In its most recent policy brief on the potential of blockchain technology, the G20 has been encouraged to corral their central banks into a blockchain consortium and build “an inclusive, transparent and accountable digital economy for all”.
According to the new report by the international economic forum, by acting on the democratizing qualities inherent in the blockchain distributed ledger technology, G20 countries can nix major geopolitical challenges - most presciently the popular resistance building against cross-border trade, the historic cynicism toward global financial institutions and the risk of increasing fragmentation of the global economy caused by anti-globalization sentiment.
At the core of the brief by Julie Maupin, senior fellow at the Max Planck Institute for Comparative Public Law & International Law at the Centre for International Governance Innovation (CIGI), was the contention that the G20 could initiate a "central banks blockchain consortium", for the universal adaption of potential blockchain-based national fiat currencies.
Maupin said the G20 must take “decisive steps to harness this technology in service of its policy goals” across focus areas as diverse as economic resilience and financial inclusion to sustainable development and women’s empowerment.
“Failure to do so risks further fragmenting the global economy, undermining public trust in international economic institutions, and pushing the most cutting-edge Blockchain developments into dark web deployments that are beyond the reach of government influence,” Maupin said.
According to the eight-page brief, by embracing the blockchains’ “socially beneficial properties” (and minimizing its potential downside risks), the G20 governments can lay the foundation for "a just, prosperous, and truly shared global economy".
At the heart of this road map, according to Maupin, is the G20-fueled “Central Banks Blockchain Consortium” a collaborative analytical body that would pick apart the monetary and fiscal policy implications of the advent of the cryptocurrency era.
There is certainly growing expertise and engagement with distributed ledger technology throughout global central banks – including the Reserve bank of Australia, Bank of England, US Federal Reserve, the German Bundesbank, People’s Bank of China, European Central Bank and Bank of Japan – with all recently disclosing their intensive internal research engagement with the technology.
Medcraft’s seat at the table
The G20 brief comes as the Australian Securities and Investments Commission (ASIC) says it expected the range of potential uses of blockchain-style distributed ledger technology to grow “exponentially”.
Speaking at the regulator’s annual forum in Sydney this week, ASIC chairperson Greg Medcraft (pictured) said the commission would publish an “information sheet” to fast track discussions with stakeholders as the technology continues to evolve.
Last week, in a largely unreported appointment, Medcraft joined the IMF’s High Level Advisory Group on finech to help IMF deepen its understanding of fintech and DLT, a position that will give the country’s top regulator insights into the global disbursement of regulatory regimes and financial technologies.
Maupin sees the G20 leading a research group to identify which of those regulatory regimes can be accelerated through the use of blockchain, as well as driving a 'sandbox' to test the most promising blockchain use cases - from seeding financial services for the unbanked, alternative clean energy financing and digital identity privacy and management services.
The report notes that blockchains are already being deployed to replace single points of financial system failure with decentralized market structures. Certainly, financial technologies have a distinct role to play also in financial inclusion to previously unbanked populations, with Australian fintech firms exploring those potentialities in regional beta-testing scenarios.
According to Maupin, the technologies are poised to improve the oversight of international markets by supplying policymakers with real-time data on financial flows and asset class risks.
Meanwhile, blockchains are rapidly becoming the bedrock of what Medcraft called the “Fourth Industrial Revolution” – introducing provenance tracking, identity management, and digital scarcity into global supply chain management while also enabling the near real-time trade and settlement of both tangible and intangible assets over secure, distributed networks.