Red Cross Implements Crypto to Boost Disaster-prone Communities
World Bank issues catastrophe-linked bonds for Philippines
The World Bank (International Bank for Reconstruction and Development or IBRD) has issued two tranches of catastrophe-linked bonds (CAT bonds) in order to provide the Republic of the Philippines with financial protection of up to US$75 million for losses from earthquakes and US$150 million against losses from tropical cyclones for three years.
The bonds, announced on November 25, were issued under IBRD’s “capital at risk” notes programme, which can be used to transfer risks related to natural disasters and other risks from developing countries to the capital markets. Payouts will be triggered when an earthquake or tropical cyclone meets the predefined criteria under the bond terms.
Both bond tranches were priced at par with the coupon set at three-month US dollar Libor+funding margin+risk margin, subject to a minimum rate of interest equal to the risk margin. The funding margin for both tranches was -0.12% per annum, while the risk margins for the US$75 million tranche and for the US$150 million tranche are pegged at 5.50% and 5.65% per annum, respectively…
Red Cross Implements Crypto to Boost Disaster-prone Communities
The new currencies use credits transferred by mobile phone and automatically recorded with Blockchain. They allow slum-dwellers or villagers to be paid for their labor and spend the credits they earn on local goods and services. (Photo by Wolfgang Kumm/picture alliance via Getty Images)dpa/picture alliance via Getty Images
It has been a widely held belief that the blockchain and cryptocurrency industry can do a lot of good in places where traditional finance and banking are under strain. Swaths of the third-world are unbanked and are not aligned with traditional banking.
This is where blockchain technology, with its drive away from intermediaries and middle-men, becomes a powerful tool for financial inclusion. Cryptocurrencies also have the ability to be a tool for communities who have difficulties with cash and the banking that comes with it.
To this end, the Red Cross has decided to lean on this emerging financial technology in what is being called ‘disaster-prone areas to help ensure frictionless banking and money management from the ease of a mobile phone…
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