Dr. Raghuram Rajan, former Governor of the Reserve Bank of India and Distinguished Professor of Finance at the University of Chicago, took the stage at Swell 2019 and underscored the important role that technology, including blockchain and digital assets, plays in fueling economic growth, increasing financial inclusion and ultimately revolutionizing businesses in emerging markets around the world.
He explained, blockchain offers an array of different opportunities to address changing attitudes about the international financial system—in cross-border payments, in tokenization within central banking and more.
It’s also in thinking differently about how we’ve historically approached monetary policy that we’ll start to see new opportunities for more people around the world start to unfold. He remarked, “we are at the beginning of another wave of globalization.”
Technology has always been a big lever for raising productivity and creating new business models. Yet, Dr. Rajan emphasized that, “We are due for stronger productivity. Tech innovation doesn’t always translate to actual productivity growth. For corporations to really learn how to use emerging technology, they need to reinvent the system. Once this is managed, we will see the pace of growth increase—not the moderate growth we see today.”
According to Dr. Rajan, financial institutions must continue to earn the trust of the underbanked and unbanked consumers around the world. Partnering with companies that leverage decentralized technologies is one way to achieve this because they encourage more transparency and bring down the cost of sending money home to loved ones.
“At an abstract level, what we see today is increased fear and fury at centralized banks. Across the world, there is a break down in globalization and a worry from businesses about adhering to rules, set by another country. The answer is more decentralized solutions, like blockchain technology—that people trust,” said Dr. Rajan.
Dr. Rajan is no stranger to the democratizing power of technology. He is considered a key visionary behind India’s early adoption of widespread mobile banking. His brainchild, the Unified Payments Interface (UPI) that launched in 2016, is revolutionizing peer-to-peer payments and helping usher in India’s migration to a more digital society.
On stage, he highlighted micropayments as one area ripe for the revolutionary change promised by decentralized blockchain technology. Dr. Rajan explained, “We’re going to see intermediaries negotiate for payments with information. If data belongs to the individual then it can be exchanged through micropayments and doesn’t become a source of monopoly. In this way, decentralization disperses trust and power, and ultimately breaks up monopolies.”