Trump Passes on a Bitcoiner, Picks World Bank Critic For Top Job
Any speculation that a bitcoiner, Mohamed El-Erian, might be picked to lead the World Bank has been put to rest after President Donald Trump nominated David Malpass (pictured) for World Bank president.
According to Bloomberg, El-Erian was being considered, with some crypto media wondering whether one of the top international job would be given to a bitcoiner.
But Malpass was a frontrunner and will now go to a vote of World Bank board members where they will decide whether to approve his nomination with the United States having some 16% of the votes.
Malpass himself has made no comment on bitcoin as far as we can see, but the 62 year old might have some influence over this space if he is appointed president of the World Bank.
That’s because the institution has considerable sway over poorer countries which receive loans from the bank if they are unable to raise funds on the market.
The bank funds these loans by itself selling bonds. Last summer, it raised $110 million through the blockchain in what they described as the world’s first global blockchain bond.
In addition, the World Banks’ department of the International Development Association (IDA) raises funds from member state pledges which are then loaned out at interest.
The new nominee wants reforms, including a narrowing of lending to only poorer countries. In particular, he argues China is too rich to receive loans or other aid from the World Bank.
In nominating him, Trump said Malpass will ensure bank’s dollars “are spent effectively and wisely, serve American interests and defend American values.”
Washington Consensus with Crypto Efficiency?
The World Bank, which is run and owned by national governments, is an unfamiliar institution for most millennials. Alongside a number of other international organizations, it was established after the second world war with the aim of aiding poorer nations and to increase standards for midle-income countries so that they can access finance from global markets.
In addition it has a number of initiatives, including aid for climate change adaptation and a food security program.
The loans come with numerous conditions that implement the Washington Consensus. John Williamson, an economist from the Institute for International Economics, describes the consensus as including ten broad sets of relatively specific policy recommendations:
As poor countries and developing nations generally lack a banking infrastructure which would greatly assist in implementing many of these points, crypto blockchain technology might be useful in some circumstances.
For example, access to global markets for government bonds, and even World Bank bonds, is generally provided by commercial banks.
Commercial banks basically buy the bond themselves, and then they sell it to ordinary investors or institutions.
The commercial banks therefore need to determine whether there is a market for the bond or whether they’ll be left holding the bag.
One can imagine that in some situations the bank can be too risk averse, potentially slowing down development as governments usually fund major infrastructure projects through loans to break up the cost into installments.
Tokenizing the bond in a trial to then sell it directly to global markets where the token itself is the bond might be one use case for blockchain tech as far as the World Bank is concerned.
Advising on how cryptos can be incorporated – especially where international remittance is concerned – within a WeChat Pay like digital app that deals with fiat transfers too, might also be one method of quickly raising standards.
The smart phone, in fact, might be one of the most important innovation in that regard as overnight every citizen or at least every village in even remote African regions can have a bank in their pocket.
Smartphones are now widespread as older versions become cheap enough for developing and even poor nations. Making the implementation of a digital banking system very feasible and pretty cheap.
Once you have the banking system, you can then take taxes straight out from payment, so providing funding for the government to build the necessary services.
Corruption is of course a very big problem, so blockchain transparency could assist there, but perhaps not as much as the other two options in the near future in any event because such transparency would depend on what is entered into the blockchain which could be incorrect information.
The best thing the 62 year old could do, therefore, is to hire coders or a tech consultancy to advise on how the digital revolution can play a key role in increasing living standards across the globe.
We would thus add point 11 to the Washington Consensus: Utilization of digital technology to provide modern financial services and to tap into global markets.
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