The World Economic Forum, held at Davos last week, represented a momentous shift in the attitude towards blockchain, digital currencies, and cryptocurrencies. The industry that has been bubbling under in the move to evolve the future of payments received a timely consideration from some of the world’s biggest financial institutions.
A new consortium was announced at the Forum with the understanding that digital currencies are a massive step towards financial inclusion – something known by cryptocurrency enthusiasts for some time – but that it will only come with proper regulation.
The consortium has thus been tasked with designing a framework for the governance of digital currencies, including stablecoins, and includes public-private cooperation across developed and high-growth markets.
A new financial opportunity
Looking deeper into the reasoning for this consortium, it is clear that the world of cryptocurrencies has opened the eyes of enterprises, regulators, and governments, to the power of a digital economy – especially one based on the blockchain which is also coming into its own.
Digital currencies are often cited as a tool for financial inclusion, however, they have remained outside of the realm of mass adoption due to a lack of good governance, according to some.
Now, with financial inclusion at the heart of the consortium, leading companies, financial institutions, government representatives, technical experts, academics, international organizations, NGOs and members of the Forum’s communities, will meet on a global level to discuss a new era of finance.
This consortium will focus on solutions for a fragmented regulatory system, looking to set up some standards that can be implemented globally. Efficiency, speed, interoperability, inclusivity and transparency will be at the heart of this initiative.
It will call for innovative regulatory approaches to achieve these goals and build trust. A set of guiding principles will be co-designed to support public and private actors exploring the opportunities that digital currencies present.
What is most impressive to see is the magnitude of some of the institutions and individuals who are not only backing the consortium but also backing the move towards digital currencies – that is fully regulated and standardized.
From leaders of the World Economic Forum to Central bankers from emerging nations like South Africa and Kenya, as well as influential central bankers from England and Singapore, and even David Marcus who is battling to get Facebook’s stablecoin, Libra, up and running
“Digital currency, a cross-cutting topic that requires input across sectors, functions, and geographies, is a key area of interest for the Forum,” said Klaus Schwab, Founder and Executive Chairman of the World Economic Forum. “Building on our long history of public-private cooperation, we hope that hosting this consortium will catalyse the conversations necessary to inform a robust framework of governance for global digital currencies.”
“Any evaluation of digital currencies should consider both policy and business objectives, as well as the unique circumstances that face different economies around the world, in order to fully evaluate their risks and benefits,” said Lesetja Kganyago, Governor of the South African Reserve Bank. “Bringing together diverse perspectives through this consortium will allow for this holistic review. In order to achieve this, we need the public and private sector to collaborate.”
“While digital currencies offer wide possibilities, these have to be assessed against the fundamental objectives of economic advancement and shared prosperity,” said Patrick Ngugi Njoroge, Governor of the Central Bank of Kenya. “Global governance of the diverse initiatives provides greater assurance of this outcome.”
“Governance is the core pillar of any form of digital currency,” said Mark Carney, Governor of the Bank of England. “It is critical that any framework on digital currencies ensures security, efficiency and legitimacy of payments while ensuring fair and open competition. We welcome the World Economic Forum’s platform to help develop a robust governance framework for inclusion through digital currencies.”
“We are exploring the potential that properly-regulated digital currencies hold for cheaper and faster cross-border payments, financial inclusion, and rooting out illicit finance,” said Tharman Shanmugaratnam, Senior Minister and Chairman, Monetary Authority of Singapore. “This dialogue between public and private sector players is now essential, so we find the right roles for each in realizing this potential.”
“We welcome the dialogue the World Economic Forum is facilitating about digital currencies,” said David Marcus, Head of Calibra, Facebook, Libra Board Member. “We agree that good regulation is important for the success and safe adoption of digital currency platforms and are looking forward to continuing to engage in this constructive conversation.”
Doors to open for better cryptocurrencies?
This decision to include major enterprises, banks, governments and regulators into one massive consortium to drag digital currencies into the mainstream with a regulatory framework that works for all could represent the true birth of the industry.
Since Bitcoin was invested, cryptocurrency has been operating on the fringes while the mainstream has shown interest. Now, this consortium could allow for other big enterprises – of the likes of Facebook with Libra – to launch other similar projects.
More so, with this growing expansion and interest in cryptocurrency, the technology revolution could well be on its way and a new form of digital payment coming to the fore.