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Stablecoin News for the week ending Wednesday 16th June.

Don’t mention the war! 

Here is our pick of the 3 most important Stablecoin news stories during the week.

This week it has all been about Basel.  I mean the lovely Alpine Swiss City of Basel, where the Bank of International Settlements (BIS) is based, not Basil Fawlty!

First, The Bank of International Settlements (BIS) which is based in Basel and the Bank of England (BOE) announced the launch of the BIS Innovation Hub London Centre today. BIS now has 4 Innovation Hubs across different locations.

According to the announcement, BIS is planning to increase the global reach of its Innovation Hub. Earlier this year, the financial giant signed a memorandum of understanding with the Federal Reserve System (New York) for a strategic partnership.

The bank mentioned that its Innovation Hub’s work program is currently focusing on 6 important areas including CBDCs, green finance, open finance, regtech, financial markets infrastructures, and cybersecurity.

BIS and BOE Launch the Innovation Hub London Centre

 

Then the BIS released an update to its’ survey of 50 central banks in the first quarter of 2021, this paper explores initial thinking on the cross-border use of CBDCs. While most central banks have yet to take a firm decision on issuing a CBDC, the survey responses show a tentative inclination towards allowing use of a future CBDC by tourists and other non-residents domestically. They have a cautious approach to allowing use of a CBDC beyond their own jurisdiction. Concerns about the economic and monetary implications of cross-border CBDC use and about private sector global stablecoins are taken seriously. At the wholesale level, 28% of surveyed central banks are considering options to make CBDCs interoperable by forming multi-CBDC arrangements. This involves arrangements that enhance compatibility, interlink or even integrate multiple CBDCs into a single payments system. Finally, almost 14% of respondents are considering an active role for the central bank in FX conversion.

CBDCs beyond borders: results from a survey of central banks

 

The Guardian has stepped forward and made the positive case for CBDC’s and also reasons why the current Commercial, Private Banking and Payments processing sector should have their privileges removed.

The UK economy could be transformed by a central bank digital currency | Josh Ryan-Collins | The Guardian

 

And finally, returning to the current Banking infrastructure the BIS has opened a path to Banks holding Crypto assets with it’s latest consultation paper for the prudential treatment of banks’ cryptoasset exposures.  The proposals split cryptoassets into two broad groups: those eligible for treatment under the existing Basel Framework with some modifications; and others, such as bitcoin, are subject to a new conservative prudential treatment.

Basel Committee consults on prudential treatment of cryptoasset exposures

Prudential treatment of cryptoasset exposures

 

So, in summary the BIS is a hive of activity coordinating with other Central Banks, exploring with the Fintech industry various use cases and working on advice to Banks on how to treat this thing called Crypto!   But what has this got to do with war?  The BIS was established after the first World War to enable war reparations from Germany, which of course we later decided was a historic mistake.  So in discussing CBDC’s it’s probably better to follow Basil Fawlty’s advice.    

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Alan Scott is an expert in the FX market and has been working in the domain of stablecoins for many years.  

We have a self imposed constraint of 3 news stories per week because we serve busy senior Fintech leaders who just want succinct and important information.

For context on stablecoins please read this introductory interview with Alan “How stablecoins will change our world” and read articles tagged stablecoin in our archives. 

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