🟩 Thailand ฿ets on retail CBDC
did you know: bitcoin found its symbol in the Thai baht? | also: Hong Kong and London jostle on finance once more
The New Money Brief covers the global revolution underway in our shared financial infrastructure, brought on by the rise of digital currencies.
Delivered several times a week. Created and edited by Marc Andrew.
The Bank of Thailand is collaborating with three payment service providers, Bank of Ayudhya, Siam Commercial Bank and 2C2P, to develop and launch its retail central bank digital currency (CBDC). The new financial infrastructure aims to enhance the convenience and efficiency of financial transactions while reducing costs.
The testing of the retail CBDC is scheduled to take place in a regulatory sandbox from June to August this year, according to Sam Tanskul, managing director of Krungsri Innovate, a corporate venture capital subsidiary under Krungsri.
Krungsri is among the first financial institutions to initiate a pilot test for the retail CBDC, called CBDC Krungsri. The bank has invited its staff and approximately 100 merchants near Krungsri’s headquarters to participate in testing the digital currency. The bank aims to increase the number of participants and has set a target of 2,000 staff joining the pilot project.
Source: Thaiger
U.K. banking titan HSBC unveiled a new HSBC Innovation Banking unit Monday, as it seeks to push into the technology sector following its eleventh-hour rescue of the U.K. subsidiary of failed Silicon Valley Bank (SVB) in March.
HSBC acquired the London-based SVB unit for £1 after its parent company suffered a run on its assets fueled by customer fears over the bank’s solvency. SVB was one of several U.S. and European lenders that met their downfall earlier this year as broader turmoil rattled the global banking sector.
The U.K. government and Bank of England facilitated the purchase in a bid to protect deposits, as Britain separately struggles to retain its position as an international tech capital.
Some have questioned whether traditional financial institution HSBC is well placed to take over the legacy of SVB and finance tech-focused startups and small businesses.
Source: CNBC
Governments should consider an international moratorium on the development of central bank digital currencies (CBDCs) due to the financial stability risk they could pose for small jurisdictions, the former director of research at the Federal Reserve Bank of New York, Stephen Cecchetti, told central bankers in Finland on Thursday.
“I believe there should be something equivalent to… a CBDC treaty — like the Nuclear Test Ban treaty — across the world where everyone agrees not to issue CBDCs,” said the American economist, who is now Rosen Chair in International Finance at the Brandeis International Business School. “Because as soon as a large jurisdiction does, there will be a rush to do this and as soon as that happens, you will see the financial systems and the monetary sovereignty of small, unstable countries just get demolished.”
The comments came in the broader context of a speech that focused on how to make banks safer in the aftermath of the bout of financial instability that gripped markets in March.
Source: The Blind Spot
Ex-Barclays boss Antony Jenkins has decried banks as "museums of technology" who have failed to properly embrace true digital transformation and are consequently shedding huge numbers of customers to more nimble tech-first rivals.
The former group CEO of Barclays and founder of core banking startup 10x, was speaking on the release of research conducted among 150 senior decision makers and more than 150 product managers, business analysts and project managers, at banks across eight markets.
The study found that banks across the globe are shedding large numbers of their customer base to rivals. One in eight banking leaders (12%) state they have lost 30-40 per cent of their existing customers due to poor customer experience. Across the board, customer attrition rates are running at 20%.
Source: Finextra
Japanese banking giant MUFG has been quick to embrace a change in Japanese law around stablecoins. On June 1, a new bill came into effect, setting a governing code around stablecoins – which are a form of cryptocurrency typically backed by a reserve asset.
The bill, passed into law a year earlier, requires that stablecoins be pegged to the yen or other legal tender, with guaranteed redemption to the holder at face value, and that they can only be issued by banks and trust companies.
Almost immediately after the law came into effect, MUFG said that its Progmat Coin platform – originally launched in February 2022 as a universal digital asset payment method for stablecoins, crypto and central bank digital currencies (CBDCs) – would be open to all banks in Japan that wish to launch yen-pegged stablecoins on a range of public blockchains.
The MUFG-backed platform will support bank-backed stablecoins on Ethereum, Polygon, Avalanche and Cosmos. It has been built with technology and security partners Toki and Datachain, which are building a bridge to allow for cross-chain transactions, lending and swaps between the four underlying blockchains. Toki itself is developing liquidity pools across the four blockchains and will release its own crypto token later this year.
Source: Euromoney
UK Prime Minister Rishi Sunak is eager to bring some Silicon Valley glitz to London. Now venture capital investor Andreessen Horowitz is setting up its first non-US office in the British capital, to focus on blockchain and cryptocurrencies. Both parties could use a win.
The firm known as a16z could benefit from some geographic diversification. Crypto funds account for about 20% of its $35 billion of assets, yet the U.S. Securities and Exchange Commission last week escalated a crackdown by filing charges against Binance and Coinbase Global, the two largest crypto exchanges.
Source: Reuters
People in Turkey are running to the crypto market as a haven against the collapsing lira currency.
Local demand for Tether, a dollar-backed stablecoin, surged in early May ahead of elections and has remained high since a win for President Recep Tayyip Erdogan rattled markets. While there’s been a global crackdown on the asset class and falling prices for the biggest tokens, the lira has fared even worse, breaching historic lows in recent days.
The Turkish currency has slid 11% against the dollar in the past week as the central bank has pulled back from intervention to prop it up after the vote. Since the previous election in 2018, the lira has lost 80% of its value as Erdogan pursued unorthodox economic policies, including attempts to tame inflation as high as 80% with interest-rate cuts.
Source: Bloomberg
The Hong Kong Monetary Authority has initiated a public consultation process regarding stablecoins and intends to establish a regulatory framework by the end of next year, according to Undersecretary for Financial Services and the Treasury Joseph Chan Ho-lim.
The number of fintech companies has increased dramatically over the past five years, Chan said yesterday, and Hong Kong will continue to expand its faster payment system to more industries. He added that the HKMA is working with the Bank of Thailand to develop the system.
Chan also mentioned that the Hong Kong administration is focusing on the development of Web 3.0, and he thinks this could develop steadily in the SAR while also protecting investors and helping counter money laundering.
Source: The Hong Kong Standard
Coinbase will push for legislative solutions on crypto rules as it fights a lawsuit by the Securities and Exchange Commission alleging that the company operates an unregistered securities exchange, the firm’s chief legal officer said.
“Even as we’re managing the litigation, we are equally eager to engage in pressing legislative solutions,” Paul Grewal said at an investor conference Monday. “We think the court could and should rule that the case lacks legal merits and that will be the end of it.”
If the court disagrees, the case will then proceed through discovery and potentially to a trial, Grewal said. In the meantime, he said he’s hopeful draft legislation addressing the issue will advance in the US House of Representatives by the end of the summer.
The SEC last week widened its crackdown on the crypto industry through a one-two punch against the biggest firms, Binance Holdings and Coinbase. The SEC alleged that Coinbase acted as an exchange, broker-dealer, and clearinghouse all without registering with the agency for any of those roles. Coinbase has denied the allegations, but analysts have said the case will be a significant overhang over the crypto exchange’s business.
Source: Bloomberg
The recent announcement by the Hong Kong Securities and Futures Commission (SFC) that individual investors can from June 1 buy and sell digital assets – such as bitcoin or ethereum – has shifted the spotlight back on the city. While regulators around the world are clamping down on digital assets, Hong Kong seeks to re-establish its position as a global financial hub for digital asset innovation.
But it is not just digital asset companies that will be supported by this new regulatory regime – financial institutions and corporations are beginning to produce distributed-ledger technology to increase efficiencies, reduce costs and offer new services to clients. This regime might just be the catalyst to spur further innovation in Hong Kong and drive the adoption of digital assets.
With the oversight of the SFC, the Hong Kong Monetary Authority and the new regulatory guidance, financial institutions will have more incentive to explore the incorporation of blockchain technology, including tokenising traditional assets and offering digital asset trading using secure and flexible wallet technology.