By Asad Sultan, CEO of Deutsche Malayan Ventures and Hirander Misra, CEO of GMEX Group
Will the current economic crisis result in changes to the economic establishment as we know it, so that a new order is established fuelled by democratised digitally enabled innovation? How can data and information become the key currency to aid financial re-inclusion and inclusion post crisis?
In 1815, Nathan Mayer Rothschild said: “I care not what puppet is placed upon the throne. The man who controls the money supply controls the Empire, and I control the money supply.”
Today’s crisis harkens back to the truth of the Baron’s words, but in a way he could never have envisaged. The binge spending by nations and corporations needed to ensure their survival will strain to the breaking point the very fiat-based monetary system that the Rothschilds proliferated. The collective call to repay these vast sums will unleash inflationary pressures never before seen.
Is it all doom and gloom?
The International Monetary Fund (IMF) has termed the Great Lockdown as the worst economic downturn since the Great Depression and in April forecast a drastic reduction in global GDP during 2020. The International Labor Organization (ILO) in March warned that 25 million workers could join the ranks of the unemployed over the next several months. By comparison, the 2008-09 global financial crisis increased global unemployment by 22 million. At the same time, large numbers of small and medium sized enterprises (SMEs) will likely be eradicated by the economic effects of the virus.
The tough measures to stem the Coronavirus outbreak could be in place for up to 12-18 months, the time that scientists say is required to find a vaccine. Who knows when cross-border travel and trade will recover to pre-pandemic levels? In other words, we could all be in this for the long haul.
Though this bodes badly, forecasts are, frankly, more opinion than fact given the unprecedented nature and scale of this crisis. While preparing for the worst, we would be well served to look for silver linings.
Can there be a silver lining beyond the crisis?
The crisis has fuelled the rise of home working and the use of digital technologies in an accelerated fashion, bringing empowerment to many in a manner which could not have been anticipated by most. Whilst there has been a short term impact on some Fintech projects and investments, if we can look beyond the crisis the smart money will return into Fintech hubs which will increasingly interconnect with each other to become ‘Smart Fintech Hubs’. A FinTech hub is the focal point for FinTech activity within a region or a network. The power of these Fintech Hubs to assist in the economic recovery is that it will bring hundreds of millions of the most underprivileged and displaced members of society into a new digital financial system.
The use of digital currencies and alternative forms of digital assets with seamless cross border exchange between them as well as goods and services with less frictional cost and more efficiency will lead to greater opportunities not just for governments and institutions, but also for the individual fuelling an Internet of People (IoP) for the masses as opposed to merely an Internet of Things (IoT).
According to the World Bank 1.7 billion adults remain unbanked globally. Digital technology has the power to direct the flow of their cash transactions onto a new Fintech-based global super highway.
Integrated into these Fintech hubs, the use of blockchain technology, coupled with artificial intelligence (AI), can ensure users control over their information and data without it being usurped by global technology giants – finally giving governments and its citizens ownership over the digital information they create and the economic value that derives from it.
Will data and information become the new currency?
In this new digital world, data and information will be the basis for the main store of value. The speed, flexibility, and reliability with which one can interact with them will change how we live, work and trade. Ultimately, data and information will become digital money in their own right.
The crisis may thus mark the beginning of the end of trickle down policies – which pump out money created out of thin air at the whim of central banks and international development funds – to be replaced by information and data that directly releases economic value to its originators and recipients based upon real tangible underlying value.
Baron de Rothschild may now be making his last stand before he is forever confined into the annals of history, much like the British Empire of which he spoke, upon which the sun never set. Digitally enabled democratisation will mean not only the death of the puppet master, but also cutting loose the strings that bind the puppets.