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CGD Policy Blogs

 

Initial Coin Offering (ICO) Mania and Its Implications for Technology-Led Social Enterprise

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.

Questioning the Role of Bitcoin for Financial Inclusion

As the price of bitcoin continues its dizzying rise—the currency briefly surpassed $19,000 yesterday—the already passionate debate about its role in the global economy has become even more heated. Over the last two months, prominent economists and financiers, including Citi CEO Jamie Dimon, former IMF Chief Economist Kenneth Rogoff, and former Chair of the US Federal Reserve Ben Bernanke have all voiced skepticism about the currency, triggering a loud response from the crypto community.  

Fragile Gains in a Fragile State: Economic Development in Afghanistan

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.

Making Blockchain Technology Work for Development: The Need for Data and Dialogue

While blockchain-based solutions have the potential to increase efficiency and improve outcomes dramatically in some use cases and more marginally (if at all) in others, key constraints must be resolved before blockchain technology can meet its full potential in this space. Overcoming these constraints will require increased dialogue between the development and technology communities and a stronger commitment to collecting and sharing data about what’s working and what isn’t in pilot projects that use the technology.

Demonetization Ushers in New Era of Digital Finance in India

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.

India Prime Minister Enacts Bold Policy to Cut Down on “Black Money”

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.

Global Efforts to Combat Financial Exclusion Forge Ahead

In November 2015, CGD published a report on the unintended consequences of anti-money laundering policies for poor countries, focusing on three groups: migrant workers who send remittances to their families, vulnerable people who are displaced by conflict or natural disasters and are in need of foreign assistance, and businesses that rely on cross-border trade. Since then, the international community has made several efforts to address the problem of financial exclusion created in part by these policies. 

Blockchain Tech Adoption Makes Progress, But Is Still No Magic Bullet for Global Financial Inclusion

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.