World Bank looks into benefits of smart contracts
The World Bank has looked into the benefits of smart contracts and found the blockchain instruments to be a "limited" financial tool. In a July 8 blog post summarizing a recent report called "Smart Contract Technology and Financial Inclusion" the international financial institution looked at the role smart contracts could play in improving financial services in poorer nations. Smart contracts are pieces of code that automatically execute the terms of a contract based on a specific set of rules. The World Bank looked at two main areas of financial services including index-linked insurance and short-term unsecured loans.
On the insurance side, the institution looked at penetration, or the ratio of policy premiums underwritten over a 12-month period against the GDP of a given nation. The post stated that smart contracts would not help fix many common issues with insurance penetration, but could assist in determining whether a particular insurance product was suitable as well as increasing trust in the product amongst stakeholders.
Examining short-term loans, the World Bank found that while smart contracts could increase efficiency with the different phases of a loan cycle, those phases are already highly automated and therefore the new technology would be redundant. The post's authors said a major factor in the costs of consumer credit was based on consumer risk and that smart contracts would be of "limited" benefit in improving borrowers' credit ratings.
The World Bank was founded in 1944 for the purpose of providing loans to governments of developing nations in order to tackle poverty. The institution has been involved in a number of blockchain projects, including raising over $100 million through the issuance of bonds on the Ethereum network.
Asian markets rose, recovering some of the losses at the end of last week, as investors followed a strong performance on Wall Street fuelled by hopes for a coronavirus vaccine, though a spike in infections around the world capped gains. Trillions of dollars in government support is keeping equities well supported but confidence is being strangled by the spread of the disease, with an explosion of cases forcing some countries to reimpose containment measures just weeks after easing lockdowns.
Traders are also looking ahead to the corporate earnings season, which will reveal how companies fared during the second quarter, when economy-sapping lockdowns were imposed around the planet. Tokyo led the gains, adding 1.7 percent in the morning session, while Hong Kong added 0.6 percent and Shanghai put on 0.5pc, with Seoul and Sydney also climbing more than one percent. Jakarta rose 0.8pc, Taipei gained one percent and Wellington added 0.6pc. Singapore and Manila were slightly lower.
The advances came after the Dow and S&P 500 surged more than one percent in New York and the tech-heavy Nasdaq chalked up another record. Investors welcomed comments from the head of German biotech firm BioNTech who said a vaccine candidate would be ready for regulatory review by the end of the year, while
Gilead Sciences said its drug remdesivir had been relatively effective in clinical trials.
"Ongoing grim US COVID-19 infection news continues to be summarily ignored in favour of ongoing optimism regarding the timeline for the discovery and rapid roll-out of an effective vaccine... and/or more policy support for asset prices in the US economy," said Ray Attrill at National Australia Bank.
Still, the pandemic's rapid spread around the planet remains a concern. The government of Spain's Catalonia region on Sunday told residents in and around the northeastern town of Lerida to go back into home confinement, while South African President Cyril Ramaphosa warned his country faced a "coronavirus storm" that was "far fiercer and more destructive than any we have known before".