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Of the 7 billion people alive on the
planet, 1.1 BILLION subsist below the
internationally accepted extreme-poverty
line of $1.25 A DAY.
The Economist
Adult population with NO USE OF formal or semiformal FINANCIAL SERVICES
Official Development Assistance
Foreign Development Aid
Remittance flows are
LARGE and GROWING
• Average total cost of sending money to Africa in 2013-Q2  11.79 %
• Cost of sending money to Africa in 2013-Q2  2.94 % more expensive than
the global average of 8.85%.
• 10 most expensive corridors  all intra-African, with 6 of them originating in
South Africa.
• Most expensive countries to send money to are those receiving mainly
• from other African countries –Malawi, Mozambique, and Botswana.
• Cheapest markets to send money to  Egypt, Liberia, and Somalia.
• Commercial banks continue to be the most expensive type of provider.
• Bank account services are the most expensive method of transfer.
Send Money Africa – July 2013 (The World Bank)
Underdeveloped infrastructure
Limited competition
Regulatory obstacles
1
2
3
4
4a
5
6
7
S
R
Current Supply Chain
Cost
incurred
1
2
S
R
Next Generation Supply Chain
(digital treasury & settlement)
Cost
incurred
S
R
Last Generation Supply Chain
P2P Transfers (already possible today)
1
2
3
4
5
6
7
Prepaid Card Supply Chain
“Virtual currencies promise to benefit
commerce on many levels, from serving
the unbanked to new financial
products. I challenge our innovators:
devise c r e a t i v e s o l u t i o n s to prevent
virtual currency abuse.”
FinCEN Director Jennifer Shasky Calvery
Financial Action Task Force
Groupe d’Action Financière
(FATF-GAFI)
Special Recommendation VI
Each country should take measures to ensure that persons or legal entities,
including agents, that provide a service for the transmission of
money or value , including transmission through an informal money or
value transfer system or network, should be licensed or
registered and subject to all the FATF Recommendations that apply to
banks and non-bank financial institutions. Each country should ensure that
persons or legal entities that carry out this service illegally are subject to
administrative, civil or criminal sanctions.
[x] ANONYMITY  product has to dissuade the bad element, never
attract it.
[y] COMPLIANCE  product and operations cannot be in violation of
any applicable laws and regulations (the “form” or “paper” side of
compliance).
[z] SUBSTANCE  what is written in their policy must actually be
implemented. Businesses must be run with integrity,
responsibility and control.
Anonymity = Anathema
Anonymous identification No value limits Anonymous funding
No transaction records Wide geographical use No usage limits
Underground economy
• The Shadow Superpower (Robert Neuwirth, Foreign Policy)  System
D (“Debruillards”)
• Informal (“extra legal,” “black”) economies  $10 trillion in aggregate
• The Mystery of Capital (Hernando de Soto, 2000)
• Mystery  failure of assets to serve as capital
• Problem  credibility of rights transfer at a distance (i.e., ability to
engage in binding contracts)
• Smart contracts  jurisdiction-free contracting mechanism
• Distributed asset ledger for everyone, EVERYONE, around the globe
@JuanLlanos
Thank you!

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New York - Digital Currencies, Remittances & Financial Inclusion - MFCNY event hosted by Morgan Stanley

  • 1. Of the 7 billion people alive on the planet, 1.1 BILLION subsist below the internationally accepted extreme-poverty line of $1.25 A DAY. The Economist
  • 2. Adult population with NO USE OF formal or semiformal FINANCIAL SERVICES
  • 3. Official Development Assistance Foreign Development Aid Remittance flows are LARGE and GROWING
  • 4. • Average total cost of sending money to Africa in 2013-Q2  11.79 % • Cost of sending money to Africa in 2013-Q2  2.94 % more expensive than the global average of 8.85%. • 10 most expensive corridors  all intra-African, with 6 of them originating in South Africa. • Most expensive countries to send money to are those receiving mainly • from other African countries –Malawi, Mozambique, and Botswana. • Cheapest markets to send money to  Egypt, Liberia, and Somalia. • Commercial banks continue to be the most expensive type of provider. • Bank account services are the most expensive method of transfer. Send Money Africa – July 2013 (The World Bank)
  • 7. 1 2 S R Next Generation Supply Chain (digital treasury & settlement) Cost incurred
  • 8. S R Last Generation Supply Chain P2P Transfers (already possible today)
  • 10.
  • 11.
  • 12. “Virtual currencies promise to benefit commerce on many levels, from serving the unbanked to new financial products. I challenge our innovators: devise c r e a t i v e s o l u t i o n s to prevent virtual currency abuse.” FinCEN Director Jennifer Shasky Calvery
  • 13. Financial Action Task Force Groupe d’Action Financière (FATF-GAFI) Special Recommendation VI Each country should take measures to ensure that persons or legal entities, including agents, that provide a service for the transmission of money or value , including transmission through an informal money or value transfer system or network, should be licensed or registered and subject to all the FATF Recommendations that apply to banks and non-bank financial institutions. Each country should ensure that persons or legal entities that carry out this service illegally are subject to administrative, civil or criminal sanctions.
  • 14. [x] ANONYMITY  product has to dissuade the bad element, never attract it. [y] COMPLIANCE  product and operations cannot be in violation of any applicable laws and regulations (the “form” or “paper” side of compliance). [z] SUBSTANCE  what is written in their policy must actually be implemented. Businesses must be run with integrity, responsibility and control. Anonymity = Anathema Anonymous identification No value limits Anonymous funding No transaction records Wide geographical use No usage limits
  • 16. • The Shadow Superpower (Robert Neuwirth, Foreign Policy)  System D (“Debruillards”) • Informal (“extra legal,” “black”) economies  $10 trillion in aggregate • The Mystery of Capital (Hernando de Soto, 2000) • Mystery  failure of assets to serve as capital • Problem  credibility of rights transfer at a distance (i.e., ability to engage in binding contracts) • Smart contracts  jurisdiction-free contracting mechanism • Distributed asset ledger for everyone, EVERYONE, around the globe