Stablecoins will not comply with upcoming global standards – Industry roundup: 20 February
by Monica Zangerle, Writer, CTMfile
First global corporate sustainability regulations receive approval by the G20 standards organization
Following efforts to end "greenwashing", the G20-backed International Sustainability Standards Board reportedly endorsed worldwide baseline standards for companies to disclose how climate change affects their business. The standards are set to take effect in January 2024, for use in yearly reports thereafter.
Reports indicate that billions of dollars have already poured into funds promoting their eco-friendliness based on various voluntary private-sector methods, which reportedly have authorities concerned about "greenwashing" or overstated claims regarding climate change. The EU and the US are reportedly drafting new corporate disclosures as new environmental, social and governance requirements become more prominent.
Approximately 50,000 firms will reportedly be subject to EU disclosure rules known as European Sustainability Reporting Standards (ESRS), with many also required to disclose under International Sustainability Standards Board (ISSB) standards. Regulators have reportedly placed the ISSB and EU under intense pressure to make their climate-related disclosures interoperable in order to avoid clashes that may raise compliance costs. The ISSB board members debated introducing some interoperability by allowing companies to use compliance with EU norms to help meet ISSB rules under certain conditions.
Since the EU standards may evolve, the board reportedly decided to include the use of EU regulations in an appendix to the ISSB guidelines. Marie-Laure Delarue, Global Vice Chair and Big Four Auditor, EY, commented that cross-referencing is the initial phase towards norm convergence, but that it would be difficult for businesses to implement in actuality.
The global payments sector to reach nearly US $848 billion by 2027, stated the recent Payments Worldwide Market Report 2023
The "Payments Worldwide Market Report 2023" study has been published. With a compound annual growth rate (CAGR) of 8.9%, the global payments industry is expected to increase from US $561.77 billion in 2022 to US $612.04 billion in 2023. Additionally, the payments market is anticipated to reach $847.59 billion in 2027, with a CAGR of 8.5%.
The payments market's largest region in 2022 was reportedly Asia Pacific, with direct debit, check payments, credit transfers and cash deposits as the four basic payment methods. Additionally, contactless payments have become increasingly popular due to demand for less human interaction. However, the expansion of the payments market has reportedly been affected by rising payment fraud. The report also noted that biometric authentication is gaining traction in the payments industry.
FSB warns that current stablecoins will not comply with upcoming global standards
As stated by the Financial Stability Board's (FSB) Head Klaas Knot today, many stablecoins that are currently in use would not comply with the rigorous standards that will soon be established by global standard organizations such as the FSB. Knot stated that the FSB's next guideline aims to strengthen stablecoin governance frameworks, redemption rights and stability methods.
The FSB, which published its project plan for 2023 today, intends to complete its proposals for regulating cryptocurrency and stablecoins by July. Cryptocurrencies known as stablecoins are reportedly anchored to the value of other assets, such as the US dollar or the euro. The majority of payments-focused stablecoins are reportedly backed by fiat currency reserves in the form of cash equivalents, or more commonly by unsecured short-term loans. Reports indicate that regulatory agencies are taking measures to monitor these stablecoins worldwide. Although stablecoin issuers have reportedly aimed to reduce private debt in their reserves and increase transparency, Knot's warning suggests that these efforts may not be sufficient and noted that many stablecoins currently in use do not adhere to global standards for payments or securities.
The FSB announced last week that it intends to collaborate with other standard-setting organizations to decide how decentralized finance should be governed and to prepare a report on crypto regulatory concerns in collaboration with the International Monetary Fund.
Visa and Froda, a Nordic fintech, launch instant push-payment solution for SMEs
Visa, in collaboration with fintech Froda, have reportedly established a global alliance with Nordic-based fintech Lunar to introduce a new solution to help small-medium sized enterprises (SMEs) overcome barriers in accessing capital. The solution aims to cut transaction times to just a few seconds by using push-payment technology for financing, a process that typically takes months to complete.
With a new financing option for businesses, Lunar's clients can reportedly gain access to business loans via Froda's unique embedded lending infrastructure, which supports direct payments and repayments using Visa cards. Visa’s presence in more than 200 countries and territories reportedly helps make the product scalable on a worldwide scale.
Olle Lundin, CEO, Froda, commented that the firm’s objective was to establish a new embedded lending platform that would provide business owners with simple access to capital and immediate rewards. The company will reportedly be able to offer the service to both neobanks and established banks across a number of markets with Visa’s support.
By allowing loan repayments and payouts to be handled directly through a payment card, the solution aims to break down boundaries, enabling customers to repay their loans through recurring card payments, while eliminating the need to track and manage monthly invoices. Additionally, Mats Persson Bergius, General Manager in Sweden, Lunar, commented that there is no longer a requirement for separate enrolment for direct debit options or data collection for invoices.
JP Morgan study shows strong corporate optimism amidst supply chain disruptions
A recent study from JP Morgan reported that there is a divide between corporations that are bullish about the future and those who are more pessimistic about it, as the outlook for the global economy for 2023 remains dire. However, the reports cite businesses as almost unanimous in their confidence to cope with current conditions.
In its yearly Business Leaders Outlook study, the bank polled more than 2,000 top managers from midsize businesses in Australia, France, Germany, India, the UK and the US, reporting that geopolitical and economic headwinds were the most common topic for all organizations. However, reasons varied greatly amongst markets.
The study found that the majority of midsize enterprises in Europe believe that supply chain challenges have become worse, with 63% of respondents from the UK and France and 57% of respondents from Germany stating that pressures have increased over the previous year. Most respondents in Australia, the US and India stated that conditions are either improving or remaining steady. Businesses in India are reportedly the most enthusiastic, with 47% stating that supply chain tensions had subsided over the previous twelve months, reportedly as a result of collaborating with new suppliers from different regions and relocating manufacturing and distribution centres.
The study reported that the majority of businesses are optimistic about their performance. Nearly all midsize business executives in India anticipate growing revenues this year, as do nearly 9 out of 10 business leaders in the UK and roughly three-quarters of business leaders in Australia, said reports.
Additionally, 42% of UK businesses are near-shoring production, up 12% from 2022. Many companies, including almost half of German businesses, are allocating additional funding to cover rising expenses associated with transferring products. Similarly, a third of UK respondents claimed that they have also resorted to warehousing to increase their resilience despite the detrimental effects of retaining excess inventory on the working capital cycle.
In general, the JP Morgan survey reportedly shows that the confidence level is still optimistic, even though businesses may not agree fully on how the continuous high inflation, high energy prices and tight supply chains influence the future for the global economy.
The Bank of Japan commences a trial programme for the digital yen
The Bank of Japan has launched a pilot programme to evaluate the utilization of a digital yen, following two years of testing. As part of the pilot program, the BOJ intends to perform simulated transactions with private firms in an experimental setting, potentially developing into including actual transactions between merchants and customers.
Kazushige Kamiyama, Director of the Payment and Settlement Systems Department, BOJ, will reportedly oversee the creation of a CBDC and states that the pilot is expected to run for a number of years, with continued collaboration with commercial banks as well as non-bank settlement companies and carriers.
EBANX debuts a payment initiator solution through Pix for Brazilian businesses
The Central Bank of Brazil has reportedly granted EBANX, a Brazilian-based fintech, authorization to provide a payment initiator service through Pix, Brazil's rapid payment platform. EBANX, which reportedly specializes in international payments in emerging countries, has officially obtained the payment initiation service provider (PISP) license to broaden services to its clients by enabling over 500 merchants in Brazil to initiate and complete payments entirely on the merchant's websites or mobile apps, reportedly eliminating the requirement that merchants obtain their own PISP license from the Brazilian Central Bank.
In accordance with the central bank’s initiatives to promote digital payments and financial inclusion throughout the nation, the Pix instant payment system was established in 2020, with approximately 75% of Brazilians currently using the system, said reports. The new EBANX feature intends to make Pix payments secure for millions of Brazilian customers, simplifying the payment process and making payments faster and more cost effective.
The transaction is reportedly handled by the merchant directly when customers pay with Pix, using the EBANX software platform to start the payment. Customers can expect to execute a transaction via their bank’s app without scanning a QR code, as well as verifying the user and simplifying the payment process.
The EBANX's Beyond Borders 2022/2023 report cited that the Pix payment platform represented more than 16% of all Brazilian e-commerce sales.
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