EU’s wholesale CBDC plans “to be published within weeks”

Euro area central banks intend to set out plans for a wholesale central bank digital currency (CBDC) within weeks, as they seek to innovate how financial institutions settle securities and foreign exchange transactions, says the governor of France’s central bank.

The wholesale plans appear to be moving faster than a more controversial plan for a digital euro to be used by ordinary citizens, where lawmakers have raised numerous concerns over privacy and the impact on commercial banks.

“The Eurosystem has started exploring new technologies for the settlement of central bank money, including the issuance of a first type of tokenised CBDC,” François Villeroy de Galhau said at an event in Paris. “The eligibility criteria and the call of interest will be published in the coming weeks and experiments will be rolled out over the course of next year, including trials with real transactions.”

A permissioned network that works with smart contracts would allow central banks to continue to govern the supply of money to the economy, something central bankers regard as essential to their task of managing inflation and financial stability, Villeroy de Galhau said.

The central bank would be exploring “alternative protocols and blockchains” as well as its own proprietary Distributed Ledger for Securities Settlement System, DL3S, he added.

A recent study by traditional finance lobbyists suggested that financial markets powered by distributed ledger technology (DLT) could save US$100 billion annually by freeing collateral and automating back office processes.

Wholesale CBDC plans were floated earlier this year at a series of industry meetings convened by the European Central Bank (ECB) and appear to be progressing faster than the retail idea, where lawmakers are currently wrestling with legislation that has raised significant political opposition.

According to reports, a recent letter from a group of cross-party EU lawmakers asked the ECB to postpone any decisions on a retail CBDC until they can agree on new legal constraints.

Signatories to the letter, sent September 26, include the Netherlands’ Michiel Hoogeveen, former Belgian Finance Minister Johan van Overtveldt and Markus Ferber, economic spokesperson for the EU’s largest, centre-right political grouping, the European People's Party.

 

EY and Microsoft launch green skills training programme

Big Four accounting firm Ernst & Young (EY) and tech giant Microsoft have announced the launch of Green Skills Passport, a new free online education programme aimed at equipping young people with sustainability skills to find green jobs and pursue green economy opportunities.

The new programme forms part of a collaboration announced between EY and Microsoft last year aimed at upskilling young people and supporting the entry, or re-entry, of millions of people into the workforce or to build new businesses, with a focus on sustainability, science, technology, engineering and mathematics (STEM).

Jean-Philippe Courtois, EVP and President, National Transformation Partnerships at Microsoft, said: “We’re proud to continue growing our collaboration with EY to offer these unique programmes that bridge the gap between education and employability. Through these programmes, we are taking steps toward social equity and empowering leaders of the future.”

According to the companies, the new programme aims to address a skills gap in sustainability, as the International Labor Organisation (ILO) estimates 24 million green jobs will be created by 2030.

The programme includes a 10-hour virtual course, using EY-curated learning paths and delivered on the Microsoft Community Training platform, on key topics including sustainability, entrepreneurship and skills for employment. In addition to receiving an EY and Microsoft certificate on completion, the course provides access to a database of websites and resources to search for green jobs, and includes employability skills, including resume writing and preparing for interviews​.

EY and Microsoft said that the launch follows successful Green Skills Passport pilot programmes in the US, India and Bangladesh, with over 1,400 course completions, including 61% who plan to apply for green jobs, and 43% who plan to enrol in a university degree in sustainability or to take more related classes.

 

Japan to stress-test banks to avert Silicon Valley Bank-style crisis

Japan's financial regulator plans to assess the ability of the country’s banks to withstand a social-media-fuelled run on deposits, similar to that leading to the demise of US lender Silicon Valley Bank in March this year, reports Nikkei Asia.

The Financial Services Agency (FSA) will conduct the stress test on around 20 banks by the end of June 2024, including the top three banking groups and some regional lenders. Online banks with fast-growing depositor bases will also be included.

The FSA and South Korea's Financial Services Commission (FSC) have agreed to resume their regular "shuttle meeting" to strengthen ties to safeguard financial stability of the two East Asian markets.

The first round of such bilateral talks since 2016 will take place in Seoul on December 19-20, the authorities confirmed in a joint statement released after Japan FSA Commissioner Teruhisa Kurita and South Korea FSC Chairman Kim Joo-hyun met in Tokyo.

The two nations agreed in June to revive a US$10 billion currency swap deal, a step symbolising a thaw in the diplomatic tensions amid increasing geopolitical risks in the region.

 

SoftBank CEO expects artificial general intelligence within 10 years

SoftBank CEO Masayoshi Son said he believes artificial general intelligence (AGI) – artificial intelligence that surpasses human intelligence in almost all areas – will be realised within 10 years.

Speaking at the SoftBank World corporate conference, Son said he believes AGI will be ten times more intelligent than the sum total of all human intelligence. He noted the rapid progress in generative AI that he said has already exceeded human intelligence in certain areas.

“It is wrong to say that AI cannot be smarter than humans as it is created by humans,” he said. “AI is now self learning, self training, and self inferencing, just like human beings.”

Son has spoken of the potential of AGI — typically using the term “singularity” — to transform business and society for some years, but this is the first time he has given a timeline for its development.

He also introduced the idea of “Artificial Super Intelligence” at the conference which he claimed would be realised in 20 years and would surpass human intelligence by a factor of 10,000.

Son is known for several shrewd bets that have turned SoftBank into a tech investment giant although some others have spectacularly flopped.

He is also renowned for bold claims about the transformative impact of new technologies. His predictions about the mobile internet have been largely borne out while those about the Internet of Things have not.

Son called upon Japanese companies to “wake up” to the promise of AI, arguing they had increasingly fallen behind in the internet age and reiterated his belief in chip designer Arm as core to the “AI revolution.”

Arm CEO Rene Haas, speaking at the conference via video, touted the energy efficiency of Arm’s designs, saying they would become increasingly sought after to power artificial intelligence.

Son said he thinks he is the only person who believes AGI will come within a decade. Haas said he thought it would come in his lifetime.

 

Kenya consults Citi and Standard Bank on maturing US$2 billion Eurobond

Kenya's government has chosen Citi and South Africa's Standard Group to advise it on how to handle a US$2 billion (€1.9 billion) Eurobond that is maturing in June 2024, a senior finance ministry official has confirmed.

The East African nation needs to repay or refinance the 10-year bond at a time when a surge in yields has effectively locked many frontier economies out of the market.

Its debt load and weakening shilling currency has also fuelled concerns about the maturing bond. Kenya's total public debt was 67.4% of gross domestic product at the end of last year, according to World Bank figures.

Finance Minister Njuguna Ndung'u has sought to downplay the situation, saying it is not a "big deal".

Citi and Standard will help the Kenyan government deal with the maturity, Haron Sirima, the director of debt management at the Treasury told Reuters, without providing more details.

According to Kenya's central bank chief, the plan is to progressively settle the Eurobond, as he acknowledged that current market conditions were not supportive of refinancing the bond.

"We are actually building our war chest to address the issue of the Eurobond," Kamau Thugge told a news conference."We do expect that between now and June, that we will progressively reduce the liability of the Eurobond," he said, without offering more details.

"By the end of June, if necessary we will be able to use our international reserves to make sure there is absolutely no doubt about the government being able to pay for the Eurobond."

 

Bank of Korea to start CBDC infrastructure pilot

“The BOK has persistently pursued technological research related to CBDC. This test, building upon past achievements, represents a significant step towards creating a prototype for the future monetary system,” he said.

 

Thunes and Access Africa to facilitate seamless transactions

Nigeria’s Access Bank said that its payment product Access Africa, developed to simplify global payments through various channels including P2P and B2B, Is collaborating with the Thunes payment infrastructure platform that connects over 130 countries into a unified network, to amplify and streamline cross-border payment services across 13 African countries.

This strategic partnership "aims to fortify and expand the reach of Access Africa’s payment and remittance services to over 100 additional countries and expose Thunes to all 60 million customers of Access Africa across over 600 branch locations. It also aims to enhance the connectivity between Africa and the rest of the world, whilst offering substantial improvements to customers who need to make routine cross-border payments to and from African markets."

Access Africa, an innovative payment product, specialises in facilitating global payments for various transaction flows including person-to-person, business-to-business, and more, operating through numerous corridors such as the United Kingdom, China, Spain, Turkey, and France among others.

Thunes, headquartered in Singapore and with offices in 20 locations worldwide, provides a modular platform that enables customers to perform various financial operations like paying, accepting, and exchanging money while ensuring compliance. It enables transparent money movement, bridging the gap between payment systems in developed and emerging markets across the globe.

A release said that customers of Access Africa, both account holders and non-account holders, will benefit from this partnership by being able to execute uncomplicated international payments and also receive diaspora inflows in USD from regions across the globe in forms of cash or bank deposits. It unifies digital payment technology advantages to address the traditional bank-based cross-border payment flows’ friction, thus making payments more swift, straightforward, and transparent.

 

Ripple secures Singapore payments licence

Cryptocurrency firm Ripple said that its Singapore subsidiary has secured a payments licence to operate in the city-state without transaction thresholds.

The licence, granted by the Monetary Authority of Singapore (MAS), will allow Ripple to provide regulated digital payment token services. It had received initial approval in June.

Ripple is one of 14 companies that are licensed to offer digital payment token services in Singapore. Others include the Singapore arm of Coinbase, the world's largest listed crypto exchange, as well as the Singapore units of the UK’s Revolut and London-based Blockchain.com.

The MAS, Singapore's central bank and financial regulator, has said it only grants licences to cryptocurrency firms if they have robust anti-money laundering controls and that most applicants have not been successful.

Based in San Francisco, Ripple said over 90% of its business is outside of the US, with Singapore - and to a larger degree Asia-Pacific - being one of the firm's fastest growing regions.

 

Cboe and S&P to launch new Credit Vix indices

Derivatives and securities exchange network Cboe Global Markets and index provider S&P Dow Jones have announced plans to launch four new Credit Volatility Indices (Credit VIX) on Friday, October 13.

“Designed to provide a VIX Index-like measure for credit market volatility,” said a release, the new indices are “added to Cboe's growing volatility index suite.”

This new series of indices, jointly developed by Cboe Labs, the company's product innovation hub, and S&P DJI, are based on Cboe's proprietary VIX Index methodology and S&P DJI's CDX and iTraxx Indices and aim to track the expected level of volatility across the North American and European credit markets. They consist of the following:

• CDX/Cboe NA High Yield 1-Month Volatility Index (ticker symbol: VIXHY)
• CDX/Cboe NA Investment Grade 1-Month Volatility Index (ticker symbol: VIXIG)
• iTraxx/Cboe Europe Main 1-Month Volatility Index (ticker symbol: VIXIE)
• iTraxx/Cboe Europe Crossover 1-Month Volatility Index (ticker symbol: VIXXO)

“As we celebrate the 30th anniversary of the VIX Index this year, we couldn’t be more excited to continue our track record of innovation and collaboration with S&P DJI by extending the VIX Index methodology into the fixed income space,” said Rob Hocking, Senior Vice President and Head of Product Innovation at Cboe.

“Interest in this asset class continues to grow amidst a rising rate environment, and we expect these indices will help investors better track credit market volatility, manage corporate credit risk, or implement yield-enhancement and hedging strategies. With the VIX family of volatility indices covering equities, credit and various other asset classes, investors can also look across our diverse product set to compare trends and correlations across different markets in a more consistent manner.”

 

Canada’s TMX Datalinx launches Data Hub

Canada’s Toronto and Montreal Stock Exchange (TMX) announced that the group’s information services division Datalinx, has launched the TMX ESG (Environmental, Social and Governance) Data Hub.

Working with leading ESG data and analytics providers, the TMX ESG Data Hub delivers data to global clients in support of ESG integration in investment decision-making processes. This includes tracking climate action plans, quantifying impact, screening companies and controversies, following news and events and performing corporate peer analysis. 

“Expanding TMX Datalinx’s offering is in response to client demand and growing investor need for a range of high quality ESG data to support portfolio construction, enhanced investment strategies and investment risk management processes,” said Michelle Tran, President, TMX Datalinx. “We are pleased to offer a suite of ESG data sets to our global clients and will continue to look at ways to deliver new content and innovative analytics and indices to support our clients’ ESG investment needs.” 

TMX Datalinx provides a broad range of real-time, historical, and other data products and services to customers across North America and around the globe.