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Future of the Banking Industry: Not without Blockchain

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If you are reading this article it means you are directly involved in the world of internet, this wonderful innovation has made it possible to connect everyone around the world directly. Through this innovation, the most promising new disrupt technologies have emerged for the future; Thus, the world of the blockchain. It is right to ask if the blockchain technology is a disruptive innovation?why is this novelle technology pacing slowly? This because the technology has only reached the required level of maturity wide mainstream use. What is a disrupting technology? It is the one that displays established technology and revolutionizes industry or ground shaking product that creates a completely new industry.

Today disruption, change and competition dictate the new paradigm for the banking industry, the financial institutions are no exception to the dynamics of industrial advancement which is driven by a fast-growing cost and great pressure. The implementation of the blockchain influences a lot of stakeholders in the financial services which include customers, employees, shareholders, investors, suppliers, industry associates, education institutions, government and non-governmental organizations. The banking world is involved in quick changes of digitalization, a potential cost and labor-savinginstrument, the prospects for the global finance market are so appealing that many major financial institutions are investing millions of dollars to research on what will be the best way to implement it.

The high-priced and opaque involvement of a third party in a transaction is the main problem that has been solved by the creation of the Blockchain due to one centralized shared database. In the past, it was impossible because every transaction requires communications between two single databases and thence another authorized controlling layer was needed. A simplified example of remittance can be used in espousing the concept lucidly, your relative who wants to Transfer money from another country to you, but before you receive the money it might take hours perhaps days for you to be able to receive the said money.

This is because transferring money involved some other parties who must authorize and control the transactions. That kind of frustrating and arduous processes get vaporized under Blockchain. The blockchain is a conceptually stored and synchronized distributed ledger that enables safe and transparent transaction across its networks. Every party involved has an identical copy of the shared ledger that is used to record and store information of the asset such as monies and properties.

Every change to the ledger will be synchronized and copied almost directly and transparently to the network where it will be seen as a block. The blocks are linked by cryptographically. An example to illustrate how this works is a situation where A wants to send money to B. The transaction is represented online in a block without a middleman. After the block is sent to every party on the network, approval is given by nodes to validate every transaction. If the transaction is approved the block will be added to the chain which revises the permanent and transparent records of the transactions Finally, the money will move from A to B and this is done in few minutes.

The blockchain network relies on the decentralized systems making it attainable for one person or group of persons to get in control of it. This safe and transparent transaction is facilitated through a decentralized system of the payment system which is allowed by the blockchain technology. Hereby staring in the era that extends beyond financial capital market, global payment, Corporate Governance social institutions and democratic participation Before Digitalization every action in the traditional banking industry had to be done manually. The industry has homogeneously surfaced centralized data stored and many intermediaries linked, this result to poor customer service through complex clearing processes, large amount manual inspections, leaking personal information and high costs.

The practice of keeping ledgers dates back in centuries, the blockchain story started in 2008 when an anonymous person or group of persons with pseudonym Satoshi Nakamoto published a white paper which proposes an Electronic peer to peer cash system called Bitcoin The blockchain was originally developed to support bitcoin but now it is used for more than thousand cryptocurrencies which resulted in a long trail effect.

The said technology can be used in so many sectors such as cybersecurity, supply chain, forecasting, networking, insurance, private transport, online storage, charity, voting, government, energy, online music, retails, health care, real estate, crowdfunding and identification As explained earlier the blockchain technology eliminates the involvement of a third party in transactions, or as prof. Anis H. Bajrektarevic coined: “Hegemony orhegemoney, a debtor empire/s’ fiat-papers.”

This chain is disrupting the banking industry as secured, cut cost, reduce delay and it is hugely efficient. Because it is decentralized and permissionless, it can lead to more disruptions in the financial sector, especially in payment clearing. Recently international organizations as well as developed countries and other countries have been paying close attention to the blockchain technology and are exploring their application in various fields.

For the financial sector, a number of the international financial institution have begun to formally plan for the blockchain technology since 2015, Goldman Sachs and other banking Giants have established their own blockchain laboratories working in close collaboration with the blockchain platforms.

Major Financial Institutions have a relatively positive attitude towards studying and improving the beck and processing efficiency of the blockchain technology and place a significant emphasis on its potential to reduce operational cost. In fact, IBM predicted that in four years sixty-six percent of the banking industry will have commercialized the blockchain at a scale. What are our indigenous Africa banks or Ghanaian own banks doing about this? Will they be part of the sixty-six percent as stated in the prediction above, it is high time we start giving opportunities to the IT department in the banking Industry to study this new technology so that we rise to be counted. Other opportunities with this new technology are a point to point payment, sharing credit data, smart contract all this using the blockchain technology.

This technology can drastically reduce the manual intervention of supply chain in finance and employ smart contract or digitized procedures that rely heavily on paperwork, numerous intermediaries, high risk of illegal transactions, high cost and low efficiency. As transaction occurs simultaneously each transaction will need to be verified by all the nodes in the entire network which is harmful to speed this impact will become especially needy when the nodes in the blockchain increase.

Despite the permission-less and self-govern nature of the blockchain the regulation and the actual implementation of a decentralized system are problems that remain to be resolved, however, it is important to note that any beneficiary technology is accompanied by risks, therefore, the blockchain regulation is necessary and should be considered earnestly. The Financial industry is highly sensitive to technological changes.

To keep up with these changes, banks must invest more into research on the blockchain not forgetting the development and empowerment of its staff in knowing more about this new technology. Although the blockchain technology is still unregulated and it could have its limitations, banks would have to improve their position in the industry.

The banks will try to improve their payment systems and overcome information communication resulting in a better customer experience hence the blockchain will become the core underline technology of the financial sector in the future.

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Economy

Without Reform on Social Protection, Kosovo’s Poorest and Most Vulnerable Will Be Left Behind

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There is growing alarm in Kosovo over rising prices for food, electricity, fuel, and firewood. This is not unwarranted. As elsewhere around the world, inflation is straining Kosovans’ budgets as incomes fail to keep pace. The situation is particularly dire for those already living in poverty or close to the poverty line since they spend a greater proportion of their income on food, energy bills, and home heating. Even small price increases threaten these households’ ability to meet basic needs.

That is where social protection programs like pensions, social assistance, and labor market programs play an important role in safeguarding the poorest and most vulnerable. Investing in well-functioning social protection systems is not just a moral imperative, it is smart economics. These programs are an investment in Kosovo’s future—essential to promoting healthier and better educated children and assisting young people in finding jobs. And when the poor are supported and given opportunities to improve their livelihoods, they are less likely to leave the country in search of a better life—helping keep valuable human capital and skills in Kosovo.

Is Kosovo’s social protection system responding well to the numerous crises—the war in Ukraine, the ongoing COVID-19 pandemic, and rising food and energy prices—facing the country? I would argue that much still needs to be done to better protect poor households. While Kosovo allocates a significant portion of its budget to social protection programs, their efficiency and redistributive impacts need improvement. To truly unlock these systems’ potential to support individuals, families, and communities in the face of economic shocks, they must be overhauled and redesigned.

The shortcomings in Kosovo’s social protection system are most apparent with the Social Assistance Scheme (SAS), which faced an 8.4% funding decrease between 2009 and 2019 after adjusting for inflation. The number of households receiving SAS benefits also dropped over roughly the same period, from more than 40,000 in 2005 to roughly 25,600 in 2020. This is partly driven by the fact that very poor households are often not SAS-eligible: of the poorest 20% of Kosovo’s population, only about one in four people receive SAS benefits. This is because the eligibility criteria are stringent and inflexible. Households must either have all adults defined as ‘dependent,’ meaning they are not required to work, or one adult must be registered as unemployed and caring for a child younger than five or an orphan under age 15. These same households must also have a low income, few assets, and poor living conditions. Such restrictive conditions likely encourage individuals to seek informal employment and exclude many working poor households and those with multiple children all over the age of five, which face higher expenses and needs.

As currently designed and despite the Government’s recent efforts to increase monthly stipends paid to beneficiaries, the SAS does not provide an adequate safety net for many poor families in Kosovo. This was especially apparent during the pandemic when SAS was unable to expand to reach households that had fallen into poverty or out of the labor market because of closures—necessitating the Government to rapidly launch a new program (Measure 15) to fill this gap.

Our analysis suggests that revising the SAS design by selecting beneficiary households on their poverty status only—considering both formal and informal income—would significantly increase its equity. This would enable the SAS to better mirror the country’s poverty profile and create a legal foundation to expand the scheme’s coverage when poverty dynamics in the country change and more budget resources are made available to finance poverty-targeted programs. Recent experience has also demonstrated the need to invest in the scheme’s delivery systems, including an integrated data management system to understand who is receiving which benefits. Payment systems must also be modernized to increase transparency and accountability over use of taxpayer funds. These reforms are a critical first step towards ensuring that the country’s poorest are protected today and into the future.

We stand ready to support the implementation of such efforts, starting with the strengthening of the current system through the World Bank-supported SAS Reform project, currently awaiting ratification in Parliament. This project will provide funding for investments in the SAS delivery systems and increase the value of SAS benefits to mitigate the economic impacts of the unfolding crises facing Kosovo.

The time to act is now. The costs of not doing so will be severe and long-lasting for the country’s future and will leave Kosovo’s poorest and most vulnerable behind.

Originally published in Albanian in Gazeta Express, via World Bank

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Comparison of the US and Chinese economy

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No doubt that the US is the largest economy, but, it is facing severe challenges and may not sustain this status forever. It is a natural cycle, nations work hard and rose to the peak and rule the other nations, sustain status quo for various duration, and then by one or another reason starts declining and pave ways for other nation to climb peak and become number one. It is an historic fact, which cannot be denied. One cannot win against the nature.

The US has been ruling the world after the World War II, and enjoyed supremacy, especially, after the disintegration of former USSR in 1991, the US enjoyed hegemony as a single superpower in the unipolar world for few decades.

However, the geopolitics has been changed, the US may not have realized, or not willing to accept it. But, the ground realities are evident and the US economy is falling sharply and losing its status of unique superpower and supremacy.

Below is the record of bankruptcy in US:-

1. Victoria’s Secret declared bankruptcy.

2. Zara closed 1,200 stores.

3. La Chapelle withdrew 4391 stores.

4. Chanel is discontinued.

5. Hermes is discontinued.

6. Patek Philippe discontinued production.

7. Rolex discontinued production.

8. The world’s luxury industry has crumbled.

9. Nike has a total of $23 billion US dollars preparing for the second stage of layoffs.

10. Gold’s gym filed for bankruptcy

11. The founder of Airbnb said that because of pandemic, 12 years of efforts were destroyed in 6 weeks.

12. Even Starbucks also announced to permanently close their 400 stores.

13. WeWork isn’t in a great spot either

14. Nissan Motor Co. may close down in USA

15. Biggest Car Rental Company (Hertz) filed for bankruptcy – they also own Thrifty and Dollar

16. The biggest Trucking company (Comcar) filed for bankruptcy – they have 4000 trucks

17. Oldest retail company (JC Penny) filed for bankruptcy – to be acquired by Amazon for pennies

18. The biggest investor in the world (Warren Buffet) lost $50B in the last 2 months

19. The biggest investment company in the world (BlackRock) is signaling disaster in the world economy – they manage over $7 Trillion

20. Biggest mall in America (Mall of America) stopped paying mortgage payments

21. Most reputable airline in the world (Emirates) laying off 30% of its employees

22. US Treasury printing trillions to try to keep the economy on life support

23. Estimated no. of retail stores closing in 2020 – 12,000 to 15,000. The following are big retailers that have announced closing: – J. Crew,  – Gap,  – Victoria’s Secret,  – Bath & Body Works,  – Forever 21, – Sears,  – Walgreens,  – GameStop,  – Pier 1 Imports,  – Nordstrom,  – Papyrus, – Chico’s,  – Destination Maternity,  – Modell’s,  – A.C. Moore, – Macy’s,  – Bose,  – Art Van Furniture,  – Olympia Sports,  – K Mart, – Specialty Cafe & Bakery, and many more.

Unemployment claims reached an all-time high of 38+ million – unemployment is over 25% (out of 160 million of workforce, close to 40 million are jobless). With no income, consumer demand is falling drastically and the economy will go into a free fall.

Of course COVID-19 has adversely impacted on the global economy including the US, but, more importantly. The US military operations, misadventures, overseas military bases, unnecessary confrontations, and war craze has costed heavily and harmed its economy severely. Only the miracles can save the US, otherwise its downfall is under process and declining accelerated.

On the other hand, China is making positive developments, despite of COVID-19, and slightly deterioration, yet the economic indicators are encouraging. China’s foreign exchange reserves totaled 3.0549 trillion U.S. dollars at the end of August, down 49.2 billion U.S. dollars from July, data from the State Administration of Foreign Exchange showed Wednesday.

“Cross-border capital flows were rational and orderly, and supply and demand in the domestic foreign exchange market remained generally balanced,” said Wang Chunying, deputy director and spokesperson of the administration.

Wang attributed the decrease in foreign exchange reserves to factors including exchange rate conversion and asset price changes. On the global financial market, the U.S. dollar index rises and the price of global financial assets declines under the influence of monetary policy expectations and the macroeconomic data of major countries.

Deeming the external situation complex and grim at present, Wang said the global financial market registers strong fluctuations amid increasing pressure on the global economy.

China has kept its economy operating in an appropriate range by effectively coordinating epidemic prevention and control with economic and social development, while implementing a raft of policies on stabilizing the economy. This helps keep its forex reserves generally stable, Wang added. Its domestic market is huge and can compensate any loss from international market. The pace of development within China is huge, which keep the economy moving on. More companies are appearing the top 500 fortunes, against the US companies are decreasing gradually.

China is emerging as a role model for many developing nations and is being followed by few countries. Chinese model is based on win-win cooperation, no aggression, no war, no occupation, no colonialization, no interference into other’s domestic affairs. It is a perfect peaceful development model and a precedence for the civilized world.

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The Black Sea Grain Initiative: What it is, and why it’s important for the world

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Workmen at Dar Es Salaam harbour loading bags of wheat destined for Central Africa (file) © FAO/Giuseppe Bizzarri

Since Russia’s invasion of Ukraine began, exports of grain from Ukraine, as well as food and fertilizers from Russia, have been significantly hit. The disruption in supplies pushed soaring prices even higher and contributed to a global food crisis. The Black Sea Grain Initiative, brokered by the United Nations and Türkiye, was set up to reintroduce vital food and fertilizer exports from Ukraine to the rest of the world. Here are some key points to understand.

1) A deal to get vital supplies moving again

Ukraine, one of the world’s largest grain exporters, normally supplies around 45 million tonnes of grain to the global market every year but, following Russia’s invasion of the country, in late February 2022, mountains of grains built up in silos, with ships unable to secure safe passage to and from Ukrainian ports, and land routes unable to compensate.

This contributed to a jump in the price of staple foods around the world. Combined with increases in the cost of energy, developing countries were pushed to the brink of debt default and increasing numbers of people found themselves on the brink of famine.

On 22 July, the UN, the Russian Federation, Türkiye and Ukraine agreed the Black Sea Grain Initiative, at a signing ceremony in the Turkish capital, Istanbul.

The deal allowed exports from Ukraine of grain, other foodstuffs, and fertilizer, including ammonia, to resume through a safe maritime humanitarian corridor from three key Ukrainian ports: Chornomorsk, Odesa, and Yuzhny/Pivdennyi, to the rest of the world.

To implement the deal, a Joint Coordination Centre (JCC) was established in Istanbul, comprising senior representatives from the Russian Federation, Türkiye, Ukraine, and the United Nations.

According to procedures issued by the JCC, vessels wishing to participate in the Initiative will undergo inspection off Istanbul to ensure they are empty of cargo, then sail through the maritime humanitarian corridor to Ukrainian ports to load. The corridor is established by the JCC and monitored 24/7 to ensure the safe passage of vessels. Vessels on the return journey will also be inspected at the inspection area off Istanbul.

2) Millions of tonnes are leaving Ukraine

Shipments monitored by the Initiative began leaving from 1st August. By the end of the month, over 100 ships, laden with more than one million tonnes of grain and other foodstuffs, had left Ukraine. By mid-September the JCC reported that some three million tonnes had left Ukraine, signalling positive progress. It is hoped that, eventually, up to five million tonnes will be exported monthly.

According to UN figures, 51 per cent of the cargo so far (as of mid-September) has been corn, 25 per cent wheat, 11 per cent sunflower products, six per cent rapeseed, five per cent barley, one per cent soya beans, and one per cent other foodstuffs.

3) Around one third of shipments are going directly to lower income countries

A 25 per cent of the cargo has gone to low and lower-middle income countries. Egypt (8 per cent), India and Iran (4 per cent each), Bangladesh, Kenya and Sudan (2 per cent each), Lebanon, Yemen, Somalia, Djibouti (1 per cent each), and Tunisia (less than one per cent)

This includes UN-chartered vessels delivering humanitarian food assistance – World Food Programme (WFP) purchased wheat – to the Horn of Africa and Yemen. Two UN-chartered ships have already left Ukraine, while another two are expected soon. WFP had so far purchased 120,000 metric tonnes of wheat to support humanitarian relief in the Horn of Africa, Yemen and Afghanistan.

The first WFP-chartered vessel docked in Djibouti on 30 August to support the drought response in the Horn of Africa. A second UN-chartered vessel, loaded with 37,500 metric tons of wheat, sailed on 30 August and docked in Türkiye on 3 September, where the wheat will be milled to flour.

This flour will then be loaded onto a different ship that will head to Yemen to support the World Food Programme’s humanitarian response there. The third and fourth WFP-chartered vessels will also supply wheat to relief operations.

Some 25 per cent of grain has gone to upper-middle income countries – including Türkiye, China and Bulgaria; and 50 per cent to high-income countries like Spain, Netherlands, Italy, Republic of Korea, Romania, Germany, France, Greece, Ireland, and Israel.

The UN points out that all of the grain coming out of the Ukrainian ports thanks to the Initiative benefits people in need, as it helps to calm markets, and limit food price inflation.

All ship movements can be found on the Black Sea Grain Initiative website, which also contains useful facts and figures.

4) Food prices are coming down

There are strong signs that the Initiative is succeeding in one of its key aims, getting food prices down.

At a press briefing in mid-September, Rebeca Grynspan, the Secretary-General of the UN trade agency, known as UNCTAD, and Amir Abdulla, the UN Coordinator for the Black Sea Grain Initiative welcomed the fact prices have come down five months in a row: the Food Price Index has decreased nearly 14 per cent from its peak in March of this year.

Mr. Abdulla explained that falling prices meant that those who had been hoarding grain, in the hope of selling at a greater profit, were now selling, which meant that there is now more food supply in the markets, leading to further price drops. Ms. Grynspan, who is also coordinator of the UN global Task Team set up to help support countries deal with the triple economic shocks worsened by the effects of the war in Ukraine, pointed out that this is making a huge difference in a global cost of living crisis.  

Globally, a record 345 million people in more than 80 countries are currently facing acute food insecurity, while up to 50 million people in 45 countries are at risk of being pushed into famine without humanitarian support.

In August, WFP Executive Director David Beasley declared getting the Black Sea Ports open to be “the single most important thing we can do right now to help the world’s hungry”. He warned that, whilst this would not, on its own, stop world hunger, bringing Ukrainian grain back on global markets would improve the chance of preventing the global food crisis from spiralling even further

5) Ongoing collaboration is necessary for continued success

The UN is acutely aware that keeping shipments sailing smoothly out of Ukrainian ports will require the continued collaboration of Ukraine and Russia. Mr. Abdulla has praised the “collaborative spirit” between the parties to the Initiative. He also noted the special role that Türkiye and the UN are playing in keeping the process moving.

However, with no clear end in sight to the war, the future is uncertain.

The current Initiative may extend beyond its initial 120 days after the signing date of 22 July, if parties so choose. Thoughts at the JCC team in Istanbul are already turning to the extension of the deal. Mr. Abdulla remains positive, expressing his hope that “with the UN’s mediation efforts, it won’t really be a matter for discussion”.

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