Treasury News Network

Learn & Share the latest News & Analysis in Corporate Treasury

  1. Home
  2. FX Management & Crypto
  3. FX Settlement

Global hub for CBDCs and tokenized assets – Industry roundup: 5 October

SWIFT announces itself as a global hub for CBDCs and tokenized assets

SWIFT has reportedly developed a framework for a global central bank digital currency (CBDC) system, claiming to have resolved the issue of network interoperability. Reports indicate that it has completed transactions between different blockchain networks using both CBDCs and fiat currencies, having followed experiments involving the central banks of France and Germany, as well as HSBC, NatWest, Standard Chartered, UBS and Wells Fargo.

Interest is currently focused on how different countries' CBDCs might interact when using different networks, specifically as the large majority of central banks are looking into the creation of digital currencies, reports added. According to SWIFT, the experiments revealed that blockchain networks can be connected for cross-border payments via a single gateway and that SWIFT's new transaction management tools can coordinate all network communication.

In addition to its task on CBDCs, SWIFT reportedly investigated tokenized assets, which is the process of turning assets like stocks and bonds into tokens that can be issued and traded in real time. SWIFT claims that it can act as a single point of access to various blockchains and that tokenization platforms can use its infrastructure to create and trade tokens.

A cross-chain interoperability protocol is reportedly being developed by SWIFT and Chainlink, a company that offers price feeds and other data to blockchains, to make token transfers possible across all blockchain networks, according to recent reports.

SMEs (68%) in Europe plan to adopt real-time payment solutions within the next year

New research by Vodeno reported that more than two-thirds of small-medium enterprises (SMEs) in Europe plan to implement real-time payment processing within the next twelve months. The provider of Banking-as-a-Service (BaaS) conducted an independent survey of 2,004 executive level decision-makers in SMEs from the United Kingdom (504), Belgium (500), France (500) and the Netherlands (500). The findings are detailed in a new report titled Crossing Borders: Understanding the SME Payments Landscape.

The study reported that 68% of respondents intend to implement real-time payment processing within the next year. Currently, only 10% of SMEs report receiving payments instantly, and 11% within an hour, revealed the study. In comparison, 35% reported that it takes between two and three days for a payment to reach their account, while 25% claimed it took about one day.

Payment delays have reportedly hampered international growth for nearly a quarter (23%) of SMEs in Europe. In addition, 61% of businesses reported having challenges with foreign exchange rates, which Vodeno's research identified as a significant depletion in resources. The study indicated that the majority of respondents (57%) intend to switch payment providers in the upcoming year. The top three considerations for SMEs in selecting a payment track were speed and ease of transactions (37%), cost-effectiveness (35%) and security assurances and compliance standards (29%).

Most European SMEs are reportedly becoming more interested in instant payment processing. However, decisions lie with the right partnership selection and the ability to deliver the service efficiently without excessive rates. SMEs have increasing options for payment processing, and BaaS providers are paving the way to provide access to faster, more secure and cost-effective payment options.

Cash forecasting tool designed for small businesses via US Bank’s all-in-one solution

US Bank unveiled a new, cutting-edge cash forecasting online tool to assist small businesses in obtaining a clearer visualization of their future cash flow. Small business customers will reportedly be able to view a 90-day forecast of their cash flow, which will also allow them to use their external data via their online dashboard, in addition to accounts with US Bank.

The cash flow tool is expected to provide clients with crucial information for planning purposes, such as forecasting account balances up to 90 days in the future and providing a 90-day historical view. Utilizing both internal and external data sources, the tool would enable users to gain more thorough cash flow insights. US Bank plans to continue investments in the tool and to add future functionality that will enable users to build "what if" scenarios and determine how those scenarios might affect their cash flow in the future.

Reports indicate that the main concern for modern businesses is the management of cash flow in an effective manner. According to Irv Henderson, Chief Digital Officer for Small Business, US Bank, providing clients with the ability to forecast their cash flow outlook on a timely basis will help them leverage that critical information in making prompt decisions for both the present and the future. US Bank's Business Essentials, an integrated "all-in-one" suite of banking and payments solutions, is the newest tool to enable companies to manage and run their operations efficiently.

Crypto and digital assets may adversely impact the US economy’s stability per the Treasury's FSOC

The Treasury Department’s Financial Stability Oversight Council (FSOC) issued a cautionary statement that unregulated cryptocurrencies/digital assets could present significant risks to the US financial system. The council reportedly outlined that lending and borrowing on the industry's trading systems as well as the use of digital or cryptocurrency assets, like stablecoins, pose a significant new vulnerability.

Furthermore, the Treasury stressed the importance of appropriate regulation, including enforcement of existing laws due to the potential risks to the US financial system threatened by activities involving cryptocurrency assets. Additionally, the Treasury emphasized that it is crucial that all governmental entities collaborate to implement these recommendations. In February 2022, the council reportedly initially established digital assets as a priority area.

According to the report, the market value of all crypto assets plateaued in November 2021 at about US $3 trillion, or about 1% of all financial assets worldwide. The report claims that despite having a minor impact on the larger global financial system, digital financing is rapidly gaining popularity. However, it has experienced tampering by fraud actors.

The council reportedly proposes escalating bank examinations to require federal and state agencies to examine services provided by crypto asset service companies. In addition, the council recommends legislation that would enable financial regulators to aggressively oversee the industry.

The FSOC, an organization formed after the 2008 financial crisis, aims to identify developing risks to the nation’s economic security as well as coordinate a cohesive approach among US financial regulators. It supervises and regulates nonbank financial companies, financial market utilities, and payment, clearing or settlement activities in order to address potential threats to financial stability. Reports indicate that the FSOC has not used this authority to regulate the cryptocurrency market to date.

Barclays restructures its investment banking division to expand globally

Barclays is reportedly restructuring its investment banking division as part of its plans to accelerate the department's growth. The bank stated that broadening its EMEA franchise is an opportunity to expand its investment banking business internationally. The transformation was reportedly taken shortly after Barclays agreed to pay US $361 million to settle allegations of over-issuing securities to the Securities and Exchange Commission. The US agency claimed that because internal controls to track these transactions in real time were not implemented, it was necessary to charge the bank in connection with the unregistered sale of an unprecedented number of securities.

FinLync and Raiffeisen Bank International partner to enhance cash management strategies

Raiffeisen Bank International (RBI), a corporate and investment bank based in Austria and Central/Eastern Europe (CEE), has partnered with FinLync, a privately-held global treasury fintech firm, to provide cash management services to RBI’s corporate customers in Austria and CEE, largely through corporate bank APIs.

Reports indicate that FinLync has modernized its corporate finance and treasury offices by aggregating global banking APIs in order to provide embedded real-time payments and cash management. RBI's cutting-edge commercial bank APIs and offerings are becoming available to existing and new corporate clients via FinLync's advanced products with a simple plug-and-play approach.

In today's fast-paced world, corporate treasurers are faced with increased pressures to accomplish more with fewer resources, commented Toby Michelmore, Global Head of Partnerships, FinLync. Additionally, treasury departments are reportedly looking to work with innovative financial firms to improve the speed, automation and security of bank data transfers and technology.

Mastercard expands into the crypto space with a new fraud-prevention solution

Mastercard launched a new software program that will reportedly assist banks in identifying and blocking transactions from fraudulent cryptocurrency exchanges. The system, known as Crypto Secure, will employ advanced and powerful artificial intelligence algorithms to assess the likelihood of fraud associated with cryptocurrency exchanges on the Mastercard payment network. The system is said to use information from multiple sources, including blockchain ledgers of cryptocurrency transactions. CipherTrace, a CA-based blockchain security start-up acquired by Mastercard in 2021, reportedly powers the service and assists businesses and government agencies in investigating illicit cryptocurrency transactions.

With fraud increasingly prevalent in the emerging digital asset market, Mastercard is looking to seize the opportunity to launch the new service to combat these schemes. According to data from blockchain analytics company Chainalysis, the amount of cryptocurrency entering wallets with identified fraudulent correlations surged to a record US $14 billion in 2021. This year has also reportedly seen a wave of high-profile cyberattacks and fraudulent activities that target cryptocurrency investors.

To help combat fraud, banks and other card issuers are presented with a dashboard on the Crypto Secure platform that has color-coded ratings for the likelihood of suspicious activity. Crypto Secure reportedly enables card issuers the ability to decide whether to reject a particular crypto merchant or not.

Mastercard already employs comparable technology to combat fraud in fiat currency transactions. It aims to extend its functions and features to Bitcoin and other virtual currencies with Crypto Secure. Ajay Bhalla, President of Cyber and Intelligence Business, Mastercard, stated that this action step was taken to ensure that its partners can remain compliant with the current stringent regulatory environment, offering its consumers, banks and merchants the same level of trust for both digital asset transactions and digital commerce transactions.

Mastercard declined to reveal the total dollar value of fiat-to-crypto volumes from its 2,400 crypto exchange network, said reports. However, Bhalla claims that the credit card giant now facilitates thousands of transactions per minute.

Like this item? Get our Weekly Update newsletter. Subscribe today

About the author

Also see

Add a comment

New comment submissions are moderated.