Smart contracts for the digital economy

Abstract

Smart contract technology is increasingly being seen as a way for the derivatives industry to realise operational efficiencies and cut costs. With this new technology potentially transforming how derivatives are executed and managed through the entire life cycle, it seems the derivatives market is on the cusp of significant modernisation. But this technology is at the relatively early stage of development, and there is still a lack of agreement on what a smart contract is, what role it can play in the derivatives market and how it might interact with existing legal standards and documentation. This paper analyses whether a smart contract could ultimately replace an existing legal contract in its entirety, or whether it will only automate the execution of certain actions specified within the contract?