The Islamic Development Bank Institute (IsDBI) has announced the development of a Smart Stabilization System (SSS) for financial markets in partnership with Belgium-based SettleMint.
In a statement, the two parties stated that the SSS will ensure the stability of assets traded on global financial markets. Relying on blockchain technology, the SSS operates via an algorithm designed by SettleMint to prevent wild price swings triggered by “speculative booms and busts.”
While details on the inner workings of the SSS are sparse, there are suggestions that it will operate by ensuring a balance between the forces of supply and demand. Sources speculate that the SSS will rely on smart contracts to trigger a purchase when there is a shortage of buyers.
Conversely, where there is a lack of sellers, the smart contract will initiate a sale, borrowing assets to complete the transaction. Several loopholes for exploitation abound in such a system, but the IsDBI and SettleMint allay fears saying that the blockchain-based system is impervious to manipulation.
“The System is forward-looking, while most other stabilization systems are backward-looking,” according to the bank. “Moreover, the SSS is self-financed, and investors’ rights are fully protected.”
SettleMint has considerable experience with blockchain, contributing to developing over 60 industry projects worldwide by providing low-code solutions to enterprises. The Belgium-based firm raised $16 million with Molten Ventures, Biocellerate, and Fujitsu participating in the funding round.
“As we find ourselves in times of significant economic uncertainty, it is an honor to support the Islamic Development Bank Institute on the design and implementation of new mechanisms that can enhance the stability, transparency, and efficiency of trading activities globally,” said SettleMint CEO Matthew Van Niekerk.
A plethora of use cases
Since its debut in 2009, blockchain has seeped into several facets of the economy, prompting governments around the world to take notice. Several governments, including India, the United Kingdom, and China, have made blockchain the cornerstone of their digitization drive amid a heightened private sector interest.
Several banking regulators rely on the technology for their central bank digital currencies (CBDCs), while other governments are deploying it for security, identification, and education sectors. The Philippines and India appear to be the largest adopters of the technology, with India eyeing a 46% blockchain adoption rate in the coming years.
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