World Bank says it must keep up with blockchain innovation
Jim Yong Kim, president of the World Bank, said this weekend that blockchain’s distributed ledger technology has “huge potential” and that the organisation must keep pace with such innovations.
Kim was speaking at the World Bank’s Annual Meeting, co-hosted by the International Monetary Fund (IMF) in Bali, Indonesia, and while giving short shrift to cryptocurrencies, he was enthusiastic about the technology that underpins them.
Addressing the twin issues of fighting poverty while boosting prosperity, Kim noted recent innovations in the technological world could help multinational organisations such as the World Bank and IMF that can help “leapfrog generations of bad practice”, generations that would take forever in terms of reducing corruption.
Indeed, the World Bank has already made moves to find applications for the blockchain, having recently partnered with Commonwealth Bank of Australia on the launch of a $73m two-year bond issue using distributed ledger technology.
“We talked about cryptocurrencies, but we think distributed ledger has huge potential and we issued the first blockchain bond in August, where we created, allocated, transferred and managed the entire bond through blockchain technology,” Kim said after the annual event.
Keeping up with change
While the blockchain bond was certainly an innovation, Kim admitted that the World Bank remained slow to absorb all the latest developments in financial technology.
“We at the World Bank Group have had to admit that we’re not keeping up with the latest developments and we’re not doing it in a way that would help our clients take advantage of the great things that are coming out,” Kim said.
The IMF, on the other hand, has been less enthusiastic about the rapid growth of the fintech sector. Christine Lagarde, managing director and chairman of the IMF, said at the weekend event countries must be awake to the threat of fintech’s use in moving money around illegally.
The fund warned in its annual World Economic Outlook last week that cybersecurity breaches and cyber attacks on critical financial infrastructure could represent the next systemic risk to the financial services.