Jump to content
  • Colin Ng
    Colin Ng

    Sign in to follow this  

    Brexit, Blockchain and borders: Fantasy or Reality?

      Time to read: 3min

    In the run up to a pivotal moment in our country’s history, it’s only to be expected there will be a growing sense of urgency, political drama and blanket media and social media coverage. Brexit, with it’s all encompassing remit, is definitely living up to this.

     

    Time is running out
    Political jousting from all parties, including the now defunct UKIP, has been the norm since negotiations began last year, with new revelations taking the spotlight every week. Currently it’s Irish border backstop an issue which has been there from the beginning.  With less than six months to go before Brexit, the fact that it remains unresolved speaks volumes about the enduring complexity of this situation in itself.

     

    How do you solve a problem like the Irish border?

    The Irish border has become controversial. Both the UK and the EU do not want a ‘hard border’ dividing the island of Ireland for obvious reasons – peace, freedom of movement and a lucrative trading relationship.

     

    The Financial Times reported that Ireland has €65bn of annual trade with Britain. According to Parliament research papers, in 2016, the UK had a trade surplus of £12bn with Ireland – having a ‘hard border’ post Brexit may put a lot of this at stake.

     

    Theresa May’s Chequers plan proposes a new all-UK customs union with the EU to take effect if no other solution can be found. Michel Barnier, the EU negotiator rejected this proposal on the basis it undermines the principles of the existing EU Customs Union.

     

    To avoid a hard border, both sides need to agree a backstop in the event that an alternative longer term solution cannot be found. 

     

    The longer term solution

    The complexities of border trading have come into sharp focus. Both sides have put forward numerous proposals ranging. From staying in the Customs Union, to performing the customs checks away from the border, to technological solutions as suggested by the Chancellor of the Exchequer.

     

    Technology 
    Is Blockchain the way to solve this complex issue? This emerging technology underpins cryptocurrency transactions and offers a transparent and immutable record of the movement of goods from start to finish. This has great potential to enable an easy and objective way of applying checks and taxes for goods between the UK and the EU and removing/minimising the need for custom checks at or away from the border.

     

    Throwing in some ‘Smart Contracts’ into the mix (which are essentially codes in the Blockchain that executes an action when pre-defined conditions are met), we may have the future of an invisible customs border. But how far into the future are we talking about?

     

    Too much too soon?
    In an ideal world, this technology will be easily and readily accessible and maintained by all parties and businesses on either side. But in reality, we are more than an 18-month transition period away from widespread understanding and application of Blockchain.  

     

    The flaws in the ability of Blockchain to solve the border issue have been argued by many.  It’s an incredibly uneven playing field too. Small to medium sized businesses may find it less accessible than larger firms, and as it is not yet a globally accepted and trusted technology there will be resistance due to a lack of understanding and the necessary regulations required to ensure it is robust.

     

    While Blockchain does not address some of the key political questions of whose Rule Book will be applied in Northern Ireland and to what extent it applies to the rest of the UK, there is potential but not in the short term.

    So, how do you solve a problem like the Irish border? 


    While all bets are off right now, and that may change in the immediate future, the race is on.

    • Like 3


    Sign in to follow this  

    Share this  

    Member Feedback



    Recommended Comments

    Luuk Jacobs

    Posted

    I think it is definitely not reality yet i.e. I can see the benefits of blockchain for data as they form one record of for example a trade of a security. With goods you can create also the associated data stream of the good (where it was produced, how it was shipped and any other step within the value chain till it reaches consumer. The big difference with goods is as I understand that this blockchain of data needs in some way to be associated with the unique good/product. Yes you can add small and cheap electronic devices to a good and create the link withers blackchin data. the challenge will be that this device remains connected to the unique good and is not prone to fraud .... Or am I missing something

    Share this comment


    Link to comment
    Share on other sites
    Share this  

    Become a member to read more and join the discussion

    Members can read and contribute to discussions

    Apply

    Register now for free access.

    Create your account

    Sign in

    Already a member? Sign in here.

    Sign In Now

  • Related Content

    • Jonathan Max
      By Jonathan Max
      Here is what is on mind; as the nonsense in parliament continues, are we merely between a rock and a hard place or to be coined 'hard Brexit'?
      Thoughts please
    • Jonathan Max
      By Jonathan Max
      ^ Vote in the poll above ^
       
      What does PM Boris Johnson Mean For Markets?
      WWW.MORNINGSTAR.CO.UK The new UK Prime Minister is expected to cut taxes and boost spending, but a lack of clarity on Brexit is holding back UK shares...  
      In theory....Boris' promise of lower taxes and increasing government spending could be good news for certain sectors such as housing. 
       
      The rather large elephant in the room however is a rather simplistic view of Brexit with a further extension or general election perhaps more likely than a 31 October departure....
       
    • Lydia Francis
      By Lydia Francis
      The following is a brief overview of the Treasury Select Committee meeting with the Financial Conduct Authority on 25th June 2019.
       

       
      Woodford Investment Management
      Unsurprisingly, the highly anticipated subject of Woodford Investment Management’s (WIM) shortcomings was the first topic for discussion at the meeting.
       
      The following observations are FSTP’s own view of the possible implications of Woodford Investment Management’s demise (we still don’t know what we don’t know and feel this subject has got some distance to run before all the facts are known).
       
      Key points:
      This failure of a retail fund will have serious and lasting impact on the operation of Asset Management in the UK.
      It throws into sharp relief the requirements falling out of the FCA’s Asset Management Market Study, in particular the need for independent Non-Executive Directors (NED) to challenge at Authorised Fund Manager (AFM) level and the production of qualitative value for money statements for all UK funds.
       
      From what we heard, we suspect there will be changes to the rules governing the liquidity of funds which retail investors are able to invest in. Andrew Bailey (FCA’s CEO) highlighted the Regulator’s view that European Union (EU) legislation has failed to manage retail funds. However, FSTP is concerned about an over reliance on principles based regulation (i.e. living within the ‘spirit of the rules’) in this area of Financial Services. Our clients operating in this arena are always looking for clarity and are generally welcoming of prescriptive rules in this area.
       
      Despite the introduction of formalised rules on product governance via MiFID II’s implementation in January 2018, distributor/manufacturer relationships and due diligence arrangements appear to be falling well short of regulatory expectations. We surmise that this is likely to result in a greater degree of regulatory intervention.
       
      The remuneration of individuals will attract the attention of the wider media and public as this situation develops. In this instance the Senior Managers and major beneficiaries of fees charged are one and the same. On the face of it there appears to be precious little individual accountability and a lack of challenge by others – the prevailing attitude seemingly being, “We pay ourselves what we think we are worth”. However, when that premise is built upon the investments of retail investors (bear in mind how much pension fund money will be tied up here) there has to be a day of reckoning. The message? If you are not providing retail investors with the service they have been led to expect, you cannot continue to reward yourselves so disproportionately. In short, Senior Managers must now be seen to be taking a more overt, moral stand on what is right and fair.
       
      Bailey was very strict to follow what he’s already told the media and the Committee’s Chair Nicky Morgan’s question, “Does anyone at the FCA read the papers and listen to what’s going on in the industry?” received a curt reply.
       
      The question, “Is it a failure of rules, or a failure of FCA supervision?” received a straight forward response of, “A failure of rules”, with Bailey’s reasoning being that whilst WIM has often had long periods of strong performance and long periods of poor performance, in this instance it is has not been able to save the situation, or the many reputations that have been tarnished as a result.
       
      The responsibilities of Link – the AFM for Woodford Funds – was centred on by Bailey who reiterated the regulatory contact that is now well publicised. The Committee observed that Link – previously owned by Capita – did not have a good record of managing Investment Managers on behalf of investors, given they were at the centre of the Arch Cru issues. (N.B. An article in the FT on 25 June alleges that the FCA pressured WIM into using the services of Link – as the largest provider of ACD services – in order for the necessary regulatory permissions to be granted).
       
      The relationship between WIM and Hargreaves Lansdown (HL) was raised by the Committee and it became obvious that once the immediate issue of fund liquidity is resolved, a review of the relationship between distributors and manufacturers will be instigated. (N.B at the Investment Association’s annual Policy Conference on Wednesday (26 June) Morgan remarked that the methodology behind Wealth 50’s composition raised questions as to whether customers are being treated fairly, after the TSC received a letter from HL confirming that its influential Wealth 50 list was not solely compiled on performance and that WIM’s inclusion on the list, despite under performance, was impacted by fee discounts offered to the platform).
       
      Justice for individuals
      A common theme throughout the discussion was ‘justice for individuals’. There is a high degree of dissatisfaction with the complexity of regulation and the consequent lack of clarity for consumers and practitioners alike, with the suggestion being made for the FCA to sort their impenetrable verbiage as most people don’t understand certain aspects such as T&Cs. This concept was understood by attendees from the FCA, who proceeded to mention that they do have enough resources to deal with all issues, and a review of systems and capabilities needs to be looked into.
       
      The FCA was forced to comment on its responsibilities under the Equality Act, bearing in mind TSC’s disappointment with the Regulator’s response to the report, ‘Consumers’ Access to Financial Services’, published by the Committee in May 2019. FCA’s Chairman, Charles Randell, stated that this is, “By no means us saying we don’t take our responsibility to consumer vulnerability very seriously”.
       
      Culture
      Culture was brought into question and Randell mentioned that the FCA’s focus is shifting to outcomes supported by principles. After some bad tempered exchanges Rushanara Ali, MP quipped, “Some would argue that you are not tough enough with bank bosses…are you too nice to bankers. Is it better to be feared, than liked or loved?” Bailey’s quick response of, “I don’t get up in the morning hoping people will love me”, will surely resonate for some time. He also added the FCA has 650 investigations currently underway, compared to the 250 when he took on the role.
       
      Brexit
      Of course, Brexit did rear its head and Bailey made frequent references throughout the discussion to the fact that regardless of the issues raised and the revisions suggested, Brexit will have a big impact on the FCA’s plans, such as the intended investment in data analytics. However there will be one area that can be assured of relatively no change post-Brexit, the Senior Managers & Certification Regime – it was made clear that the Regime will be implemented in its entirety.
       

       
      And finally....
       
      Overall, Randell (above left) and Bailey (above right) held their own against some intense questioning, but one wonders how much Bailey’s ambition to be the next Governor of the Bank of England tempered his responses.
       
      This was first published on the FTSP LLP blog.
    • Andy Milner
      By Andy Milner
      Interesting to read the information and response to Facebook's announcement last week.
       
      Even less hot headed commentators are saying that this could cause significant financial instability - if it gains traction.
       
       
      Facebook's Libra coin cryptocurrency, explained
      WWW.WIRED.CO.UK Facebook has finally revealed its cryptocurrency plans. Here's what you need to know about the Libra coin and the company's own Calibra wallet  
    • AlgoMe
      By AlgoMe
      Opportunities for asset management in a rapidly changing world.
       
      Join us at The Investment Association’s Annual Policy Conference 2019, the IA’s flagship event and one of the most influential platforms for debate about the future of asset management in the UK. This year's conference will focus on how the industry can capitalise on growth opportunities and overcome the imminent challenges in a rapidly changing world.
       
      High level speakers will provide key insights on how the asset management community can utilise technology and innovation in order to deliver better outcomes for consumers; attract the best talent pool in a dynamic world of work and maintain the UK financial services industry’s global influence in a post-Brexit era.
       
      https://www.theia.org/events-training/event?eventtemplate=168-the-ia-annual-policy-conference-2019&event=357
       
Debug
Debug info:
You may be asked to provide the below information to an AlgoMe administrator if you are facing any problems with the app:
appcms
modulepages
controllerpage
topics/forum ID52
page ID
PHP user agentCCBot/2.0 (https://commoncrawl.org/faq/)
ThemeAlgoMe v2.1.1a
Mobile appNO
Member ID
×

We use cookies to give you the best possible experience. If you continue, we’ll assume you are happy with this. For further information, see our Privacy Policy.