In a speech, Lael Brainard says the Fed is "paying close attention" to DLT, recognising its potential to transform the way financial market participants transfer, store, and maintain ownership records of digitised assets.

Financial services firms around the world are rushing to test how they can use blockchain technology in everything from cross-border payments to trade finance to securities clearing and settlement. With most of the industry still on the proof-of-concept stage, carrying out simple experiments, Brainard says that full scale rollouts are still probably years away, although she notes that this may change.

With the industry in a particularly innovative period, she says firms need to stick to the guardrails that have been developed over many years, adding: "We expect the private sector to bear important responsibility for developing and deploying new financial technologies in a safe and sound manner, even as we all seek an innovative and efficient payment system over the long run."

Says the speech: "Like many new financial technologies, distributed ledgers could ameliorate or exacerbate traditional financial risks. What matters to us as policymakers and regulators is not only whether the migration to a new technological platform increases or reduces risks, but also whether risks are rendered more or less opaque, and how they are distributed among and between financial intermediaries and end users.

Brainard also used the speech to note that the new business models associated with blockchain might make the traditional US model of regulators licensing firms outmoded. The New York State Department of Financial Services' new BitLicense, and the fact that a distributed ledger company received Federal Reserve Bank of New York approval for participation in the National Settlement Service are examples of possible ways forward.

Meanwhile, the Fed will publishes its DLT research paper this year, summarising its findings and continue to talk to finance firms, technologists and academics.