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Last year, the World Bank and the Commonwealth Bank of Australia announced an authorized Ethereum-based blockchain to facilitate the end-to-end issue of bonds between financial partners. The financial institution created by Bretton Woods hopes to make debt capital markets much more efficient with a bank-bank blockchain network. At the same time, the World Bank bond scheme was examined for political and corporate collusion with global leaders and Fortune 500 multinationals.
Read also: Central banks around the world test their digital currencies
The World Bank plans to sell debt through Blockchain
The World Bank wants to digitalize bond markets and debt capital regulation on an Ethereum private blockchain. The project is led by three other major financial institutions including the Commonwealth Bank of Australia (CBA), RBC Capital Markets (RBC) and TD Securities (TD). According to the blog post of the World Bank and CBA, the project had raised $ 81 million for the issuance of distributed accounting based bonds in August 2018. This year, on August 16, the Bank worldwide revealed that the project partners increased the blockchain bond liquidity by over $ 33 million. In essence, the bank uses the private blockchain to issue a digitized debt instrument called Bond-i, an autonomous intelligent contract token system that pays coupon payments over a long period of time. The technicalities of the blockchain platform were developed by the CBA's Blockchain Center of Innovation Lab and the bank revealed that "the architecture, security and resilience of the blockchain platform were conducted by Microsoft". Moreover, from a legal point of view, the project is supported by the litigation company King & Wood Mallesons.
Basically, the project is very centralized with its authorized distributed ledger viewable only by bank-to-bank associates, Microsoft and a well-known law firm. Basically, outside observers have to take press releases from the World Bank and its partners with a pinch of salt. The debt token similar to the ETH is in its early stages and the $ 114 million blocked in the project is only a few cents compared to what these banks play when they participate in debt capital markets around the world. In the end, the World Bank wants to include an annual loan of the institution from $ 50 to $ 60 billion. The Northern Trust asset manager and several Australian financial institutions and government agencies participated in the purchase of the Bond-i. With a two-year duration, the World Bank predicts that Bond-i blockchain debt security will be exchanged between buyers and sellers. Fundamentally, the World Bank hopes to hide the fact that the corporate bond system is inefficient because it only serves bureaucrats and companies, rather than the countries that buy the bonds.
IBRD: selling debt to governments to end extreme poverty since 1944
To understand this is the Bond-i project, it is a good idea to gain an understanding of what the operations of the World Bank entail. The World Bank was established as an International Bank for Reconstruction and Development (IBRD) simultaneously with the announcement of the International Monetary Fund (IMF). The two financial institutions were created after the Bretton Woods conference of 1944 and the IBRD concept was designed by leading project architect and leading economist John Maynard Keynes. At that time, economists called the period between 1944 and 1971 the age of Bretton Woods and IBRD had to finance developing countries that needed an economic boost.
The whole concept was and still is deeply rooted in Keynesian economics, a theory of total spending and which uses debt capital markets to influence the production of inflation. In essence, the IBRD is not much different from a borrowing shark that lends zero loans to credits with negative interest and government bonds to countries in need. Despite the fact that the spending and debt markets have produced high rates of inflation, the Keynesian economists behind the World Bank still believe it works. The World Bank states that the ultimate goal is to end extreme poverty by 2030, but so far it has only enriched 500 companies, bankers and politicians. As the Austrian economist Murray Rothbard once said: "It is easy to be visibly" compassionate "if others are forced to pay the costs."
The artificial and insidious bonding regime severely damages the global economy
This is because the global elite, politicians, global financiers and the banking cartel are the only ones to reap the benefits of the World Bank's debt sales system. Fundamentally, the World Bank sells these bonds for commodities of the real world and political influence and promises to pay the interests of the bondholders or promise to pay the entire capital on a later maturity date. The largest borrowers, who obtained bonds and loans through IBRD in 2018, include India ($ 859 million) and China ($ 370 million). In 1998, it was estimated that countries with low economic resources owed the World Bank nearly $ 2.5 trillion and since then the figure has increased by over $ 50-60 billion.
After the IBRD has secured real assets and raw materials from the loan of government bonds and credits, the central banks of the countries buy the IBRD bonds borrowed from the government on the open market. This, in turn, increases the money supply of the country which therefore feeds inflation and the increase in prices linked to goods and services. The bond system of the World Bank is no different from the insidious mechanisms that jeopardize the global economy such as the fractional-reserve banking system and quantitative easing. The World Bank that sells debt in the form of bonds so that central banks can print more money has the same effect as directly manipulating interest rates.
"If the government manages to establish paper tickets or bank credit as money, equivalent to grams of gold or ounces, then the government, as a dominant currency supplier, becomes free to create money without costs and at will", he said. explained Murray Rothbard of the growing credit and debt cycle in 1995. "Consequently, this" inflation "of the money supply destroys the value of the dollar or the pound, raises prices, paralyzes economic calculations and hinders and seriously damages the functioning of the market economy. "
In the middle of selling Blockchain Bond snake oil, the World Bank is heavily scrutinized for neotism
Although the World Bank's blockchain project is one of the highest profile experiments of its kind, the institution has been subjected to scrutiny for a while to allow for the growth of nepotistic behaviors. Last year, the bank was criticized for cronyism and corporate influence in a research report written by Rabia Malik and Randall Stone. The report explained that the corrupt states touch the funds for development, the technocrats manipulate the statistics and the bureaucrats participate in the political capture of the international financial institutions (IFI). Stone and Malik's research shows that the richest countries use the World Bank bond system to strengthen their influence on political power.
"The World Bank withholds loan disbursements in order to build a reputation for enforcing conditionality and the multinationals are pressuring for these funds to be released," report details of the research report. "We find evidence of the participation of the Fortune 500 multinationals as the project contractors and the investments of these companies are associated with unjustified disbursements from the project's performance."
It is not difficult to notice that the game of shells is taking place with the growing World Bank bond scheme and the so-called "compassion" towards the poorer nations. Many people believe that sharks lending this ability are not at all compassionate and sell debts to the unfortunate in a parasitic way. People like Ludwig von Mises, Lew Rockwell, Ron Paul and Murray Rothbard have all explained how the World Bank is just another failed concept designed by John Maynard Keynes and his followers. Likewise, the Bond-i blockchain project is just an elaborate form of debt sale, but the process is not very transparent, unless you are a member of the banking cabal.
Unlike public blockchains, the general public does not have access to the blockchain explorer of this project and probably never will. For the skeptics, the $ 114 million blocked in the Bond-i project is a joke and if the World Bank wants to end the systematic global economic crisis, it should stop interfering with the economy by selling debt. Central politicians and central bankers, however, are not ready to hit the bottom because they sincerely believe they are interfering with the market adjustment process. Regardless of whether it is hosted on a fantasy blockchain or not, as long as the World Bank does not interrupt the bond scheme, the borrowing economies will remain manipulated and artificial.
What do you think of the new Bond-i project of the World Bank blockchain? What do you think of World Bank / IBRD practices of selling debt to poor countries? Let us know what you think of this topic in the comments section below.
Image credits: Shutterstock, World Bank logo, Wiki Commons, Pixabay, Jamie Redman, Peter VanValkenburgh and WBG.
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