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Michael Pisa is a policy fellow at the Center for Global Development, where his work focuses on how digitalization is shaping economic development. He is currently overseeing a project on how governments can use and regulate the use of data in a way that supports innovation, growth, and development while protecting individuals against abuse. Before joining CGD, Pisa served as a senior advisor to the Under Secretary for International Affairs at the US Treasury Department, where he helped organize and inform the Obama Administration’s efforts to support financial inclusion abroad. In earlier roles, he served as deputy director of Treasury’s Office of International Banking, and acting US financial attaché in Afghanistan. Pisa received a PhD in political science from the University of California, San Diego.
A growing number of humanitarian aid organizations operating in conflict zones are having trouble finding banks willing to work with them. We attended an international stakeholder dialogue on ensuring financial services for nonprofit organizations, and offer our preliminary thoughts here.
One of the bubblier aspects of the recent enthusiasm for all things blockchain has been the rise in popularity of initial coin offerings (ICOs), also known as token sales. By design, the acronym calls to mind the more traditional fundraising model of initial public offerings (IPOs), in which companies sell equity stakes to investors. With ICOs however, companies use blockchain technology to issue digital assets (usually referred to as tokens or coins) to investors rather than equity stakes. Another key difference—at least for the time being—is that ICOs are virtually unregulated. In fact, many of the advantages ICOs have over more traditional fundraising platforms derive from their unregulated status.
When NATO forces entered Afghanistan following the attacks of September 11, 2001, much of the country’s infrastructure, as well as its public institutions and underlying social fabric, had been destroyed by more than two and a half decades of conflict. At the time, landmines were still killing an average of 40 Afghans a day. Over the last 15 years, the international community, led by the United States, has invested massive resources in an attempt to transform Afghanistan into a more stable, modern, and prosperous country.
Distributed ledger technology, like Bitcoin’s blockchain, has the potential to transform cross-border payments, boost financial inclusion, and lessen the unintended consequences of anti-money laundering enforcement. Ripple, a fintech company using distributed ledger technology, made headlines recently, as did the appearance of a new cryptocurrency, Zcash. If you’ve gotten swept up in the enthusiasm around emerging financial technologies (fintech), you may think that the creaking system of international transfers in fiat currencies, and the problems of global financial exclusion associated with it, will soon come to an end. However, as we’ve said before, these innovations may not have as much of an impact as you expect.
Prime Minister Narendra Modi’s announced a bold measure on Wednesday to reduce the role of unaccounted for cash or “black money” in the country’s economy by “de-monetizing” higher-denomination currency notes. The new policy bans the use of 500 rupee and 1,000 rupee currency notes. While this measure may have the positive (though potentially temporary) effect of forcing illicit activity out of the regulated economy, the process could be disorderly, with the poorest members of society bearing the brunt of the disruption.
It has been more than 100 days since the Modi government declared that the two largest denomination notes in India—the 500 and 1000 rupee notes—would no longer be accepted as legal tender. The announcement of “demonetization” had an immediate and sweeping effect on Indian households, which were no longer allowed to use the notes (outside of a few narrow exceptions) and were given less than eight weeks to deposit or exchange them.
As the organization responsible for setting international standards on anti-money laundering and countering the financing of terrorism (AML/CFT), the Financial Action Task Force (FATF) has encouraged countries to design measures that protect the integrity of the financial system and support financial inclusion. But it has also received criticism that poor implementation of its standards can undermine financial access.