UK inflation stuck at 8.7%, core continues rising

The UK’s Office for National Statistics has revealed the annual Consumer Prices Index that tracks inflation rose 8.7% in the 12 months to May, unchanged from the previous month and above market expectations. Core CPI, which excludes the more volatile energy, food, alcohol and tobacco sectors, rose by 7.1% in the year to May, up from 6.8% the previous month to hit its highest rate since March 1992.

Rising prices for air travel, recreational and cultural goods and services, and second-hand cars resulted in the most significant upward contributions to the monthly change. Food and non-alcoholic beverage prices rose by 18.4% in the year to May 2023, having been running hot at over 19% for the past two months, including March’s peak of 19.2%, which was the highest annual rate seen in the category for over 45 years.

“Airfares and the second-hand car market were large contributors pushing prices up,” commented William Marsters, Senior Sales Trader at Saxo UK. “And although the rate of food price increases has slowed, inflation there remains high. On top of that focus for households, mortgage holders will also be concerned what this means for rates. These inflation numbers will put a lot of pressure on the Bank of England who has their policy rate decision tomorrow. A 25 bps hike tomorrow by the BoE is 100% priced in. There is also a chance of a 50 bps hike, more likely now following today’s inflation numbers.”

 

EIB premieres bond on blockchain-based platform

The European Investment Bank (EIB) has issued its first digital green bond on the blockchain-based platform for digital bonds launched by SEB and Credit Agricole. In April, SEB and Credit Agricole CIB (Commercial and Investment Bank) announced the development of so|bond - a blockchain-based platform for issuing digital bonds.

As the first actor, the European Investment Bank has issued a bond on the platform. The premier bond is a digital Climate Awareness Bond of SEK1bn. The EIB will, in turn, use the proceeds for lending to climate-related projects.

The digital bond platform uses a new type of validation logic, which enables low energy consumption and encourages the affiliated banks to continuously improve the carbon footprint of their infrastructure. This is done through a reward system where the actors are rewarded for their efforts, where the lower the environmental impact, the greater the reward.

 

CaixaBank and Iberpay launch Request-to-Pay in Europe

After obtaining the corresponding approval certificates from the EPC, CaixaBank and Iberpay announced that their respective payment technology platforms are ready to launch, as of 22 June, the first SEPA Request-to-Pay in Europe. In parallel, CaixaBank, which has become the first bank in Europe to obtain EPC’s Request-to-Pay approval certificate, is preparing to soon launch the first commercial service that will facilitate companies the online and instant management of customers’ unpaid bills through Request-to-Pay messaging.

Request-to-Pay allows companies and individuals to request instant payments from their customers or counterparties online, digitally and without friction. This new instant ‘pull’ payment (the payment recipient initiates the process) complements current instant credit transfers, representing the ‘push’ payment (the payer initiates the payment).

Spanish banks have advocated adopting this new European standard for some time. They are working with Iberpay to become certified and incorporate the standard into their services in the coming months. This will help to create a critical mass of users, enabling the widespread adoption of this new functionality and the development of new instant and digital payment solutions.

 

Call for clearer ESG standards in Japan

A recently released Japan Legal Framework for Impact Policy report outlines how Japanese investment law permits - and in many cases requires - investors to pursue sustainability impacts when those impacts are financially material. However, this is not well understood by investors due, in part, to the lack of clarity in Japanese regulation.

The report, released by Principles for Responsible Investment (PRI), the United Nations Environment Programme Finance Initiative (UNEP FI) and the Generation Foundation, says that Japanese investors are unclear on the extent to which they are permitted or required to invest in sustainability impact – that is, use the tools and resources at their disposal (such as asset allocation and stewardship) to intentionally pursue sustainability outcomes.

This lack of clarity and understanding in Japan hinders climate finance, potentially discouraging investors from taking action. The report recommends updating existing rules, standards and guidance in Japan so investors can better understand their duties in pursuing sustainability impact goals. Specifically, the report makes the following recommendations for Japanese regulators and policymakers:

• Clarify the extent to which investors’ duties permit or require them to consider pursuing sustainability impact goals.
• Ensure better investor access to corporate sustainability-related information by updating existing rules, standards and guidance.
• Clarify when and how investors can use stewardship activities to pursue sustainability impacts by updating the stewardship code and through relevant implementation support programmes.
• Enhance transparency and market discipline on responsible investment claims by introducing rules and guidance on disclosures, labelling and classification.
• By introducing relevant guidance, ensure better communication between investment managers and their clients and beneficiaries on sustainability objectives and preferences.

 

Cleareye.ai secures strategic investment from J.P. Morgan

Cleareye.ai, the provider of digital trade finance solution ClearTrade, has secured a strategic investment from J.P. Morgan. The ClearTrade platform offers an intelligent interpretation of data and documents in trade to identify trade-based money laundering and sanctions red flags, automating labour-intensive manual checking processes with a document digitisation engine that can extract, validate, and accurately classify unstructured data.

In addition to the investment, Cleareye.ai is working with J.P. Morgan’s trade and working capital team to enhance its offering, which all trade finance banks can benefit from.

“Future proofing trade operations has been at the forefront of J.P. Morgan’s digital strategy in trade and working capital,” said James Fraser, Global Head of Trade & Working Capital for J.P. Morgan. “A manually intensive industry loaded with paper and lacking standardisation, burdened by an increasing cost base, needs real innovation in order to transform.”

 

Philippines and India to enhance fintech cooperation

The governments of India and the Philippines have signed a memorandum of understanding (MoU) to enhance cooperation between the Philippines and India on financial technology.

The two countries are creating a joint working group that is expected to facilitate inter-governmental discussions on three vital areas: 

1. The exchange of best practices to improve policies and regulatory connections.
2. Promote cooperation in the development of fintech solutions for business or financial sectors.
3. Develop international standards by encouraging the creation of an international version of APIs.

“On the one hand, India is a rising economic powerhouse, with a forte in digital technology,” commented Philippines Finance Secretary, Benjamin E. Diokno. “On the other, the Philippines hosts a young and tech-savvy talent pool that can provide the intellectual capital needed to succeed in the digital economy. Clearly, the possibilities between our two economies are boundless.” 

 

Wallstreet Suite users migrated to ISO 20022

ION Treasury has successfully moved its Wallstreet Suite clients to ISO 20022. An enterprise treasury and risk management solution for the largest and most complex organisations, Wallstreet Suite offers multi-entity support, real-time information across all asset classes, and advanced analytics for decision-making and performance measurement. The move coincides with significant structural changes in the financial industry, driven by using ISO 20022-compliant messaging to modernise and standardise the processing of financial transactions.

The Eurosystem, via its T2/T2S Consolidation project, required TARGET2 EUR payments to switch to ISO 20022 in March 2023. SWIFT, via its Cross Border Payments and Reporting (CBPR+) initiative, is also moving to ISO 20022 over a three-year coexistence period. As a result, interbank legacy SWIFT message type (MT) payments and bank statements will be retired in November 2025.

These changes parallel initiatives elsewhere to upgrade legacy payment systems to ISO 20022, including RITS in Australia and FEDWIRE in the US. New payment systems, such as P27 in Scandinavia, are also adopting ISO 20022. The changes are expected to yield several benefits, from improved customer experience through greater transparency to faster straight-through-processing and improved financial compliance.

As a result of ION’s implementation, its Wallstreet Suite clients now generate ISO 20022-format payments (instead of SWIFT MT formats) and receive status updates, bank notifications, and statements in ISO 20022 formats.

 

While 93% of Hong Kong SMEs acknowledge importance of digitalisation, funding a significant challenge

A DBS Hong Kong survey of the city’s small and medium enterprises (SMEs) reveals 93% believe digitalisation is vital to business growth; however, 57% of those surveyed see funding as their biggest challenge when trying to digitalise their businesses. 

The survey interviewed 105 respondents from the SME community in Hong Kong between March and June 2023 to understand the community’s attitudes and priorities towards digital transformation. 

Among all respondents to the survey, while funding emerges as the top challenge in digitalisation (57%), limited resources (46%) and relevant technical expertise/skillset (43%) are also identified as the primary reasons contributing to the digital gap. To step forward in their digitalisation journey, 65% of the SME community responded that they are planning to increase their investments in digitalisation by more than 25% this year compared to 2022.

With digitalisation and innovation continuing to re-define how people live and business is done, the respondents identified digital marketing (46%), establishing online presence/e-commerce/mobile applications (41%) and developing data analysis and management (37%) as their top business priorities in the next five years.