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US Chamber of Commerce proposes industry-specific regulation of AI rather than “one-size-fits-all” – Industry roundup: 10 March

EU endorses increased energy efficiency Green Deal policies, agreeing to 11.7% target by decade end

The European Union member nations and EU Parliament negotiators have reached a tentative agreement with the goal of lowering energy use across the 27-nation union. The accord states that EU nations must collectively reach the target in order to achieve a consumption reduction of 11.7% at a minimum compared to projections for 2030 established three years ago.

The revised directive aims to encourage businesses to become more energy efficient. Large energy clients will reportedly be mandated to implement energy management systems. Additionally, all businesses, including SMEs, that consume more than 85TJ of energy per year will also be required to implement an energy management system. Companies that do not comply and that consume annual energy in excess of 10TJ will reportedly be subjected to an energy audit. A reporting system for the energy efficiency of significant data centres has also been introduced for the first time.

Furthermore, the agreement aims to enhance measures on financing for energy efficiencies in order to mobilize capital effectively. EU nations will be expected to encourage alternative financing solutions and green loan products for energy efficiency. The number of investments made in energy efficiency must be reported by EU member states, said reports.

The agreement, which is a component of the EU's goals to become carbon neutral by 2050, must be formally approved by the Parliament and the Council. Frans Timmermans, Executive Vice President for the European Green Deal, commented that the agreed-upon regulations should also guarantee that EU nations support local heating and cooling schemes in cities with a population of more than 45,000 people.

US Chamber of Commerce proposes industry-specific regulation of AI rather than “one-size-fits-all”

The US Chamber of Commerce has reportedly urged regulation of artificial intelligence technology to ensure it does not affect growth or pose a national security risk. The rapidly expanding AI program ChatGPT has raised concerns among US policymakers about its effects on national security. Lawmakers and business executives are urged to create a "risk-based regulatory framework" that will guarantee AI is used appropriately, said reports.

The Chamber reports state that by 2030, AI is expected to contribute US $13 trillion to the growth of the world's economy, adding that it has already made significant contributions, such as reducing the shortage of nurses in hospitals and mapping wildfires to expedite emergency reaction times. Furthermore, the study found that almost all businesses and government organizations plan to employ AI within the next twenty years.

The report, which was a result of the Chamber’s analysis on AI created in 2022, acknowledges that the business sector will reportedly serve as a critical player in the implementation and oversight of AI. However, the Chamber cautions that, despite its demand for more regulation, there may be significant exceptions in how it is administered. The strategy is reportedly aimed at the development of adaptable, industry-specific guidance and best practices as opposed to attempting to create a universal regulatory framework that fits all situations, states the report.

SWIFT moves forward with cross-border use of CBDC interface following successful experiments

SWIFT affirms acceptance from both central and commercial banks after conducting a twelve-week sandbox assessment of an experimental technique for integrating CBDCs with current fiat infrastructures. The results, which comprised over 5,000 transactions, were reportedly modelled between two separate blockchain networks and with the current fiat-based payment systems. The Monetary Authority of Singapore, the Banque de France, the German Bundesbank, BNP Paribas, HSBC, NatWest, Royal Bank of Canada, Société Générale, Standard Chartered and UBS were among the eighteen institutions that participated in the sandbox and reportedly desire further collaboration on interoperability.

More than 110 nations are reportedly investigating CBDCs, stated the Atlantic Council, and about a quarter of those surveyed in a recent study by the OMFIF Digital Monetary Institute plan to debut their digital currency in a couple of years. However, reports indicate that most central banks are placing emphasis exclusively on domestic usage, which could reportedly result in a disintegrated ecosystem.

SWIFT plans to create a beta version of the payment system that central banks can test out further. Additionally, a second round of sandbox testing is expected to be conducted, allowing the SWIFT member institutions to work together closely while concentrating on brand-new use cases such as conditional payments, trade finance and securities settlement (cross-asset exchange).

Morgan Stanley anticipates increased regulatory scrutiny of cryptocurrency firms in light of the recent Silvergate collapse

Morgan Stanley stated recently that U.S. regulators may soon heighten their regulation of banks that provide services to cryptocurrency companies. During the later part of February, the Federal Reserve, the Federal Deposit Insurance Corporation and the Office of the Comptroller of the Currency reportedly released a joint statement cautioning banks to take into account the liquidity risks that are associated with cryptocurrencies. More regulatory action may force the closure of further outlets, added Morgan Stanley.

The decision of cryptocurrency-focused firm, Silvergate Bank (SI), to scale back on converting fiat dollars into cryptocurrencies in the US was reportedly caused by the recent market and regulatory developments. Silvergate Bank's shares dropped 58% on 2 March after the company stated it was assessing its ability to remain in business and that it was under investigation by regulators, the US Department of Justice and Congress. The analysts claim that the bank, which was a US-registered bank providing crypto services to crypto exchanges, has been at the forefront of crypto development for a long period of time.

The cryptocurrency market will reportedly concentrate on rival crypto bank Signature Bank and Binance, the world's largest crypto trading platform by volume, as well as any further regulatory actions related to specific companies or products, stated reports. Additionally, Bitcoin, which is the world's largest cryptocurrency, has reportedly fallen below the critical technical support threshold of US $22,200, trading at approximately $21,700 as of yesterday.

US fintech, Marco, raises US $200 million to finance LatAm exporters, aiming to close the $350 million trade finance gap

Marco, a US-based trade finance fintech venture that provides loans to exporters throughout Latin America, has reportedly secured a US $200 million credit to help expand its financing operations in the region, with funding provided by MidCap Finance and Castlelake, as well as Arcadia Funds LLC.

The company plans to use the additional funding to support its clientele in the US and Latin America, aiming to reach a $2 trillion global cap in trade finance, which reportedly affects small and medium-sized enterprises (SMEs) significantly. Additionally, the firm claimed that despite SMEs accounting for 90% of all firms in the region, less than 10% of SMEs have access to funding, noting that banks have reportedly discontinued lending to SME trade for the most part.

Peter D. Spradling, Co-founder and COO, Marco, stated that the estimated finance gap is worth approximately $350 billion, adding that traditional lenders rely on antiquated, time-consuming financing procedures that restrict the expansion of SMEs and prevent many exporters from accessing international markets.

The fintech claims their software will enable SMEs to receive lending decisions in days as opposed to weeks, with a 24-hour approval turnaround to help expedite their capacity to engage in the global market. In 2022, the fintech reportedly financed $100 million per its financial data and approximately $250 million in the previous two years. By the end of 2023, the firm aims to reach $750 million, with the main concentration on the US and Latin America. Mexico, Ecuador, Colombia and Peru are just a few of the regional markets that Marco finances, with exports totalling approximately $490 billion.

Egypt introduces new coding regulations, opening domestic payments market to global firms

The Central Bank of Egypt (CBE) has reportedly implemented a regulatory structure that specifies the guidelines for payment card coding for interoperability with electronic devices. The bank claims that the new regulations directed by the National Payments Council of Egypt will further the region's digital development by allowing payment cards to be integrated into mobile apps and used for contactless transactions.

Furthermore, the CBE claimed that the new plan would open the local market to a wide range of global businesses, ranging from smaller fintechs and payment giants such as Apple Pay and Samsung Pay, boosting competition by continuously fostering opportunities for innovation in Egypt's financial sector. Additionally, the new laws in place aim to assist financial institutions operating in the region by reducing their service time and associated costs, the bank further emphasized.

The bank's earlier initiatives, which include the adoption of mobile phone wallets and the establishment of various real-time payment rails, along with this recent transition reportedly help expedite CBE's objective of making Egypt a nation less reliant on cash.

A Scottish SME-focused financial firm, Alba, secures a banking license from regulators

The UK Prudential Regulatory Authority and the Financial Conduct Authority have awarded a banking license with restrictions to Scotland's Alba Bank, which is based in Glasgow and currently lends to small and medium-sized businesses (SMBs). Reports indicate that the restrictions include limits to engage in the regulated activity of accepting deposits, and the total amount of deposits held by the firm shall not exceed £50,000.

For the past five years, Alba has reportedly collaborated with both regulators to create its concept, systems and processes. Additionally, the bank has a location in London and aims to create business hubs throughout the UK in the long-term. By combining cutting-edge digital technology with expert relationship managers, Alba's projected high-tech, high-touch business strategy aims to set them apart in the UK SME loan industry, commented Rod Ashley, Chief Executive, Alba. The bank reportedly has raised sufficient capital to transition beyond the mobilisation stage.

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