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Digital Bretton Woods needs the chains of trust to be introduced into the world economy

The next big throw in global trade is the emergence of “chain of trust” digital platforms. Each country is now setting up such platforms so that businesses can conduct transactions securely and seamlessly from anywhere on the planet. These platforms – which combine open allied legal agreements (such as Visa or Mastercard legal agreements), distributed general ledger technology (such as blockchains like hyperledger), and end-to-end encryption. They can handle not only salaries, but also finances, commerce, taxation, and auditing in a consistent manner, wrote Alex Pentland, an MIT professor in an article in IEEE Spectrum magazine.

A well-documented example of this is Singapore’s Project Ubin, sponsored by the country’s monetary authority and the Temasek Sovereign Wealth Fund, which has now been introduced after five years of testing and development. China has established similar systems that are already widely introduced but less documented. Another example is the Swiss Trust Chain, which MIT helped create. This platform is already operational, but its commercial applications are still being developed.

Chains of trust place a layer on existing Internet protocols that transforms the Internet from a loosely connected communication medium to a reliable transaction medium. They make it cheaper, easier and more secure to do business with anyone, anywhere, anytime. Technologies such as artificial intelligence, blockchain and digital identity are helping this transformation and helping to make software platforms more responsive to a distributed global economy.

This is a huge challenge for the various legacy systems – salaries, taxes, shipping, duties, etc. – to adapt to a new single digital platform. In this new system, the deterioration of personal data protection and the growing power of data owners – companies and government bodies – are a matter of serious concern. For these chains of trust to work, data needs to be more accessible and standardized, but it also needs to be adequately protected. Technologies such as federated artificial intelligence, distributed ledgers, open legal alliances, and business models such as data exchange can make this possible. But there is also a need for governance and architecture standards that guarantee the use of such technologies.

One of the main motivations for the proliferation of trust chain platforms is that many countries are in a hurry to issue central bank digital currencies that technologies are used to facilitate payments and tax collection. These “digital dollars” can make commerce and pay cheaper, as well as make money laundering more difficult and make it easier to track fraud. But unless they are built very carefully, they also allow the government to see everything you buy and limit what you can and cannot do with your money.

These digital currencies are increasingly they conquer more space. According to a 2021 report by the Bank for International Settlements, 86 percent of central banks surveyed are looking into the possibility of issuing a central bank digital currency, and the first such currencies are already in operation in the Bahamas and Bermuda. China, meanwhile, is conducting large-scale tests with the digital yuan. become the main intermediaries of platforms. Today, the United States and the EU control virtually every financial system in the world and their dominance is a powerful weapon in their geopolitical arsenal, often used in the fight against crime, unethical behavior and tax evasion.

Consequently, digital the geopolitical consequences of the changeover to currencies can be significant. It is likely, for example, that new trading blocs, such as countries in the China Zone and Road Initiative, may choose not to use the digital U.S. dollar or the euro as a means of payment. Instead, they can rely on other digital currencies to avoid compliance with US or EU standards.

There is an urgent need to develop a new international digital governance system. Lack of transnational cooperation carries with it the danger of a “bottom-up race”, where countries compete with each other to relax workers’ protection and devalue their currencies, with the citizens of the smaller nations suffering the most.

A II. at the end of World War I, the world’s financial and trading system was in turmoil, and the great nations of the world held a meeting in Bretton Woods, which created new international financial institutions and monetary norms. The current state of affairs calls for the creation of a ‘digital Bretton Woods’ to manage and set standards for privacy, dispute resolution, taxation and criminal investigation. Interoperability between systems introduced by China, Singapore, Switzerland and other nations must also be ensured.

According to Alex Pentland, these new standards should aim to make digital platforms efficient, secure, interoperable and inclusive. . A II. however, contrary to post-World War II efforts, this coordination should include technical and governance standards in all aspects of digital commerce, taxation, finance, privacy and security in order to build a stable and inclusive world economy

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Sandra Loyd
Sandra is the Reporter working for World Weekly News. She loves to learn about the latest news from all around the world and share it with our readers.

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