Technology, small states and the legitimacy of digital development: combatting de-risking through blockchain-based re-risking?

An increasingly lamented consequence of re-regulatory efforts following the 2007/2008 global financial crisis has been ‘de-risking’—the growing disengagement by banks and other financial institutions with markets perceived as posing greater risks than justified by potential profits. As banks based i...

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Bibliographic Details
Published in:Journal of international relations and development 2021-06, Vol.24 (2), p.455-482
Main Authors: Campbell-Verduyn, Malcolm, Rodima-Taylor, Daivi, Hütten, Moritz
Format: Article
Language:English
Subjects:
Area Studies
Banking
Blockchain
Cooperation
Development Studies
Digital currencies
Disengagement
Economic crisis
Finance
Financial inclusion
Financial institutions
Financial services
International finance
International Relations
Legitimacy
Original Article
Political Science and International Relations
Political Science and International Studies
Profits
Small states
Technology
Transactions
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Summary:An increasingly lamented consequence of re-regulatory efforts following the 2007/2008 global financial crisis has been ‘de-risking’—the growing disengagement by banks and other financial institutions with markets perceived as posing greater risks than justified by potential profits. As banks based in the Global North have moved to withdraw financial services from many emerging economies, de-risking has attracted attention for undermining financial inclusion and developmental efforts. Novel technologies are being harnessed to address this problem, including applications of blockchain, the digital ledgers of transactions originally underpinning cryptocurrencies. Contributing to IR theorising of legitimacy and re-risking, this article illustrates how technology-based de-risking efforts that seek to attend to the perceptions of foreign financiers can undermine the legitimacy of financial inclusion projects. Contrasting unfolding blockchain-based financial inclusion initiatives in two regions of small states in the Eastern Caribbean and Eastern Europe, our analysis stresses the need for greater local participation and clearer distribution of benefits from finance and technology (fintech) centred forms of digital development.
ISSN:1408-6980
1581-1980
DOI:10.1057/s41268-020-00198-5