What Mechanisms Can Be Implemented on a Consortium Blockchain to Mitigate Systemic Risk?

To mitigate systemic risk, a consortium blockchain can implement several mechanisms. A shared, real-time ledger provides regulators and participants with a clear view of market-wide exposures, helping to identify risk concentrations.

Smart contracts can enforce risk controls, such as exposure limits and automated margin calls, which are executed without fail. Furthermore, a consortium can establish a default fund, managed by smart contracts, to handle member defaults in a transparent and predefined manner, thus containing the impact of a single failure.