Etiqueta: news

Link: https://economictimes.indiatimes.com/tech/tech-bytes/g7-finance-leaders-lay-out-guidelines-for-central-bank-digital-currencies/articleshow/87012431.cms

Date: October 14, 2021
Media: The Economic Times

• What happened?

The G7, a group formed by some of the seven most influential countries in the world (Germany, United Kingdom, Japan, France, Italy, the United States and Canada), is stating that their financial systems are willing to support the creation of digital currencies. The main issue is that it needs to provide rigorous standards of privacy, transparency, and accountability for protection of user data. Also, in the article is stated that a central bank digital currency (CBDC) could help the flow of economy with liquidity, representing a safe-settlement asset that would be ideal to perform as an anchor for the whole payment system.

• Whom and where it affects?

This possible measure directly affects the economic system of the G7, and also the organizations they belong to (i.e. The European Union, in the case of France or Germany), but also, it would be a gamechanger in normal people’s lives, since the governments could arguable have more control over theirs population’ monetary movements.

In the long run, we estimate that, if given the opportunity, it would restructure the global economy as we know it, so technically everyone around the world would be splashed sooner or later.

• What sort of public or private institutions are involved?

Mainly, it would be the G7 Central Banks that are involved, since they will be the ones issuing and regularizing the virtual money and ensuring compliance with their rigorous privacy standards, to modernize financial systems and speed up both domestic and international payments in a safe way.

Also, It is expected that private banks will also be changing their intern structure to cope with these groundbreaking changes.

• Why is it important for Banking and Finance?

This is important because the Central Bank of each country rules the rest of the Banking of its own country, as main responsible of guaranteeing the stability of its currency. Therefore, the rest of financial entities, public or private, will be heavily encouraged to embrace Central Banks’ guidelines.

So, on the bottom line, if this measure is adopted, all the Banking systems will change, including the way people and companies invest.

• What do you think will be the consequences in the foreseeable future?

We think it is a risky move over the future of the world economy, since not many Central Banks have evolved this way and, with the ‘Boom’ of Cryptocurrencies like Bitcoin, Ethereum and many others revolutionizing the way people see finances, it is definitely a step forward that will shape the rest of the 21th century, the era of technology.

If the G7 Central Banks carry out this financial regulation, we think it will not be too long before the rest of countries start implementing these measures too, just because it is better for governments to avoid fraud risk and control people’s debts, payments and other aspects.

Also, we do not think it will be bad for the people’s privacy when it comes to private external companies, because they will not, assumably, be able to trace nor to access to the public systems of the Central Banks.

KEYWORDS: central banks, digital currency, G7, financial stability, payments sistem

Link: https://www.cnbc.com/2021/10/19/first-bitcoin-futures-etf-rises-2percent-in-trading-de but.html

Date: TUE, OCT 19 2021

Media: CNBC

What happened?

In EEUU was born the new bitcoin-linked exchange-traded fund (ETF) made more than 700 Millions of transactions in his first day. This notice shows the growth of the ETF industry today.

Whom and where it affects?

This would affect all investors, companies, the country to a certain extent, the stock exchange world and the crypto world, as the values of certain tokens may fluctuate after this event. We could even talk about other countries, which have among their future proposals the idea of incorporating cryptocurrencies in the legal course as if it were fiat money.

What sort of public or private institutions are involved?

The ProShares Bitcoin Strategy ETF ( BITO ), New York Stock Exchange ( NYSE ) and Commodity Futures Trading Commission ( CFTM ).

Why is it important for Banking and Finance?

From the point of view of Banking and Finance, the strengthening of the cryptographic market with the launch of the ETF has positive effects especially on investors who want to excrete the benefits of Bitcoin.

Advantage of Bitcoin is that it is an asset with high liquidity. This is why investors want a physically backed bitcoin ETF in the future.

What do you think will be the consequences in the foreseeable future?

The acceptance of cryptocurrencies by a large part of the population, thanks to the fact that many investors have already embraced them and, with this fund, many more will have the confidence to trust them.

In the future, the value of Bitcoin will continue to rise, thanks in large part to the establishment of this ETF and new ETFs to come.

In addition, we believe that banks will lose power, due to the decentralisation necessary for the evolution of the crypto market.

Keywords: NYSE, BITO, ETF, Bitcoin, Cryptocurrencys.

Link: https://californianewstimes.com/brussels-warned-not-to-delay-tighter-capital-rules-for-eu-banks/569122/

Date: 24^th of October 2021

Media: California News Times

What happened?

The European Commission proposed to postpone for two years the banking rules which were supposed to enter into force by 2023. This fact gave birth to the reaction of the Secretary-General of the Basel Committee on Banking Supervision (BCBS), Carolyn Rogers, who underlined the importance of the application of these rules on time.

Whom and where it affects?

The measures taken will set new standards for how international banks measure capital to create cross-border consistency. So, the postponement of these rules would affect European Banks (“Banks in countries such as France were hit hardest by having to hold more capital to comply with the latest rules, but delays are welcome due to the risk of conflict with global regulators”); and EU delays can also frustrate European regulators. Besides, another worldwide banks could be affected in terms of fair competition. Therefore, this possible delay in applying the rules could have a global banking repercussion.

What sort of public or private institutions are involved?

There are different institutions involved in the related new:

On the one hand, The Basel III reforms are the Basel Committee on Banking Supervision’s key response to the global financial crisis (2008). This institution is the primary global standard setter for the prudential regulation of banks and provides a forum for regular cooperation on banking supervisory matters.

On the other hand, the European Commission helps to shape the EU´s overall strategy, and, in this case, is proposing to give European banks a two-year extension of the internationally agreed deadline for implementing some new banking rules.

Moreover, the European Banking Authority (EBA) is the EU agency tasked with implementing a standard set of rules to regulate and supervise banking across all EU countries; and the European Central Bank’s supervisory committee also supervise this process of banking reforms.

Finally, different International Banks around the world will be affected for the implementation of these standards and the possible postponement decision taken by the European Commission.

Why is it important for Banking and Finance?

It’s important for Banking and Finance because it could delay the process of setting new standards for how international banks measure capital to create cross-border consistency and, as a consequence, also its long-term benefits of strengthening the resilience of the financial system.

What do you think will be the consequences in the foreseeable future?

The European Banking Authority (EBA) has published a Report on the impact of implementing the final Basel III reforms in the EU. The full Basel III implementation, in 2028, would result in an average increase of 15.4% on the current Tier 1 minimum required capital of EU banks. Taking this into account, EU delays can trigger some conflicts between the different institutions involved, because it is important that good Basel III standards be fully, timely and faithfully; in order to achieve a resilient banking system that supports the real economy.

Keywords: European Commission, Basel Committee on Banking Supervision, European Banking Authority, Basel III standars, financial system.

Link: https://www.cnbc.com/2021/10/14/crypto-could-cause-2008-level-meltdown-bank-of-england-official-warns.html

Date: THU, OCT 14 2021

Media: CNBC

What happened?

The Bank of England’s deputy governor for financial stability, Jon Cunliffe, and the Bank of England’s Governor, Andrew Bailey, explain the risky nature of crypto investment. 

The current applications of crypto assets pose a financial stability concern since the majority «have no intrinsic value and are vulnerable to major price corrections». As this is happening in a large unregulated space, it could lead to a financial crisis similar to the one in 2008.

The scale of those risks will be determined by the speed of response by regulators and governments.

Whom and where it affects?

As the use of cryptocurrencies increases, the need for political regulations on this type of investment also increases.

This issue affects those that invest in cryptocurrencies and at the very end at the financial system, governments and population all over the world.

What sort of public or private institutions are involved?

The public institutions that are involved are the Bank of England and the U.K.’S Financial Conduct Authority.

Why is it important for Banking and Finance?

The crypto world is beginning to connect to the traditional financial system and we are seeing the emergence of leveraged players. In a largely unregulated space this situation could lead to investors losing all their money due to the assets’s lack of intrinsic value.

The risk to financial stability could grow rapidly if the market continues to expand at such a pace and this could ultimately take the economy to a global crisis such as the one back in 2008.

What do you think will be the consequences in the foreseeable future?

Given the volatility, the lack of regulations and the extensive growth of crypto currencies, we could expect a crisis derived from crypto assets in which investors will lose their money.

The current volume of cryptocurrency operations, $ 2.3 trillion, is comparable to the $1.2 trillion subprime mortgage market in 2008; so it would not be unreasonable to expect a similar crisis to happen again. However, institutions seem to have begun to analyze, warn and take action on the matter to avoid this risk. So, apparently, there is still hope to avoid a crisis derived from cryptocurrencies.

Keywords: Cryptocurrency, crisis, meltdown, regulations, investors, risks.

FRI, OCT 22 2021

Link: https://edition.cnn.com/2021/10/22/economy/uk-inflation-5-bank-of-england/index.html

What happened?

The UK is concerned that the inflation could reach 5% next year, while the Central Bank’s target is 2%. It happens because of a product and labor shortages. That is the consequence of the coronavirus pandemic and now energy price hikes.

Whom and where It affects?

It affects the UK economy and soon could have consequences on international relationships. For example, British consumer goods giant Unilever (UL), that operates all over the world, hiked prices in September. On the other side, the main population of the UK can be damaged too, because of the rising prices and high unemployment rate.

What sort of public of private institutions are involved?

Starting with public entities, we find the Bank of England, of which one of its main economists informs us about the seriousness of the economic situation in the United Kingdom due to the shortage of products and labor. On the other hand, in the private sphere we highlight the Office for National Statistics, which tells us about the economic stagnation of the United Kingdom and its GDP.

Why is it important for banking and finance?

Economists worry that the United Kingdom may be entering a period of «stagflation» characterized by weak economic growth and rising prices.

The worsening product and labor shortages will put the brakes on the economic recovery at the same time as higher energy prices drive up CPI inflation.

What do you think will be the consequences in the foreseeable future?

Currently, it is already having importance in the economy due to the bottleneck in the manufacture of all kinds of products, where society demands more than factories can manufacture. This situation is applicable to any product such as energy, where we are seeing its price increase day after day. Therefore, we can foresee that prices and inflation will continue to rise with no possible solution in sight.

Keywords: Stagflation, CPI, ONS, Inflation, High Unemployment Rate.

Link:  https://www.thebanker.com/World/Americas/US/Fed-plans-new-round-of-bank-stress-tests-in-response-to-Covid-19

Date: 15^th of October 2020

Media: The Banker

What happened?

Due to the ongoing uncertainty around the Covid-19 pandemic, the US Federal Reserve Board has announced another round of bank stress tests to see how large banks stand up against two scenarios featuring severe recessions.

Whom and where it affects?

Firstly, it affects US-based banks and financial institutions, especially those with large trading or processing operations, because their strength and solvency will be tested.

It also affects all creditors of those banks, as the results of the tests will give them insight into the banks’ capital strength under a tailored set of assumptions, given the ongoing coronavirus-related uncertainty.

Finally, it indirectly affects everyone, as the strength and health of the international banking system is something that has effects on our daily life.

What sort of public or private institutions are involved?

The most important institution involved in this piece of news is the US Federal Reserve, which is the central bank of that country and the competent authority for carrying out stress tests, which are now needed because of the fragile economic situation due to the Covid-19 pandemic.

Also, private banks are important in the article because they will be subjected to those stress tests, what means that their resiliency is going to be evaluated by the FED.

Why is it important for Banking and Finance?

As we are facing a pandemic that is affecting all aspects of our lives, the strength of the international financial system is a fundamental key to prevent possible future crashes.

Therefore, it is important to evaluate the health of the most important financial institutions worldwide, especially private banks, because we need to know if they would be capable of resisting to an adverse economic scenario derived from the pandemic. Depending on the results of those tests, the confidence in the financial system will either increase or decrease.

What do you think will be the consequences in the foreseeable future?

If the results are positive and banks can demonstrate their solvency and strength despite the adverse financial situation, creditors and investors would be more willing to keep investing on them, and therefore, the economic situation might improve, as those investors would maintain their confidence in the system. That could also reduce the impact of the pandemic in the economy.

However, if banks fail those tests, the confidence in the banking system would plummet, and consequently depositors and investors might want to withdraw their money, what would lead to a bank failure that could easily extend to the rest of the institutions because of the adverse situation resulting from the pandemic.

Key words

Stress test, banks, FED, scenario, economy, pandemic.

Source: https://www.valuewalk.com/2020/10/central-bank-bahamas-sand-dollar/  

Thursday, October 22nd, 2020

Media: ValueWalk

What happened?

The Central Bank of the Bahamas has developed one of the first Central Bank Digital Currency (CBDC) in the world, the Sand Dollar, which is a digital version of the Bahamian dollar. 

Whom and where it affects?

This digital currency has an instant availability for all Bahamian residents. Even though The Bahamas is not a big nation, having only three hundred and ninety-three thousand habitants, this CBDC development can have a huge financial impact worldwide, mostly thanks to its direct link to the US market. 

What sort of public or private institutions are involved?

The CBDC adoption is mainly intended to provide financial access to the Bahama’s increasingly unbanked population due to the banking sector downsizing physical branches. The Sand Dollar is backed by the Central Bank of the Bahamas and tied to the BSD, and thus the USD, so it would be a regulated alternative to non-governmental third party stablecoins. 

Why is it important for Banking and Finance?

The main purpose of Project Sand Dollar is to modernize and streamline the archipelago’s financial system, with the benefits of greatly reducing costs and improving financial inclusion among communities throughout The Bahamas.

What do you think will be the consequences in the foreseeable future?

We will soon see other nations follow the bahamas by creating their own state backed crypto currency. The Sand Dollar will serve as a live test, with new currencies being implemented in different manners, depending on the success or failure of the Sand Dollar.

Key words: Central Bank Digital Currency, Sand Dollar, Digital Transformation, Banking Sector.