What if the blockchain allowed to revitalize the economy at the time of covid-19?

With the global economy at a standstill, investment does not appear, at first glance, to be a priority for the thousands of French victims of the crisis. And yet, at the time of deconfinement, it seems essential to revitalize the "unlisted" economy in a healthy and efficient way. We are indeed talking about a loss of 6 points of GDP for France and economic activity down 27% in just 2 months. Hence the fundamental importance of finding solutions to revitalize the economy.

Savings for the French have never been greater. Since 2015, the stock of so-called "secure savings" has increased by 530 billion euros. A statement shared by Philippe Crevel, Director of the Savings Circle: “Even before the crisis, we had already been on an upward trend in the savings rate for two years, with a strong preference for liquidity and security” before adding that "this trend will strengthen because the French are worried, especially in the face of the foreseeable rise in unemployment". We are indeed on the verge of reaching an historic peak in 2020 since, with the crisis, in March and April, the French deposited 55 billion euros on their books according to the OFCE. According to statista, 53% of French people said that the coronavirus crisis pushed them to save more money than before. (1)

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This is why the moment could be paradoxically ideal, as long as the French, especially the young generations, know how to invest. Millennials do not recognize themselves in the investment proposals made by institutional players such as banks or insurance companies. 44% of these 15-25 year olds do not feel understood by their banks and only 8% trust these institutions. More than half of them (2) say they want to invest but don't know where to start.

Traditional financial products offer unattractive yields: A passbooks have reached a historically low level with a return of 0.5% per year and Euro funds do not offer much better with only 1.4% on average. The unlisted market offers significantly more attractive investments. In addition, it addresses all economic sectors: real estate, Private Equity, Venture Capital, etc. However, this market for unlisted securities presents three main barriers to entry: initial investments are generally very high; they are not very liquid because blocked over a long period of time, generally 5 to 8 years; complex administrative procedures are necessary to gain access.

If, with the crisis, the situation seems unfavorable, the French are therefore in reality ready to invest. However, they seek to do so in a controlled manner. It seems essential to me that the modern investment solutions employed allow to 1) improve the post-market infrastructure of unlisted financial securities, 2) increase liquidity by speeding up the process of exchange of securities for cash payment and 3) be oriented towards the “unlisted” economy. Faced with these challenges, Blockchain technology has no shortage of advantages. Investing in the unlisted financial securities market would enable the French to finance the local economy in a responsible manner.

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In fact, the evolution of our production and consumption patterns must take place quickly to establish our way of life over the long term and ensure a viable future. I am convinced that investment is one of these choices; it must be reflected and enlightened. However, the investment must have a positive effect for both parties: the investor who seeks to return his capital and the recipient of the latter who seeks to obtain the financing necessary for the realization of his project. To this, a third factor is added: the external environment in which the first two players operate. Indeed, regardless of the amount of investment and the nature of the project supported, there are externalities that result. Now is the time for positive externalities for society and the environment. That said, my wish is to create a virtuous circle, where our choices and actions, in terms of investment, are favorable to society and the environment. The behavioral awakening associated with new uses and new technologies, blockchain in mind, will bring more transparency, fairness and the confidence necessary for this new dynamic which will help to simplify and streamline financial transactions. The French are neither allergic to risk nor angry with the markets, they are tired of the lack of visibility and the methods offered.

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Thus, one of the major needs of our current economy, whatever the place and the time, resides in the capacity to be able to propose solutions and functionalities allowing to operate with ease the operations on securities of shares or related actions collective investment undertakings (UCIs). So many needs that blockchain technology would therefore meet.

Source:

1Impact ofe the coronavirus epidemic on the savings behavior of the French in April 2020

2 Millenials + Money: the unfiltered journey

This forum is brought to you by Bilal El Alamy, Founding President ofEquisafe, when submitting an application to the Banque de France for a digital currency (MDBC) experiment.


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