Over the decades of globalization the average volume of foreign exchange flows has risen from $15 billion per day in 1973 to $5.3 trillion in 2013 and, today, supply chains account for 80% of global trade value. However, the global financial infrastructure has not kept up with the internationalization of trade and what we are seeing with digital currency and stablecoins is the globalization of money itself.
A move to 1930s style protectionist trade policies would be disastrous for the global economy and MNCs are taking measures to protect their supply chains and influence the direction of future globalization. Alternatives to the Bretton Woods multilateral system are being created and new models of multi-stakeholder governance is emerging, some built around blockchain consortia.
This is happening amid a resurgence in nationalist politics and a deterioration of post-World War II (Bretton Woods) governance and free-trade agreements, leaving a power vacuum in global governance, or a ‘G-Zero World’.
This power shift can be seen in the waning power of the United Nations which this year faces a funding crisis as member nations refuse to pay fees, and the rise of corporate multi-stakeholder groups such as the World Economic Forum (WEF) which moves closer to global governance after signing an MOU with the UN this year.
Facebook’s Libra Association has been the greatest attempt by an MNC to recreate the multi-stakeholder model in a consortium that if successful could become a ‘decentralized NGO’. However, as blockchain potentially enables new forms of decentralized organization and co-opetition between rival companies ‘decentralization’ could also be used as a veil to absolve companies from traditional liabilities, just as no one can be subpoenaed for the consequences of bitcoin or any other permissionless cryptocurrency.
Part 2 of this research series looks at the governance models of the three prominent blockchain consortia, Hedera Hashgraph, Libra and R3 Corda.
- the possible motivations for joining a consortium
- Blockchain enabling new forms of corporate governance models
- The decline of multilateralism and the rise of multi-stakeholder groups
- The role of tokenized assets (security tokens) in enterprise
Just as blockchain and cryptocurrencies are being used to reorganize the traditional structures within corporations it is also leading to new forms of governance between corporations as industry leaders steer the next phase of globalization and global governance. It is vital for investors and business leaders to understand this next evolution of blockchain.
DOWNLOAD FREE REPORT
BLOCKCHAIN IN ENTERPRISE PART 2: Consortium governance and the future of globalization
This year the UN faces a funding crisis as the post-Bretton Woods governance system reaches its limits in the digital globalized economy, leaving a gap on the direction of globalization. Digital currencies are the globalization of money and corporations are starting to put their weight behind blockchain consortia.