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Thursday, August 29, 2019

Wal-Mart, Facebook and Digital Tokens for Inclusion

Fascinating piece on the notion of 'Financial Inclusion' and its use by retailers of both products and of marketing data,  like Wal-Mart and Facebook.    Meaning of this discussed in the Gartner Blog.  Does this mean that companies like these are attempting to construct their own monetary systems to improve this inclusion?  How will this be regulated?   Implications?

Libra and Walmart “Blockchain” Tokens: Financial or Walled Garden Inclusion?   by cuzureau    Gartner Blog

Facebook has announced the development of a digital currency, Libra (cf. “Facebook Libra — Liberator or Trojan Horse”1 ) and Walmart has filed a patent application for a digital token (cf. patent application2). Both initiatives rely on blockchain technology. The two companies have multiple rationales for launching or planning such initiatives. In this blog post, we explore their claims toward financial inclusion.

Facebook has stressed in the Libra white papers its objective of improving financial inclusion globally. And Walmart’s patent application’s introduction, stresses that: “The cost of having little money is high because of frequent short-term borrowing, accumulated interest on short-term borrowing that becomes long-term, high bank fees proportional to wealth, high credit card fees, and high payday loan interests…. Providing digital currency based on blockchain may overcome the drawbacks associated with the low-income households”

Having more companies try to address financial inclusion is positive and across all markets. Mature banking markets such the US also have to deal with a financial services access gap. The FDIC National Survey of unbanked and underbanked Households (cf.  https://www.fdic.gov/householdsurvey/) estimates that in 2017 there were 8.4m unbanked (no account at an insured institution) households and 24.2m underbanked (checking or savings account only with insured institution), in the USA.   ... " 

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