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Industry roundup: 15 March

Bank of Thailand CBDC for business pilot finds DLT limitations

The assistant governor of the Financial Markets Operations Group at the Bank of Thailand (BOT), Vachira Arromdee, has announced the results of the Central Bank Digital Currency (CBDC) for Business Prototype Development Project. The project is a collaboration between the BOT, SCG and Digital Ventures Company Limited (DV) initiated in June 2020, with support from technology provider ConsenSys. The project aims to explore how CBDC can be used by the business sector to enhance efficiency and flexibility of payments while supporting financial innovation. The CBDC system prototype uses distributed ledger technology (DLT) in integrating with the procurement management, billing, and payments systems between SCG and its business partners (suppliers).

The BOT test results demonstrate that DLT can increase payment efficiency for businesses by allowing users to set various conditions on the CBDC (programmable money) to enhance flexibility in handling business activities. The experiments include setting conditions for payments to be made as specified in invoices in supply chain financing and setting conditions to enhance efficiency in cash management. However, the results note that the usage of DLT in this prototype has some limitations, particularly in supporting large transaction volumes and preserving transaction privacy. BOT says that resolving these issues through technology development or system design will need to be explored further. 

The Project marks the first time the BOT has expanded the scope of CBDC development to business users. The bank says it highlights an important step in staying apace with the advancement of digital currencies both domestically and abroad, which could play a significant role in future economic and financial activities. During 2021-2022, the BOT will focus on the research and development of a publicly-accessible CBDC (retail CBDC). The design of CBDC for widespread usage will need to take into consideration safety and efficiency as well as implications on monetary policy, financial system stability, and the roles of financial institutions and the central bank. 


Latin American corporate indicators materialising challenges in 2021

Latin American corporate credit indicators point to an improving economic and operating environment for most countries across the region in 2021, while challenges surrounding the rollout of vaccinations and political volatility materialise, according to a series of new reports from Fitch Ratings.

Corporates in Argentina already have limited access to US dollar revenues and reserves. Several capital controls forced them to burn US dollar resources held abroad, reducing liquidity cushions and weakening financial flexibility. Brazil's economic recovery is threatened by a strong second wave of the coronavirus in several regions of the country, very low levels of vaccination and high unemployment, resulting in a challenging Q1 2021. Key sectors are showing gradual, although slower, recovery, despite this challenging scenario.

Chile faces a heavy political cycle over the next two years. Presidential and congressional elections take place in late 2021 amid a constitutional rewrite, which will elect a 155-member constitutional convention in April 2021. This process should end around mid-2022, when the Chilean population will vote on the new constitution. Colombian corporate revenues and operating cash flows, severely affected in 2020 by demand shocks and economic disruptions, will gradually recover and reach pre-pandemic levels in 2022-2023. About 10% of revenues and 20% of aggregate EBITDA were lost in 2020.

The ability of Mexican issuers to reduce leverage depends on boosting operating results. Expectations for gradual strengthening of leverage metrics in the next two years are challenged by the current economic environment and will most likely be delayed. Vaccine distribution and reopening of businesses will determine the speed of recovery by sector and industry. Economic activity in Peru during the first half of 2021 will be marked by continued measures of fighting the coronavirus, including the vaccination of the population, and a moderate recovery in private sector investments pending the outcome of the presidential election. Some volatility in the exchange rate is expected during the first half of the year as a result of the electoral process.


Sage expands CSI partnership to deliver vendor payments offering 

Sage and Corporate Spending Innovations (CSI) have announced an expanded relationship. The companies are working together to deliver new vendor payments capabilities natively within the Sage Intacct cloud financial management system - providing a seamless experience from bill to reconciliation for joint customers.

From processing automated clearing house (ACH) batches to printing and mailing cheques, the accounts payable (AP) process is often time-consuming and costly. Finance teams end up jumping between multiple systems or getting bogged down in manual processes to deliver and reconcile vendor payments. With the new Sage Intacct Vendor Payments powered by CSI, businesses should be able to streamline and automate their payments process. This solution brings together Sage Intacct’s cloud financials and the payments platform from Corporate Spending Innovations. The offering aims to enable customers to pay vendors quickly, speed up reconciliations, and offer more ways to pay, while reducing payment transaction costs.

“With the sudden move to fully remote workforces for many businesses in 2020, CFOs became painfully aware that digitising AP, especially payments, was an initiative that should have been implemented years ago,” said David Disque, president from Corporate Spending Innovations.

“Most companies don’t realise just how much time and money gets wasted in their traditional AP workflows,” added Dan Miller, Sage’s SVP of Product for Sage Intacct. “Studies have shown it can cost companies US$20 or more per cheque to pay vendors and more than 80% of an AP team’s time is spent on manual transactions and payment processing. Sage Intacct customers can now leverage the trusted payments platform from Corporate Spending Innovations as a seamless extension to their company’s AP team to streamline the AP process and save money on each vendor payment.”

Sage Intacct Vendor Payments powered by CSI is currently available to US-based early adopters and is expected to be generally available to all US-based customers this summer.

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