The United Nations Development Programme (UNDP) is exploring the potential of cryptocurrency to enhance human development, particularly in promoting financial inclusion in unbanked areas.
Kanni Wignaraja, the UN Assistant Secretary-General and Regional Director for Asia and the Pacific highlighted in a blog post the need for careful research into how cryptocurrencies, central bank digital currencies (CBDCs), and stablecoins can foster economic growth and social progress. However, she also stressed the importance of addressing the risks associated with digital assets through regulatory measures to ensure financial stability.
Wignaraja emphasized the significant market value of digital assets like Bitcoin and Ethereum, which reached $3.9 trillion in December. She proposed that a small portion of these funds could be redirected to improve education, healthcare, job creation, and skill development in communities. Additionally, she pointed out the benefits of cryptocurrency for instant cross-border transactions and its potential support for unbanked populations. However, she also raised concerns about market volatility and the risk of illicit activities, advocating for a balanced regulatory framework to ensure innovation while maintaining financial security.
The UNDP is expanding its efforts to use blockchain technology for good governance, focusing on enhancing transparency in fund tracking and reducing corruption. Wignaraja suggested conducting controlled tests of crypto-based funding mechanisms with strict safeguards to evaluate their effectiveness. To build expertise, the UNDP has already begun equipping its personnel with blockchain knowledge, including a partnership with the Algorand Foundation to launch a blockchain education academy to train 24,000 UN employees by November 2024.
Wignaraja also pointed to the growing adoption of CBDCs in key Asian economies, including China, India, Indonesia, Thailand, Singapore, Japan, and South Korea. She argued that these digital currencies could enhance financial transparency, reduce corruption, and strengthen economic accountability. She urged for deeper analysis and best practices to assess whether stablecoins can be safely integrated into financial systems to improve resilience in recovering economies.
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