Central bank of Israel to purchase high-yield corporate bonds – Industry roundup: 3 June
Central bank of Israel to purchase more risky assets after adding Chinese yuan
The central bank of Israel will continue to diversify its reserves to include more stocks and high-yield corporate bonds, according to Governor Amir Yaron. The bank added the Chinese yuan to its holdings for the first time in April 2022. Yaron stated that they have a broader set of currencies and plan to expand more instruments. “It's part of our way of enhancing the overall return on these reserves as we're looking at the medium-run outlook for the return on our investments”, he further added.
According to reports, the shift into more equities and higher risk assets is part of the bank's largest portfolio change in the last 10 years, with its investment framework also evolving. Previously, the bank held only US dollars, euros and British pounds. However, in April it reduced its holdings of the dollar and euro and added yuan, Canadian and Australian currencies and the Japanese yen. The origination of this change is Israel’s desire to extend its investment options and generate higher returns on its approximately US $200 billion foreign exchange reserves. Bottom of Form
Andrew Abir, Deputy Governor, Bank of Israel, said in April that "We need to look at the need to earn a return on the reserves that will cover the costs of the liability."
Earlier this year, the International Monetary Fund (IMF) reported that the dollar's share of the world's currency reserves had fallen to its lowest level in more than 20 years, prompting speculation about the rise in the yuan. However, Aleksandar Tomic, Economist, commented that even though challenging times may cause economic volatility, the US dollar remains stabilized.
Differentiated efficiencies improve lending processes via Citi and BDC Capital’s investment in Arteria AI
Citi SPRINT (Spread Products Investment Technologies), the strategic investment divisions of global spread products, and BDC Capital have reportedly invested in Arteria AI, a Canadian-based provider of digital business documents. The partnership collaborates with fintech stakeholders Information Venture Partners, Illuminate Financial, StandUp Ventures and Golden Ventures. The capital is aimed at accelerating Arteria's global growth and the adoption of its differentiated, data-centric, low-code approach to documentation.
Christina Wojcik, Director, Legal Innovation, Citi, commented that “Arteria is approaching the complex document data challenges of financial institutions with a forward-thinking approach, reflecting their deep understanding of financial documents.”
Reports indicate that Arteria's software has been deployed by many world-class financial institutions to provide clients with fast and accurate documentation experiences while reducing the cost and risk of doing business. Arteria uses artificial intelligence and a data-first approach to facilitate the documentation process in a seamless and efficient manner.
Katya Chupryna, Head of SPRINT, Citi, stated that Arteria’s differentiated technology is widely applicable to various Citi businesses, including new issuance for structured credit and their broader ecosystem of portfolio companies.
RBI to expand UPI for cross-border remittances through global alliances
The Reserve Bank of India (RBI), in its annual report for FY21, revealed that it is working on using Unified Payment Interface (UPI) for cross-border remittances in various jurisdictions.
The RBI said it is investigating the possibility of connecting UPI with similar systems in other jurisdictions, especially in the G20 countries, to improve cross-border payment arrangements. Apex Bank claims to be involved in the fundamental and framework discussions of UPI and cross-border remittances with the Committee on Payments & Market Infrastructure (CPMI) and the Financial Stability Board (FSB).
The cross-border payment settlement processing currently works through banks with offices in both countries. This process can be expensive and time consuming, as the bank converts money into the local exchange value, and users pay up to 10% in fees for cross-border remittances.
India’s National Payments Corporation (NPCI), a specialised division of RBI for payments and settlement systems as well as the governing body of UPI, has a similar partnership with Singapore-based PayNow, which reportedly has the potential to form the basis of India's cross-border payment ecosystem. Continuous efforts are said to be at various stages in different countries, but the link between UPI and PayNow has been officially publicized. According to RBI, it should be operational in the second half of 2022.
This partnership is expected to further establish the flow of trade, travel and remittances between countries and to reduce the cost of cross-border remittances. Apex Bank also outlines in its annual report that it can serve as an example of linking each fast payment system to achieve immediate remittances in a cost-effective manner.
Fintech Trustly acquires Ecospend to expand its position in the UK Market
Trustly, an international payment platform for digital account-to-account (A2A) transactions, has acquired Ecospend, the United Kingdom’s (UK) open banking payment platform (transaction details are undisclosed). Ecospend's A2A product and full bank connectivity will reportedly help Trustly accelerate adoption in the UK. Ecospend, serving a range of industries including the public sector, processed more than £5 billion in A2A payments to more than 2 million consumers during the past year.
According to reports, “four years after PSD2 made open banking a regulatory requirement in the UK, the market has established itself as a dynamic ecosystem with a rapid acceleration in consumer recruitment and a significant increase in transaction volume.” With Ecospend's robust UK Payment Initiation and Account Information Services (PIS and AIS) and connectivity to more banks in the UK, this reportedly builds a powerful complement to Trustly's collection capabilities and broader European footprint.
Trustly’s digital A2A, which is aimed at redefining payment speed, simplicity and security, connects some of the world's most prominent merchants directly to consumers via their online banking accounts.
Reports indicate that Trustly has the ability to manage the entire payment process and offer attractive alternatives to the traditional card networks at a lower cost. It is noted that Trustly serves 8,100 merchants, connecting them with 525 million consumers and 6,300 banks in over 30 countries. In 2021, they processed over $28 billion in transactions across their global network.
Open banking gains momentum throughout Europe via Truelayer and Thunes
TrueLayer, a European-based open banking platform, partners with Thunes, a Singapore-based fintech and global cross-border payment provider, to streamline and improve the consumer payment experience in the UK and Europe. Thunes is reportedly building a borderless B2B payment infrastructure to address the payment needs for online retailers, marketplaces, gig and shared economy platforms, and fintechs.
As A2A payments continue to grow, Thunes plans to leverage TrueLayer’s open banking payments in their platform as one of the easy-to-use payment methods available to Thunes' 100,000 merchants worldwide. Therefore, marketplace platform customers and partners will be able to take advantage of open banking payments and benefit from TrueLayer's extensive market coverage and industry-leading conversion rates.
Payments from TrueLayer are said to provide a faster and cost-effective alternative to bank transfers as well as circumvent the fees associated with traditional card networks. Additionally, reports state that it can significantly decrease the risk of fraud and eliminate chargebacks.
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