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Bank of Papua New Guinea explores blockchain potential for improving financial inclusion
The Australian government has allocated $200,000 to support the Bank of Papua New Guinea's efforts to explore the potential of blockchain technology to help improve PNG’s low rate of financial inclusion, ABC reported.
The central bank noted that only about 15 percent of Papua New Guineans currently have a bank account. Such low level of financial inclusion not only limits people’s economic opportunities, but also has broader implications for PNG's prosperity.
Loi Bakani, Bank of PNG's governor, said the difficult terrain of the country makes it difficult for many people to have access to financial services. He said the people hope that blockchain technology, by the use of digital currency Bitcoin, could help improve the situation in rural areas.
The central bank has signed an MOU with the Australian Government funded PNG Governance Facility, managed by Abt Associates, as the beginning of a larger collaboration aimed at developing blockchain use cases for solving a number of PNG’s infrastructure and logistical challenges. Bakani said that he is in talks with a number of international organizations including the World Bank and IFC, as well as the private sector to join the collaboration.
Rabbie Namaliu Jnr is the manager of Private Sector, Innovation and Economic Growth, at the Australian-funded PNG Governance Facility. He said that the efforts to explore the technology would hopefully help determine whether it is best suited for PNG.
"Whether people can participate meaningfully in the banking system, if they choose to," he said. "How money can be remitted internally and address some of issues of fraud and anti-money laundering. Also [if it will] meet compliance KYC, which is Know Your Customer standards that banks often have."
Namaliu pointed out that the first step would be to identify the factors that prevent people from accessing financial services.
"What is the issue of financial inclusion? Is it around ID? Is it around access to internet or is it around access to power?" he said. "How do you make banking cheap, or reduce cost of doing banking in the rural sector, that allows for people to be on the system. But at the same time offers a value proposition for our current financial institutions to provide that service to the 85 per cent that are unbanked."