The significant increase reflects a broader improvement in Egypt’s external financial position and highlights the growing confidence of foreigners in the nation’s financial system. The Central Bank of Egypt attributed the increase to recent actions aimed at stabilising the currency and promoting the use of official channels for remittances. With Egypt’s net international reserves rising from USD 47.8 billion in March to USD 48.5 billion at the end of May, the impact of these policies is also evident.

In a statement, the central bank noted, “On a monthly basis, remittances in April 2025 increased by 39% year on year, reaching approximately USD 3 billion, compared to USD 2.2 billion in the same month of 2024.”

Remittances are one of Egypt’s most vital sources of foreign currency, alongside Suez Canal revenues, tourism, and exports. They previously peaked at USD 31.9 billion during FY 2021/22, before declining to USD 22.1 billion in FY 2022/23.

The decline was largely attributed to the global economic fallout from the COVID-19 pandemic, which caused business closures and job losses among Egyptian expatriates, as well as pressures from the local exchange rate and the emergence of a parallel currency market, compounded by the Russia–Ukraine war.

The increase in remittances coincides with broader economic reforms being implemented as part of a stabilisation programme supported by the International Monetary Fund (IMF). Egypt’s foreign exchange position has improved as a result of these reforms, which have also helped attract more foreign investment.

According to data from the Central Agency for Public Mobilisation and Statistics (CAPMAS), Egypt ranked seventh globally in terms of remittance receipts in 2024, with USD 22.7 billion in inflows. The list was topped by India (USD 129.1 billion), followed by Mexico (USD 68.2 billion), China (USD 48 billion), the Philippines (USD 40.2 billion), Pakistan (USD 33.2 billion), and Bangladesh (USD 26.6 billion).

Mostafa Madbouly, the prime minister, declared in May that Egypt’s real gross domestic product grew by 31.9% in the first half of the fiscal year. While foreign direct investment increased by about 17%, private sector investment rose by 80%. However, inflation remains a significant problem. Due in large part to ongoing pressure on non-food prices, the annual urban headline inflation rate increased from 13.9% in April to 16.8% in May.

These inflationary trends coincide with ongoing domestic and international forces that continue to shape Egypt’s overall economic environment. Amidst continuing structural reforms, external shocks, and public debt management initiatives, the government is managing a fragile recovery.

The post Egypt records 77% rise in remittances over 10 months: Central Bank data appeared first on International Finance.

The Monetary Authority of Singapore polled 25 economists, and their median forecasts predicted growth of 3.1% in the last quarter of 2024 and 2.6% in 2025.

Following third-quarter growth that exceeded projections at 5.4%, the trade ministry increased its 2024 GDP growth forecast to 3.5% last month from a previous range of 2.0% to 3.0%.

The MAS is expected to stick to its current monetary policy in its quarterly reviews in January, April, and July, according to the majority of economists polled.

Even though inflation decreased and growth increased in October, the MAS maintained its monetary policy settings.

Since a tightening in October 2022—the fifth consecutive tightening—it has not altered its policy.

Just 33% of respondents anticipate monetary policy to be loosened in January through a decrease in the slope of the Singapore dollar nominal effective exchange rate, or S$NEER, down from 50% in the September survey.

Singapore’s central bank determines the direction of the S$NEER’s policy band, which influences the value of the local currency relative to its major trading partners.

Core inflation this year was 2.8%, down from 2.9% anticipated in the September survey, while headline inflation for 2024 was 2.5%, down slightly from that forecast. According to the survey, core inflation in the last quarter of this year was 2.1%.

Compared to a year earlier, core inflation decreased to 2.1% in October, the lowest increase in nearly three years. Both headline and core inflation in 2025 are predicted by the economists polled to be between 1.5% and 1.9%.

Meanwhile, US President-elect Donald Trump has vowed to raise tariffs to as high as 20% on imports from around the world including Singapore.

The post Singapore economists see growth of 3.6% in 2024, monetary policy remains unchanged appeared first on International Finance.

According to the most recent economic data, core inflation, a gauge of price changes that takes energy prices into account, decreased marginally from 3.9% to 3.7% over the same period, but annual headline inflation fell from 3.5% in August to 3% in September 2024.

The rate of inflation in services decreased from 6.2% in August to 5.8% in September.

September’s other goods inflation rate held steady at 2%, indicating that the local business environment’s price pressures are abating.

The primary reasons for the decline in inflation are lower fuel and food prices, even in the face of ongoing threats from unfavourable weather conditions linked to extreme climate change patterns.

Uncertainty persists regarding the precise effect of the central bank rate (CBR) cut on the momentum of economic growth. Economic growth is anticipated to range from 6% to 6.5% for the fiscal year 2024–2025.

“Whenever we cut the CBR, we consider inflation and economic growth in perspective over 12 months. So far, the CBR stood at 10 per cent while the average interbank rates stood at around 12% by the end of September. With the CBR down to 9.75%, average interbank rates will reduce to around 11.75%. This situation will encourage commercial banks to cut lending rates, expand their loan books, and eventually boost economic growth along the way,” Dr Adam Mugume, Bank of Uganda’s Executive Director for Research said.

In August, the central bank cut its interest rate to 10%.

“The CBR cut was widely expected because of the recent easing of monetary policy undertaken by the US Federal Reserve. The US Fed has already cut its benchmark policy rate while the European Central Bank has slashed its policy rate twice. The CBR cut implies commercial banks will cut their prime lending rates going forward and this will stimulate demand for private sector credit, increase aggregate demand, and boost economic growth,” Benoni Okwenje, General Manager for Treasury Operations at Centenary Bank Uganda Limited said.

The post Bank of Uganda cuts key lending rate again, indicates reduction in inflationary pressures appeared first on International Finance.

In its April 2023 ‘Global Financial Stability Report’, the International Monetary Fund issued a warning that “financial stability risks have escalated quickly as greater concerns about inflation and fragmentation have put the resilience of the global financial system to the test.”

Smaller emerging economies with significant debt and declining repayment capacity have the most unstable banks. The IMF expects a dire financial climate due to increased geopolitical concerns, unmanageable debt, rising inflation and interest rates, and tighter monetary conditions. It was closer than anyone admitted during those stressful March days.

“The lightning-fast, forced takeover of Credit Suisse by rival UBS had helped to avoid a national calamity,” Swiss Finance Minister Karin Keller-Sutter said in Washington in April.

Switzerland’s central bank director, Thomas Jordan, said the takeover prevented Credit Suisse from “being the first domino in a systemic collapse.”

A systemic crisis

The crises around United States’ banking majors like Silicon Valley Bank, Signature Bank, First Republic Bank and their Swiss counterpart Credit Suisse have revealed systemic problems that require immediate attention. There is a contagion worry around the financial circles in Europe and the United States, and this worry is now bothering regulators.

The Swiss government deserves recognition for moving fast and decisively to rescue Credit Suisse, as its quick deployment of resources prevented a 2008-style banking catastrophe.

On the other hand, American depositors were so nervous about the future of their deposits, that they started withdrawing those capital en masse from the domestic banking sector. The Federal Reserve too expressed worry, which didn’t help the matter either.

“It appeared like contagion from SVB’s bankruptcy may be far-reaching and inflict damage to the broader financial system,” said Fed vice chairman of Supervision Michael Barr.

Michael Barr also said that if the customers can’t access their money, depositors may start distrusting US commercial banks’ safety and soundness.

Potential risky behaviour

As we shall see, both banks somehow slipped the leash of risk-averse management that authorities imposed on them after 2008. The obvious question is: have the global giants returned to the reckless behaviour that caused the financial crisis?

After the Credit Suisse panic, French and German authorities raided five giant banks for possible money laundering and tax evasion on behalf of wealthy clients, highly illegal activities that had enraged regulators after the 2008 revelations of egregious behaviour.

Since 15 years of reforms were designed to eliminate banking shocks, the question is significant. National regulators ordered a wide range of measures that separated investment from deposit banking, boosted capital ratios and liquidity, sheeted home responsibility onto specific senior executives, eliminated sky-high undeserved bonuses, and, most importantly, ensured a tottering institution could collapse without triggering a house of cards, as happened in 2008. No bank could be “too big to fail.”

Meanwhile, authorities scrutinized systemically significant institutions (G-Sibs), which bankers sometimes hated.

Despite all this regulation, 49-year-old Silicon Valley Bank failed in 24 hours after what the US Federal Reserve called “a devastating and unexpected run by its uninsured depositors,” while once-mighty Credit Suisse was bundled into USB, its supposed rival, with indecent haste before it failed. Credit Suisse’s viability has long troubled Swiss regulators.

Credit Suisse might earn over $17 billion in 2022 from financing Swiss railroads. The second-largest Swiss bank seemed impregnable until a year ago. Swiss banks are known for their strength, dependability, and prestige. The major Swiss regulator, FINMA, is also held in high regard. The Swiss government had to quickly raise $122 billion to save Credit Suisse. The new guidelines say even a G-Sib’s failure shouldn’t cost taxpayers.

In the US, SVB was not for sale, even at gunpoint. The Federal Deposit Insurance Corporation, which ensures financial stability and confidence, followed the book, or “hierarchy,” as central bankers believe. The FDIC swiftly guaranteed SVB and Signature Bank’s insured deposits after a run on deposits caused them to fail. Troubleshooting regulators took over after the US Fed fired senior managers overnight.

Most significantly, the Fed guaranteed up to a year’s worth of liquidity to other banks, preventing future runs. As per the post-2008 hierarchy, SVB equity and liability holders lost their investments.

Speculation & effects

These failures have various effects. Credit Suisse, with operations in the US, Europe, the Middle East, and internationally, has substantially higher numbers. The effects may last for years. UBS, with $1.1 trillion in assets and $34.6 billion in sales, may be able to swallow its rival, mainly due to its doubtful assets. The takeover creates a $5 trillion entity, but nobody knows how much of Credit Suisse’s assets will be written down.

Credit Suisse stockholders lost money, and FINMA will value its tier-one bonds at zero. UBS will buy Credit Suisse for $3.3 billion, a fraction of its pre-failure value.

Reading between the lines, the US Fed was astounded by Silicon Valley Bank’s collapse. Supervisor Michael Barr told the House Committee on Financial Services that management’s failure to manage liquidity risk, its largest responsibility, and the run killed the bank. According to media reports, management prioritized development over stability and ignored internal stress testing that highlighted issues.

Why run, and why now? The Fed seemed bewildered and embarrassed. Michael Barr stated, “SVB’s failure warrants a full assessment of what happened, including the Federal Reserve’s monitoring of the bank.”

It is already known that SVB had a focused business model and that its customers were mostly in the high-risk but potentially lucrative technology and venture capital industries. The bank had been established for over four decades, but in the three years leading up to 2022, it tripled its assets as the IT sector boomed. Concerns should have arisen. Before 2008, fast-growing institutions like the Royal Bank of Scotland failed on both sides of the Atlantic.

The Fed says SVB invested fast-growing deposits in longer-term securities with higher yields without the necessary expertise: “The bank did not effectively manage the interest rate risk of those securities or develop effective interest rate risk measurement tools, models, and metrics.”

The bank also neglected its liability risks. Senior executives fell into the liability-asset mismatch trap. Media reports suggest some personnel had severe concerns about their boss’s decisions. SVB’s troubles stemmed from the technology sector’s need to hold cash deposits in the bank to cover salaries and operating costs. However, cash deposits can be removed at will and often are.

On March 8, SVB realized it wasn’t liquid enough and announced a $1.8 billion loss in a securities transaction but expected to raise funds the following week. That alerted its clients, and some of America’s brightest examined their bank’s balance sheet.

Michael Barr stated, “They did not like what they saw,” in typical US fashion.

On March 9, SVB clients withdrew over $40 billion, demonstrating how insecure a supposedly well-funded bank may be. SVB collapsed the following day as other depositors followed suit. The nightmare of regulators and bankers, an unstoppable run by depositors, took SVB down in three days.

Slow decline

Credit Suisse’s demise appears to be a case of bad management and, as the US Fed admits, supervisory errors, while SVB’s was a case of terrible management and political interference. Unlike in the US and UK, FINMA did not release more than 100 red flags to the bank regarding its many faults during its slow decline.

Credit Suisse was in trouble by 2021 due to $10 billion in losses on client funds invested in Greensill Capital, a massively indebted British supply chain finance firm, and $5.5 billion in US hedge fund Archegos Capital Management.

The integrated global finance sector failed both in 2021. Credit Suisse lost the most in these disasters. Former bank CEO Thomas Gottstein said these blunders were “awful.” Credit Suisse was unlikely to recoup any capital in Greensill and possibly none in Archegos at the time of writing.

These disasters followed years of risky investment banking by Credit Suisse, which had brought down US banks like Lehman Brothers in 2008. Wealthy clients fled, the share price fell, and the bank’s credibility, any institution’s most valuable asset, collapsed. Swiss Info, a Swiss Broadcasting Corporation magazine, says that the bank’s leadership is to blame.

Events quickly deteriorated. In October 2022, Swiss authorities installed a new management team to fix the investment bank firm. “The bank will build on its outstanding wealth management and Swiss Bank franchises,” it said, returning to its roots.

At the time, FINMA Chairwoman Marlene Amstead called this spring clean “a start in the correct direction towards risk reduction.”

The bank had a record-breaking client fund run in the same month. In the fourth quarter, withdrawals reached over $155 billion, and although Credit Suisse survived again, the writing was on the wall.

The two occurrences highlighted “too big to fail” for systemically important organizations. The financial crisis reforms created a two-part worldwide norm. The bank is either a “going concern” that can be saved or a “gone concern” that will be properly buried. The global standard defines a “going” bank as one that has enough capital to cover current business losses and a “gone” bank as one that can be restructured or liquidated.

The Credit Suisse takeover is the first real-world test of the “gone” part of “too large to fail.” No banking authority is ignoring this case study, which has garnered global attention. FINMA’s Marlene Amstead believes Switzerland did the right thing in a communal solution combining taxpayer money, the government, regulators, the central bank, and UBS’s consent.

However, Credit Suisse may have caused a financial disaster if it failed. Does that mean the entire “too big to fail” architecture must be overhauled after the debacle?

Regulatory failures

In a bank disaster, regulators must take responsibility, and they typically do. The Bank of England’s “regulation-lite” faith in management was abandoned during the Great Financial Crisis.

After SVB was classified as a higher-risk “big and foreign financial organization” with $100 billion–$250 billion in assets, its supervision was transferred to a new team. It’s not a G-Sib, but any organization with up to $250 billion in assets is important.

The new team instantly rated its enterprise-wide governance and controls “deficient-1” due to management concerns. Supervisors met with management in November 2022 to discuss rising risks, particularly in interest rates and liquidity, which pose some of the greatest threats to a bank’s integrity. They also worried about rising interest rates affecting SVB and other banks.

The supervisors did not anticipate that it would collapse so quickly. Banks and regulators often clash. While most banks follow the rules and want to follow supervisors’ advice, some must be judged. Because of judicial enforcement, regulators usually win with resistant banks.

Most of FINMA’s 40 annual enforcement proceedings in Switzerland never go public. FINMA conducts 600–700 investigations a year, which require inspectors to knock on doors “to clarify suspected infractions.” In nine out of 10 situations, banks take corrective action when presented with evidence, but Credit Suisse’s refusal was a significant issue.

FINMA states that institutions rarely ignore investigations and multiple judgments. Thus, Swiss authorities are privately discussing Credit Suisse’s case. No country can accept an institution that bullies the regulator, and Switzerland was exceptionally weak.

Central bankers like the Bank of England, the US Fed, and others can name names.

“As the events around Credit Suisse illustrate, our instruments reach their limits in severe cases,” says Marlene Amstead, who wants additional power. “An extension is worth considering.”

Historically, politicians have been hesitant to grant FINMA the necessary authority. Unlike France, the UK, and the US, FINMA lacks the ability to impose fines. Following a prolonged discussion, Swiss politicians ultimately voted against the merger of Credit Suisse and UBS.

Functioning properly

In a broad internal evaluation, the Fed asks if the regulatory regime is effective.

“Once discovered, can supervisors discern concerns that constitute a serious danger to a bank’s safety and soundness? Supervisor Michael Barr asked the House of Representatives, “Do supervisors have the instruments to reduce threats to safety and soundness?”

“The failure of SVB highlights the need to go on with our work to increase the resilience of the banking system,” he added.

Thus, supervisors should be tough before it’s too late. The US Fed wants to apply Basel III regulations to smaller banks like SVB because they can withstand losses better than the G-Sibs. The financial sector will be closely monitoring the Fed’s proposed new set of stress tests, which cover a wider range of risks and reveal contagion channels. That implies that present stress-testing technology fails.

Contagion is often irrational. In the current banking system, insured depositors get their money out, but dread spreads without explanation. Fintech’s emergence represents a hidden weakness in the post-2008 global banking system. They’re faster, cheaper, and more customer-friendly, weakening the giants’ financial dominance. For example, US banks are smaller.

US Fed Governor Michelle Bowman said, “De novo [new] bank development has largely frozen for the past decade during a period when financial services have quickly evolved.”

New banks are smaller, more conservative, and, surprisingly, safer.

“As we have seen over time, they often outperform larger banks during periods of stress like the pandemic and during the 2008 financial crisis,” Governor Michelle Bowman said.

They also treat small businesses better during rough times. That may drive depositors away from giants. Bank capital may be insufficient in the future. Regulators admit they weren’t before the Great Financial Crisis, and the latest concern is pushing for a reassessment.

Undercapitalized banks have serious repercussions. The 2008 banking crisis caused the longest and deepest recession since the Great Depression. America, the world’s wealthiest nation, saw six million foreclosures, 10 million people fall into poverty, and six years of job losses. Research suggests the impacts persist.

Central banks are worried about the resumption of the run on deposits, but nobody is predicting a worldwide banking collapse. In a post-Credit Suisse debate, Bank of England Governor Andrew Bailey said, “We’re in a very different place, and I genuinely don’t see this as the start of a systemic financial crisis.”

No central banker would disagree, but the tremors created by SVB and Credit Suisse’s collapse have revealed systemic flaws that must be fixed.

The post Is global financial system failure-proof? appeared first on International Finance.

In a letter to clients, Fitch Ratings stated that the pressure on the naira has reversed the initial narrowing that followed the naira’s devaluation due to limited FX availability and strong demand in the underground market.

“There has been a renewed divergence between the parallel market and official exchange rates since August due to the limited supply of FC (foreign currency), reversing some of the narrowing at June’s devaluation,” the rating agency stated.

According to the assessment by three leading analysts, “This raises the possibility of a further devaluation and highlights the difficulties in sustaining exchange-rate liberalization.”

President Bola Tinubu of Nigeria abolished gasoline subsidies and restrictions on foreign exchange, which led to a 40% decline in the value of the naira versus the dollar and the highest inflation in 18 years.

The official and black market rates temporarily aligned as a result of Bola Tinubu’s decision; however, this alignment was fleeting.

The gap increased as a result of buyers turning to the parallel market due to the central bank’s limited availability of foreign currency.

In 2023, the naira experienced its worst-ever performance on the illicit market, reaching 1,000 to the dollar.

Former Citibank Nigeria chairman Olayemi Cardoso was confirmed as governor of the central bank on the same day that the value of the naira fell to a record low. He promised to boost the value of the naira.

Fitch Ratings stated in its note that despite being bearish on the naira, the central bank “has instructed banks to retain their large FX gains rather than to distribute them as dividends, which will provide a cushion to absorb further currency devaluation and loan quality risks.”

In September, Fitch Ratings noted that the financial data published by the central bank for the seven-year period between 2016 and 2022 contained large gaps that prevented a trustworthy evaluation of the nation’s net reserve position.

It also agreed with Bola Tinubu’s assertion that the liberalization of the exchange rate should make it easier for the West African country to attract capital.

The post Naira’s value falls further as parallel market exchange rates widen appeared first on International Finance.

In the year leading up to March, Egypt’s currency depreciated by more than half, increasing the cost of imports. Import restrictions have been put in place to address a severe foreign currency shortage.

According to a statement from the central bank, the USD 557 million surplus offset a USD 3.49 billion deficit between January and March of 2023. Egypt’s first surplus in years was recorded from October through December 2022, totalling USD 1.40 billion.

From USD 17.55 billion in January–March and USD 21.30 billion in the same period in 2022, imports dropped to USD 16.18 billion this time around. From USD 9.55 billion in January–March and USD 11.44 billion in April–June 2022, exports decreased to USD 8.57 billion in 2019.

While Suez Canal revenue increased to USD 2.54 billion from USD 1.91 billion, tourism revenues increased to USD 3.32 billion from USD 2.55 billion in the corresponding quarter last year.

But from April to June 2022, remittances from Egyptians working abroad fell precipitously, to USD 4.63 billion from USD 8.29 billion.

Many Egyptians living abroad have been holding back their wages or selling them on the black market in Egypt because they fear that their country’s currency will devalue soon, according to analysts.

Trouble mounts further

Moody’s has now downgraded Egypt’s credit rating by a notch to ‘Caa1’ from ‘B3’, citing the country’s worsening debt affordability, amid the African nation’s record inflation and a chronic foreign currency shortage, and an ongoing eight-year borrowing spree, which has further made external debt repayments increasingly onerous.

“Moody’s expects the materialization of asset sale proceeds at the central bank to help restore the economy’s foreign currency liquidity buffer,” the credit rating agency said, placing Egypt’s outlook at ‘stable’.

The outlook reflects the agency’s expectation that Egypt will have continued access to official financial support from the International Monetary Fund under its USD 3 billion arrangement.

Egypt has imposed import restrictions to remedy the shortage of foreign currency, while at least two national banks have suspended the use of Egyptian pound debit cards outside the country to stop a drain on foreign currency.

The country, which is preparing for elections in December, devalued its currency by more than half in the year to March 2023.

The post Egypt’s current account surplus increases amid Moody’s setback appeared first on International Finance.

Nine experts from the fields of market economics, academics, consumer groups, and law, will compile a feasibility report on digital yen by 2023 end.

Shifting the attention from Japan, let’s find out what’s happening in the United Kingdom. The government there is pushing ahead with the plan of creating a digital pound, known as ‘Britcoin’, which will be issued by the Bank of England.

CBDC: The New Craze

The crypto market bloodbath of 2022 forced the experts to advocate for the sector to be regulated. Cryptocurrencies as of now don’t have a centralised authority to decide their value. That’s where CBDC comes into play.

India, Bahamas, Nigeria, China, USA, UAE, Jamaica, Ghana, Malaysia, Singapore and Thailand have already made significant strides in the CBDC field. In fact, Bahamas hit the headlines in 2020, as the island nation launched the world’s first-ever central bank digital currency, called the Sand Dollar.

Central Bank Digital Currencies (CBDCs) are the digital currencies issued by a country’s central bank, similar to cryptocurrencies, but differ from the latter in terms of getting their value fixed with government intervention, apart from being equivalent to the country’s fiat currency.

CBDCs’ role is to provide businesses and consumers with privacy, transferability, convenience, accessibility, and financial security, apart from reducing cross-border transaction costs, empowering those who currently use alternative money-transfer methods with lower-cost options and lessening the risks associated with cryptocurrencies.

While cryptocurrencies are notorious for their volatility and the resultant financial stress, CBDCs are envisioned to provide households, consumers, and businesses with secure means of exchanging digital currency.

CBDCs have two types, wholesale and retail. Financial institutions mainly use wholesale CBDCs, while consumers and businesses use retail counterparts. Retail CBDCs are further divided into token-based and account-based ones.

These currencies eliminate the third-party risk of events like bank failures, apart from lowering high cross-border transaction costs by reducing the complex distribution systems and increasing jurisdictional cooperation between governments.

CBDCs also remove the cost of implementing a financial structure within a country to promote maximum financial access to the unbanked population. Last but not least, CBDCs also establish a direct connection between consumers and central banks, thus taking out the need for expensive infrastructure.

CBDCs Are Not Perfect Either

As per a January 2023 report from the Atlantic Council’s Central Bank Digital Currency tracker, around 114 countries were exploring the CBDC option, and these economies in total, represent over 95% of the world’s GDP, thus suggesting a bright future for these digital currencies. However, the idea has its own problems as well.

The biggest of them lies at the privacy front. As per a Wall Street Journal report, a digital currency may allow governments to track every transaction a person makes. While the defenders of CBDC may promote the transparency aspect here, as such a mechanism would allow the law enforcement authorities to prevent crime/fraud much earlier; critics believe that CBDCs can also be weaponized, in order to introduce new kinds of social control.

Another drawback is the lack of data on how switching to CBDCs affects household expenses, investments, banking reserves, interest rates, and most importantly, a financial system’s stability. Will a central bank have enough liquidity to facilitate CBDC withdrawals during a financial crisis? How will these currencies deal with monetary policy controls? There are no conclusive answers to these questions yet.

Another doubt area is the cyber security aspect of these CBDCs. The cryptocurrency sector is known to be a hunting zone for threat actors. These criminals won’t spare a central bank-issued digital currency either. These banks need to ensure robust mechanisms, which would prevent system penetration, theft of assets and customer information.

Conclusion

Government employees in the Chinese city of Changshu will receive their salaries in digital yuan from May 2023. Zimbabwe too will introduce a gold-backed digital currency as its legal tender. These two developments alone show the growing popularity of the concept called ‘CBDC’.

These currencies have the potential to be safe bait in the long run, compared to unregulated and decentralised cryptocurrencies, whose values are dictated by investor sentiments, usage, and user interests, thus making these currencies volatile assets. Remember, cryptocurrencies are more suited for speculation, which makes them unlikely candidates for use in a stable financial system. CBDCs offer this much-needed financial safety in the coming days, but these currencies need to answer the grey areas quickly as well, to live up to the ‘safe bait’ status.

The post IF Insights: CBDCs are the new craze in the world of digital currencies appeared first on International Finance.

In order to explain the working, the regulator is still expected to issue details on the same with the National Payments Corporation of India (NPCI) as well as to banks and ATMs.

Several banks have already allowed the mode of transaction “on-us basis”. These banks include ICICI Bank, Kotak Mahindra Bank, HDFC Bank and SBI. All these banks allow customers to withdraw their cash without a card.

On promoting cashless payments, Shaktikanta Das in his MPC statement said, “Aiming to go for the card-less cash withdrawal facility, which will soon be available in all the banks as well as ATMs and operators. It has been proposed that in order to enable customer authorization with the use of UPI while at the same time transactions would happen through the ATM networks.”

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Sael Al Waary, Deputy Group CEO of Bank ABC told the media, “The pilot was tested using US dollars, and this technology will allow us to scale up our existing offering and introduce more currencies in the future. We envisage major changes across the world with digital currencies, which will play a critical role in enabling future digital economies.

The JPM coin system tokenizes money that is present in JP Morgan bank accounts and is not a stablecoin. Digital currency payments are direct but that wouldn’t be needed with all parties banking at the same bank. With the currency becoming digital, it becomes programmable, giving corporates greater flexibility for the timing and conditions that trigger payments.

After the rests were first announced in May, the central bank announced that it would consider the system for central bank digital currency (CBDC) trials. Additionally, the central bank expressed satisfaction with the system’s ability to eliminate inefficiencies that exist with cross border. According to a recent research report from JP Morgan and Oliver Wyman, it predicted that CBDC could save $100 billion in cross border payment costs. JP Morgan’s Onyx was involved in a cross border CBDC trail between France and Singapore.

The post Bahrain Centra Bank debuts JPM Coin remittance trial appeared first on International Finance.

But the bank slightly upgraded its forecast for economic growth in 2022 to between 4.7 percent and 5.5 percent, from a range of 4.6 percent to 5.4 percent previously. This shift would reflect in Bank Indonesia’s (BI) monetary policy stance to “pro-stability” in 2022, from “pro-growth”.

Perry Warjiyo, Governor of Bank Indonesia said that the other policies of the bank will continue to support the country’s economic recovery. The reduction in excess liquidity will be the bank’s first move to unwind its ultra-loose policy and is targeted to help Southeast Asia’s largest economy that is disrupted due to the Covid-19 pandemic.

Warjiyo remarks, which were made during an annual gathering with financial stakeholders matched with his earlier comments on 2022 policy tightening plans, even after the bank cut down on the economic growth forecast of the year.

Warjiyo told the media, “Excess liquidity in the banking system, which is currently very large, will be reduced gradually and cautiously so as not to interfere with the ability of banks in lending and purchasing of state securities to finance the state budget. The policy of low-interest rates… will be maintained until there are early indications of rising inflation.”

The post Bank Indonesia to reduce liquidity in 2022 and keep rates low until inflation rises appeared first on International Finance.