Russian central bank cautions borrowing costs could continue to decline as interest rates cut more than expected
The Russian central bank has warned that borrowing costs could fall further as interest rates are cut more than expected and the priority shifts to supporting economies derailed by international sanctions over the Ukraine invasion.
According to Bloomberg reports, three weeks after cancelling some of the emergency hikes imposed after the attack, the Central Bank of Russia again lowered the benchmark by 3 percentage points to 14%. All economists surveyed by Bloomberg predicted smaller declines.
Elvira Nabiullina, Governor, Central Bank of Russia, commented that the bank will make the necessary monetary policy decisions to adapt the economy to a rapidly changing environment and that price stability is their absolute priority.
Legislators released new forecasts last Friday showing that the Russian economy could shrink from 8-10% this year. According to the central bank, inflation is expected to reach 18-23% by the end of 2022.
The report further stated that the lower borrowing costs will complement various other measures by the Central Bank of Russia, after suggesting that they will not fight inflation "at all costs". Nabiullina warned that Russia is entering a period of transformation due to sanctions imposed, which has disrupted the supply chain and deprived companies of many imported parts. Bloomberg Economist stated that the Central Bank of Russia has a firm grasp of capital markets and is rushing to mitigate the economic impact of sanctions.
Alexei Zabotkin, Deputy Governor, Central Bank of Russia, stated that the economic difficulties will continue to become more apparent in the coming months, causing a steep economic decline. Nevertheless, it is said that banks have returned to surplus liquidity and the ruble has recovered, mainly due to rising commodity prices and capital restrictions. In April, the Russian currency rose nearly 14% against the dollar.
According to Natalia Orlova, Economist, Alfa-Bank, key interest rates will not fall below 10% before 2023.
Swiss National Bank to exclude bitcoin as a currency reserve requirement
The Swiss National Bank (SNB) opposes holding bitcoin as a reserve currency, stated Thomas Jordan, Chairman, Swiss National Bank, last Friday. Jordan further added that purchasing bitcoin is not a problem for the bank, as they can buy it directly or buy investment products based on Bitcoin. The bank should be able to set up the technical and operational requirements relatively quickly if they need to include bitcoin in their balance sheet. However, Swiss National Bank stated that bitcoin will not be able to meet their currency reserve requirements and will not include bitcoin in their balance sheet.
Facilitating cross-border trades for exporters in India via IndiaMART and Tazapay alliance
In efforts to facilitate cross-border transactions for exporters in India, IndiaMART, India's largest B2B marketplace with 75 million website visitors and over 97,000 product verticals, has partnered with Tazapay, a payment platform that offers escrow-as-a-service and security for high-value transactions. This partnership is said to support exporters in obtaining a more customized, seamless payment solution for B2B transactions. Presently, merchants are not only faced with complex negotiations amongst their payment processors, but also have limited ability to initiate and accept payments on a global scale.
The partnership between IndiaMART and Tazapay is said to help B2B exporters gain coverage in key economic markets such as Southeast Asia, the United States, the United Kingdom and the EU. In addition to providing buyers and sellers with local payment methods (similar to UPI), such as local bank transfers, credit cards and QR code payments, merchants will have the ability to trade with international customers like locals while at the same time benefiting from competitive platform fees and FX rates.
Furthermore, the report indicated that the partnership will safeguard that all transactions comply with international trade requirements, including issuing Foreign Remittance Advice (FIRA) where required. It was noted that the alliance between IndiaMART and Tazapay will significantly benefit India-based exporters of goods and services.
Tazapay reportedly processes millions of dollars per month, covering more than 173 countries around the world, and is said to enhance the value proposition offered by IndiaMART Verified Export Services (IVE). IndiaMART launched its IVE service in 2020, enabling its merchants to grow their business globally by leveraging a pool of over 10 million foreign buyers from over 100 countries each month.
Revolutionizing SME’s digital banking capabilities through India’s 100th unicorn fintech, Open
India now has 100 unicorns. A Bangalore-based neobank founded in 2017, Open, announced its Series D funding round from Mumbai-based investment firm IIFL with existing investors Temasek, Tiger Global and 3one4 Capital. In this round, Open is currently worth US $1 billion and is noted as the 100th participant in India’s unicorn club. According to reports, Open claims to have built Asia's first digital banking platform for small businesses, start-ups and freelancers. Over the last 12 months, Open states that they have increased their customer base to 2.3 million.
IIFL stated that their strategic investment is to help accelerate Open's new SME lending product, as the platform prepares to launch three new products aimed at increasing SMEs’ capital needs in addition to its existing SME credit card offerings. According to reports, the new products include Open Flo, an innovative revenue-based financing product for e-commerce businesses, Open Settl, an early settlement credit offering, and Open Capital, a working capital credit offering for SMEs. Additionally, Open aims to disburse $1 billion loans over the next 12 months through these new suites of products on the platform.
The funding will also support Open in accelerating its existing Zwitch (embedded financial platform) and BankingStack (enterprise banking solution for banks) product lines, and driving global expansion by potentially reaching more than 5 million customers with the next year. Additionally, the funds are expected to strengthen the leadership team and increase the number of employees from 500 to 1000 by the end of the year.
Apple responsible for violating EU antitrust laws regarding its payment technology
EU antitrust authorities charged US-based technology company, Apple, with restricting access to competitors to its NFC chip technology. Reports state that this move could impose heavy fines on the iPhone maker and force them to open their mobile payment systems to competitors. The European Commission stated that it has sent Apple an indictment known as “a statement of objections” detailing how Apple abused its dominant position in the mobile wallet market on iOS devices. Margrethe Vestager, Chief of the EU Antitrust Commission, said they have indications detailing how Apple restricted third-party access to significant technology necessary to develop competitive mobile wallets solutions on Apple’s devices.
Apple commented that Apple Pay is only one of many options available to European consumers for making payments, and that it has ensured equal access to NFC while setting industry-leading standards for privacy and security.
Deutsche Bank raided by German regulators in a money laundering investigation
German authorities searched Deutsche Bank headquarters in Frankfurt on Friday on suspicion of money laundering. According to reports, officers from the financial regulator BaFin, the federal police, and the Frankfurt public prosecutor’s office began the raid after securing a search warrant from the local court, based on the suspicion that unnamed Deutsche Bank employees may have violated anti-money laundering laws. Deutsche Bank revealed that the issue was self-reported and that they are fully cooperating with police and prosecutors. It was reported that the investigation by the Frankfurt public prosecutor was in connection with suspicious transaction reports (SARs) filed by Deutsche Bank.
Banks and other financial institutions file SARs with law enforcement agencies when they suspect that customers may be using their services for potentially criminal activities. However, SARs do not mean that the customer was necessarily involved in an illegal activity or that the bank must stop doing business with the customer.
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