Economic conditions globally are not favourable for the larger part of the world. With a recession on the horizon, nations will need to innovative find ways to tackle a key aspect of their economy – debt settlement – especially developing nations.
The World Bank in a bid to offer help for the changing economic times needs to innovate how it serves nations around the world, Mark Suzman, CEO of the Bill & Melinda Gates Foundation, said at the World Economic Forum, 2023. He explained that while the current systems used by most financial institutions have performed over the years, the financial challenges of today’s society will require innovation.
Mark also stated that the blockchain technology stands out as a viable tool for financial institutions to adopt. Although crypto is seen as a risky venture, the infrastructure on which it is built, the blockchain, has a long-term gain for the planet.
He added that there are new financial systems and models created to help nations settle their debts in a precarious situation as is present today. An example cited by the CEO is the currently debt settlement between Zambia and China.
A new democratized financial system
Speaking further in the discussion on how financial institutions innovate under pressure, anchored by Steve Sedgwick, the Bill and Melinda Gates Foundation official said, “the world needs a democratized, interoperable payment system.” This new system, which is digitally engineered, will bring more prosperity to the world with a focus on the poorer nations.
Mark cited the process used to distribute palliative income to citizens during the COVID-19 pandemic as an example of how transforming the financial system of nations can make life easier for citizens. Therefore, there’s a need for a national and global interoperable payment system that gives both the big players and the small players access to global financial services.
Difficulty with scaling of digital solutions
Mark who supports the transformation of the current financial system revealed that a crucial challenge in the implementation of these systems is scale. It’s not as hard to build as it is to scale these solutions to billions of users around the world due of lack of foundational infrastructures on which to build the solutions.
That’s why at the Bill and Melinda Gates Foundation, there are investments made to help develop and scale such financial solutions, Mark added. The CEO also noted that digital identity is another solution that should be incorporated into DLT-based solutions. This will grant provide the necessary security needed for citizens as the interact with digital payment platforms and other related services.