Australian financial experts and institutions are collaborating with the Bank of Papua New Guinea to utilize Bitcoin’s blockchain technology to improve financial inclusion within the country.
The Australian government and its financial contractors have allocated $200,000 for the development of blockchain technology to develop an alternative banking system for Papua New Guinea. Considering that only around 15 percent of the country’s citizens and residents have access to proper banking and financial services, both the Australian and Papua New Guinean governments recognized the importance of providing an easily accessible platform for Papua New Guineans.
Loi Bakani, the governor of the Bank of Papua New Guinea, revealed that the institution had been closely cooperating with the Australian government to utilize bitcoin to provide financial services for the unbanked in rural areas. Bakani noted that financial exclusion of Papua New Guineans in the rural areas is an important issue which the government has been trying to solve over the past few years.
One major problem with the collaborative effort between Australia and Papua New Guinea is the lack of stable internet connection throughout the country. Several criticisms around the two countries’ bitcoin and blockchain-based project revolved around the fact that most rural regions in Papua New Guinea do not have access to stable internet connection.
However, blockchain experts including University of Technology Sydney’s Pip Ryan stated that internet connectivity would turn out to be a minor issue if the two governments successfully develop a viable and practical financial network using bitcoin and blockchain technology that can be actually be adopted by the unbanked.
“If you can get up a system that’s secure and that can ensure transactions will occur when they should, and the correct amounts and you trust it. Then you can actually introduce banking services where they don’t currently exist — I think it’s a really positive move,” said Ryan.
As a start, Papua New Guinea should regulate bitcoin as a remittance method and a legal currency, like the central bank of the Philippines did earlier in 2017. In February, the Philippines officially legitimized and legalized bitcoin as a payment and a remittance method. Bangko Sentral ng Pilipinas announced in its BSP Circular No.944 entitled “Guidelines for Virtual Currency (VC) Exchanges” that bitcoin and other digital currencies can be freely used within the Philippines as a means of payment and remittance.
“Rather, the BSP aims to regulate VCs when used for delivery of financial services, particularly, for payments and remittances, which have a material impact on anti-money laundering (AML) and combating the financing of terrorism (CFT), consumer protection and financial stability,” the document of the Central Bank of the Philippines read.
Since then, bitcoin businesses and bitcoin remittance service providers such as Coins have enjoyed explosive growth. Coins became the most widely utilized financial application on Android and iOS in the Philippines and secured a $10 million Series A funding round.
Australian-funded PNG Governance Facility manager Rabbie Namaliu stated that the two governments would first have to discover reasons behind financial exclusion in Papua New Guinea and how to convert the unbanked to bitcoin and blockchain-based platforms.
“What is the issue of financial inclusion? Is it around ID? Is it around access to the internet or is it around access to power? How do you make banking cheap, or reduce the 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 percent that are unbanked,” said Namaliu.