A very wise and thoughtful economist wrote,
“The state protects the individual’s life, health and property against violent or fraudulent aggression…..creates and preserves the environment in which the market economy can safely operate………Each man is free; nobody is subject to a despot. Of his own accord the individual integrates himself into the cooperative system. The market directs him and reveals to him in what way he can best promote his own welfare as well as that of other people.”
Timeless wisdom from–Ludwig von Mises; Human Action
When this was written, in the 1940s, we could not lift from poverty those living in an environment that did not honour and protect the individual. Economies were local and controlled by the country in which one lived. This is no longer so.
Over 2 billion people live in extreme poverty. None have access to traditional banking.
The IMF Managing Director, Christine Lagarde, spoke with CNBC about developments in financial technologies, specifically about cryptocurrencies such as Bitcoin. She noted that distributed ledger technologies have the capability to make the banking system more exclusive. She said,
“I think of women in some of the developing countries that have to carry cash around and who are at risk of violence and all the rest of it, if they can use their cell phone and operate in a much more discrete and efficient way, it would be terrific.”
A precedent setting activity, M-PESA, has clearly demonstrated the robust impact of mobile banking technology on the economy of a formerly struggling nation, including extension of benefits to the “bottom of the pyramid”- the most remote, rural areas.
“Mobile phone technology has in a few years of its existence demonstrated how financial inclusion can be leapfrogged on a major scale and in a short time span using appropriate technological platforms.”- Njungunua Ndung’u, Governor, Central Bank of KenyaOmwansa, Tonny K.. Money, Real Quick: The story of M-PESA (Guardian Shorts Book 22) Guardian Books. Kindle Edition. Access to M-PESA has allowed an estimated 194,000 households to move out of extreme poverty.
The Bill and Melinda Gates Foundation just launched a system using distributed ledger technology, Mojaloop, which represents a major mechanism for building “inclusive payment models to benefit the world’s poor.” This system, in concert with the expertise of a host of major financial and mobile tech organizations will open the door to financial services for many more of the remaining 2 billion.
I believe we can, by providing economic opportunity to those in such environments, pave the way for health, education, cross border economic opportunity and ultimately power to shift into the hands of the oppressed. This is the potential of an international, borderless, currency not controlled by government banking. This is the power of a bank that is carried on your cell phone and transacts across the world without intermediates. Just as the developing world bypassed traditional landline infrastructure and embraced cell phones, it will bypass traditional banks and embrace the digital wallet. The sheer numbers of the unbanked, when empowered, will change the face of banking, levelling the playing field and redefining the financial universe.
“Every life has equal value.” -The Bill and Melinda Gates Foundation
We cannot imagine or predict the value to the world, to each of us, that will ensue as we release billions from poverty to think, teach, create, design, invent and produce. So many minds! We have everything to gain by working toward the goal of eradicating world poverty, facilitating world health, and enhancing education around the world. Now we have powerful tools to bring directly to individuals.