on the crypto
Digital finance, cryptocurrencies and the economy based on blockchain technology are conquering markets in developing countries unchallenged, say experts from the World Economic Forum in Davos.
Economists believe that, rather than going hand in hand with conventional banks and lenders, fintech operations and cryptocurrencies are booming in emerging markets.
Keyu Jin, professor of economics at the London School of Economics (LSE), said: “Digital services have actually complemented traditional ones, rather than interrupting them.
China is one of the main examples among developing countries that support some of the leading technologies in the fintech sector. And it is clear that this well-integrated system has helped to reach rural areas and has helped small business owners. "
Panel members discussed the ways in which technology is currently reshaping the global financial services sector.
Asian incentives
Developing economies, particularly in Asia, are increasingly looking for digital alternatives to traditional finance, trying to reach millions of unaffiliated individuals via smartphone and blockchain technology.
China is reportedly about to release its digital yuan, but it may even be anticipated by Cambodia.
The Central National Bank of Cambodia is working with a Japanese blockchain developer on a digital finance solution aimed specifically at that 70% -80% of the population that currently does not use banking services.
"Intrinsic conflict"
Katherine Garrett-Cox, CEO of Gulf International Bank and panel moderator, took note of the "intrinsic conflict" in the digital sector regarding the financial establishment, which is both highly regulated and controlled in its nature.
Jeremy Allaire, co-founder and CEO of Circle, the American company working on the USD stablecoin, believed that the world is now in an inflection point according to which the lenders "are finally reconsidering the very core of the financial system" .
The Circle chief said the experts were now "examining the very nature of the money" and observing how it is issued and distributed. Allaire said that the drivers of recent developments included "an alliance with some of the largest technology companies in the world".
He specifically referred to "a stablecoin project that will reach billions of people" - most likely Facebook's Libra. State-backed initiatives could also push digital tokens towards success, such as the "stable value cryptocurrency" that will be launched this year by China.
The panel bankers admitted that digital solutions are rapidly growing.
Government role
In the meantime, the panel also discussed regulation in the fintech sector. Allaire said:
“Regulators are taking action. I think that about technical innovation in the financial system there is this thought: how can we allow the same type of innovation process that has taken place in other Internet industries [such as retail, transport, media and communication […] knowing that there will be negative externalities? "
