Category Archives: Herman Gref

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Ex-Russian Economics Minister Claims Crypto as the Right Model for Money Supply

Russia’s former Minister of Economics and Trade, Herman Gref, has spoken out in favour of cryptocurrencies and their transformational nature as a future threat to the financial sector’s status quo.

Gref, who was Russian Economics minister between 2000 and 2007 is CEO and Chairman of the Executive Board of the largest Russian bank Sberbank. In a recent forum, he suggested that over time centralised money supply models would give way to new innovations.

However, Gref did suggest that such change would take time and certainly wasn’t imminent, although he felt that blockchain adoption was a much nearer prospect. Cryptocurrency adoption would, in his view, take another decade before it could offer a challenge to current banking systems, commenting that, as yet“… it’s not likely that any state is ready to part with the centralised money supply model.”

Talking of DLT the ex-minister suggested that the significance of the new technology is starting to find its way into financial systems’ collective sub-consciousness as more applications for it are revealed each day:

“The technology is not ready now. When will it be ready? In my opinion, three to five years. If you ask me in five years, maybe I can say something more distinct about its place, but the potential is huge.”

Gref argued that over-regulation of the cryptocurrency space was a sure and certain way of stifling innovation, suggesting that instead, the technology needs time to develop and grow. It was also refreshing to hear that the CEO is putting his money where his mouth is and applying blockchain technologies to the state-owned financial service provider’s own future plans. In his words, in the aftermath of the hype of 2017, the industry can now benefit from a “balanced consideration and evaluation of this technology.”

It is encouraging to hear a major figure at the helm of a major state financial institution making no mention of money laundering, fraud or of the financing of illegal activity in connection with a discussion on the future of cryptocurrency.

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Blockchain Has 3-5 Years to Maturity, Russian Bank Executive

The CEO of Russia’s largest banking conglomerate, Sberbank has questioned whether governments will embrace new decentralized models while giving blockchain around 3-5 years before it is mature enough to be ready for mass adoption.

Despite Herman Gref saying that the nascent blockchain technology is not developed enough for proper use yet, he has faith in the ability of the underlying ideology of the technology to usher in much-needed changes in both commerce and communities.

Local news outlet RIA Novosti quotes Gref, ”the philosophy embodied in [blockchain] could drastically change approaches in many areas. Improving this technology could bring huge value both to business and society.”

He gave blockchain between 3 and 5 years to reach a level of maturity where it will be ”ready” for industry implementation.

His comments correlate with a recent poll of executives who claim that implementing blockchain in enterprises has been ”harder than expected.” They cited scalability as a significant part of the challenge, with close to half of poll respondents struggling to process high volumes of transactions on the blockchain network quickly.

Decentralized currency

Gref said that as he sees it, governments on a global scale do not look likely to accept any decentralized model of currency, such as cryptocurrencies like Bitcoin. However, he believes that in around 10 years opinions might change in favor of a decentralized money supply, although even this he says in an ”optimistic” time frame.

The CEO called on governments to find a middle ground in regulating cryptocurrencies in a manner that could prevent illicit activities, but also not stifle innovation or kill cryptocurrencies altogether. Any ban on crypto usage could also damage the blockchain industry, he said.

Russia-based Sberbank as an institution has taken a positive stance in both blockchain and cryptocurrencies. In June, Sberbank took the central bank’s ”regulatory sandbox” as an opportunity to begin testing options for investors looking for opportunities in cryptocurrency.

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