissioned systems.”

    After Mr Lumb wrote about the need to edit the blockchain in the New York Times last week, he has been criticised by several bitcoin supporters.

    Rocky wrote on the Crypto Hustle website: “The narrative of mutable private blockchains may be a symptom of financial institutions trying to use technology that was never built for them. In fact, the entire purpose of a blockchain is to circumvent those very institutions.”