How the Inter-American Development Bank is Driving Blockchain Use Cases in Latin America, the Caribbean – Lessons for Africa? – BitcoinKE
The Inter-American Development Bank (IDB) is paving the way for multilateral financial institutions to leverage blockchain technology to create more opportunities by operating LACChain, a publicly endorsed blockchain network.
With permission, LaCChain is different from permissionless blockchains like Ethereum and Bitcoin, which are open to everyone, as it can only be accessed by permissioned users.
The Inter-American Development Bank (IDB) is an organization similar to the African Development Bank (ADB) and shares the goal of improving the lives of people in the region it covers.
Through financial and technical support to countries working to reduce poverty and inequality, we help to improve health and education, and promote infrastructure.- IDB
The IDB has 26 members, which are countries in Latin America and the Caribbean.
91 organizations are already participants in LaCChain and 178 nodes run on the blockchain with 64 different solutions already implemented.
The solutions include, from the examples and sectors below:
- Agriculture
- education
- Health
- Digital identity
- Verifiable identification for vaccination certificates
- Certificate of education
- The bio-carbon register
The LaCChain blockchain was started by IDB Lab in 2019 to help improve the lives of people in member countries, which is in line with IDB’s goals.
The expected results are based on empowering people, improving digital security, generating confidence in the economy and digital society, promoting the efficient use of energy, thus supporting inclusive growth, well-being, human rights. people and core values.
These two use cases were highlighted by Arias Hofman, CEO of IDB Lab, which runs the blockchain project.
Issuance of blockchain bonds
In August 2022, one of Colombia’s largest banks, Davivienda, issued a $25,000 Colombian blockchain bond on the LaCCain blockchain.
The issuance was piloted in Colombia’s regulatory sandbox and involved the participation of the central bank as well as the capital market regulator of Colombia. All steps of the process occurred on the blockchain, including issuance, trading and compliance.
Even all the procedures required to go through the national registry of securities and issuers happened on the blockchain. IDB Invest, an independent affiliate of IDB, bought the bond.
“We almost have a captive market to offer this option,” Aria Hoffman said.
IDB Invest already makes 7-8 billion dollars in issues annually and has 500 private clients consisting of financial institutions, infrastructure firms and real estate companies.
Although this was a pilot with a small amount, the IDB expects the practice to be fully commercialized so that private investors can start participating in such blockchain bond issuances.
The IDB expects to use tokenized money in the next bond.
Digital money for social transfers
The IDB, which makes billions of payments annually, has identified the possibility of making social transfers running on the blockchain, an innovation that could help farmers.
While blockchain payments can help reduce the cost of transfers, the IDB is skeptical about how communities will access these transfers in a cash-driven society, especially in rural communities where the IDB works.
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“If someone receives a digital payment, they need to be able to easily convert it to cash. So an important push in the future is to target the unbanked and increase the use cases that have a social impact,” Aria Hoffman said.
Hofman also indicates that at the moment the opportunity is greater in the capital markets where they can execute on a very large scale almost immediately.
“But it’s harder to see the impact of that on the ground. And these 64 solutions are a fantastic platform to grow from.”
With emerging markets in Africa, the opportunity that IDB is exploiting will obviously find applications on the continent since similar needs and challenges found in the LATAM markets can be found in Africa.
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