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The New York Fed experiments wholesale CBDC for cross-border payments – Industry roundup: 9 November

Binance, a crypto exchange, to procure rival FTX, drawing the attention of regulators

Binance, a major cryptocurrency exchange, is vying for the business of rival FTX Trading, which was reportedly on the verge of insolvency. Reports suggest that the move underlines the most recent market fluctuations in the nearly US $1 trillion digital currency market. Furthermore, if the agreement to buy rival FTX goes through, Binance will reportedly have more than 80% of the global crypto market, which may draw the attention of antitrust regulators, said a research report released Tuesday. The deal's financial terms were not disclosed.

Reports indicate that the agreement was made subsequent to FTX limiting customer withdrawals on its platform earlier on Tuesday, with the last FTX transaction occurring at 6:37 a.m., according to data from Etherscan. Withdrawal pauses are frequently used as the first warning sign from crypto firms that they are facing insolvency risk.

Although the FTX and Binance entities holding non-US business are located offshore, if FTX has investments in US and European jurisdictions, regulators in those regions may be compelled to intervene, said reports. Analyst reports also stated that Binance must investigate any misappropriation of client funds to key stakeholders or for unauthorized purposes. Additionally, if FTX's financial statements reveal a discrepancy, Binance would reportedly acquire FTX as a fire sale, while investors may raise legal questions about FTX's conduct and any potential malfeasance.

FTX investors reportedly purchased at valuations of $18 billion and $32 billion in two consecutive funding rounds earlier this year.

Bank of America and CrossBoundary Energy partner to expand renewable energy across Africa and achieve sustainability

Bank of America and CrossBoundary Energy, a major developer of commercial and industrial renewable energy projects in Africa, joined forces to examine financing options to boost investments in renewable energy solutions for commercial and industrial enterprises throughout Africa. The partnership will reportedly help CrossBoundary deliver about 255MW of solar and wind generation and 50MWh of storage projects, representing a blended finance transaction driving the flow of capital into emerging economies.

CrossBoundary Energy claims to offer its corporate customers customized, fully financed renewable energy solutions, enabling them to avoid upfront capital expenditure and technical risks while still benefiting from cost-effective, greener and more accurate power. CrossBoundary is currently delivering a US $230 million project portfolio for more than thirty corporate customers across fourteen African countries. It is reportedly the preferred renewable energy provider for many companies present in Africa, including Unilever, Diageo, Rio Tinto, Heineken and AB InBev.

Matt Tilleard, co-founder and Managing Partner, CrossBoundary Group, commented that the partnership illustrates their shared commitment towards expanding large-scale renewable energy projects in Africa. Karen Fang, Global Head of Sustainable Finance, Bank of America, also stated that emerging markets, like developed markets, require a net zero transition. The bank is reportedly committed to achieving net zero before 2050, and $1.5 trillion is pledged towards sustainable finance by 2030 to ensure that the climate finance capital is allocated in a focused and fair way.

The Open Finance Association makes its debut in the Houses of Parliament, promoting open finance in the UK and EU

The Open Finance Association (OFA), a non-profit fintech trade association, was established with the goal of advancing open finance in the United Kingdom and the European Union, as well as empowering businesses and consumers to improve use of their financial data and payments. The official launch event was held at the Houses of Parliament, with TrueLayer, Plaid, GoCardless, Armalytix, Crezco, finAPI, Nuapay, Ordo and Token among those in attendance.

The OFA is based in both Brussels and London, with an independent secretariat in each city, to help shape open finance developments in both localities. Nilixa Devlukia, the new organization's independent chairperson, commented that open banking, in its current form, excludes savings accounts, investments, loans, pensions and mortgages, whereas open finance helps consumers and businesses gain a more comprehensive view and management of their financial data. Furthermore, the OFA plans to work with third parties and combine expertise and knowledge in order to work cohesively with all stakeholders to reshape financial services towards transitioning to open finance.

Devlukia stated that one of the company's top priorities currently is to hasten the adoption of the legislation and regulations necessary to enable the sector to develop on open banking and transition to open finance. Additionally, Devlukia added that the organization intends to obtain an independent successor for the Open Banking Implementation Entity, which reportedly has the authority and responsibility to govern the implementation and operation of open finance.

Open finance access must be enabled through the use of secure APIs, helping to ensure lower entry requirements for third parties and preserving a high degree of trust in the financial landscape, added Devlukia.

AIIB and GEAPP form a US $1 billion investment partnership to endorse Asia’s transition to renewable energy

The Asian Infrastructure Investment Bank (AIIB) and the Global Energy Alliance for People and Planet (GEAPP) officially confirmed a strategic investment partnership at COP27, mobilizing up to US $1 billion for the financing of renewable energy and green energy transition projects within both the public and private sectors.

The collaboration aims to address energy transition challenges in Asia as well as identifying co-financing opportunities for projects and programs of mutual interest in grid-based renewables, distributed renewables and fossil fuel transitioning areas, according to reports. Additionally, it is reportedly the first time AIIB has collaborated with a global, philanthropic, foundations-led initiative.

Reports indicate that the partnership will also improve support for co-financing operations and private capital mobilization. In addition, the capital is expected to aid countries that are eligible for AIIB financing and meet the multilateral development bank's strategies and policies.

BankiFi and MX collaborate to facilitate data exchange and account interoperability for financial institutions

BankiFi, a provider of embedded banking solutions, has entered into a partnership with MX Technologies, an open finance firm, to facilitate secure information sharing and account interoperability for businesses that use BankiFi's platform. Financial institutions can expect to use MX's open finance APIs to provide account interconnection and data access to a comprehensive suite of financial solutions designed to meet the specific needs of small and medium-sized businesses (SMBs) as a result of this collaboration.

SMB users will reportedly be able to safely link their bank accounts to the BankiFi Open Cash Management platform to obtain a detailed overview of their financial information as well as a comprehensive view of accounts receivable and payment activity through a secure, centralized platform. Through the collaboration, financial institutions should be able to offer effective solutions designed for SMBs while also strengthening relationships, identifying lending opportunities and offering a comprehensive set of financial workflows, said reports.

BankiFi is also expected to benefit from MX's Instant Account and ID Verifications for a wide range of applications within the Open Cash Management system. The platform was reportedly designed to quickly and simply enable a variety of financial workflows to manage invoice issuance and payment collection, invoice data and payment matching and reconciliation, supplier payments and cash flow forecasting. Furthermore, BankiFi's platform claims to manage API connectivity with major accounting packages such as QuickBooks and XERO, transforming it into the SMB's consolidated platform for financial management functions.

Brett Allred, Chief Innovation Officer, MX, commented that financial institutions will be able to bring the power of open finance and data-driven knowledge and insight to the SMB sector through the partnership. Additionally, the alliance is expected to remove barriers between banking, accounting and accounts payable/receivable platforms, making it easier for businesses to monitor their cash.

Worldline purchases the merchant acquiring operations of Banco Desio for €100 million

Worldline, a France-based multinational payment and transactional services company, has officially confirmed a €100 million acquisition of Italian-based Banco Desio's merchant acquiring activities, with plans to also form a commercial partnership.

The French company stated that it intends to distribute its payment products and services to merchant customers in Italy through Banco Desio's banking network of over 230 branches. The move, according to Giles Grapinet, CEO, Worldline, is in alignment with the company's strategy to broaden its merchant services in southern Europe.

Research from the Polytechnic University of Milan reported that Italy is Europe's third largest euro economy, with cash accounting for nearly 76% of total payment volume in 2021. However, it also showed a major transition from cash to card and electronic payment adoption, with the region having one of Europe's highest point-of-sale densities per capita. The bank's merchant acquiring division reportedly assists approximately 15,000 merchants and processes forty million transactions each year.

Worldline expects the acquisition to generate an additional €15 million in annual revenue in year one, with double-digit organic growth predicted over the next several years.

The New York Fed experiments wholesale CBDC for cross-border payments

The Federal Reserve Bank of New York has reportedly created a wholesale CBDC prototype for a blockchain-enabled experiment in cross-border digital currency transactions. Project Cedar, the inaugural project of the New York Fed's new Innovation Center, is expected to research and develop a technical framework for a notional wholesale CBDC.

The project's first phase was designed to model a foreign exchange spot trade and introduce a wholesale CBDC prototype to determine if using blockchain technology could improve the speed, cost and ease of access of cross-border wholesale payments.

Most FX spot trades currently take two days to settle, said reports. Payment senders and recipients are exposed to settlement, counterparty and credit risk during this time period, which can impair an institution's ability to convert assets into cash. The experiment discovered that payments could be settled in less than 15 seconds and that the simulated ledger network enabled atomic settlement, which means that both sides of the transaction were settled either simultaneously or not at all, reducing risks, according to reports. Furthermore, the design reportedly supported interoperability by allowing transactions across uniform ledger networks representing a variety of financial institutions, including central and private sector banks, on a 24/7/365 basis.

Per von Zelowitz, Director, NY Innovation Center, commented that Project Cedar Phase I demonstrated potential applications of blockchain technology in its efforts to modernize the critical payments platform, emphasizing that the first experiment serves as a strategic launch platform for additional research and development on the future of money and payments in the US.

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