The Philippine Central Bank supports a bank-backed digital currency

Considered to be the original Bitcoin as laid out by Satoshi Nakamoto, BSV has adhered strictly to a policy of development that aligned itself perfectly …

It should be abundantly clear to almost everyone by now that digital currencies are going to be the next step in the evolution of money. While there will always be those who stubbornly refuse to accept change of any kind, even when it creates a better environment, the number of people who refuse to accept or embrace cryptocurrencies continues to dwindle. As the latest example of the role crypto is going to play in society, the Philippines are getting on board the central bank digital currency (CBDC) train with plans for launching its own digital currency.

Bloomberg reports that Benjamin Diokno, the governor of the Philippine central bank, has organized a team of individuals to explore the launch of a CBDC. The group will prepare a report on the merits – and possible pitfalls – of the digital currency, providing an in-depth analysis of the viability of the project. That report is expected to be ready sometime next month.

As has been the case in other countries that have explored their own CBDC, the concept isn’t necessarily driven by the use of crypto itself. Diokno explains, “Cryptocurrency for us has always been beyond the asset itself but more on the blockchain technology that underpins it.” He adds that introducing a CBDC won’t threaten the country’s national currency and would, instead, work in tandem with the fiat counterpart.

So far, Japan, China, Switzerland, Sweden, France, the Marshall Islands, Bermuda and others have dived into the digital currency realm with their own CBDC projects. Each country is at different stages of development, but they have all embraced the idea only within the past 12-18 months – a short time considering the extensive history of money, and they all understand the benefits of including a digital version of money that can facilitate financial transactions cheaper, quicker and with more safeguards than found with fiat alternatives.

Even Visa, which had been strongly opposed to crypto as it started to gain international fame, is now jumping in. Cuy Sheffield, who was tapped to lead the company’s crypto projects, said recently, “I’d argue that central bank digital currency (CBDC) is one of the most important trends for the future of money and payments over the next decade. Regardless of anyone’s personal views of whether it’s good or bad, the reality is that global interest in it is not going away. As governments evaluate CBDC, the path that they decide to take will have major implications for privacy, monetary sovereignty, geopolitics, and financial inclusion, as well as global adoption of crypto dollars and Bitcoin.”

His comments are poignant and strike a harmonious chord with Bitcoin SV (BSV). Considered to be the original Bitcoin as laid out by Satoshi Nakamoto, BSV has adhered strictly to a policy of development that aligned itself perfectly to the framework implemented for the financial space, a framework that had been built over decades to protect consumers and financial operations. BSV sits at the top of the list in terms of providing support for monetary sovereignty, privacy and financial inclusion, and will continue to work to ensure that the crypto space matures responsibly while keeping with the values and ethics digital currency was meant to provide.

Mixed View: Fed Combines Hint of Optimism with New Worries as it Leaves Rates Alone

Data sources: CME Group, Cboe Global Markets. … or a rate cut at the next few Fed meetings, based on the performance of CME Fed funds futures.

(Wednesday Post-Fed) No rate change, but you probably already expected that.

What wasn’t as widely expected from today’s Fed meeting conclusion was a bit more of an optimistic tone in the Fed’s statement, which seems to be giving stocks a little boost here in the late going of Wednesday’s session. That said, Fed Chairman Jerome Powell also added a bunch of things to worry about, including some possible slowing in the economy as caseloads spike.

The Fed, as markets had factored in, held rates steady in a range near zero at its meeting Wednesday afternoon. It’s now more than four months since the Fed pushed down its benchmark rate to between zero and 0.25%.

After the Fed’s decision, the S&P 500 Index (SPX) held onto earlier gains and started to build on them a bit, but the dollar continued to edge to new multi-year lows and Treasury yields didn’t really see any change for the better. The Fed’s trying its best to use dovish policy to inject some zip back into the economy, and its statement indicated it does see some reason for optimism.

What’s Changed? A Hint of Optimism

Key changes in the language include the Fed saying “Overall financial conditions have improved in recent months,” a bit of an edit from the previous, “Financial conditions have improved.”

It’s hard to read this as anything but the Fed indicating that things have improved across more of the economy and over a longer period, which could help explain why 10-year Treasury yields rose slightly after the decision before inching back into the red. They’re still incredibly low at 0.58%.

Also on a bullish note, the Fed added that employment, along with economic activity, has picked up in recent months. Last time it just said economic activity, with no reference to jobs. However, it added that both “remain well below their levels at the beginning of the year.”

“The path of the economy will depend significantly on the course of the virus,” the Fed’s statement said in new language added this meeting.

Language that didn’t change from last time included the Fed promising to continue increasing its holdings of Treasury securities and mortgages. This should potentially continue to help the housing market. The Fed said it will also “use its tools and act as appropriate” to support the economy. None of that is new.

These Fed meetings are becoming more about what Powell has to say at the post-game press conference and less about what the Fed plans to do with rates. The central bank’s own predictions are for rates to stay at current low levels through the end of next year and into 2022. The question Powell might face is whether this can continue if inflation starts to show up due in part to the weak dollar that low rates tend to contribute to.

It was kind of a weird day on Wall Street as the financial networks had to transition from their live coverage of a congressional hearing involving top executives from Alphabet (GOOGL), Amazon (AMZN), Apple (AAPL), and Facebook (FB) over to Powell at the Fed (where he appeared to be showing up in person, not from a distance).

Powell Talk

Powell peppered his post-meeting remarks Wednesday with some good and some bad. The Fed’s seen some pickup in factory activity, and household spending has recovered about half of its earlier losses, though travel and leisure lags behind. Stimulus payments and unemployment benefits helped households, he said.

Also, about one-third of the lost jobs have been regained, he added.

As for inflation, the pandemic has had a mixed impact, Powell said. It’s raised food prices due to supply constraints, but prices for travel and leisure have fallen and inflation remains well below the Fed’s 2% objective.

Ominously, Powell said there are some signs that the recent rise in virus cases is having an impact on economic activity. Credit and debit card use looks like it’s down since late June.

Powell had a pretty passionate message for Congress as far as urging more fiscal stimulus. He credited the first round of money from Congress as successful, but said even if reopening goes well, industries that involve a lot of people getting together (like restaurants and bars) have a long path ahead, and many workers there won’t be able to get their jobs back.

“There will be a need…in the broad scheme of things, for more fiscal policy,” Powell said.

He added that consumer sentiment surveys appear to be softening after their initial reopening recovery as cases spike here in July, though some aspects of the economy like housing and motor vehicles sales look better. There seems to be some slowing in the recovery, but “it’s too early” to say how long or sustained this might be, as the Fed awaits data on spending and employment, Powell said. So investors should consider watching those same things in the weeks ahead.

He said there’s been a big shock to demand and that COVID-19 is “disinflationary” and that the economy will be struggling for a long time against disinflationary, not inflationary pressures.

Great Expectations? Not Necessarily

As the Fed prepared to gather, it might have been the least anticipated Fed meeting since…well, the last one.

Maybe even less anticipated than the last one, actually. At least that one promised some drama with the release of freshened long-term interest rate predictions in the quarterly “dot plots.” Those represent the Fed’s most up-to-date ideas about where the rate environment is headed, and showed Fed officials pretty much united in seeing no uptick from zero through 2021 and possibly 2022.

That wasn’t exactly welcome news for the Financial sector, where banks rely in part on net- interest margin for their lending profits. That sector keeps languishing, possibly a challenge for the broader market if Tech can’t regain its footing here following a short dip. Though it hasn’t been the case lately, old timers say it’s hard to have a long rally without the banks.

Last time out, in June, Powell made it absolutely clear that higher rates weren’t coming anytime soon. In fact, he memorably said the Fed “isn’t even thinking about thinking about” raising rates. It’s hard to get more definitive than that.

He also delivered some unpleasant observations on the economy back then, saying, “Indicators of spending and production plummeted in April, and the decline in real GDP in the current quarter is likely to be the most severe on record.” Tomorrow morning brings the government’s first official look at Q2 GDP, and consensus on Wall Street is for a 35% slide, according to research firm Briefing.com. To say that’s off the charts is a major understatement.

The question is whether Powell sees any deflation on the horizon, or, on the contrary, if there’s a chance these record low rates could begin to stir inflation. At this point, a bit of inflation might be welcomed by some as a sign of economic vigor, though others would say higher prices are the last thing people need as they struggle to provide for their families.

So what does the Fed have left in the toolbox if things get worse? Well, it already did one thing this week, announcing Tuesday that it’s keeping seven of its emergency pandemic lending facilities open to applications for an additional three months (see more below).

Crypto Service Providers in Thailand Doubles in Twelve Months

Finally, the regulator has approved four Initial Coin Offering (ICO) portals — SE Digital, T-box, Bitherb, and Longroot. Bitherb is a joint venture between …

Thailand has been consistently growing as a country with an increasingly structured cryptocurrency space. This reputation appears to be well-founded, as the country is now attracting more companies in the industry.

What a Regulated Environment Can Achieve

Thailand made a splash in the crypto space when the government approved the Royal Decree on the Digital Asset Businesses B.E. 2561. The decree went into effect last May, and it provided definitions for digital assets, the business scope of digital currencies, and the scope of regulation, amongst others.

Amongst other things, this decree has now made it possible for companies to seek out licenses. Per reports, the Thai Securities and Exchange Commission (SEC) has now approved 13 companies to act as digital asset service providers.

The companies include six cryptocurrency exchanges — Bitkub, EXR, Satang Pro, BX, Huobi Thailand, and Zipmex. The agency also approved three digital asset brokers — Bitazza, Coins TH, and Kulap. However, Coins TH is the only licensed dealer that appears to be operational.

Finally, the regulator has approved four Initial Coin Offering (ICO) portals — SE Digital, T-box, Bitherb, and Longroot. Bitherb is a joint venture between Japanese crypto exchange Bitcoin Japan and the Asia Herb Association Bangkok Co. Ltd, but it’s not yet functional.

Progress with the approvals has been quite impressive. This time last year, the Thai SEC had only approved five digital asset trading licenses — the agency approved Huobi Global on July 5, 2019.

Thailand Progresses With a CBDC

The success in Thailand’s private crypto sector is also matched by progress in the public space. With many countries on the verge of launching Central Bank Digital Currencies (CBDCs), Thailand is also working earnestly to do the same. The Bank of Thailand announced last month that it was moving ahead with a pilot program for a CBDC, claiming that it was working towards an asset that would function for large-scale enterprises.

As the official press release confirmed, the bank partnered with Siam Cement Group, Thailand’s largest provider of cement and building materials. Thai FinTech firm Digital Ventures Company Limited also participated in the pilot program.

The bank gave a progress report two weeks ago, with local English news source The Nation claiming in a report that it had successfully deployed the CBDC and was using it for large-scale business transactions.

Per the report, the Bank of Thailand has entered the third phase of developing its “digital Baht.” The bank now plans to expand it to include more businesses.

Most particularly, the bank has plans to collaborate with the Hong Kong Monetary Authority, Hong Kong’s central banking institution, in September. The Bank of Thailand is also exploring the possibility of expanding the asset’s use to the general public to provide low-cost, real-time transaction functionalities. However, it believes that there will be some required study to explore the potential implications of a general-purpose CBDC.

The Bank of Thailand is reportedly following China’s blueprint, as they believe that Beijing’s rollout of its digital Yuan hasn’t had any side effects thus far.

Philippines Central Bank Considers Issuing Its Own Digital Currency

China has begun a pilot program for an official digital version of its currency. Still, Diokno said he doesn’t see the prevalence of digital currencies …

(Bloomberg) — Follow Bloomberg on LINE messenger for all the business news and analysis you need.

The Philippine central bank has created a committee to look at the feasibility and policy implications of issuing its own digital currency, Governor Benjamin Diokno said on Wednesday.

“We have to first look at the findings of the group before making a decision,” Diokno said in a virtual briefing. The initial results of study is expected next month.

Some of the world’s major central banks, including the Bank of England and Bank of Japan, have teamed up to assess the potential of developing their own digital currencies as new technologies and companies issuing their own digital tokens pose a challenge to monetary authorities. China has begun a pilot program for an official digital version of its currency.

Still, Diokno said he doesn’t see the prevalence of digital currencies affecting demand for fiat money yet.

“Cryptocurrency for us has always been beyond the asset itself but more on the blockchain technology that underpins it,” he said.

©2020 Bloomberg L.P.

Sky Guo, Founding Member at OMFIF Digital Monetary Policy Institute, Explains why …

Cypherium can support cross-chain transactions among any two CBDCs or other digital currencies. This is a vital aspect of bringing CBDCs into a …

We recently caught up with Sky Guo, a founding member at the OMFIF Digital Monetary Institute, the global central banking think tank that assists policymakers with understanding central bank digital currencies (CBDCs).

Guo, who’s also the founder of Cypherium, which focuses on enabling interoperability between CBDCs, has been actively involved in several different virtual roundtable discussions with De Nederlandsche Bank, European Central Bank, Banque de France, and the Digital Currency Research Institute at the People’s Bank of China and others.

Guo is an advocate for ensuring CBDCs are interoperable and he has created a framework to ensure that CBDCs are able to achieve full adoption while supporting global innovation. Guo told Crowdfund Insider that he developed this framework after engaging in many discussions with global monetary policy experts across the globe.

Crowdfund Insider: What are the main benefits of issuing a central bank digital currency (CBDC)? Isn’t the money we have in our online accounts already digital? How is fiat currency, in digital form, held in bank accounts any different from what a CBDC might be?

Sky Guo: That’s an excellent question. In its most seamless transition and implementation, the user experience of a CBDC might not be so different to some current payment systems. However, a government-issued CBDC would be profoundly different in substance.

Today, we have become accustomed to relying on private institutions to serve as custodians of our money because most people are uncomfortable keeping their valuable possessions and cash in private homes. Banks offer security and convenience in our system that the government cannot. With CBDCs, there would be no need for the intermediaries of private banks or payment services that centralize so much of our global capital and dictate investment around the world.

Beyond this more philosophical point, CBDCs will also increase financial inclusivity by lowering the barriers to banking, make cross-border payments cheaper, and expedite financial policy decisions. In short, the experience of a CBDC might be familiar, but the world that this technology creates will be quite different.

Crowdfund Insider: Is it possible or worth it for countries to adopt a sort of “dual” monetary policy where one policy would regulate the issuance of the main currency like the Chinese yuan as we know it today while the other CBDC from China follows some sort of “digital” policy?

Sky Guo: Countries are more likely to continue with a single monetary policy. For example, the Chinese CBDC is a substitution of the Yuan, but is still subject to the same monetary policy of the Chinese government.

Crowdfund Insider: Why is it even necessary for different digital currencies to “interoperate,” like you’ve recommended?

Sky Guo: If CBDCs are going to gain adoption and global importance, as we at Cypherium believe they will, these new digital fiat systems will need to communicate with their domestic economies, with other nations, and with private cryptocurrencies, which are quickly becoming legitimate global economic factors.

Today, the governments of the world use financial policy to administrate amongst each other as well as within their own nations, and CBDCs would bring this to new levels of efficacy.

Crowdfund Insider: Which projects are you involved with, and why.

Sky Guo: Cypherium is heavily involved in the development of CBDC interoperability. On the business side of things, this is mainly achieved through our presence as a founding member of the OMFIF Digital Monetary Institute, a London-based think tank on central banking.

The DMI has connected us with a number of central banks across Europe, with whom we have discussed the construction of novel CBDC structures. Through tools like CypherLink (a notary mechanism based on the InterLedger protocol), Cypherium Connect (a third-party plug-in module for banking systems), and Cypherium Validator (a verification machine), our network can link any two banking systems.

Cypherium can support cross-chain transactions among any two CBDCs or other digital currencies. This is a vital aspect of bringing CBDCs into a globalized financial climate.

Crowdfund Insider: Please explain the state of cross-border payments today and how it can be improved.

Sky Guo: Cross-border payments are both inefficient and expensive. As anyone who has ever sent money overseas will know, most remittance companies serve as gatekeepers that mostly extort torn families, in which the breadwinner is alone in trying to send earnings home.

Bitcoin is one way around this, but because there are still many issues with the network, most notably know-how and custodianship, and because the price of the currency is so volatile, there must be a fiat solution. Cypherium allows a payment in one currency to trigger a resolution in another, seamlessly and safely. This is needed for families across the globe, as well as for international business, trade, and economic transactions on every scale.

Crowdfund Insider: What is the difference between wholesale CBDCs and retail CBDCs?

Sky Guo: A retail CBDC would be a user-end, everyday digital currency intended for public use. This is the kind of digital money that resembles our current bank accounts and debit cards, with which customers could buy coffee and pay rent.

A wholesale CBDC would be intended for macro-transactions between financial institutions as well as for use in public financial markets. This would be a blockchain that financial professionals would be trained to use, much as a variety of economic behaviors from investment to accounting require government certification.

These two levels of the economic activity are certainly already explicit and separate, and, accordingly, so too would be their digital currency systems.