The group, which was first announced in October 2025 when just 10 banks were ⁠involved, also eyes expanding into stablecoins pegged to other G7 currencies, with the euro emerging as the top priority.

Stablecoins, which are used to move money around the world in the form of cryptocurrency, have seen a revival in interest, especially after the rebound in crypto prices in 2024.

United States President Donald Trump’s support for the sector has further sparked the idea of using blockchain in the mainstream financial system.

The financial group will compete with a separate consortium of 37 financial institutions, which formed ‌a ⁠company called Qivalis, with the latter planning to launch a euro-pegged stablecoin later this year.

The post Goldman Sachs, BofA-led consortium plans 2027 stablecoin launch appeared first on International Finance.

Will the rapid normalisation of POS and digital wallets make banknotes a thing of the past? Not so easily, claims another study from the Official Monetary and Financial Institutions Forum (OMFIF), as per which, digital payment ecosystem is useful till the presence of electricity, connectivity, and authentication servers. If one among them goes down, or all the three go down together, physical cash becomes the last line of defence.

The April 2025 blackout on the Iberian Peninsula (continental Spain and Portugal), in which the power grid collapsed and telecommunications faltered, entire regions found themselves suddenly cut off from the digital economy. Payment cards did not work. Mobile wallets froze. Online banking was inaccessible. Merchants could not connect to networks. People with ample digital balances were unable to purchase food or fuel. Only those who carried physical banknotes retained economic agency.

Cash is king, but has its weakness

A well-designed monetary ecosystem always treats both physical cash and digital money complementary to each other. While the POS and digital wallets serve the tech-savvy sections of the populations, cash ensures that the elderly, the digitally excluded, unbanked communities, informal workers, and those concerned about privacy still to participate in the digital economy.

Private digital payments provide speed and convenience. CBDCs may provide a modern, stable form of public digital money. But only cash provides a non-digital layer that can sustain economic activity during severe disruptions. It is the monetary equivalent of an emergency generator.

However, physical banknotes also have their share of vulnerabilities, and the prominent among them is counterfeiting. We are talking about the illegal act of creating, copying, or imitating a physical currency, that if left unchecked, can undermine national economies, apart from weakening financial institutions and jeopardising people’s livelihoods.

The introduction of unauthorised, counterfeited money artificially increases the currency supply, which in turn devalues legitimate currency, leading to higher prices and inflation. Individuals and businesses unknowingly accepting counterfeit bills suffer immediate and unrecoverable financial losses, as these notes get confiscated by banks without reimbursement. If the volume of fake cash reaches a critical mass, it lowers the faith among people on the utility of paper money entirely, threatening its function as a medium of exchange and a store of value.

In August 2025, under Europol’s watch, a joint law enforcement operation intercepted the distribution of counterfeit currency through postal services. Nearly one million items got confiscated, including fake euros, US dollars, and British pounds, with an estimated value of over EUR 66 million.

The collaboration between authorities from 18 countries also triggered 102 new investigations targeting criminal networks engaged in currency counterfeiting. Led by Austria, Portugal and Spain, the probe was conducted between October 2024 and March 2025, and uncovered several criminal networks engaged in currency counterfeiting. Most of these networks were operating from outside the EU (European Union), mainly from Asia, but also from America and the Middle East.

Central banks vs counterfeiters

In March 2026, the Swiss National Bank unveiled the new-look Swiss franc banknote designs, featuring native plants, landscapes, and how human life adapts at different altitudes throughout the Alpine nation. The central monetary authority has also utilised a revolutionary three-layer substrate called Durasafe in the next-generation notes, which sandwiches a polymer layer between two outer layers of cotton paper.

This unique base, combined with over 20 advanced security features, makes counterfeiting nearly impossible. The notes have also embedded fibres and security numbers that glow when viewed under UV light, and sections that disappear under infrared light.

Another very good case study has been Singaporean banknotes, that use a blend of advanced physical substrates, intaglio printing, and optically variable devices (OVDs) to prevent counterfeiting. Lower denominations get printed on durable polymer, while higher denominations utilise specialised paper. Genuine notes feature a metallic, reflective kinogram. When tilted, the denomination numeral shifts, and the MAS (Monetary Authority of Singapore) logo transforms into the Singapore lion symbol.

Polymer-made lower denominations also feature an embedded metallic thread, while paper notes utilise an interwoven thread. When held to light, holographic images of the Singapore Lion symbol and MAS logo become visible on the thread.

The MAS logo itself has been printed in a micro-lettering format, which ‘ will be difficult to figure out without a magnifying glass. Specific elements like the serial numbers, chairman’s seal, latent image patches, and denomination numerals have been kept UV-friendly, emitting a bright, distinct glow.

The Bank of England’s proposed new banknote designs, despite being controversial for leaving out historical figures, will be having intricate wildlife photos like bird flapping its winds or a deer running, that in the words of the central bank, will be combined with latest security technologies to prevent counterfeiting.

United States, to commemorate its 250th anniversary, will be launching its ‘Catalyst’ series of redesigned $10 currency, that will incorporate advanced visible and covert machine-readable security features to combat counterfeiting. These new notes will incorporate advanced security features commonly deployed in other developed economies, but never used in US currency. Features like enhanced optically variable devices, sophisticated watermarking techniques, and critically, machine-readable elements specifically designed for high-speed automated authentication.

Keeping in mind the counterfeiters’ shift to generative AI to replicate microprinting and watermark patterns with increasing accuracy, the Catalyst redesign will also be introducing security elements that current counterfeiting technology cannot reproduce.

While central banks are bringing more complex security features like polymer substrates, 3D ribbons, and colour-shifting inks, counterfeiters are adapting as well against these security advancements. They are reportedly using advanced flatbed scanners paired with layer-based graphic software (like altered versions of Photoshop) to isolate, sharpen, and reconstruct complex banknote graphics layer by layer.

Using high-end commercial digital printers, these ‘notes’ are getting reproduced, with ‘fine lines and micro-text’. Counterfeiters are also using chemical solutions to strip the ink off low-value banknotes (such as $1 or $5 bills), followed by the reprinting of higher denominations ($50 or $100) on the original, authentic paper, effectively bypassing security pens and texture tests.

Forgers are even mimicking the extreme-pressure intaglio presses on the notes, by utilising fine-tip glue pens, or selectively applying clear matte lacquer sprays over portraits and text. Makeup kits, specifically eyeshadow and nail polishes, are being used to replicate expensive Optically Variable Ink (OVI), or colour-shifting 3D ribbons.

Last but not the least; to create the security threads, some criminals split thin paper sheets in half, before manually placing a simulated plastic or UV-ink strip inside, and gluing the layers back together.

Making the banknotes secure

Modern-day banknotes are being made from synthetic polymer materials like biaxially oriented polypropylene (BOPP). As compared to paper banknotes, they last significantly longer, have less environmental impact, reduced cost of production and replacement, and, most importantly, more than enough room for inducting abundant security features.

It was the Reserve Bank of Australia (RBA), Commonwealth Scientific and Industrial Research Organisation (CSIRO), and The University of Melbourne, that first innovated and issued the new breed of currency in Australia during 1988. By 1996, Australia switched its physical dollar to polymer banknotes.
Romania was the first country in Europe to issue a plastic note in 1999, and became the third country, after Australia and New Zealand, to fully convert to polymer by 2003.

Polymer banknotes usually have three levels of security. Primary security levels are easily recognisable by consumers, and may include intaglio, metal strips, holograms, and the clear areas of the banknote. Secondary security features are detectable by a machine. Tertiary security features may only be detectable by the issuing authority when a banknote is returned.

Next comes watermarks, one of the basic features to ensure banknotes’ effective documentation and protection for centuries. They are extremely difficult to replicate, as slight deviations in the portrait, or in the motif, raise suspicion in the minds of people and authorities alike.

When it comes making watermarks an iconic shield of defence against the counterfeiters, German company Giesecke+Devrient GmbH, that operates in the fields of digital security, financial platforms, and currency technology, has become a known name. It has developed an array of watermark designs like multitone, highlight and pixel, each of which has a distinct appearance.

These watermarks, if linked together on a banknote, create unambiguous and memorable motifs. Watermark designs often get amplified in printed and applied security features, further helping simplify the currency’s authentication process.

Next, we have ‘Security Thread’, a polymer-based stripe incorporated into banknotes during the papermaking process. The concept came into the picture during the mid-1800s when legendary American papermaker Crane and Co. introduced silk security threads.

In 1940s, the Bank of England wrote a new chapter in banknotes’ security, by proposing metallic threads for shilling banknotes. Since then, security threads have become a widely used authentication method.

Today, more than 90% of banknotes contain security threads, and their design has only become more sophisticated over the years, featuring microtexts, holograms, colour-changing effects, and UV luminosity.

Depending on their location in the paper, security threads can be of three types: Latent (completely embedded within the paper substrate), Diving (thread that weaves in and out, creating a dotted line on the banknote’s surface), and Figure (thread that appears as a series of shaped windows but forms a solid line when viewed in transmitted light). Threads can be of metal without text, metal with microtext, semi-transparent with text, holographic, colour changing, or luminescent under UV light.

Threads also carry magnetic properties, which are detectable by specialised devices with magneto-optical sensors. There can also be floating images in these security threads, that creates a motion effect (when the note is tilted, the image appears to move or shift). Every security thread comes with a dynamic effect, that produces motion, shifting, or transformation when the banknote is tilted or moved.

The devil lies in the details

Microprinting is a powerful anti-counterfeiting security feature that consists of incredibly tiny text (usually 0.15 to 0.3 mm high) printed onto banknotes. To the naked eye, the microprint appears as a solid, continuous thin line, but if seen under a magnifying glass, it reveals clear, legible words or numbers. Because of the feature’s microscopic size, counterfeiters using standard photocopiers or scanners cannot reproduce the fine details, and end up producing a text that usually translates into a blurred or solid line.

Central banks use either of positive microprinting (dark letters on a light background) or negative microprinting (light letters on a dark background). You will find some of the best use cases of microprinting in any prominent currency.

Next is ‘Intaglio Printing’, a security printing technique where designs get engraved into metal plates. Thick ink fills the recessed grooves, and immense pressure transfers it onto the paper, creating a thick, raised, and highly tactile texture. Here, Giesecke+Devrient has redefined the game through its ‘FIT System’, a combination of computerised engraving and laser technology that enables the realisation not only of very fine lines, but also translucent, multi-tonal structures that create new colours.

The element is embedded directly into the intaglio master by means of high-resolution laser engraving, and then embossed onto a reflective metal patch of the banknote paper. Three-dimensional structures are reproduced to an exceptional level of quality. The precise engineering guarantees that originals remain unique, whilst each reprint is identical to the base stock.

Another impact player is colour-shifting ink. Also known as Optically Variable Ink (OVI), the mechanism is a premium anti-counterfeiting measure that is used on modern banknotes. When you tilt the bill, the ink displays two distinctly different colours depending on your viewing angle, making it an incredibly reliable, naked-eye security feature.

The ink contains specialized metallic or magnetic flakes that bend and reflect light differently at various angles. Held flat, the ink on the note may appear green. Tilted, it shifts to blue, gold, or copper, depending on the specific currency and denomination.

Currency meets technology

Central banks are already thinking about the future. Digital and smart authentication of banknotes will be the next method to watch out for, as the procedure will be integrated into advanced cryptography, digital watermarks, machine-readable codes, and smartphone-based AI models to verify currency, deter counterfeiting, and bridge physical cash with digital financial ecosystems.

German technology company AUGENTIC and Orell Fussli Limited Security Printing have prepared a solution called ‘Smart Banknote CBDC’, that combines Orell Fussli’s highly secure banknotes with AUGENTIC’s ‘CBDC Platform’, including trustwise.io Distributed Ledger Technology.

Smart banknotes emerging from this ecosystem can be exchanged like traditional banknotes, apart from being converted into digital cash at any given time. This happens by using encrypted, anti-copied 2D barcodes for authentication purposes via smartphone. All processes are secured by DLT in combination with smart contracts.

Central banks and tech developers are also utilising consumer smartphones to verify currency. By using built-in cameras, infrared sensors, and advanced machine learning models, mobile apps can analyse banknote fingerprints, micro-printing, and edge transitions to confirm if a note is genuine with near-perfect accuracy.

Digital watermarks and machine-readable features, in the coming days, will allow banknotes to get printed with covert data, like specific magnetic signatures and invisible infrared patterns. Scanners, photocopiers, and ATMs will be programmed to detect this digital data, actively preventing unauthorised reproduction, or verifying deposits in real-time.

And then, there is ‘Chaotic Element Fingerprinting’, a state-of-the-art system that analyses the natural, random distribution of security fibres embedded in the paper pulp of a banknote. When scanned with UV light, this pattern serves as a unique cryptographic fingerprint linked to the note’s serial number.

The post Cash vs Counterfeiters: An Eternal Battle appeared first on International Finance.

As per the European Commission’s 2023 data, 99% of European businesses are small and medium-sized ones. Apart from providing jobs to more than 85 million citizens in the continent, SMEs are also driving innovation and entrepreneurship in the region, while promoting a sustainable and digital economy. The start-up wants to revolutionise the sector further by redefining the payment experience for merchants, eliminating things like hidden fees, outdated hardware, and poor customer service.

Hand-holding European SMEs To Growth Highway

Flatpay’s operational value is simple: European merchants deserve a payment solution that is easy to understand, affordable, and free from hidden fees. To execute this, the start-up is offering a straightforward pricing model with no setup fees for terminals, no subscription fees, and a flat rate for all card types.

Flatpay’s journey began in 2022 when three digital entrepreneurship and payment solution experts came together in Copenhagen to disrupt the market with a simple, transparent, and affordable payment solution for small and medium-sized merchants. Since then, it has expanded its presence to Finland, Germany, Italy, and France, while continuing to grow rapidly.

Apart from witnessing a quick growth on the customer front, Flatpay’s own valuation has grown at a similarly fast pace as well. Now valued at 1.5 billion euro (USD 1.75 billion), the Danish start-up reached unicorn status in only three years. CEO and co-founder Sander Janca-Jensen, while interacting with TechCrunch, said that his company recently crossed the 100-million-euro mark, when it comes to annual recurring revenue (ARR).

He added that the amount (approximately USD 116 million) is increasing by nearly 1 million euro a day (USD 1.16 million) currently. The plan for 2026, as per Jensen, is to grow another 300% and close the year with between 400-500 million euro of ARR.

The Products

Flatpay’s payment options help SMEs thrive by streamlining their order and payment processes, giving the business owners more time and freedom to focus on operational growth. Apart from keeping the customer support active on a 24/7 basis to keep the payments running smoothly, day and night. Businesses, in return, only need to pay Flatpay at simple rates, with no hidden fees.

Take the payment terminal, for example, that automates the task of creating annual payment reports by uploading transactions and Z-reports directly to the businesses’ bookkeeping systems, saving time and reducing human errors. The payment terminal provides everything an entrepreneur needs to accept major cards like Visa and Mastercard, including contactless options, in one device.

Also, the device’s intuitive interface ensures less waiting time for customers, due to lightning-fast payments. All the business owners need to do is choose the payment terminal they need for their ventures, following which Flatpay takes over, in terms of completing full on-site installation of hardware, software, and setup.

Next is Flatpay’s POS (Point of Sale) solution, which streamlines payments, product management, and sales analytics for all businesses. Designed to make accepting payments faster, easier, and stress-free, the solution tracks sales, manages inventory, and generates reports directly from the client’s business’ POS, thereby donning the role of an “all-in-one business hub.” And it also integrates seamlessly with a wide range of accounting tools.

The POS has been customised for businesses of all sizes. For small ones seeking simple payment and management tools, the solution comes with a simple, clean setup with a tablet and portable terminal. For businesses that are ready to shell out more, the premium all-in-one POS comes equipped with a 15.6″ touch screen, built-in printer, and customer-facing display.

On the online payment front, Flatpay is enabling SMEs to receive online payments quickly and securely, at a competitive price. Not only do the start-up’s technologies and encryption methods ensure protection of payments and personal information of the business owners and customers, but it is also compatible with popular payment methods like Visa, Mastercard, PayPal, Google Pay and Apple Pay.

Expanding At A Steady Pace

As Flatpay entered the league of European fintech unicorns, the start-up will use the newly raised capital to support its continued growth in Denmark, Finland, France, Germany, Italy, and the United Kingdom, as well as eyeing further expansion into one or two new markets in 2026.

Flatpay currently has 1,500 staffers, or “flatpayers,” and plans to double that by the end of 2026. Increasing headcount is another crucial goal the company has locked in on the same level as revenue, as the start-up aims to grow both by 10x by 2029.

Flatpay believes that SMB owners actively look for new solutions, even if their current systems are overpriced or insufficient. As per Janca-Jensen, “That’s where we come in the door.” The start-up’s staffers show up with pen and paper to explain its pricing, and with card terminals for instant demos.

Flatpay is betting big on this particular hands-on approach to increase its market share against legacy providers like PayPal, Stripe, and SumUp, as well as new entrants focusing on specific sectors, such as hospitality. As SMBs want operational simplicity, Flatpay is ready to provide that.

The start-up is not completely averse to AI, as it uses the technology for real-time features and is currently experimenting with voice AI agents. The venture is also planning to expand further into fintech with a banking suite that would include cards and accounts.

The post Start-up of the Week: Flatpay emerges as European fintech unicorn challenger appeared first on International Finance.

The crisis has utterly annihilated the company’s famously stellar operating margins, which typically ranged between 15% and 18%, rates that once made it the envy of the global automotive industry. Management has now desperately lowered its forecast, projecting operating margins will clock in between a disastrous 0% and 2% for the year.

This collapse forced the sudden departure of CEO Oliver Blume, who struggled to manage dual roles at Porsche and Volkswagen effectively, and now requires the immediate elimination of 1,900 permanent jobs alongside other restructuring measures.

The company’s market value is now halved since its public listing three years ago, a loss of shareholder confidence that directly reflects the high cost of failing to adapt to a changing industrial landscape. Porsche’s financial health has been utterly exposed, demonstrating definitively that brand legacy is insufficient protection against fundamental structural flaws.

Software Failure And Chinese Humiliation

A core failure of Porsche’s strategy was its disastrous miscalculation of the electric vehicle (EV) revolution, particularly in the most critical growth markets. The company misjudged customer appetite for high-performance battery-powered sports cars, leading to the abandonment of its ambitious goal of 80% of sales from electric vehicles by 2030.

The attempt to reverse this course, steering the firm back toward petrol and hybrid power, is proving excruciatingly expensive and logistically disruptive, requiring billions in restructuring costs, including the decision to scrap plans for in-house battery production.

The Macan, a highly successful small SUV, will be sold only as an electric vehicle starting in 2026, for example, but the petrol replacement has been embarrassingly delayed until 2028, creating a competitive chasm in a crucial segment.

The most profound failure, however, occurred in China, once Porsche’s largest pillar of global growth, where sales volume has plummeted sharply, projected to be only 40,000 vehicles this year, down from 93,000 in 2022.

The contraction is driven by technological displacement from hyper-agile local competition, a true humiliation for the German giant. Local manufacturers like Xiaomi, with its SU7 model, are offering a car that mirrors the performance and braking of the Taycan EV, but for roughly half the price. Worse, Chinese consumers prioritise software and connectivity, integrated artificial intelligence (AI) features that European-developed infotainment systems fail to deliver, falling “well below the expectations of Chinese buyers.”

Porsche suffered a digital collapse, a failure to verticalize the critical software layer, handing tech-native rivals the perfect weapon to seize market share and dictate pricing.

Why German inertia will cost billions

Further compounding Porsche’s troubles is its acute and entirely unnecessary exposure to geopolitical risk, particularly in North America, which has now overtaken China as the company’s single largest market, accounting for a quarter of sales in 2024.

This exposure is a direct result of the company’s structural inertia, its insistence on relying entirely on exports from Germany, unlike competitors such as BMW or Mercedes-Benz, which wisely localised manufacturing in the US.

The fatal lack of a US manufacturing footprint has made Porsche a willing hostage to American trade policy. The projection of President Trump’s potential 15% tariff on cars imported from the European Union (EU) is anticipated to wipe 700 million euro directly from Porsche’s profits this year.

To offset this crippling damage, Porsche is forced to raise vehicle prices in the United States in the coming months, a move that is likely to impact sales volume, undermine growth stability, and threaten the market position the region has provided.

This is the crushing cost of strategic inflexibility, the penalty for prioritising an inherited German export model over adapting to global supply chain and political realities. The incoming CEO, Michael Leiters, faces an unenviable, perhaps impossible, task, trying to put the powerful oomph back into a company that has been brought to its knees by its own self-inflicted wounds.

The post IF Insights: Unpacking Porsche’s financial collapse appeared first on International Finance.

The move comes as Binance faces increased regulatory scrutiny around the world, and crypto exchanges try to assure investors that their funds are safe after FTX collapsed in 2022. Last February, US authorities fined Binance USD 4.3 billion for violating federal anti-money laundering and sanctions laws by failing to monitor its internal controls and sentenced its founder and chief executive, Changpeng Zhao, to four months in prison.

Still, Binance has remained the world’s largest cryptocurrency exchange by trading volume, handling billions of dollars in trades daily across hundreds of cryptocurrencies.

Meanwhile, European users can now convert cryptocurrency into fiat and withdraw money straight to a Mastercard that is eligible for almost instantaneous settlement, thanks to a new feature Binance has introduced. With the help of Mastercard Move, the payment behemoth’s suite of money-movement tools, the service is operational on the Binance website and app.

Two components make up the new functionality: a “sell to card” option that instantly transfers the money to the user’s Mastercard after converting cryptocurrency into euros. The “withdraw to card” option is an additional choice that enables users to transfer their current euro balances from Binance straight to their card.

Currently, only euro-based payouts are available for both services; additional currencies should be added soon. The new features are intended to simplify cryptocurrency payments, according to Thomas Gregory, vice president of Fiat at Binance.

“Our goal is to continue expanding our services with global leaders and innovators in digital payments, like Mastercard, to widen access and possibilities for our broad global user base,” the senior official stated further.

This update makes off-ramping easier for users who prefer fast access to their money without using conventional bank transfers. With availability in almost real time, it fills a significant gap between regular fiat spending and cryptocurrency wallets.

The post Binance teams up with BBVA to let customers keep assets off exchange appeared first on International Finance.

Kos Stiskin, Finom’s chairman and co-founder, told TechCrunch that the capital infusion “will be used exclusively and only for growth and not for operational expenses or product development.” The latest round was a nontraditional funding one in which General Catalyst will not take any equity. Finom’s core operations, as of May 2025, are generating positive cash flow, with all new investments and funding going directly toward attracting new clients.

In 2025, Finom, primarily a banking business, expanded its offerings beyond digital banking services while making considerable efforts in innovation.

In February, Finom unveiled its “autonomous AI accounting agent” for Europe-based entrepreneurs and freelancers. The start-up has now expanded into direct lending, which incorporates an AI-powered scoring engine. Finom’s credit offering, available in the Netherlands, will be expanded across Europe by the end of 2025.

Expanding Rapidly

Right now, Finom counts over 100,000 businesses across Germany, France, Spain, the Netherlands, and Italy as customers, reporting positive unit economics in all markets. The start-up’s revenue model, which is primarily a subscription-based one, also generates revenue through transaction fees for certain services, apart from offering a competitive cashback programme. As the company expands into the territory of lending, the move has also opened a new revenue stream through interest on credit lines.

As per Stiskin, Finom doubled its annual recurring revenue in 2024 and became EBITDAM (earnings before interest, taxes, depreciation, amortisation, and marketing) profitable. The chairman and co-founder right now sees Qonto, a Paris-based challenger bank, as his business’s closest rival. Qonto, in 2022, announced a massive 486-million-euro (USD 552 million) Series D funding round. However, Stiskin believes that Finom has a “stronger localisation strategy and more comprehensive product suite.”

Presently, Finom has 505 employees, up 31.5% compared to 2024. Last September, the company named Alessandro Camilotti, former head of finance and analytics EU at Klarna, as its CFO. The venture has so far raised nearly 190 million euro (roughly USD 214 million) since its inception in 2020.

Through Finom, global businesses can conduct corporate payments with no limits, while enjoying unlimited cashback on all card transactions, even the biggest ones, apart from spending and receiving money in 150-plus countries. Companies can open their account fully online in five days to send and get money from anyone, anywhere, while enjoying benefits like lowest exchange rates, fixed and low transaction fees, up to 1% of unlimited cashback, and free in/out SEPA transfers (Single Euro Payments Area, which represents a pan-European network of countries where two cross-border bank accounts can send and receive payments in euros) and direct debits.

Here Are The Key Products

Using Finom’s “Unlimited Cashback” feature, medium and large companies can boost their businesses by maximizing their savings with a tailor-made cashback system, with benefits like up to 1% cashback on all card expenses, up to 200,000 euro in monthly transaction limit for each card, and, finally, unlimited free virtual cards.

Next is “International Transfers,” under which businesses can save, exchange, spend, and receive money like a local everywhere. Under this, 20-plus currencies exchange at great rates under transparent fees. Up to 75% of money gets transferred in 150-plus countries within the same day, saving entrepreneurs’ time and maximising efficiency.

Companies can open accounts within days, not months. The entire process becomes three times faster with a personal manager, allowing clients to instantly exchange over 20 currencies from their phones or desktops.

Also, Finom’s currency exchange feature is known for being three times cheaper than at traditional banks. The exchange rate, claimed as “exceptional” by the start-up, comes at the ratio of +0.5% at the interbank level. The businesses can store money with no commission in any of the 24 currencies available, while sending and receiving funds with a fixed fee of 5 euro.

Entrepreneurs, whether in corporate or enterprise settings, can manage account access and control team expenses through a unified interface using Finom. They can easily issue, top up, or set limits on cards for employees with just a few clicks. Additionally, they can provide either limited or unlimited access to external accountants and generate bulk exports of documents and transaction data.

The “Personal Account Manager” (a human professional) acts as the dedicated helping hand in sorting out international payment subtleties, while carefully checking the money transfer documents before the transaction takes place.

Image Credits: Finom

The post Start-up of the Week: AI innovations drive Finom’s new services appeared first on International Finance.

Currency impacts

Exchange rates are often ignored by the public because they are rarely necessary. An average person uses the local currency to conduct his/her daily business. Only in the case of infrequent transactions like international travel, import payments, or foreign remittances, exchange rates become a concern. A strong national currency would appeal to foreign visitors because it would make trips to the country more affordable.

However, there is a drawback, as over time, a strong currency can significantly hinder the economy by making entire industries uncompetitive and resulting in the loss of thousands of jobs. Although some people might favour a strong currency, there are more economic advantages to a weak currency.

One of the most important factors that central banks take into account, when determining monetary policy, is the value of the home currency on the foreign exchange market. Currency fluctuations can affect several things, including your mortgage interest rate, investment portfolio returns, the cost of groceries at your neighbourhood supermarket, and even your chances of landing a job.

The economy is directly affected by the level of a currency in many manners. Take merchandise trade for example. This represents the imports and exports of a country. A weaker currency generally raises the cost of imports while lowering the cost of exports for buyers abroad.

Over time, a country’s trade surplus or deficit may be attributed to its currency, which may be strong or weak. Say, for instance, that you are an American exporter who offers widgets to a customer in Europe for $10 apiece. The exchange rate is $1.25 for every €1. Thus, each widget will cost €8 to your European buyer.

Let us now assume a weakening of the Dollar and an exchange rate of €1=$1.35. You can afford to give your buyer a break and still make at least $10 per widget, but they want to bargain for a lower price. Your price in Dollars is $10.13 at the current exchange rate, even if you set the new price at €7.50 per widget, which is a 6.25% discount from your buyer’s perspective. A feeble Dollar makes it possible for your export company to compete in global markets.

On the other hand, if imports become more affordable and exports become less competitive, the trade deficit may increase and the currency may eventually weaken as a result of a self-adjusting mechanism. However, an overly strong currency can harm export-dependent industries before this occurs.

Another case study is the capital flows. Strong governments, robust economies, and stable currencies are typically associated with a flow of foreign capital into those nations. For a country to draw in money from international investors, its currency must be reasonably stable.

In the absence of such, foreign investors may be discouraged by the possibility of suffering exchange-rate losses due to currency devaluation. Foreign direct investment (FDI) refers to the process by which foreign investors build new facilities or acquire stakes in companies already operating in the recipient market.

On the other hand, foreign portfolio investment involves the buying, selling, and trading of securities in the recipient market by foreign investors. For developing nations like China and India, FDI is a vital source of funding. Foreign portfolio investments are hot money that can flee the country quickly in hard times, so governments typically prefer foreign direct investment (FDI) over them. Any unfavourable event, like currency devaluation, can cause this capital flight.

Also, significant importers may experience “imported” inflation as a result of a depreciating currency. Imports could cost 25% more in the event of an abrupt 20% decline in the value of the home currency because a 20% decline implies a 25% increase is required to return to the initial price point.

How about interest rates?

Another way the economy is directly affected by the level of a currency is interest rates. As was previously mentioned, when most central banks set monetary policy, exchange rates are a major factor. When determining monetary policy, the Bank of Canada considers the Canadian Dollar’s ongoing strength, according to Governor Mark Carney’s statement from September 2012.

Carney claimed that one factor contributing to his nation’s “exceptionally accommodative” monetary policy for so long was the strength of the Canadian Dollar. A strong home currency has a similar effect on the economy as how a tighter monetary policy does.

Furthermore, if monetary policy is tightened further during a period when the domestic currency is already strong, this could make matters worse by drawing in hot money from overseas investors looking for higher-yielding investments, which would strengthen the domestic currency even more.

Judging the global impact

With over $5 trillion traded every day, far more than all global equities, the forex market is the most actively traded in the world. Even with these massive trading volumes, currencies are typically not featured on the front pages. On the other hand, there are instances when sharp fluctuations in currency values have global effects.

One notable instance of the chaos sparked by unfavourable currency fluctuations is the ‘Asian Financial Crisis’ that commenced in the summer of 1997 due to the devaluation of the Thai baht. This devaluation followed a targeted speculative onslaught on the baht, ultimately compelling Thailand’s central bank to relinquish its fixed exchange rate with the US Dollar and allow the currency to float freely.

The adverse effects of this currency crisis then radiated to neighbouring countries including Indonesia, Malaysia, and South Korea, resulting in a substantial economic downturn characterised by a surge in bankruptcies and a sharp decline in stock markets.

The other one is China’s undervalued Yuan. China maintained the renminbi at roughly 8.2 to the Dollar between 1995 and 2005, allowing its export-led economic boom to capitalise on what its trading partners claimed was an artificially devalued and suppressed currency. China reacted in 2005 to the mounting chorus of grievances from the United States and other countries. As a result, the value of the yuan increased gradually, reaching roughly 6 RMB for every Dollar by 2013 from over 8.2 RMB in 2013.

Similarly, the Japanese Yen’s Gyrations is one such incident. From 2008 to 2013, the Japanese Yen was among the most volatile currencies. Due to Japan’s policy of nearly zero interest rates, traders preferred the Yen in carry trades, where they borrowed money for very little and used it to invest in foreign assets with higher yields.

However, as the global credit crisis deepened in 2008, terrified investors rushed to buy Yen to pay back loans denominated in the currency, which caused the Yen to appreciate sharply. The outcome was a more than 25% increase in the value of the Yen relative to the United States in the five months leading up to January 2009. Then, in 2013, Prime Minister Shinzo Abe unveiled plans for fiscal and monetary stimulus (dubbed “Abenomics”), which caused the Yen to fall by 16% in the first five months of the year.

Also, the Euro fell 20% from 1.51 to the Dollar in December 2009 to roughly 1.19 in June 2010, owing to fears that the heavily indebted countries of Greece, Portugal, Spain, and Italy would be forced out of the European Union. Over the following year, the Euro gained strength once again, but only momentarily. The Euro fell 19% between May 2011 and July 2012 as a result of renewed concerns about an EU breakup.

How can an investor benefit?

There are some ideas for profiting from currency changes. The first way is to invest overseas. Foreign exchange gains will increase your returns if you are an American investor who feels that the American Dollar is losing strength and you want to invest in robust foreign markets.

Examine the S&P/TSX Composite Index for Canada from 2000 to 2010. While the S&P 500 Index was essentially unchanged during this time, the Canadian Dollar saw returns on the TSX of roughly 72%. For American investors buying Canadian equities with greenbacks, US Dollar returns were about 137%, or 9% per annum, due to the steep appreciation of the Canadian Dollar.

The other ideas are to invest in US multinationals, refrain from borrowing in low-interest foreign currencies, and hedge currency risk. A sizable portion of the revenues and profits of the numerous large multinational corporations based in the United States come from overseas. The depreciating Dollar helps American multinational corporations’ earnings, and when the Dollar depreciates, stock prices should rise accordingly.

Since 2000, the United States has experienced record-low interest rates, so, indeed, this hasn’t been a major concern. However, the rates have risen since 2022, as the world’s largest economy, along with a huge part of the world, faced record inflation.

When such a situation, like the above one, occurs, investors should keep in mind those who had to rush to return borrowed Yen in 2008 when they were tempted to borrow in foreign currencies at lower interest rates. The lesson learnt from this tale is to never borrow money in a foreign currency if you cannot or will not be able to manage the exchange risk and it is likely to be appreciated.

Unfavourable currency fluctuations can have a big effect on your finances, particularly if you’re heavily exposed to foreign exchange. However, there are many options available to mitigate currency risk, including exchange-traded funds like the Invesco Euro CurrencyShares Japanese Yen Trust (FXY) and Euro Trust (FXE), as well as currency futures, forwards, and options. If you prefer to sleep at night, consider these.

Changes in currency can have a broad effect on both the domestic and international economies. Investors can profit from weakening US Dollars by making foreign investments or purchasing shares in US multinational corporations.

When one has a significant amount of exposure to foreign exchange, currency movements can be a powerful risk, so it might be best to use one of the many hedging tools available to reduce this risk.

The post Understanding currency fluctuations appeared first on International Finance.

The French Prudential Supervision and Resolution Authority held a conference to announce the central bank digital currency. The digital euro pilot project will solely target private financial sector players in the country. Also, it will strengthen the French financial system —while reinforcing trust in the digital currency. 

The chief focus of the pilot project is to establish France as the world’s first country to issue central bank digital currency. The governor told the media that, “We want to start running experiments rapidly and will launch a call for projects before the end of the first quarter of 2020. A CBDC would help to preserve the trust in the financial system that stems in part from being able to exchange assets for legal tender.”

Previously, France had shown skepticism toward Facebook’s Libra cryptocurrency, stating that it can jeopardise the monetary sovereignty. The country’s digital euro currency is expected to benefit the whole eurozone and might eventually lead to a eeuro. Eeuro will be the country’s next big focus making a significant contribution to the Eurosystem’s body of work. 

Even the People’s Bank of China is also expected to launch its own digital currency in the next 18 months. Currently, it is in the experimental stage and has undergone robust research for five years now. 

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The Euro-area, wonderland of economic growth and competition?

The main argument for adopting a common currency is so countries in the Euro-area can achieve greater economic performance thanks to increased stability and competition, which will ultimately benefit Euro citizens as they enjoy a higher standard of living. Indeed, as explained by Robert Mundell in his famous 1961 paper ‘A Theory of Optimum Currency Areas’, sharing a common currency in an integrated trading area fosters economic growth thanks to lower transaction costs due to the elimination of exchange rate fluctuations, increased price transparency, and competition.

Has the promise of greater economic performance been delivered over the past 20 years? Based on the recent report published par the European Parliament in January 2019 entitled ‘Euro project, 20 years on’, the Euro-area member countries have clearly enjoyed the longest period of steady economic growth since the establishment of the Euro despite the sovereign debt crisis.

As stated, “since the establishment of the Euro and until the subsequent recession in 2011, GDP grew by 30 percent”. Nonetheless, the steady growth came at the price of a relatively lower level of economic growth as in the previous expansion where ‘GDP had grown by 40 percent,’ according to a London School of Economics study. Turning to data on wage per capita as a way to capture the situation of Euro citizens, they tell the same story as the GDP data: the volatility of wage per capita has been significantly less volatile over the period, but the growth of wage per capita has been comparatively lower. If we had not had the 2007 financial crisis that subsequently led to the sovereign debt crisis in the Euro area, the Euro could have been looked at as a success for its members as they began to deliver steady growth and economic stability through major economic integration.

The Euro, the sovereign debt crisis, and the rise of nationalistic parties

The sovereign debt crisis has been the starting point of the strong criticisms addressed to the European Commission and to the ECB that have been accused of making the population worse off. Since 2011, the GDP growth has globally flattened and countries bailed out have clearly suffered from a decrease in their GDP.

It is hard to say whether Euro-members could have performed better outside of the Euro area; countries bailed out included. Indeed, countries bailed out were characterised by structural weaknesses that have not resisted the global recession after the 2007 financial crisis. In the case of Greece, it can even be argued that its membership to the Euro delayed the crisis as investors kept buying Greek government bonds as a perfect substitute for any other Euro-member government bond in the belief that Euro-members would rescue any country in financial trouble sharing the burden. As it happens, this was a wrong assumption as no rules had been clearly written. It does not come at a surprise that feelings of discontent occur when the bad times come and choices need to be made. As long as economic growth was steady, everyone was more or less benefiting from economic prosperity. When came the time of recession, resources became tight, choices had to be made, and population discontent started to spread.

The main discontent regarded the inability of governments to pursue their own public spending agenda due to the existence of the stability pact capping government deficit and debt – even if in reality the limits have all been bypassed during the worst of the economic recession – and prohibiting the monetisation of government debt. The incapacity of countries to recover was attributed to the inflexibility of the European Commission and the ECB. The situation would have improved if governments could have spent as much as much it took to restore economic activity printing money and devaluating in order to stimulate exports. The reason for the prolonged recession was essentially due to the lack of governments’ empowerment.

Printing money is never the solution

The rise of nationalistic parties across Euro member countries is a straightforward illustration of that belief. Unfortunately, economics does not work that way. Spending by printing money has never brought any restoration of economic growth as some countries in South America or Africa have experienced again recently; it is usually the road to economic chaos. Most of the time, countries that have come under pressure with the spread of sovereign debt crisis are countries that have suffered from structural problems that had not been addressed during booming times. This had been the case especially in Portugal, Spain, Greece, Italy and France. Taking a different angle, it is even possible to say that countries struggling with long-lived structural issues have mainly benefited from the Euro until the sovereign debt crisis because economic prosperity hid their internal problems.

To conclude we can ask ourselves if the situation of the euro-member countries would have been that different if we had not had the Euro? The answer is clearly no since the Euro brought more stability to some countries thanks to the delivery of a more credible and stable currency compared to their national counterparts (just think about the devaluation of the Italian Lira, the Spanish peseta or the French franc during the time of the European Monetary System!).

If we take a look around the world, we can see that demand for nationalistic policies are far from exclusive to Euro-area countries. Let’s start with the election of Donald Trump in the US and the trade war he has started with China! As theorised by the economist Rodrick, governments are now facing the impossible trilemma where democracy, national sovereignty, and global economic integration are mutually incompatible, just two of the three are mutually compatible. National sovereignty is indeed hardly compatible with democracy and economic integration.

The post Is the Euro a threat to European democracy? appeared first on International Finance.

The analysis suggested that the shift had been driven by doubts among labour voters who backed leave originally. The trend is most observable in the north of England and Wales, the labour heartlands in which the sentiment appears to be changin. This development will further pur pressure on Jeremy Corbyn to soften the party’s opposition to reconsidering Britain’s EU departure.

The research was compiled by modelling two YouGov polls of more than 15000 people total—conducted before and after British prime minister Theresa May published her proposed Brexit deal on July 6. The polls were combined with the detailed census information and data from the Office for National Statistics to come to the conclusion.

A total of 632 seats in England, Scotland and Wales were examined for the study. It was found that 112 had switched from leave to remain. The new analysis suggested there are now 341 seats with majority remain support, up from 229 seats at the referendum. One seat has switched support in Scotland and 97 have switched in England, while 14 of the 40 seats in Wales have changed from leave to remain. Overall, the model puts remain on 53% support, with 47% backing leave.

Among the constituencies to switch from leave to remain, most significantly– is that of Boris Johnson, the former foreign secretary and face of the leave campaign itself. Support for remain in his Uxbridge and South Ruislip constituency has risen from 43.6% to 51.4%, according to the new model.

Surrey Heath, the constituency of the other Leave figurehead, Michael Gove, also emerged as having a pro-remain majority. Support for remain increased from 48% in 2016 to 50.2%. There was also a 12.8 point swing towards remain in shadow chancellor John McDonnell’s seat of Hayes and Harlington.

The seats of three pro-Leave Labour MPs switched to remain. Birkenhead, Frank Field’s constituency, now has a 58.4% majority in favour of remain. Graham Stringer’s Blackley and Broughton constituency now has a 59% in favour of remain. Kelvin Hopkins’s Luton North seat now has 53.1% backing remain.

Eloise Todd, the chief executive of Best for Britain, stated: “This groundbreaking research shows that Brexit is still not inevitable. People across the UK have witnessed the last two years of uncertainty with dismay and are thinking differently – 112 constituencies have switched to majorities that back staying in our current bespoke deal with the EU.

“The sands of public opinion are shifting and politicians risk falling behind. Our research shows that the deal must be put to the people. Westminster should legislate for a people’s vote on the Brexit terms, giving the public the option to stay and build our future on our current deal with the EU.” he added.

The post More than 100 seats that originally backed Brexit now want to remain in EU appeared first on International Finance.