Banque de France shares takeaways from wholesale CBDC experiments 

Following the publication of an initial report in 2021, the Banque de France has released a new set of conclusions and lessons learned, covering the first and the second tranches of its wholesale central bank digital currency (wCBDC) experimentation programme, launched in March 2020 and comprising twelve experiments. These findings contribute to the Eurosystem’s exploratory work announced in April 2023, which aims to investigate how wholesale financial transactions recorded on DLT platforms could be settled in central bank money.

Through these experiments, the Banque de France shows the operational feasibility and practical implementation of the three models it has conceptualised for issuing wCBDC directly on DLT: (1) the interoperability model, (2) the distribution model and (3) the integration model. They all address critical aspects of wholesale CBDC implementation, and each model offers different capabilities and functionalities compared to the conventional systems so that they can be complementary rather than exclusive. 

These three models have been tested with different types of DLTs across a large spectrum of use cases, covering two key strategic areas: (i) the tokenisation of finance and (ii) the improvement of cross-border transactions. Eight key takeaways have emerged from these experiments, split equally between the policy and technical sides.

Key policy takeaways:

• Issuing a wholesale CBDC, complementing a retail CBDC, would contribute to the singleness of money by ensuring the anchoring value of central bank money for retail and wholesale payments and convertibility between the different forms of private money.
• International cooperation and public-private partnerships remain prioritised to converge towards a more globally inclusive and interoperable wholesale CBDC framework.
• Interoperability should be prioritised to ensure seamless data and transaction exchange between DLT-based and conventional infrastructures.
• Climate-related concerns highlight the need to develop energy-efficient solutions in the design of wholesale CBDCs.

Key technical takeaways:

• Technological advancements related to DLT offer various means for central banks to maintain control over their wholesale CBDC.
• Central banks should remain technologically neutral while actively contributing to adopting common standards.
• DLT could enhance the straight-through processing of trade and post-trade activities and contribute to overall financial stability.
• Continued experiments at domestic and international levels are essential to advance Banque de France's analysis and efforts to develop an operational framework through a learning-by-doing approach.

 

Likelihood of US recession falls - Goldman Sachs 

The probability of a US recession in the coming year has declined, as recent economic data signal that bringing inflation down to an acceptable level will not require a recession, according to Goldman Sachs Research. The investment bank’s economists say there's a 20% chance of a recession in the next 12 months, down from their earlier projection of 25%. 

US economic activity remains resilient, suggesting GDP will continue to grow — albeit at a below-trend pace, Jan Hatzius, head of Goldman Sachs Research and the firm's chief economist, writes in the team's report. And the inflation data has been encouraging. The 0.16% increase in the CPI inflation (excluding food and energy) in June was the lowest since February 2021 and follows a string of 0.4% readings this year. Other measures of underlying inflation have also been easing for quite a while.

 

Wolters Kluwer launches tax reporting tool for multinational companies

Wolters Kluwer has launched CCH Integrator BEPS Pillar Two, a product to assist multinational companies in effectively navigating the evolving reporting requirements set forth by the Organisation for Economic Co-operation and Development’s (OECD) Pillar Two global minimum tax initiative.

The solution is designed to allow multinational enterprises to make timely adjustments to be ready with the new requirements, streamline and simplify processing massive datasets, and empower multinational enterprises (MNE) in the face of an increasingly sophisticated tax compliance landscape. 

CCH Integrator delivers a suite of offerings that is multi-language, multi-currency, and fully cloud-based. Key functionalities of the CCH Integrator BEPS Pillar Two solution include a configurable design ethos, country-by-country reporting, a single source of truth on the cloud, automated data collection, and templated Pillar Two calculation and schedules.

The OECD Pillar Two initiative progresses international tax reform, particularly regarding challenges posed by cross-border taxation. With multinational enterprises facing increasingly complex reporting obligations, Wolters Kluwer says the tool allows for timely adaptation, simplifies processes, increases the efficiency of multinational tax teams, and creates more significant potential for growth.

 

Banco Santander, BBVA and CaixaBank join forces to fight fraud

Banco Santander, BBVA and CaixaBank have joined forces to fight one of the biggest challenges in banking, financial fraud. They are working on tools to exchange important information and data that will help prevent financial crime. The banks have created FrauDfense, a company that will bring together anti-fraud initiatives from the banks. FrauDfense has been presented to the appropriate supervisory and regulatory authorities. 

The alliance will first develop a tool to share information on fraudulent practices and effective response measures. The tool will keep information private and secure. The alliance will fight fraud, which can take many sophisticated forms, such as new account fraud (where customers' identities are stolen to buy products), online fraud and card payments.

FrauDfense will start in Spain, and banks and companies from other industries interested in exchanging information on fraud to protect customers, entities and broader society will also be able to join.

Carlos Requena will be FrauDfense's CEO. The board of directors will comprise two representatives of each bank: Carles Solé Pascual, chief information security officer (CISO), Santander España; Daniel Barriuso, group chief transformation officer, Banco Santander; Natalia Ortega, global head of Financial Crime Prevention, BBVA; Sergio Fidalgo, group chief security officer, BBVA; Sofia Karapatsiou, director of Governance and Fraud Control, CaixaBank, and Lorenzo Malo, CISO, CaixaBank. BBVA’s Natalia Ortega will be FrauDfense’s first chair, a role rotating every two years between the three member banks.

 

C2FO grows in Mexico

C2FO has announced its further expansion into Mexico by creating a Mexican subsidiary. Established relationships with three major enterprises, including Walmart México, offer local suppliers access to C2FO’s working capital solutions. New marketplaces will launch with three enterprises, including Grupo Cinemex and Grupo Posadas. But millions more micro, small and medium enterprises (MSMEs) need easier access to fast, flexible and equitable working capital — something that could transform the Mexican economy. The 4.5 million Mexican MSMEs account for 52% of the country’s gross domestic product (GDP). Despite their significant contribution, a 2022 McKinsey Global Institute study commissioned by C2FO found that Mexican MSMEs encounter substantial financial challenges that hinder their ability to unleash their full economic potential.

In today’s high-interest rate environment, many MSMEs encounter hurdles in maintaining a flexible cash management strategy and securing working capital to conduct and grow their businesses. C2FO’s study highlights key challenges MSMEs face, including late payments from buyers and significantly higher interest rates than larger enterprises. Additionally, traditional large financial institutions primarily cater to other market segments, neglecting the specific needs of MSMEs.

This is problematic for the Mexican economy due to the high number of MSMEs in the country. Many businesses have their capital locked up in receivables instead of growing their company, creating new products or expanding their teams. Without long-term solutions, Mexican companies, their employees, and the broader economy will continue to suffer the squeeze — and stall growth.

A long-term and effective solution benefits both sides of the supply chain and incentivizes enterprise buyers to participate. To ensure an enterprise chooses the right solution that benefits its business and suppliers, C2FO says company leaders should look for solutions that offer flexibility in funding, customisation and segmentation, and excellent service.

 

Mondu and Acquired.com bring B2B payment services to European businesses

B2B payments company Mondu has partnered with payments firm Acquired.com to see its suite of B2B payment services offered to more customers in the UK and Europe through Acquired’s network.

Acquired.com provides a single platform for all corporate payment needs, delivered with a consultative approach. Working together in partnership, Acquired.com and Mondu will introduce each other to relevant businesses looking to improve the payment experience for their customers.

Mondu started in 2021 in Germany and launched a Buy Now, Pay Later (BNPL) B2B solution for merchants and marketplaces. Its payment solutions include net terms and instalments for online checkouts as well as in-person and telesales. Mondu is available to business customers in Austria, Germany, the Netherlands and the UK. The company recently launched to buyers only in the French and Belgium markets, with further expansion planned later this year.