Yesterday, the 1st of July marked the 75th anniversary of the start of the Bretton Woods conference, held at Mount Washington Hotel in the United States (1st to 22nd July 1944). The conference created the financial system we use today, establishing the rules which still govern our economies.
Luno, a global cryptocurrency firm, recently carried out a ‘Future of Money’ survey in seven key markets to analyse the understanding and attitudes that individuals across the globe have developed towards the financial system. The findings indicate that the respondents from emerging markets are seeking a change to the way global money exchange and banking operates today.
The Bretton Woods conference, also known as the United Nations Monetary and Financial Conference, created a new way of managing and exchanging value between individuals and organisations primarily based on the needs of developed countries and markets.
Marcus Swanepoel, CEO of Luno, says: “The survey results show that emerging markets are seeking a change to the financial system which was created 75 years ago. The increase in population, changes to the distribution and inequality of wealth, at a time of tremendous steps forward in technology means that the current financial systems need to undergo another Bretton Woods moment.”
“Individuals in these markets cannot afford to, and should no longer need to, pay extortionate exchange rates, accept national devaluation or lose out when they simply transfer money between individuals or entities. Access to a more inclusive financial system will enable people everywhere to think of new and better ways of exchanging value and technology can play a key part here.”
The survey showed that respondents have three main areas of concern with the existing financial system: economic benefit, security, and transparency. It was also very clear that where they don’t have immediate access to wealth in the way that those in developed markets do, the respondents demonstrated a greater understanding of how it should work for them and are open to being more creative with how to maximize the value of what they do have. In more affluent societies knowledge, protection and understanding of money are less well developed.
For example, when asked how secure they feel about their current financial situation, South Africa (36%), Nigeria (35%) and the UK (24%) showed the highest percentage of individuals saying they did not feel very secure. These are alarming numbers and with political uncertainties like Brexit, established markets are also under pressure.
Over 91% of respondents in South Africa said they pay for a personal bank account and 75% said they use mobile banking. The results also indicate that respondents in South Africa are savvier with their money than those in European markets, as the second highest percentage of respondents that said they invest in products (i.e mutual funds and stocks) that came from those in South Africa. In comparison, a high percentage of individuals from European markets; France (70%), UK (61%) and Italy (59%) said they do not usually invest with a purpose of increasing their wealth.
When respondents were asked about monthly budgeting and expenditure, only 54% of people in the UK said they set a monthly budget for personal spending, a huge comparison to the 73% that said they did in South Africa, 80% in Malaysia and 65% in Nigeria. This indicates that those in emerging markets are more cautious with their personal finances, with 66% of respondents in emerging saying the main reason for having funds is to secure their families well-being.
Even though the financial system was established 75 years ago by some of the world’s greatest minds, it is clear that many markets are struggling with their economy and we do not utilise the technology that is now available. Across all markets, the percentage of individuals that felt their economy in the areas they live is currently performing very well was low. The strongest answers came from South Africa (27%) and Nigeria (23%), where they felt their economy was performing fairly poorly. Individuals from rural areas showed a higher percentage of negativity towards their economy than those in urban areas, this is largely down to the lack of access to the financial system in those areas. (23% of respondents in Nigeria and 22% of respondents in South Africa said it was very difficult for them to send money overseas.)
“We have seen little change to the global monetary system over the last 75 years, particularly amongst developed economies where financial institutions have built a system around the transfer of currencies, assets and commodities which benefit astable and strong economy. As technology advances, it is important that institutions globally find a way of adopting these advancements, enabling emerging markets to have the same access to money and transfer of assets.” – Says Marcus Swanepoel
South Africa (22%) and Nigeria (23%) showed the highest percentage of positive attitude towards a single global currency making the current financial system better, whereas only 7% of respondents in the UK agreed. The most common answer when asked what the advantages to a single global currency would be, the majority across all markets said better for the global economy; UK (20%), France (21%), Indonesia (39%), Italy (25%), Malaysia (25%), Nigeria (39%) and South Africa (35%).
The most popular answer across all markets to what the disadvantage to a global currency would be was that countries would become less independent.
As some of the world’s largest tech giants announce they are launching cryptocurrency coins, we believe developing markets will be the lead adopters. Our research shows that in these markets people are more financially savvy because they have to be, which means that they need and understand the benefits the new coins can offer.” – Marcus Swanepoel concluded.