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Euro’s digital currency assessments move forward with Spanish banks – Industry roundup: 11 November

SNB and cryptocurrency developer David Chaum collaborate to launch privacy-protecting CBDC technology

Swiss National Bank (SNB) is collaborating with David Chaum, a developer of eCash cryptocurrency, which predated Bitcoin, and, more recently, the elixxir cryptocurrency, to advance effort on Project Tourbillon, which is reportedly designed for privacy-focused central bank money. Chaum commented that a form of CBDC that protects privacy could exist and benefit society. The Bank of International Settlements (BIS) Innovation Hub plans to oversee the project's development, the organization said on Thursday. The project aims to increase the number of CBDC pilots already being developed by the BIS Innovation Hub, such as the Helvetia and Mariana projects, both of which also involve the SNB.

According to the BIS, the technology underlying Project Tourbillon combines privacy-preserving functions and Chaum's quantum-resistant cryptography. The press release also states that the system will be scalable because it will use an infrastructure that is complementary to, but not based on, distributed ledger technology. In a joint research paper, Chaum and Thomas Moser, an alternate member of the SNB governing board, presented the concept, which was reportedly based on Chaum's blind signature technique.

The project, according to Morten Bech, Head of the BIS Innovation Hub Swiss Centre, reduces trade-offs between cyber resilience, scalability and user privacy. Bech stated that Project Tourbillon will create and evaluate a working model that balances these trade-offs and advances the technological capabilities of central banks. The prototype is expected to be finalized by mid-2023.

NatWest introduces new APIs for corporate real-time payment processing

NatWest, a UK-based retail and commercial bank, has released three new APIs aimed at corporate, commercial and institutional customers. The APIs are intended to help with real-time payments and automated reconciliation processes, such as BACs payments.

The rollout is expected to broaden the bank's indirect access payments API collection, which is reportedly used by NatWest agency banks and indirect payment service providers of all grades, including bank-grade and non-bank grade, totalling billions of dollars.

Reports indicate that the new launch will provide commercial clients with the ability to initiate faster payments and international transfers directly with the Clearing House Automated Payment System (CHAPS), as well as obtain close to real-time payment status notifications, citing customer feedback. Additionally, businesses can expect to retrieve and schedule reports, enabling treasury teams to access information directly. One of the APIs, which is primarily directed at large corporate customers, reportedly enables BACs payments to be completed effortlessly and without monitoring.

NatWest Group has also recently announced new collaborations with Token, Tink and Yapily to implement variable recurring payments (VRP). The Open Banking Implementation Entity, which oversees the process, defines VRP, also known as sweeping, as the automatic transfer of money between a customer's own accounts for a variety of services such as utility bills, subscriptions and charitable donations.

As a result of the move, NatWest has now reached agreements with six payment providers to offer VRP as a new payment method, adding TrueLayer, GoCardless and Crezco, which have reportedly confirmed VRP agreements. In addition, the bank is also testing VRP as a payment option for NatWest Rapid Cash customers via Payit, the company's open banking platform.

Major blockchain intelligence firm, TRM Labs, raises US $70 million in Series B funding round to help combat financial and crypto fraud

TRM Labs, a blockchain intelligence company, has officially confirmed a US $70 million boost to its Series B funding round, elevating the total raised to $130 million. Thoma Bravo, a major software investment firm, led the investment, with participation from Goldman Sachs, PayPal Ventures, Amex Ventures, Citi Ventures and others. In addition, TRM Labs reportedly raised $60 million in Series B funding in December 2021, led by Tiger Global.

Law enforcement organizations, regulatory bodies, tax authorities and financial intelligence units around the world reportedly use TRM's blockchain intelligence solutions to support investigations into and analysis of financial crime and fraud involving cryptocurrencies. Some of the most well-known companies in the financial services and cryptocurrency industries, such as Circle, Shopify, MoonPay, OpenSea and Uniswap, use TRM's blockchain intelligence platform to identify fraudulent or illegal financial activity, as well as adhere to regulatory requirements for sanctions and anti-money laundering.

TRM intends to invest in product development and talent with the money raised from this round of funding, aiming to provide efficient tools for preventing fraud and illicit finance in the cryptocurrency industry. Additionally, the firm plans to meet the demand for its incident response services and training courses.

Esteban Castao, co-founder and CEO, TRM, commented that with continuous threats arising, the firm is setting the bar for information, products and training that would enable businesses and governments to combat fraud and financial crime.

Since its debut in 2018, TRM has reportedly increased its revenue 490% year over year and grown from four to more than 150 employees, with notable growth in teams across the UK, Singapore, Australia, Brazil and the UAE over the past two quarters. Former law enforcement officers from the FBI, HSI, IRS-Criminal Investigation, Australian Federal Police, UK's National Crime Agency, INTERPOL, UK Department of Justice, UK Department of the Treasury and others are reported to be part of TRM's team.

Multinational clients’ use of Citi's Institutional Virtual Accounts increases significantly, accelerating the digitization process

Citi’s Virtual Accounts has accelerated expansion of its institutional client base, which includes corporations, financial institutions, e-commerce and insurance firms. This expansion is reportedly driven by multinational corporations across industries continuing to use Citi's solutions to improve operational efficiency, reduce costs, accelerate time to market and accelerate their digitization initiatives. Reports show that account balances have increased by 82% in 2022, while adoption increased by 33%.

The global solution is expected to provide numerous advantages over traditional account structures, such as:

  • Simplified bank accounts
  • Real-time cash concentration and account segregation based on a company's operating system
  • Immediate access to cash management capabilities
  • A highly automated and digitized orientation and training
  • Simplified documentation execution and reduced IT requirements for clients, with account open and transactional within 24 hours
  • Domestic, international and immediate payment options across numerous payment methods, encompassing high and low value payments
  • Available in 41 currencies

Stephen Randall, Global Head of Liquidity Management Services, Citi Treasury and Trade Solutions, commented that clients will also be able to automatically reconcile their accounts payables and receivables process. Additionally, clients will have the ability to add an unlimited number of virtual accounts on-demand digitally in a fraction of the time it takes to set up traditional bank accounts, thus improving time to market without making significant investments to their own technology infrastructure.

Citi’s Virtual Accounts are currently available in the United States and 16 Western European countries in 41 currencies. Further launches of the platform are expected to take place in the treasury hubs of Asia Pacific, Hong Kong and Singapore in early 2023, with additional rollouts in six more Asia Pacific nations and Canada.

Bank of England initiates sales of its emergency bond purchases to commence on 29 November

The Bank of England (BoE) has announced that it will begin selling a portion of the 19 billion pounds (US $22 billion) of bonds it purchased to calm market turmoil. Reports show that the Bank of England purchased long-dated and index-linked bonds between 28 September and 14 October in order to halt a fire sale of assets by British pension funds after some bonds experienced their steepest drops on record. Andrew Hauser, a Senior Executive, BoE, stated that it was critical that these purchases be reversed as quickly as possible and that more information would be forthcoming.

The BoE will reportedly accept offers from investors to purchase the bonds beginning on 29 November. The BoE is not expected to follow a set schedule or pace for these sales, unlike its separate programme of auctions to unwind some of its more than 830 billion pounds in quantitative easing purchases.

The plan, according to the BoE, is a demand-led approach to loosen recent financial stability bond purchases in a prompt and effective way.

Euro's digital currency assessments move forward with Spanish banks

The Spanish financial industry has reportedly established a taskforce and proof-of-concept (PoC) to evaluate the impact of the European Central Bank's implementation of a digital euro. In order to conduct a thorough analysis of the technical, operational and business implications of the digital euro and its coexistence with current payment mechanisms, approximately thirty banks, in collaboration with infrastructure providers Bizum, Iberpay and Redsys, intend to implement the PoC.

In addition, the proof-of-concept project is expected to be finalized before the end of 2022, mobilizing numerous digital currency payment use scenarios presented by the Eurosystem in a controlled production environment. The assessments are expected to include simulated person-to-person remittances of digital euros, e-commerce payments and physical commerce payments, all based on a scheme in which banks would be the custodians of their customers' digital currency accounts, similar to the current euro. The test findings are expected in 2023.

SABB partners with Visa and Saudi Payments to introduce a new prepaid procurement card for corporates

The Saudi British Bank (SABB) has joined forces with giant Visa and Saudi Payments to introduce the SABB Procurement Card, which has been created specifically for its corporate and business clients with the ability to manage daily payments digitally.

With the recently released procurement card, corporations and businesses can expect to manage payments more effectively, securely and affordably while cutting costs. It will reportedly help lower risks associated with handling cash, as well as the continuous monitoring of expenditures. According to Yasser Al-Barrak, Chief Corporate & Institutional Banking Officer, SABB, the launch of this co-badged mada-Visa card will become a major component of the bank’s business initiatives to continually improve the customer experience by satisfying their requirements through creative solutions and maintaining the country’s digital transformation goals. Furthermore, the holders of these special-purpose cards can expect to have a streamlined payment experience in meeting their financial needs due to the nation's structured framework and widespread acceptance of the mada scheme across the entire nation.

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