The weight of the global economy on blockchain’s shoulders
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A new report claims that “blockchains can play a critical role in strengthening economic resilience while ensuring the global economy works to the benefit of all.” But what does that mean exactly?
Julie Maupin, a senior fellow at the Centre for International Governance Innovation (CIGI), wrote in a report titled The G20 Countries Should Engage with Blockchain Technologies to Build an Inclusive, Transparent, and Accountable Digital Economy for All that “blockchain technologies hold the key to building an inclusive global digital economy that is auditably secure and transparently accountable to the world’s citizens.”
The paper is included in G20’s Policy Briefs, which offer recommendations for a collection of areas, including climate policy and finance, forced migration and digitalization.
Blockchain: With or without?
According to Maupin, a world without blockchain —or at least the core focus areas— would lead to further fragmentation of the global economy. Other downsides could also be: undermining public trust in international economic institutions, and pushing the most cutting-edge blockchain developments into dark web deployments that are beyond the reach of government influence.
Emerging technologies should go first
She opined that “the G20 must take concrete steps to harness the tremendous opportunities and minimize the risks of blockchain technologies in this critical incubative period of their development.”
By doing so, the organization can respond to two major geopolitical challenges:
- The prevailing Zeitgeist of citizens’ “increasing scepticism towards cross-border trade and open markets” and the public’s concomitant distrust in the institutions that structure our global economy.
- The “risk of an increasing fragmentation of the international economic order” brought about by rising anti-globalization sentiments.
This technology can also solve core G20 concerns [financial inclusion, for example] and strengthen economic resiliency, Maupin added.
The G20 should facilitate active experimentation within each of these core concerns.
Maupin claimed that there are two key existing G20 policy documents which guide the manner in which the G20 countries should adopt and implement the foregoing policy recommendations.
- The G20 Blueprint for Innovative Growth (2016), “highlight[s] the importance of inclusiveness to eradicate extreme poverty, reduce inequality and social exclusion and to bridge the digital divide.”
- The G20 New Industrial Revolution Action Plan (2016) recognizes that nascent technologies like blockchain imply “[n]ew industry and business models will be established and supersede conventional ones” and therefore enshrines the Multi-Stakeholder Communication Principle as its modus operandi.”
Read the entire paper here.
Good for business?
A recent report by Accenture titled Banking on Blockchain (co-written with top benchmarking firm McLagan, a business unit of Aon plc) claims that blockchain could offer investment banks “a lifeline.” The technology behind Bitcoin “could enable a progression from today’s multiple and sequential data reconciliation models to a much more efficient process in which reconciliation is an integral part of the transactional process.”
We estimate that investment banks spend around two-thirds of their IT budgets supporting legacy back-office infrastructure, plus $billions more each year on cost reduction initiatives.
Despite the obvious advantages, the authors of the report also emphasize that they are not suggesting “blockchain is a panacea to remedy all the ills of investment banking. For many use cases, conventional database structures or processes will achieve a similar outcome without the costs and challenges of a blockchain solution. Examples include internal automation, staff reduction and outsourcing/offshoring. However, there is compelling evidence that blockchain could radically reduce, if not entirely eliminate, many existing clearing and settlement processes.”