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  1. Hello all, I mentioned in another thread that given I work for BofA I have the fortunate luxury in accessing our research team's material on pretty much everything. More recently, BofA have created a series labelled "Digital Money Series" which largely focus on Fintech in particular how it can disrupt existing business or general status quo. Before I share anything, the research team is independent to the general enterprise of the company so anything that is mentioned in the research is likely to have little influence. It's more for information catered towards clients to become more educated (at least that's how I see it). The following points do not mention Ripple or XRP explicitly or contain information to alter your investment decisions. Like I said, this is purely informational. Do not take this as investment advice whatsoever. So far there are six issues, i'll be making a post of each issue. Digital money series #1: how did we get here? There is a real chance that 2021 sees the launch of a central bank digital currency (“CBDC”) from a developed economy. This would represent a radical change to money, banking and commerce. There seems to be growing support for a retail CBDC from central banks and regulators. The EU has set out an increasingly detailed timetable for a CBDC – feedback process ending in January 2021, decision on whether to conduct a full trial by mid 21 – and accompanied this with increasingly positive reports on the topic. The UK’s Bank of England has also published some fairly upbeat commentary about CBDC, seemingly embracing the radical reshaping of finance this could bring about. The list of positive central bank commentary has recently been swelled by ECB and BofE. The ECB seems to like a CBDC because it is worried about: 1. continually declining use of cash – something COVID has hastened, 2. private sector digital currencies such as Diem (aka Libra) and 3. The risk of the Euro being supplanted by CBDCs from third countries (especially China). CBDC seems to us to be highly likely to undermine existing retail banking franchises without generating any obvious offsets. So, should a digital Euro happen, we think that it would be negative for retail-focused European banks. Policy formation is a process, and there are many stages to go between where we are today (“we’re looking into it”) and issuing a CBDC (“we’re doing it”). However, we’ve been struck by the tone of the ECB, which has been becoming increasingly positive, we think. “Here” is a place where the ECB is in the midst of a “public consultation to seek feedback from people across Europe [about CBDC] and gain a better understanding of their needs. It will be completed in January, and the results will be published once they have been analysed.” This is according to ECB Executive Board member Fabio Panetta: This all sounds good – efficiency, safety, choice, costless payments. What’s not to like? In particular, he talks about the potential for big techs to become major players in payment – he (Fabio Panetta) seems to be against this. “If not properly regulated, big techs may pose considerable risks from an economic and social perspective and they may restrict, rather than expand, consumer choice.” This view is one we discussed in detail in “Don’t fear the Libra” (18th November 2019), and we think it may be hard for big tech to move regulators on from it. We talk a bit later about the boarder landscape for CBDCs, but the Bank of China has taken considerable steps towards a digital currency (a “digital Yuan”). According to various reports, the Bahamas has beaten them to it, with their “Sand Dollar”, a digital currency backed one for one by the Bahamian Dollar. He (Fabio Panetta) also points out that cards used across Europe rely on “agreements with international card schemes. As a result, people mostly use international schemes for cross-border card payments, and the European market for card payments is dominated by non-European schemes.” Presumably, this includes MasterCard and Visa. He says: “a digital euro would need to be carefully designed, in order to enhance privacy in digital payments [and] respect the rules on countering illegal activities.” A CBDC would be a better place to park cash than a commercial bank account. It has a lower risk profile, for a start. Granted, Euro deposits up to €100,000 are guaranteed by the various national central banks, but a CBDC has two benefits over guaranteed deposits: • It cuts out the entity in the middle – your risk is directly that of the ECB. • It replaces the national sovereign as lender of last resort with the ECB itself. This arguably isn’t much of a credit upgrade if you’re German, but it would be if you were a citizen of many European countries. We have discussed this already, with Mr Panetta. There is an understandable fear that if a region did not develop a CBDC, it could risk being left out when faced by the unstoppable march of the Sand Dollar or the Digital Yuan. Our view is that this is a matter than could be addressed by regulation. We note that the US Fed doesn’t seem to be in the vanguard of central banks looking at CBDCs, suggesting they do not fear this outcome. Diem (the artist formerly known as Libra); We note that as well as Mr Panetta, Libra is explicitly mentioned by Andrew Haldane, in a recent speech on innovations in payments. He said: This is more scene setting than justifying a CBDC – the whole speech is fairly discursive – but Diem/Libra is clearly there in Mr. Haldane’s thinking. Mr Haldane addresses directly the broader systemic impacts of CBDC. Lastly, the fears about “narrow banking” are precisely our key fear about CBDC. Narrow banking’s key tenets are as follows: • Banks would be able to lend using depositors' money only after the depositors themselves choose to transfer their money to designated "lending" accounts that will be regarded as "risky" accounts (similar to mutual funds). Otherwise, depositors' money will be kept as liquid cash or deposited with the central bank. Mr. Haldane’s response to this worry is in our view extremely important. And he’s right. If you split deposit taking form lending, you don’t have to worry anything like as much about the systemic impact of a deposit-taker facing bankruptcy, because assuming it didn’t engage in fraud or other malfeasance, it’s very hard to see how it could happen. From a supervisory point of view, life would be easier, as you would have to question whether all the rules intended to make sure that Governments don’t have to action their various deposit guarantee schemes would be necessary. Mr Haldane’s speech is significant because it suggest that a CBDC might form part of a radical approach to the banking industry. This worries us, but it adds an important plank to the central bank discussion of CBDC. The ECB’s approach seems to be to try to limit the impact of a CBDC on the incumbents. Mr Haldane approaches it from a different angle, considering CBDC as potentially an agent of change for the banking sector.
  2. Looking for a summary of the SWELL Conference + the latest news about XRP? I've got you covered! SWELL was a tour-d-force for Ripple; you won't want to miss my TL:DR breakdowns of each session in this blog. I provided my own personal take on each of the sessions, including the "800 Pound Gorilla" panel discussion at the end. This latest blog also covers the latest news in crypto, and Ripple & XRP as well, including what to expect from the Malta conference, and news that SmartStream piloted Ripple tech. Coinswitch adds a custom crypto switch page for XRP fans, and Bitrue announces their new mobile application. I hope you enjoy the read & please leave any feedback below. Also, feel free to share my blog with anybody you'd like - and also feel free to re-post on any other social media platform you wish - and thank you for doing so! Twitter Reddit r/Ripple Reddit r/CryptoCurrency Reddit r/CryptoMarkets Reddit r/xrp Reddit r/RippleTalk Reddit r/alternativecoin Bitcointalk - alt coin sub forum Bitcointalk - XRP speculation thread
  3. Mark Carney changes mind AGAIN as Bank of England moves toward 'Brit coin': Mr Carney:“the future of central banking may involve fewer central bankers”, instead suggesting the prospect of a central bank digital currency (CBDC). Source: https://www.express.co.uk/finance/city/966127/bitcoin-latest-cryptocurrency-news-ethereum-mark-carney-bank-of-england His mind change is based on a report titled, ‘Central bank digital currencies — design principles and balance sheet implications’ found that in the scenarios described, there was no reason to believe that adopting a CBDC would negatively impact the UK economy, specifically private credit or total “liquidity provision”. You find the very interesting but long report here: https://www.bankofengland.co.uk/-/media/boe/files/working-paper/2018/central-bank-digital-currencies-design-principles-and-balance-sheet-implications.pdf?la=en&hash=11469281B32821BCFD85B4A5483AB3577E38B2DD It is titled: Staff Working Paper No. 725 Central bank digital currencies — design principles and balance sheet implications Beside all the insights on possible CBDC scenarios you will find on Page 1 Footnote 1 the following sentence: Several other central banks are actively considering the use of distributed ledger technology to provide CBDC for interbank payments. This includes, but is not limited to, the Bank of Canada, the Monetary Authority of Singapore, the European Central Bank and the Bank of Japan.
  4. This is a cross-post from my reddit post. On May 8th, The IMF (International Monetary Fund) Deputy Managing Director Tao Zhang hold a speech on Atlanta Federal Reserve Bank Conference. Topic: Digitization of Money and Finance: Challenges and Opportunities Full speech is available here: http://www.imf.org/en/news/articles/2018/05/08/sp050818-digitization-of-money-and-finance-challenges-and-opportunities He went through the folloging steps: First, I will discuss how financial services may be transformed by the adoption of financial technology; Second, I will examine how crypto-assets rise may pose challenges to financial integrity and stability; Third, how central banks and regulators can mitigate potential stability risks without impeding innovation; And finally, I will highlight the work the IMF is doing to help its 189 member countries address these challenges. He made references to useful services: "Some useful technology is being developed to improve market efficiency. For example, services have slashed from days to minutes the time it takes for cross-border payments to reach destinations. These include relatively small firms like BitPesa in Africa and BitOasis in the Middle East and such well-known companies as Western Union and Moneygram." He gives the answer on how regulators and central banks should respond? First, regulators need to complement their focus on entities with increasing attention to activities. This responds to the reality that an increasingly diverse group of firms and market platforms are providing financial services. Second, governance needs to be strengthened. Rules and standards will need to be developed to ensure the integrity of data, algorithms, and platforms—in other words, to ensure that they operate in a manner that does not expose consumers or the financial system to undue risk. Third, policy options could be considered to support open networks, and licensing policies could be adjusted to help foster competition. Fourth, legal principles need to be modernized. Maintaining trust in financial services may also require the development of new legal frameworks to clarify rights and obligations within the new financial landscape. They already begun! He confirms: "In fact, a group of central banks is actively experimenting with the use of digital currencies and distributed ledger technology with the aim of making cross-border payments more efficient."
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