World bank cryptocurrency

world bank cryptocurrency

* Besides, the G20 and many countries have raised the need and significance of a crypto regulatory framework along with the development of a. SAN SALVADOR, June 16 (Reuters) - The World Bank said on Wednesday it could not assist El Salvador's bitcoin implementation given. The World Bank, meanwhile, has made clear its preference for. WHAT WILL THE NEXT BITCOIN BE

I mean, to simplify. This is really something where you can have the benefit of digital payment and, at the same time, not the risk of the volatility of the asset, which has been one of the major problem with the Bitcoin and equivalent. Some of them are called global schedule coins, which would be, somehow, a source of finance that you can use across the world.

A couple of years ago, you may remember Facebook mentioned Libra as a way to do that. In the in between, a lot of discussion are taking place with the regulators on, can it work? But, I think that created the potential to think about that and there is a lot of discussion at the moment on these global stablecoins. Then, you have the current development on what is called Central Bank Digital Currency. Where it's actually the public sector, the central banks, that then provide the digital money, to simplify.

Therefore, that will lose a direct claim on the Central Bank. So, you don't have private money, but public money. That's the way, the equivalent of your dollar, but in your cell phone and issued by a central bank. There is a lot of work going on at the moment, with some central bank are being already adopted this and others looking at it.

Thinking about it, creating pilots, et cetera. So, the big question is, how can we then mobilize that for cross-border payment and integrate the systems amount? Instead of having to go through the whole system of financial institution and what we call cross-bank and banking relationship, then you can make it [inaudible ] directly. At least, that's the potential going forward and some of the tests at the moment.

Imagine, with each intermediary taking their fee in the transaction, if suddenly you can reduce the number and directly transact, you don't have to wait. It reduces the cost, there is more transparency. Obviously, that's going to be a bit more complicated than it, but fundamentally, this is the discussion in front of us and what people are looking at and testing as we speak. I want to move a little to climate, which is something that's really on our minds lately.

With the recent COP26, what are the climate implications, if we're seeing greater uptake of cryptocurrencies? It's a complicated discussion. I mean, as you know, there is that old discussion on the Bitcoin mining and the fact that it takes a lot of energy. Therefore the net element, in terms of climate impact, is not totally clear. Some partners have said that they've actually find a way to reduce the energy footprint, somehow, of Bitcoin or equivalent.

So, this is an ongoing debate. At the moment, from what I understand, the jury is still out as to whether it's possible to do it that way. Now, if you think about it, more digital money generally, so at the moment, in most countries, if you want to open a bank account, you need to go to the bank. You need to take your car, you need to face people. Imagine that you can do that all remotely, without having to travel, without having to take your car or the bus, et cetera.

I'm not sure that anyone has actually done the calculation of how it would reduce the carbon footprint, but clearly, there is a potential there to reduce the physical transportation element. As well as all the elements related to keeping this in terms of real-world paper and destruction of that paper, et cetera.

We are looking at that at the moment and my colleagues working on payment system are trying to identify whether we can have a kind of assessment of the benefit. But clearly, the ability to go digital and to reduce the physical face-to-face has a benefit in terms of carbon footprint.

That mining mechanism is the part that brings about the climate footprint. Are there any other pitfalls with using? Did I get that right, or did I get it-. You're right on the Bitcoin, because the production of it, if you'll go Central Bank Digital Currency, for instance, you don't have the [inaudible ] because you don't need to mine.

It's just the assurance by the Central Bank of the virtual equivalent of your dollar or Euro or whatever other currency in your pocket. I think that's less the case, but for the mining of Bitcoin, that's been one of the element of concern, on the carbon footprint and energy footprint.

Beyond climate change, is there other pitfalls that people should be aware of when it comes to cryptocurrency? There are different elements. One is data. There is a huge potential, because you have more data, more information and therefore, you can have better credit profile of the customers, for instance. You have a couple of fintech companies that are beginning to look at patterns of consumption.

Now, people go online and they're able to fine tune your credit profile thanks to that. That means, potentially, not just through the credit registry, based on your past financial industry, but your broader history. You will be able to fine tune more and probably thanks to that, reduce the cost of finance for some people who don't have that history. Therefore, you can begin a credit entry in much simpler way, by looking at the rest. The data usage is very fundamental, as you see with what Amazon is doing, to some extent.

Now, the flip side of that is that, obviously, you are more exposed. People have more information about you, but there is an element around data governance and using data in ways that can really be beneficial. Linked to that is obviously privacy.

You need to make sure that there is the environment on that. That the last demand is around integrity. The abuse of the financial sector for money laundering or things like that. On the one end, it's much easier to trace the transaction when you are in the digital world. So, you don't have people coming with a luggage of cash, et cetera. I mean, that's also part of the image that we have in mind.

Trustability can be better, but sometimes, the identification of who's behind the transaction in the first place is very complicated. That's actually part of the discussion on the one end, to make sure that there is that knowledge and that information. At the same time, not creating impediment for people to be able to access. In most countries, people don't have ID. How you open a transaction account without an ID? We have ways to do that [inaudible ] for small transaction, you actually don't need and make it easier for financial inclusion.

When it gets more sophisticated, then you can ask for identification, but then you would benefit, because you have more trustability. That trustability, that identity. Those issues, I mean, that comes down to the architecture of the different currencies or the different assets? That comes to the architecture of the different assets. CBDC, there are lots of option in terms of design and the way that's designed. What's the role of the traditional banking sector?

What's the role of the new service provider? Is fundamental. You need the infrastructure in terms of payment system and open payments system beyond the traditional players. Then, digital ID is going to be absolutely essential. What we see is that, in the countries where there is a development of digital ID, it makes it easier for even the most vulnerable to have access to the financial sector.

Just one last question. As somebody who spends a lot of time thinking about these technologies, where do you see the most potential, going forward? First off, in answer to your question, I'm not on the technology side. I know the technology colleagues, including the Innovation Lab colleagues at the World Bank love that, because they see a lot of potential from a technological standpoint.

I'm more on the financial sector angle, so what we are seeing is, really, a development of products and ability to transact that are completely different. Are fundamentally transforming the financial system.

I think we are just beginning to understand the potential of that, potentially in terms of opportunities, potential in terms of risk. I really think that cross-border payment is the next agenda. The next frontier. There is actually a huge work program that has been announced by the G20 and the Financial Stability Board. So, really, the financial sector community is very mobilized.

Lots of potential, lots of opportunities, but this is something on which everybody's been trying to work for years. We have not yet cracked that nut. Because of what we said earlier on remittances, that could have a major development impact, in addition to facilitate the trade, et cetera. But, from a development perspective, that would really make the difference. As always, we would love your feedback.

If you'd like to get in touch with us, send us an email at thedevelopmentpodcast worldbank. Who We Are News podcast. Podcast December 22, Email Print. Tweet Share Share LinkedIn. Stumble Upon. Raka Banerjee: Today, crypto, from trade to remittances, digital currencies to smart contracts, how digital technologies could revolutionize development. Jean Pesme: It's actually transforming finance.

It's really a major fundamental change. Raka Banerjee: We're picking apart the hope from the hype and analyzing the promises and pitfalls of crypto technologies. Jean Pesme: I mean, all of us need to be concerned about potential cyber attacks on our banks, because that information is super private. Paul Blake: All of that and more over the next few minutes, but first, let's go back to some basics on crypto.

Raka Banerjee: Yeah, and there are a lot of them. Paul Blake: So, let's try to wrap our head around it, at least broadly, in five minutes or so. Raka Banerjee: No, it isn't. Raka Banerjee: It comes from the fact that some of these technologies use similar mathematical formulas as encryption technologies. Paul Blake: Right. But, blockchain, what's that? Raka Banerjee: This is a bit abstract, but bear with me. Paul Blake: Okay. So that is kind of abstract, but I think I'm following. Go on.

Raka Banerjee: Maybe the most well-known use of blockchain technology today is with cryptocurrencies. Paul Blake: So, just to make sure I'm understanding, blockchain technology underpins cryptocurrencies, but there are many different types of cryptocurrencies and different types of crypto technologies?

Raka Banerjee: Yeah, exactly. Raka Banerjee: Those tokens, like these coins, are not issued by a government and they're not backed by the full faith and credit of a government. Raka Banerjee: These are not issued by a government, but their value is linked to a government-backed currency or a basket of assets.

Are they out there in the wild and why don't I have any? Raka Banerjee: Not really. Raka Banerjee: Interestingly, they found early uptake in the Caribbean, with eight of the nine countries that have launched CBDCs are located there. Paul Blake: That's pretty fascinating. Paul Blake: But this blockchain tech, it's my much more than these virtual currencies, right? Raka Banerjee: Yeah, definitely. Raka Banerjee: You could also see it used to facilitate cross-border remittance payments.

Paul Blake: Well, crypto tech or blockchain tech, whatever you want to call it, it is really fascinating. Raka Banerjee: Let's get more now on how crypto technologies have the potential to boost international development work.

Paul Blake: Joining us now here in Washington, D. Raka Banerjee: Jean, thank you so much for being here. Jean Pesme: So, I'm going to focus essentially on the financial sector, but for the financial sector, it's actually transforming finance. Jean Pesme: That, obviously, from a broader development perspective, blockchain can do much more.

Jean Pesme: Different way to assess creditors, so it's really a fundamental change in ways that can provide lots of opportunities. Paul Blake: You mentioned some of the applications there, cross-border payments is another. Jean Pesme: First, we are going to talk about cross-border remittances. Jean Pesme: Clearly, there is a potential for disruption there. It's a very huge amount of money- Paul Blake: And important for development. Jean Pesme: Very important for development.

Imagine you cut the cost of sending that by two, that means the beneficiary families have more to spend for their basic needs [crosstalk ] Raka Banerjee: Right, you've got more money going into their pockets directly, if you're cutting down on the fees.

Jean Pesme: Exactly. Raka Banerjee: How far are we right now from bringing down those fees? Is that happening right now? Jean Pesme: First, this is part of the system of development goals. Jean Pesme: So, the more players you have, the more competition you have. Jean Pesme: If, now, you can go to other service provider, then there will be more competition.

Jean Pesme: This is where digital can also provide more incentive and facilitate, somehow, the competition from the customer perspective. Jean Pesme: We make up that concern on anonymity with the crypto assets, but they also benefit in the sense that you can trace the flow of money much more easily. Raka Banerjee: Got it. Jean Pesme: When we think about merchandise trade, we tend to think about the physical movement of container.

Jean Pesme: You have 20 to 30 different parties, bits of data. Jean Pesme: Now, the next element is [inaudible ] of information between countries. Jean Pesme: Then, you can have elements of trade documentation and the portfolio about the trade that makes it much easier to do custom declaration and custom clearance. Paul Blake: I want to talk to you about cryptocurrencies. Jean Pesme: I mean, in most countries, naturally, you can now buy your coffee with your cell phone.

Jean Pesme: I think that's the part, also, where there is such a need and also new providers being able to come into the system that you are seeing this kind of innovation. Jean Pesme: Is it more a speculative asset, or can it facilitate mechanism of payment? Jean Pesme: This is really something where you can have the benefit of digital payment and, at the same time, not the risk of the volatility of the asset, which has been one of the major problem with the Bitcoin and equivalent.

Jean Pesme: A couple of years ago, you may remember Facebook mentioned Libra as a way to do that. Jean Pesme: There is a lot of work going on at the moment, with some central bank are being already adopted this and others looking at it. Jean Pesme: Imagine, with each intermediary taking their fee in the transaction, if suddenly you can reduce the number and directly transact, you don't have to wait.

Raka Banerjee: I want to move a little to climate, which is something that's really on our minds lately. Jean Pesme: It's a complicated discussion. Jean Pesme: At the moment, from what I understand, the jury is still out as to whether it's possible to do it that way. Jean Pesme: I'm not sure that anyone has actually done the calculation of how it would reduce the carbon footprint, but clearly, there is a potential there to reduce the physical transportation element. Jean Pesme: We are looking at that at the moment and my colleagues working on payment system are trying to identify whether we can have a kind of assessment of the benefit.

Paul Blake: That mining mechanism is the part that brings about the climate footprint. Did I get that right, or did I get it- Jean Pesme: You're right on the Bitcoin, because the production of it, if you'll go Central Bank Digital Currency, for instance, you don't have the [inaudible ] because you don't need to mine.

Paul Blake: Beyond climate change, is there other pitfalls that people should be aware of when it comes to cryptocurrency? Jean Pesme: There are different elements. Jean Pesme: Now, people go online and they're able to fine tune your credit profile thanks to that. Jean Pesme: Therefore, you can begin a credit entry in much simpler way, by looking at the rest. Jean Pesme: Linked to that is obviously privacy.

Jean Pesme: On the one end, it's much easier to trace the transaction when you are in the digital world. Jean Pesme: That's actually part of the discussion on the one end, to make sure that there is that knowledge and that information. Jean Pesme: We have ways to do that [inaudible ] for small transaction, you actually don't need and make it easier for financial inclusion. Panel regressions across more than countries A central bank digital currency CBDC could well incorpo-rate options and features specifically designed to execute cross-border payments, with a view to reducing the ineffi-ciencies and rents discussed above by shortening the pay-ments value chain.

CBDC would have many of the same. A central bank digital currency CBDC could well incorporate options and features specifically designed to execute cross-border payments, with a view to reducing the inefficiencies and rents discussed above by shortening the payments value chain. This note on distributed ledger technology DLT and blockchains is part of a series of short notes that explore new trends and developments in Fintech and analyze their potential relevance for WBG activities.

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Central bank digital currencies could vastly improve today's international payments systems, according to a report by the World Bank, the International Monetary Fund and the Bank for International Settlements late last week.

Bitcoin creation explained That the last demand is around integrity. Not necessarily as the currency, but as the technology that secures and guarantees the transaction itself. What Is a Blockchain? Select your Category Query Suggestion. Blockchain Decentralized Finance DeFi. Paul Blake: That's pretty fascinating.
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