Bank of Russia May Use Blockchain to Control Microfinancing Market
Bank of Russia concedes employing blockchain technology to de-criminalize microfinancing market and enhance its transparency, Izvestia reported.
According to the publication, earlier this February the General Prosecutor’s Office of Russia demanded that the Bank of Russia tightens control over microfinancing organizations and pawn shops. A spokesperson for the Central Bank’s working group for distributed processing and accounting of financial data said that blockchain could be useful in covering the issue.
Blockchain technology may be employed to make credit repayment more transparent and maintain debtor identification easily. In addition, the system will accelerate transactions and provide security for financial data. A lendee gets registered in a blockchain-based system with a personal account associated with his or her identity. The set of letters and numbers will be transferrable to a counterparty without any need to disclose the identity, with only government institutions controlling the data.
The working group is set to finalize the research of the technology by this June.
Alexander Dunaev, COO at MoneyMan, a microfinancing organization, said blockchain could indeed benefit entrepreneurs engaged in microfinancing.
“It seems to me that introduction of crypto-technologies could act as a fillip for prompt introduction of simplified identification procedures for customers of online crediting services,” he stated.
Julia Zilbert, project manager at Microcredits of Russia told Lawmix.ru:
“That’s a good idea. Any idea aimed at increasing market transparency is worth consideration. However, it will involve only legal MFO. There are lots of ‘black creditors’ in the country beyond the legal terrain. They still will keep on hanging their ads on lamp-posts and lend money at gargantuan interest at backstreet locations. They don’t give a damn on average true interest cost vocalized by the Central Bank, or consumer lending regulations, or personal data protection, or debt load cap.
“Bank of Russia doesn’t have to chase after the shadow market players, it has other missions to accomplish. Though the regulator is currently involved in revealing and eliminating shadow players, that’s not right at all.”
Dunaev also said that the Central Bank intends to introduce simplified identification with accounts at the state services website. According to the ministry of communications of Russia, there are 22 millions of Russians registered at the Unified System for Identification and Authentication. However, the idea of remote identification has never been developed any further.
Dunaev believes that microfinancing transactions will propel consumer crediting market, even though there were only 10% of 3.7 thousand officially registered MFO’s that had provided online microcredits.
In early 2016, deputy chairwoman of the Russian Central Bank Olga Skorobogatova assumed that blockchain-based systems for financial markets may emerge as early as in 2017 or 2018.
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