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Industry roundup: 24 February

Mastercard and Island Pay launch world's first CBDC-linked card

Under a new programme from Mastercard and Island Pay, the Bahamas Sand Dollar prepaid card gives people the option to instantly convert the digital currency to traditional Bahamian dollars and pay for goods and services anywhere Mastercard is accepted on the Islands and around the world.

The digital Sand Dollar is issued by the Central Bank of The Bahamas and carries the same value and protections as a traditional Bahamian dollar. The digital currency can be used to facilitate government disbursements, offer additional payment choices and build a more inclusive economy. In The Bahamas, there are 700 small islands and more than 5000 square miles of water. Cash money movement becomes costly which makes a CBDC a preferred digital payment in the region. In the future, the Sand Dollar will be offered to tourists.

Originally piloted in 2019, the Sand Dollar became the first fully-deployed digital version of a country’s fiat currency in October 2020. At that time, the Sand Dollar was exclusively accessed by registered users through a digital app at select merchants. Island Pay mobile wallet users can decide if they want to transact in Sand Dollars or Bahamian dollars at merchants using the mobile app.

Mastercard’s work with central bank digital currencies (CBDC) supports governments around the world as they explore, test and deploy real-life use cases across existing payment rails. Its virtual testing environment enables the simulation of issuance, distribution and exchange of CBDCs between banks, financial service providers and people. Island Pay’s technology platform, combined with Mastercard technology and wide merchant acceptance, has the potential to help reduce the operational distribution costs of cash and modernise the overall payments system in The Bahamas.


MicroStrategy completes US$1.05bn offering of convertible notes, plans to invest proceeds in bitcoins

MicroStrategy Incorporated has announced the closing of its previously announced offering of 0% convertible senior notes due 2027. The aggregate principal amount of the notes sold in the offering was US$1.05bn, which includes US$150m aggregate principal amount of notes issued pursuant to an option to purchase, within a 13-day period beginning on, and including, the date on which the notes are first issued, which the initial purchasers exercised in full on February 18, 2021 and which additional purchase was also completed.

MicroStrategy estimates that the net proceeds from the sale of the notes will be approximately US$1.03bn, after deducting the initial purchasers’ discounts and commissions and estimated offering expenses payable by MicroStrategy. Interestingly, the corporation says it intends to use the net proceeds from the sale of the notes to acquire additional bitcoin, offering an insight into how the world of corporate treasury may intersect with that of cryptocurrencies going forward.

Speaking on CNBC's Squawk Box, Michael Saylor, chairman and CEO of MicroStrategy said: "Bitcoin's not for spending, it's not really a currency... Bitcoin is for saving. Bitcoin has a compound annual growth rate of nearly 200% for the past decade, and so if you want to save your money for the next decade it is logical to do one transaction - put all your money in Bitcoin and wait for a decade for it to go up."


Bank of England outlines data collection transformation plan

The Bank of England has published ‘Transforming Data Collection from the UK Financial Sector: A Plan for 2021 and beyond’, its plan to transform its ability to collect data over the next decade. The Bank expects that delivery of the plan will ensure that it gets the data it needs to fulfil its mission, at the lowest possible cost to industry.

Publishing the Transformation Plan completes the year long data collection review that was announced in the Bank’s response to Huw van Steenis’ Future of Finance report. That review included the publication of the discussion paper ‘Transforming Data Collection from the UK Financial Sector’ on 7 January 2020.

The Transformation Plan is the Bank’s response to tackle strains put on the current data collection process, and on the suppliers of data within the financial sector. These strains include technological advances and automation that mean that more data than ever before is being created and captured. And the expectations of participants across the financial system, including authorities like ourselves, that they should have high quality, timely data available to guide them in their decision making. 

The Transformation Plan sets out the issues facing parties involved in the current data collection process; and lays out a vision, reforms and set of next steps that aim to address those issues. Central to the next steps of the transformation plan is the creation of a joint work programme with the Financial Conduct Authority (FCA) and industry. 

“Having timely and consistent data is vital to our role as a regulator, and to the ability of firms to manage their business," said Sam Woods, deputy governor for Prudential Regulation and CEO of the Prudential Regulation Authority. "Working jointly with the FCA and industry on the reforms set out in the Transformation Plan, we are confident that we can start to deliver valuable change and set the stage for a larger transformation over the next decade.”

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