On August 28th, the Guatemalan Banking Association held its “Blockchain Forum” session focusing on blockchain technologies, 4 out of the 7 panelists selected to speak were eosMeso partners!
The Guatemalan Banking Association is the institution that unites the entire banking sector in the country. It was established in 1961 and has among its mandates to: Foster the modernization of the banking practices and financial instruments to stimulate savings and investment into projects that benefit the development of the national economy. Our teammates were glad to have been invited, each on their own merits within their specific field of expertise.
Prof. Luis Gramajo, eosMeso’s Head of Infrastructure, remembered his days working within several of the represented institutions at the event, in their IT departments, with a little melancholy, but happy to have moved on to a much more exciting venture. He was glad to be able to orient his former colleagues attending the blockchain forum, several of whom he encountered for the first time in a while, on what the equivalent industries of the world have been up to and quite importantly, what they have learned, in order to save the local institution’s valuable time to not repeat the same mistakes other banking sectors have made.
He introduced the audience, mostly comprised of IT personnel and C-level banking executives to several use cases they can work on implementing in the near term. He used the example of a recent problem in the pork industry that lost millions because of not having appropriate tracking on the blockchain of the supply chain, having to recall massive amounts of meat due to uncertainty as to which lots of it had been where when. Gramajo used the example to illustrate the kinds of savings/profits that can be had in the local economy by implementing blockchain solutions. He, importantly, highlighted the risks that can be reduced to the banking sector because of it, in terms of the credit risks on their client´s side. Brilliant! He let them know about possible innovations in insurance, mortgages, liquidity services, etc. The crowd was buzzing when he said: “When the IMF chair, Christine Laggard says you should take blockchain seriously, we should not lag behind”.
Next up was Eduardo Cuevas, eosMeso partner, financial guru and UFM business school faculty member and eosMeso partner-advisor on finance and law, who asked the question: Blockchain: A Risk or an Opportunity for you banking business? He gave the audience an introduction to several methodologies they can use to study their business models and understand how they will be affected by the changing landscape. He helped them see how they can plan to adapt to it, including stress testing their projections based of what if scenarios, strategic hiring of local expertise or consultants and how to make their work effective, empowering IT departments to experiment with coming technologies, etc. He let them know that the competitive environment is quickly becoming much tougher, because now they are not only in competition with each other, but with emerging tech giants and even with decentralized autonomous corporations. He let them know about Block One´s record setting ICO and what it might mean for the future of capital formation. He made the room go into quiet contemplation when he assured them that the worst mistake they can make is not being proactive about blockchain. He stressed: Whatever you decide to do about this phenomena, you ignore it at your peril.
Darío Ramirez, Phd and faculty at USAC´s post-graduate program of constitutional and tributary law, also eosMeso partner and legal advisor, explained how the banking sector can embrace blockchain´s traceability properties to better track and give transparency to important public projects, reducing the risk of fraud and malfeasance. He contrasted this ability to the more popular notion of “cryptocurrencies are for criminals and money launderers”. He explained that cash and other forms of current laundering mechanisms are much more effective for criminal use than most blockchain currencies, he gave examples of cases where blockchain allowed tracking of criminal activities, aiding the crime fighters, hampering the criminals. His hope is that the local industry can understand this important point and save time that could be wasted in the adoption of this important toolset because of a lack of understanding of its actual properties.
His contributions during this event and during the past years helping the ABG (Guatemalan Banking Association) understand the technology and embrace it instead of letting the fears guide the discussion have been invaluable. If our group and the larger local blockchain community succeed in our quest to obtain a friendly regulatory environment locally, we will owe a large debt of gratitude to Darío. Keep on fighting the good fight, Darío “The Heart”!
Our Head of Strategy Jose Toriello, presented the important industry body with a choice: Blockchain can be the catapult of economic development for the country or the end of the macroeconomic stability we have enjoyed in the past decades. His argument hinges on a word in Spanish that has no direct translation to english: DIVISA. Guatemala has a law in place since the 1990´s called the “Ley de libre negociación de divisas”, which loosely translates to: “Law of freedom of negotiation of currencies”, which basically gives Guatemalans the right to do business in their currency of choice, at least according to Jose.
This is where the language becomes important, see, divisa means foreign currency used in international commerce, according to the judicial dictionary of the Spanish Royal Academy. He argued: Bitcoin and others are DIVISAS! We have freedom of negotiation of currencies! Let´s treat these currencies as we treat every other foreign currency! The current uncertainty in regulatory environment can be dealt with if, as an industry, this law is used as backing!
Jose eloquently explained to the audience that if the industry as a whole wants to avoid being ubered by DACs and blockchain currencies, they must evolve to become like them. He explained that the industry should want to avoid being like the local taxi cartels, who a few days before the event had blocked streets in Guatemala City, without being effective in debilitating their “enemy” Uber, and only being succesful at gaining the animosity of their potential customers. He finished with: “Without a group like the ABG using the standing freedom of currency law to demand regulatory flexibility to allow for innovation in financial services, it is highly likely that what will happen is the whole space will be ‘satanized’ as money laundering, banks will continue to be boxed into being more satellite police than bankers, congress will create lousy regulation that will push serious capital to other jurisdictions, push local entrepreneurs into grey black markets, push to the margins electronic businesses and reduce the freedom and economic opportunity for average citizens in general, in exchange for what? To please the fading Bretton Woods arrangement? Ladies and gentlemen, the ball is in your court.”
The evening ended with a panel answering the audience’s questions.
All in all, it was a great opportunity for eosMeso to work on its 2nd pillar, to foster the adoption of EOS. Our participation led to many business card exchanges with local banking executives eager to know more, and an invitation to two upcoming industry events relating to microfinance and money laundering countermeasures. EosMeso partners are continuing to become the local opinion leaders in the blockchain space, guess where most conversations end up when they are asked about how to apply blockchain solutions? You guessed right! EOS!
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