Publication: Smart Contract Technology and Financial Inclusion
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2020-05-01
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2020-05-01
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FinTech Note is a World Bank Group (WBG) series that explores the role of FinTech (the confluence of 'finance' and 'technology') in economic development, with an emphasis on financial inclusion. The purpose of this note is threefold. First, by bringing together in single resource key technological, economic, and legal aspects of smart contracts (sections 3-5), the note serves as a high-level reference on the basic elements of smart contracts. It equips local policymakers and WBG staff with the requisite foundation to effectively brainstorm about smart contracts' productive use in local economies. Second, the note discusses select policy considerations (section 6) that local authorities, standard setting bodies, and international organizations will need to evaluate in order to ensure smart contracts' responsible and effective deployment in retail and micro, small, and medium enterprise (MSME) finance. The note focuses on financial consumer protection, customer due diligence, key legal determinations, standardization and vetting, and data source automation. Finally, the note analyzes smart contracts’ potential applications in retail and MSME finance (section 7), focusing on supply chain finance, insurance, and consumer credit. It discusses the extent to which smart contracts could facilitate incremental financial inclusion gains and the changes they would introduce to these products. To this end, the Annex further examines the changes smart contracts could bring to two specific microfinance products, a weather index insurance policy and a mobile money-based, short-term unsecured loan.
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“World Bank Group. 2020. Smart Contract Technology and Financial Inclusion. Fintech Note;No. 6. © World Bank. http://hdl.handle.net/10986/33723 License: CC BY 3.0 IGO.”
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