Financial institutions all over the world are increasingly experimenting with emerging technologies like blockchain to streamline payment systems and achieve financial inclusion. In a new study, the World Bank has once once again emphasized blockchain'due south potential for financial inclusion.

Issued by the Banking concern for International Settlements on April fourteen,the new report from the World Bank Group on "Payment aspects of financial inclusion in the fintech era" outlines a wide number of crypto and blockchain-related concepts like stablecoins and central bank digital currencies (CBDC). In the seventy-page study, the bank provided a detailed overview of selected advances in engineering science that are considered to exist the near relevant to payments besides as described their applications and associated risks.

Extended version of 2022 PAFI report

The new report reiterates and enhances the guidance developed in the report on Payment aspects of financial inclusion (PAFI) issued by the World Bank in collaboration with Committee on Payments and Market place Infrastructures (CPMI) in 2022. Basically, the latest report sets out fintech-focused key aspects, putting them in the context of the general PAFI guidance, which was formulated in a tech-neutral way and did not include developments like blockchain.

Among major PAFI tools, the Earth Bank listed distributed ledger engineering (DLT), stablecoins, CBDCs and payment tokenization systems, placing them in line with other fintechs like big data analytics and cloud calculating. Combining several technologies, products and access models, the World Bank drew up the and then-called "PAFI fintech bicycle" to identify fintech developments that are potentially relevant to the payment aspects of financial inclusion.

WBG's

WBG'due south "PAFI fintech wheel." Source: Bank of International Settlements

Stablecoins prompted CBDC investigations for more than efficient cantankerous-border payment

Specifically, the report says that DLT "may further spur business organization model innovation in cantankerous-border payments," noting that the engineering science has a potential to streamline such payments in a permissioned, i.e. private environment.

The Globe Bank also pointed out the role of stablecoins and CBDCs in cross-border transactions, emphasizing that existing stablecoin projects similar Facebook's Libra pushed some jurisdictions to accelerate CBDC investigations to fix major issues of cantankerous-edge payments. Neither a global retail stablecoin project nor a CBDC live network is operational to date, the bank noted.

The report reads:

"Stablecoins have prompted central banks in some countries to advance their investigations into CBDCs and more often than not resulted in greater attention being paid to the challenges of financial inclusion and more efficient cross-edge payments [...] No global retail stablecoin initiative is currently operational."

Interestingly, the Bank for International Settlements found out in March 2022 that no existing CBDC project explicitly focuses on cross-border payments so far, as those initiatives do non become beyond the primal bank's jurisdiction.

World Bank's previous interest in blockchain to drive financial inclusion

The World Bank'due south fintech-focused report on fiscal inclusion is not the arrangement'due south outset foray into blockchain and associated emerging technologies.

In late 2022, the World Bank published an all-encompassing blockchain report titled "Distributed Ledger Engineering and Blockchain," emphasizing that DLT implementation for financial inclusion goals requires the development of important accompanying components like interoperability with traditional payment services and effective oversight. The report as well describes in detail major cryptocurrencies like Bitcoin (BTC) and Ether (ETH), likewise as their public blockchains.