What would it mean for the world if everyone, everywhere could be part of the global economy, with access to the same financial opportunities?
Mercy Corps is today announcing our partnership in the Libra Association, the organization responsible for developing Libra — a new global currency that we believe could spark a revolution in financial inclusion.
Around the world, 1.7 billion people don’t have access to a bank account — but a billion of those same people do have a phone in their pocket. Libra could put new opportunities to save, send and spend money into the hands of those people — connecting them more closely with their local and global economy, and giving them transformed opportunities to provide for themselves, their families and communities.
For more than 40 years, Mercy Corps has worked with people in poverty around the world to help them build more secure, productive and just communities in some of the toughest circumstances possible.
We’ve seen first-hand that no single group or organization can solve the toughest challenges alone, and that the only way to achieve truly transformational change is to connect communities with the private sector, public sector and civil society — with accountability and inclusive participation.
So we’re excited to join a group of leading global organizations — players that bring the very best expertise in payments, technology, telecommunications and social impact — to tackle one of the greatest challenges in the world: how to connect millions of people to the global economy.
Abu Goubran with his granddaughter and a pile of freshly harvested produce he grew on a farm in Syria. PHOTO: Ezra Millstein/Mercy Corps
I see five areas of enormous potential for Libra to create progress for the people we serve. First, a stable, low-volatility currency could provide financial stability for people living in countries that are struggling with conflict, natural disasters and instability.
Second, a global, low-friction currency promises to reduce the financial costs that disproportionately face poorer communities. Let’s just take the example of remittances — money sent to people in low and middle income countries last year reached a new record high of $529 billion. Banks charge an average of 11 per cent on those transactions, which means more than $50 billion were spent last year on fees. With a truly global currency, that money that could go directly to building up communities and local economies.
A third great promise we see is underpinned by the blockchain on which Libra will be built, and which offers enormous potential for innovation in the tough-to-solve area of user identification. For many of the people we serve around the world, it’s tough to prove their identity — which makes it impossible for them to access financial services. (After all, there aren’t many banks that will give a loan to someone when they can’t prove who they are). Blockchain creates a record of transactions that could be used by financial institutions to make lending decisions.
Fourth, Libra will be an open platform, which offers the potential for innovation from totally new players to create financial services that work better for people living in poverty. Finally, a global, stable and secure currency powered by blockchain offers the potential to transform how aid is operated and delivered around the world — significantly increasing efficiency, transparency and accountability.
Of course, we need to be determined realists even as we look to the potential of a global currency. There are still real-world challenges to overcome to fulfill the promise of financial inclusion for all. While many people around the world do have access to phones and the internet, and the number of people who do is growing exponentially, there are still millions of people who do not — and millions for whom digital and financial literacy are also enormous barriers to economic participation.
At Mercy Corps, we recognize these challenges and we also see the possibilities for the people we’re dedicated to serving. That’s why we’re joining as a Founding Partner in the Libra Association. We’re committed to bringing the voice of the communities we serve to the governance of the Libra Association, to addressing the challenges of financial inclusion and to ensuring that Libra fulfills its promise of opportunity for all.