IMF and World Bank Both See Potential in Blockchain Technology
The IMF and the World Bank at annual meeting discussed the impact of diverges in emerging economies in a context of low growth, and the current geopolitical issues around the world, the subjects of disruptive technologies and financial innovations were also brought up for discussion.
The IMF and the World Bank annual meeting took place last weekend in Washington, DC. Among the topics discussed, which included the normalization of the US Fed monetary policy, the impact of diverges in emerging economies in a context of low growth, and the current geopolitical issues around the world, the subjects of disruptive technologies and financial innovations were also brought up for discussion.
According to a report from the Mexican bank Banorte on the meeting, "digital cryptocurrencies," notably Bitcoin, raised much skepticism among the committee for both their use as stores of value, as well as global currencies.
Among the skeptics, American businessman and investor Warren Buffett warned to "stay away from Bitcoin," that it was a "mirage," while American business executive and current chairman, president and CEO of JPMorgan Chase Jamie Dimon, said Bitcoin "is a terrible store of value."
Overall, none of the attendees believed Bitcoin or any altcoin, will take over the world as the next global currency. Further, some compared the technology to what happened with Esperanto, a constructed international auxiliary language created in the late 19th century by Polish physician Leyzer Leyvi Zamengov, which failed to fulfill its initial purpose of being a language of international communication.
However, the attendees agreed the digital protocol underlying cryptocurrencies, is where lays the real potential. Therefore, the Bitcoin protocol "might be an initial 'layer' in which platforms or even full-blown payment systems can be built upon." The report states:
"The main nicety is that this protocol conducts real-time operations, in which value is transmitted, instead of the current use of corresponding banking, representing a liability for one of the counterparties, in both, simple money transfers and FX operations."
These criteria are said to be consequently reducing transaction costs and counter-party risks. Overall, the committee showcased a rather constructive assessment of the technology, notably regarding its operational aspects, which could be used for building more secure and cheaper-to-use payments systems.
Standard Chartered Bank group chief executive, and panelist at the meeting Peter Sands, qualified the block chain technology as "a true computational innovation that could be very powerful in the context of financial inclusion," reported CoinDesk. Sand also added he was confident about the potential of the technology to reform titled property:
"You could transfer title to the thing you're buying... If you’re buying a car or a house, your transfer of title using this kind of distributed ledger-type technology could be massively more efficient than the system at the moment. [...]That’s where I think actually some of these block chain technologies could be really powerful."
The IMF and the World Bank gather each autumn for the "Annual Meetings of the International Monetary Fund and the World Bank Group," and each spring for the "Spring Meetings of the International Monetary Fund and the World Bank Group."
Back in April, the two organizations met with the Digital Asset Transfer Authority (DATA), a community of digital currency-related that aims to "to outline opportunities, to better understanding, and to unite the industry around sensible outcomes for development of digital asset technologies.”
New York State superintendent of Financial Services Benjamin Lawsky, and vice president of the Federal Reserve Bank of St. Louis, David Andolfatto, were among the attendee's list. The meeting was the occasion to discuss digital currency-related topics, including regulation and potential guidelines for Bitcoin exchanges.
Did you enjoy this article? You may also be interested in reading these ones: