Where Finance Finds Its Future
SDX crypto-currency service is live
Season 1, Ep. 118
SDX, the digital arm of the Swiss stock exchange, has launched an income-generating crypto-currency staking service for clients of the private banks in Switzerland. Owned and operated by a separate entity within the group, the Cloud-based service enables holders of crypto-currencies to collect a yield on their portfolios by staking their assets to claim the rewards for validating or attesting blocks of transactions. Dominic Hobson, co-founder of Future of Finance, asked Alex Smith, Crypto Product Lead at SDX, what services SDX is providing for clients both now and in the future, how it is managing the recent volatility and the unavoidable risks and what adjacent opportunities it is exploring for the future.
Wednesday, May 24, 2023
Stablecoins are not the destination but a stepping stone on the journey towards programmable money
Season 1, Ep. 137
It is easy to fall into the trap of treating monetary innovations such as Stablecoins in isolation, or as a final destination, when innovation is in fact constant and individual innovations are merely components of much larger secular trends driven by technology and the interaction of technology with the wants and needs of households and businesses. One organisation that has not made this mistake, and places Stablecoins firmly in the context of a financial system evolving towards programmable money, is Quant. Dominic Hobson, co-founder of Future of Finance, spoke to Gilbert Verdian, CEO of Quant, about what he sees in the Stablecoin phenomenon.
Friday, March 24, 2023
Is this how CBDCs will happen in the major global currencies?
Season 1, Ep. 136
When it came to digital money useable on blockchain networks, the choice between central bank money and commercial bank money used to feel binary: Stablecoins and tokenised deposits and e-money were stopgaps pending the introduction of CBDCs. But as the threat of Stablecoins that were either global or issued by unregulated non-banks has receded, a more traditional hierarchy of money has asserted itself. CBDCs are likely to become the central bank digital money foundation on which myriad forms of digital commercial bank money will blossom.Central bank digital currencies (CBDCs) originated in need (to put fiat currency on blockchain networks) but also fear. Central banks were fearful that private forms of money based on blockchain technology would rob them of control of national and international monetary conditions. These fears were crystallised by the prospect of Facebook issuing a multi-currency Stablecoin called Libra.Having crushed Libra – whose remnants were sold to digital asset bank Silvergate in January 2022 – developed market central banks around the world are now bringing Stablecoins within the regulatory perimeter by privileging banks as issuers and prescribing what assets they can use to back a Stablecoin. This has released much of the pressure on the major central banks to issue CBDCs.There are currently just four CBDCs actually in issue – the Bahamas Sand Dollar, the Eastern Caribbean Dcash, the Nigerian eNaira and the Jamaican JAM-DEX – and all are developing slowly, with limited take-up. Significantly, all four were issued in developing economies, where the benefits of CBDCs in promoting financial inclusion and fighting financial crime are easiest to capture.Of another 93 countries exploring a CBDC – as monitored by the Atlantic Council CBDC Tracker – the most advanced (Brazil and Kazakhstan) fit the pattern. In all, just 17 are at the pilot testing stage. Of them, the Swedish eKrona project is the only one being pursued by a Western economy. 72 central banks are still developing or researching their plans, and the rest have stopped doing even that. True, the Bank for International Settlements (BIS) website records ten CBDC experiments in progress, with various combinations of banks and central banks taking part, and it is not hard to find others where the BIS is not involved. So the leading central banks have not lost interest in CBDCs, but they do now seem relaxed enough to let the private sector lead the digitisation of money.This reflects a consensus that a CBDC in a developed market must not disintermediate the commercial banks through which central banks influence monetary conditions. Nor are most central banks credible providers of customer-facing services such as digital wallets, foreign exchange and checking customers are not money launderers, terrorists or sanctioned businesses or individuals.There is an even more profound sense in which central banks are content to cede the leadership role, and it is this: CBDCs are emerging as the foundation of a layered system of issuance and distribution in which asset-backed Stablecoins issued by regulated banks, tokenised cash on deposit at regulated banks and e-money backed by cash held at regulated banks will provide the bulk of digital monies.To carry on reading, go to : https://futureoffinance.biz/is-this-how-cbdcs-will-happen-in-the-major-global-currencies/PanellistsRicardo CorreiaSenior Technology Executive at R3 Gilbert VerdianCEO at QuantBarney ReynoldsPartner, Global Head Financial Institutions, Governance & Advisory at Shearman and SterlingKeith BearFellow at the Centre for Alternative Finance, Judge Business School at the University of Cambridge
Thursday, March 16, 2023
D7 is an invisible bridge between digital assets and traditional securities markets
Season 1, Ep. 135
There is now widespread acceptance that digital assets are going to co-exist alongside traditional assets for a long time. That implies that issuers and investors will need a market infrastructure that renders issuers indifferent as to whether a source of liquidity is digital or traditional and investors indifferent as to whether an exposure is available in digital form or in traditional form. Both sides of the market just need something that works efficiently at low cost with minimal disruption to the status quo. D7, the Cloud-based post-trade infrastructure Clearstream is building to link the digital and the traditional securities markets, aims to provide exactly that. Dominic Hobson, Co-founder of Future of Finance, spoke to Michael Crezelius, Head of the Issuer CSD at Clearstream, and Thilo Derenbach, Head of Commercialisation and Digitisation at Clearstream, about how D7 does what it does now – the service is in production already - and what it will do in the future.