Summary of key points:
- People have been discussing Libra's open goal of bringing the global poor into the modern financial system, although the target was almost lost due to regulatory difficulties.
- Many non-profit organizations have long been working to solve this problem. To its credit, Facebook recruited some of the most forward-thinking organizations to join the Libra Association.
- Non-profit organizations that have seen the potential benefits of blockchain technology will better serve their target audience.
- Are these nonprofits only doing superficial work? Women's World Banking and Mercy Corps tell CoinDesk that if Libra does not serve their mission, they will not stay.
Who can open the real global inclusive finance? Many people have tried, but they all ended in failure. Perhaps a Harvard student can reverse this situation.
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- Zuckerberg testimony (full text): The United States needs innovation, Libra is just a way of transferring money
According to a bulletin released in June this year, the first task of Libra, a stable currency project sponsored by Mark Zuckerberg's Facebook, is to serve those who have no bank accounts (Unbanked). However, most of the project's founding partners, such as Uber, Mastercard, Stripe and eBay, have gathered their attention in developed countries.
So, how can the Libra Association allow those who have the hardest access to financial services to enjoy the convenience of this stable cryptocurrency? Four NGOs in the association may play a key role.
Among the 27 founding partners (previously 28, PayPal withdrew from the project last week), there are four small, backbone non-profit organizations focused on helping these non-bank accounts. They are Mercy Corps. ), Women's World Banking, Kiva International, and the Creative Destruction Lab.
So far, there are few signs that the launch of the Libra cryptocurrency really works. Part of the reason is that since June, people's attention has focused on the general opposition of regulators to the project. When Libra's destiny is in the hands of the US Congress and the Frankfurt School, it is easy to forget that it was designed for places like Uganda, Pakistan and Indonesia.
But these influential partners are cautiously optimistic about Libra's potential and are pleased that the association is willing to get a seat at the negotiating table. Although they won't buy Libra tokens, the rest of the partners are paying for the $10 million governance token.
J. Tom Jones, chief operating officer of World Women’s Bank, said in an interview with CoinDesk:
“Our small NGOs are not set up as internal devices. From a risk analysis perspective, this is really important.”
Focus on October 14
The association is currently making decisions on its own governance issues, and both partners interviewed by CoinDesk stated that they believe they have a full say at the negotiating table. Members of the Libra Association will gather in Geneva on October 14 to formally approve the charter of the organization.
Jeremiah Centrella, General Counsel of International Mercy Corps, said in an interview with CoinDesk:
“If we have the opportunity to join an organization where all questions are answered and everything is very mature, this may not be attractive to us.”
As far as Jones is concerned, he believes that helping the new cryptocurrency to start is not particularly risky for his institution. He said:
“At the end of the day, the World Women’s Bank and other influential partners have the final say, and we can choose to leave. I firmly believe that if we leave, it will send a major signal.”
After Paypal's withdrawal, spokespersons from Mercy Corps, World Women's Bank and Kiva confirmed their plans to stay with the Libra Association. The Creative Destruction Lab has not yet responded to CoinDesk's request for comment.
In other words, if there is something that prompted the organization to leave, Jones believes that:
"We won't leave quietly. If we don't think this will work, we will ask why."
A natural question for influential partners is: Do they receive financial support from Facebook or the Libra Association? Jones declined to comment on the issue. A spokesperson for the International Mercy Corps said:
“The issue of funding for practical action has already been discussed. This is part of our conversation.”
The Libra Association limits its impact partners to institutions with at least five years of inclusive financial program records and a $50 million operating budget.
Both International Mercy Corps and the World Women’s Bank attach great importance to promoting the economic outcomes of their respective support groups. Centrera explained that the International Mercy Corps has been taking market-oriented interventions. He said:
“When Facebook contacted us, we had established an executive team working group focused on distributed ledger technology.”
Centrella's non-profit organization is committed to areas such as microfinance and inclusive finance, seeking community-driven ways to recover from experiments or achieve economic growth. The organization also released a white paper in 2017 to illustrate the potential of the blockchain in the non-profit sector.
But why is it so interesting about it so early? International Mercy Corps generally believes that cash is king in helping to overcome pressing challenges. It may be more effective than other methods, but cash also has its own challenges.
For example, if the entire market is destroyed, cash will not work. Actual cash delivery and cash delivery in local currency can also be difficult. In addition, it leaves the most ugly written record (non-profit organizations need these records to show the results).
Therefore, Libra offers hope to solve some of the drawbacks of banknotes.
Developed based on some of the best features of various cryptocurrencies, Libra is built using the Proof of Entitlement (PoS) mechanism, which is very selective for who can participate early. Although this architecture has recently encountered some trouble, the Libra Association has not shown any signs that it will strictly manage the system, nor does it show interest in open participation over time.
Jones of the World Women’s Bank also emphasized a similar point of view. His organization helps provide microfinance services (providing very small loans to very small business owners) rather than acting as lenders themselves. For example, when a borrower needs to suspend business for a few days, it provides default insurance services for such short-term loans.
The world's poorest people are most severely squeezed by the costs of the global financial system. When Jones talked about Libra, he said:
"It has no cost structure. It is a huge victory."
Libra also has the potential to make the World Women's Banking System work quickly. He said that for borrowers, this will ultimately save time in the bank and give them more time to do business. For insurance business, Libra can make instant payment claims.
In fact, the power of this speed has appeared again and again in the World Women’s Bank and the International Mercy Corps. Centrera introduced one of the most vivid examples and said:
“Someone may be hit by a hurricane. When the hurricane strikes, they must have money in their accounts.”
Influence giant company
But will Fortune 500 companies follow the advice of this group of non-profit organizations?
Jones said he was pleasantly surprised by how his organization was treated as a full member of the Libra Association. He said:
"At least from my contact and participation, everything is done through consensus."
Centrera pointed out that the efforts of large technology companies to help developing countries do not always work. Inviting non-profit organizations to help guide this project can avoid similar mistakes. He said:
“I did work with a lot of company partners. I think they have the best intentions to do anything, even if they have failed completely. One thing I want to say is: I am with the head of the Facebook blockchain David. David Marcus and his team often interact, and they have always proved in a very passionate way that they really want to do it."
Through the regulatory storm, Centrera hopes that the world may let the Libra Association solve these problems. He said:
"I really want it to start. If it really starts, we really hope it will bring a revolutionary positive impact."
Although Jones admits that the question is mainly for Facebook, he also has the same hope for Libra, he said:
"All the greatest ideas in the world have been told at some point that this is not going to work. Why don't we try?"