The United Kingdom - indeed the City of London, in particular - is a historic leader in the introduction of new financial institutions and technology.
The Bank of England was among the first central banks established in 1694. It was a pioneer in the issue of paper money and banknotes, as well as in the introduction of the Gold Standard in the late 18th Century. Itâs no stretch to credit the âOld Lady on Threadneedle Streetâ with the subsequent strength and might of the British Empire (Walter Mead did just that in his excellent book God and Gold).
The London Stock Exchange, for its part, has also pioneered countless financial innovations, from the invention of options trading in the 1790âs (a century before any other exchange) through the introduction of electronic trading in the 1980s.
All this to say: when the City of Londonâs leaders heartily embrace a new technology, itâs worth paying attention.
Such is the case with this weekâs announcement on digital currencies.
Enjoy your weekends! Marc.
â«ïž âFive associations have united for the formation of a new alliance â the UK Forum for Digital Currencies (UK FDC) â which looks to elevate innovation across the industry.Â
In a bid to develop better policies, practice and regulations around digital currencies, the group members include the City of London Corporation, Digital Pound Foundation, The Payments Association, TheCityUK and UK Finance.Â
As part of the announcement, the group mapped out that âdigital currencies have been gaining rapid momentum over the past few years and have the potential to change how society thinks about and uses moneyâ.Â
Addressing the current climate it added that âwhile there are risksâ, the UK FDC has seen a growing interest and the adoption of new forms of digital money. At the heart of accommodating innovation and growth however remains a positive regulatory frameworkâŠâ
Source: The UK Payments Association. Read the Press Release announcing the organisation.
â«ïž âThe Bank for International Settlements (BIS) published a brief paper exploring the options to address the risk of cryptocurrencies, or as it likes to call them, crypto-assets.
It argues that cryptocurrencies feature many of the risks of TradFi, but while similar, the risks tend to be exaggerated. These include the extensive use of leverage, liquidity and maturity mismatches, and significant asymmetries in information.
Weâd add an observation on the maturity mismatches. For example, crypto lenders have deposits that can be instantly withdrawn but extend loans to borrowers for months or years. TradFi may have similar mismatches. However, because cryptocurrency is networked, including at the social/Twitter level, âbank runsâ and herd movements are far more frequent, exaggerating the problematic nature of the maturity mismatches...â
Source: Ledger Insights
â«ïž âTwitter is working on a feature called Coins, allowing users to support creators on the platform.
This is according to hacker Jane Manchun Wong, who managed to see the partially finished feature in action.
"Coins allow you to support creators who Tweet great content. Unusued coins are kept in your balance," says a notice on the Coins purchasing screen, obtained by Wong.
Wong also tweeted a screenshot of the Coins menu that takes the user to the purchase screen, as well as list of Twitter Awards you can send to other users, which range from "1 Mind Blown" equalling one coin, to "1 Gold! equalling 5,000 coinsâŠâ
Source: Mashable
â«ïž âEl Salvador, which became the first country in the world to recognize bitcoin as a legal tender two years ago, approved on Wednesday a law that would regulate the issuance of other digital assets by both the state and private entities.
The bill, backed by ruling party lawmakers allied with President Nayib Bukele, aims to attract national and foreign investors while creating new financing opportunities for citizens, companies and the government.
Lawmakers in the unicameral Congress dominated by Bukele's New Ideas party passed the proposal in an overwhelming majority vote of 62 in favor and only 16 opposed.
"The purpose of this law is to establish the legal framework that grants legal certainty to transfer operations to any title of digital assets used in public issuance offers," according to the legislation.
Public offerings may be made by issuers using existing digital assets, with the opportunity to create new ones through them, the law indicatesâŠâ
Source: Reuters
â«ïž âFor the first time ever, the Peopleâs Bank of China (PBOC) has included its central bank digital currency (CBDC) in official cash reports.
Chinaâs digital yuan, otherwise known as e-CNY, amounted to 13.61 billion yuan (roughly $2 billion) by the end of December, per official figures reviewed by the South China Morning Post. That reportedly converts to 0.13% of Chinaâs outstanding monetary base supply.
Announced in 2019 and launched for public testing in April 2021, Chinaâs CBDC has made its way into 26 different cities and into the hands of 5.6 million merchants.
Unlike bitcoin and ether, the digital yuan does not run on a blockchain or distributed ledger, and should not be considered anything similar to decentralized cryptocurrency, or even stablecoins such as tether and USDC.
It is money issued by the government via centralized technical underpinnings more akin to traditional, fiat-powered payment apps such as Apple Pay.
Late last year, the Bank of China in Hong Kong offered 500 customers the opportunity to open trial accounts, where they would receive 100 e-CNY to spend in different stores across the mainland and at local supermarket chainsâŠâ
Source: Blockworks
â«ïž âIndia will spend nearly $320 million to promote cards on RuPay and for low-value UPI transactions, the latest in a series of moves by New Delhi to fuel the growth of its homegrown payments network.
New Delhi approved a plan Wednesday to spend $318.4 million for the promotion of RuPay debit cards and low-value person-to-merchant transactions on UPI during the period of current financial year ending in March 2023.
âUnder the said scheme, acquiring banks will be provided financial incentive, for promoting Point-of-Sale (PoS) and e-commerce transactions using RuPay Debit Cards and low-value BHIM-UPI transactions (P2M) for the current financial year FY 2022-23,â it said in a statement.
The Narendra Modi-led governmentâs move is an attempt to assuage the concerns of banks that have questioned the financial viability of the UPI network. UPI, a six-year-old payments network built by a coalition of banks, has become the most popular way Indians transact online today.
The payments service fetches money directly from banks, removing the reliance on any intermediary. But it operates on zero merchant discount rate, tiny fees on transactions that is one of the main sources of income for banks and card companiesâŠâ
Source: Techcrunch
â«ïž âThe introduction of central bank digital currencies may highlight the security benefits of the decentralized finance (DeFi) industry.
Short for central bank digital currencies, CBDCs are the digital form of a countryâs fiat currency, issued by central banks. CBDCs are often touted as the future of money, with over 100 countries already experimenting with the technology.
Mitchell Amador, the founder and chief executive officer of Immunefi, a Web 3.0 bug bounty platform, expects the introduction of CBDCs to highlight the security benefits of DeFi and attract more capital into the space. âThere have already been billion-dollar hacks at traditional financial institutions. But weâre going to see an explosion of that with the rise of CBDCs,â he said.
âBut weâll all be looking then and be like, wow, those DeFi guys are so much more efficient and so much more secure. We were hitting them with a stick. We didnât know we couldnât do a better job. And this will in turn push more and more money into DeFi.â
Amador believes that CBDCs will have the same security perils as todayâs traditional financial systems. âThe world of CBDCs is going to have all this DeFi-like infrastructure operating under similar conditions. You have the exact same security concerns,â he saidâŠâ
Read the full interview with Mitchell Amador at Yahoo
â«ïž âAs familiar as Americans are with the concept of credit, many of us, upon encountering a sandwich that can be financed in four easy payments of $3.49, might think: Yikes, weâre in trouble.
Putting a banh mi on layawayâthis is the world that âbuy now, pay laterâ programs have wrought. In a few short years, financial-technology firms such as Affirm, Afterpay, and Klarna, which allow consumers to pay for purchases over several interest-free installments, have infiltrated nearly every corner of e-commerce. People are buying cardigans with this kind of financing. Theyâre buying groceries and OLED TVs. During the summer of 2020, at the height of the coronavirus pandemic, they bought enough Peloton products to account for 30 percent of Affirmâs revenue.
And though Americans have used layaway programs since the Great Depression, todayâs pay-later plans flip the order of operations: Rather than claiming an item and taking it home only after youâve paid in full, consumers using these modern payment plans can acquire an item for just a small deposit and a cursory credit check.
From 2019 to 2021, the total value of buy-now, pay-later (or BNPL) loans originated in the United States grew more than 1,000 percent, from $2 billion to $24.2 billion. Thatâs still a small fraction of the amount charged to credit cards, but the fast adoption of BNPL points to its mainstream appeal..â
Source: The Atlantic
 â«ïž âIt is a mobile first companyâ was a common but now obsolete statement. Similarly, we will soon stop asking âCrypto first companyâ because most companies â starting with the broader financial services industry â will have a crypto component.
As crypto takes up more and more mindshare of consumers, financial apps will require seamless way for currency conversion and medium for transactions anytime anywhere & globally.
Embedded finance has taken the financial world by storm, and its growth is likely to continue. Buy-now-Pay-later, which is well on its way to becoming mainstream in 2023 & other possible lending opportunities with low fee and real time solutionsâŠâ
Pradeep Singh, Head of Fintech at CapGemini in Finextra
â«ïž âCross-border payments will soon be seamlessly integrated with other fintech services, such as open banking and embedded finance
Consumer behaviour is changing and, with it, requirements regarding the efficiency of the payments space. This places additional strain on B2B finance as vendors and merchants opt for streamlined methods and businesses must keep up with the trend.Â
But B2B transactions â particularly those that require cross-border flexibility â are complicated by the different international regulations governing and securing financial transactions. In an ever-changing and developing industry, where speed and agility of transactions are paramount, the challenges are vast.
According to a recent study by Rapyd on digital transactions in Europe, the international payments space has a raft of fresh demands. For example, in Denmark, 71% of respondents reported a recent online purchase using Danish mobile payment apps. Alongside this, only 5% of Germans chose credit cards as their top online payment method, while more than two-thirds of Spanish spenders said they used PayPal for a recent online purchaseâŠâ
Source: Fintech Magazine
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