The International Monetary Fund (IMF) and World Bank have set foot in the blockchain and cryptocurrency arena as they jointly launched a private blockchain and quasi-cryptocurrency, called “Learning Coin”, on Friday, April 12.
According to reports, the purpose of the new project is to help the international institutions better understand the emerging technology of digital assets that is slowly but surely disrupting the finance industry.
Mere a couple of days ago, Christine Legarde, General Manager of International Monetary Fund (IMF), stated that crypto is “clearly shaking the system” and steps must be taken for regulation of this space so that disruption in global economic stability can be stopped.
She went on CNBC and said;
I think the role of the disruptors and anything that is using distributed ledger technology, whether you call it crypto, assets, currencies, or whatever … that is clearly shaking the system.
The “Learning Coin” is dubbed as a quasi or supposed cryptocurrency because unlike Bitcoin or Ethereum it has no monetary value whatsoever and is therefore not exactly a real cryptocurrency. The Learning Coin application will instead serve as a “hub for knowledge” where blockchain and crypto related content like blogs, research, videos and presentations will be stored.
The Fund further added that the World Bank and IMF staff could actually earn Learning Coins upon achieving certain educational milestones. However, since they have no monetary or real value, the developers are still testing and working on how the staff can redeem their coins for some sort of rewards. This will help the staff learn firsthand how these virtual coins can be used in real life.
Since the Learning Coin app is just a prototype built to explore the new technology, it is not available to general public. The Washington-based agencies emphasized that the coin will be inaccessible for anyone or any entity outside the World Bank and the IMF.
The million dollar question here is why IMF and World Bank, two of the most powerful institutions, would launch a private blockchain or a quasi-cryptocurrency, for that matter. As it turns out, there are a number of reasons behind this move: firstly, to keep up with the rapidly growing technology. IMF Managing Director Christine Lagarde believes that blockchain innovators are shaking up the traditional financial world and this impacts all the necessary players in the system.
The development of crypto-assets and distributed ledger technology is evolving rapidly, as is the amount of information (both neutral and vested) surrounding it.
The complexities of the blockchain and crypto world have formed a growing knowledge gap between the legislators, policymakers, economists and the technology. This project aims to bridge that gap and form a strong knowledge base of the technology among the parties.
Moreover, this project aims to help the staff to familiarize themselves with the whole concept of digital assets. According to the report, the development of the Learning Coin played an important role in helping the staff become familiar with theories like the distributed ledgers that are key to crypto assets, smart contracts and their possible use cases, decentralization and its potential to enhance transparency.
Additionally, the World Bank and IMF reportedly might use blockchain to launch smart contracts, fight money laundering and enhance the overall level of transparency in the near future.
World Bank’s Blockchain Endeavors
The World Bank and blockhain share a complicated bond. Prior to the launch of the Learning Coin, the institution had some pretty skeptic views on the technology. Earlier in March, during the 20th Annual Conference on Land and Poverty in Washington, D.C., Aanchal Anand, a Land Administration Specialist in the bank’s Global Land and Geospatial Unit, said very candidly that the general notion of blockchain being a magical bullet that can save the rainforest or solve world hunger is not true.
Skepticism aside, the World Bank cannot just turn a blind eye to blockchain completely as it too has realized the technology’s unlimited potential. In fact, last year in August, the World Bank launched a blockchain operated debt instrument dubbed “bond-i”.
Bond-i is the world’s first bond to be created, allocated, transferred and managed through its lifecycle using distributed ledger technology. The idea was welcomed with open arms by investors as it managed to raise A$110 million. The reason behind launching this project was fairly simple: blockchain could significantly streamline the process of issuing bonds which has been heavily reliant on physical paperwork for the past 200 years.
In February 2018, J.P. Morgan, one of the largest bank of the United States also announced its very own blockchain-based cryptocurrency, by the name of JPM Coin. The World Bank also launched a blockchain lab back in July 2017 as part of a bid to pilot projects that can improve governance and social outcomes in developing countries around the world.
The fact that major institutions like IMF and World Bank are exploring the realm of blockchain is a huge step in the direction of mass adoption.