The Taiwan Banker

With the rise of central bank currencies, cryptocurrencies, and other blockchain systems around the world, governments everywhere hope not to fall behind. Excepting a few financial hubs, however, digital empowerment is not just a matter of prestige for its own sake. The immense possibilities and flexibility of digital solutions must be well understood if such tools are to be applied successfully.Recently, the Taiwan Banker magazine got the opportunity to talk with Michelle Chivunga, blockchain and digital economy expert, and founder of Global Policy House, an impact-driven fintech group which promotes digital solutions in the UK and around the world. The most obvious use of technologies like blockchain, AI, and IoT is to digitalize and automate processes and ease access to assets and money for businesses, and Global Policy House supports training and education programs to help future entrepreneurs learn about potential commercial applications. In particular, it focuses on empowerment of women, youth, and black communities, which are vulnerable and under-represented groups in many societies. It also builds and invests in research and ethical software development to support this work.Beyond these direct approaches, Global Policy House also advises many groups including governments, commercial banks, and central banks on the policy and financial implications of diverse new technologies. A major motivation for this effort is data portability. In that sense, digital infrastructure can serve as a base layer for future innovation, whose form may not yet be clear. Even that step however requires careful planning in order to keep up with current regulations, including those on data usage. Strength in variety“Global Policy House exists to close the digital divide,” she said. “We’re really keen to make sure that everybody around the world has access to digital tools, and they’re able to capitalize on the opportunities that exist within the digital economy.” Global Policy House advises and works with multilateral institutions like the UN, World Trade Organization, African Union, international chambers of commerce, the World Union of Medium and Small Enterprises, and national governments such as Bermuda. One issue of particular interest is data standardization. “As innovators, we need to have access to easy flow of data.” With central bank digital currencies, for example, cross-border trade requires system inter-operability, which in turn depends on robust and secure data protocols. At the same time, however, governments are paying increasing attention to data protection issues such as privacy. This sort of tradeoff requires collaborative compromises and clever solutions.An additional challenge when working in underdeveloped economies is that not every country has a data law. Africa, for instance, has recently come together to form the world’s largest market, the African Continental Free Trade Area (AfCFTA) uniting the 55 African nations to enable intra-African trade. It is not yet clear how a data law in one country might affect trade with another country. Issues that seem simple in principle can become more complex in the implementation.Despite the complexity, however, strategic application of these technologies also makes certain problems simpler. “Blockchain is always talked about almost in isolation, and then you have other technologies such as AI, again talked about in isolation. But the real advantage is how they can come together and work alongside and converge with different technologies.” “That combination of the technologies is where I think you’re going to see a lot more value, and you’re going to see a lot more companies coming up with new products and services.”“Blockchain is not an answer to every problem, but it is a so-called trust machine. In fact, you have to be very careful when you select the usage of blockchain.” Its classic use case is cryptocurrency – a financial use case – which has attracted regulatory pushback in some countries, but in many people’s eyes is seen as the ‘people’s money,’ a catalyst for financial inclusion. Blockchain however has many uses. A more powerful use case in many developing countries is land titles on a blockchain, which can help manage ownership rights and ease land disputes that may arise. but this also requires careful consideration. Registries solve one particular problem – trusted data storage – without affecting related issues like transaction processes and historical titles. Thus, one use case is overpowered, while another one is underpowered. It falls upon regulators to navigate these shortcomings.Security and fairnessAI has a comparable problem. It can simplify a variety of complex problems, but without specific countermeasures, its decisions are no more objective than those of a human, and can be even less so. Application of this technology without appropriate guardrails can be dangerous, particularly in a multi-ethnic society. “It’s not the fault of the technology, it’s the fault of how these things are designed, the data you’re using, and how and by whom the algorithms are designed,” explained Chivunga. AI does what it’s told, just like any other computer program. “The future after COVID will very much be driven by technology, but that technology will be driven by human behavior.”In one respect, technological advancement is making society definitively worse-off: cyber security. “The next wars you will see happen will not necessarily be traditional wars on the ground. Even developed nations are having trouble keeping up with technological advancement.” She suspects that most governments have made insufficient investments in cybersecurity and emerging technologies, with COVID-19 impacting already-limited budgets. Nevertheless, technology can solve some of the same problems that it has created. Blockchain design is oriented around security concerns. AI can also be deployed for analysis and capability prediction, measuring trends and capturing vulnerabilities far more thoroughly than humans could.The solutions to these problems are not simple, but the benefits of leveraging digital tools may be powerful. “The future is going to be very personalized. Facilitated by data protections and interoperability, digital identities will become increasingly elaborate, and easy liquidity will be demanded by a more tech-savvy generation.” These trends will likely play out in different ways across the developed and developing worlds, and their implications will require concerted efforts to understand. The problems Global Policy House aims to address will not be going away anytime soon.