In contrast to the previous centuries, the next big financial innovation seems likely to bloom first in the Far East. At least this is what the news from China, Singapore and South Korea suggest. The development of digital central bank currencies (CBDCs) has recently been picking up speed.
Finance revolution? Singapore releases stable coin on the Ethereum blockchain
Big innovations often start on a small scale. At least that is what the Monetary Authority of Singapore (MAS) thought when the central bank of the dwarf state gave its blessing to the stable coin of the domestic payment institution Xfers last week. With immediate effect, the financial platform is officially authorized to issue the digital Singapore dollar XSGD. In the future, anyone who wants to use digital currency will only need a bank account in the city-state. The aim of the pioneering project is to strengthen the financial infrastructure of Southeast Asia and to promote the spread of the Singapore dollar. The island state is one of the most important financial centers in the world – its own currency, however, is comparatively insignificant.
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Meanwhile, the big neighbor China is also hot in terms of CBDC : slowly but steadily, the big dragon is rebuilding the foundations of its financial infrastructure. The latest figures from the mammoth project show that the dimensions in the Middle Kingdom are different from those in Germany. As the South China Morning Post reports, the country’s central bank has already processed transactions worth the equivalent of 162 million US dollars via the digital yuan. For the world’s second largest economy, these are literally peanuts. However, the days of cash seem numbered in the long run.
South Korea’s central bank wants to test the CBDC project from 2021
South Korea’s CBDC plans are more cautious. As reported by the Eastern media, the Bank of Korea (BoK) is planning), the country’s central bank, is now also launching the first test runs of its digital currency for the coming year 2021. Unlike in China, however, they want to first examine the distribution and circulation of the state coin in a virtual environment. While Beijing and Co. are rushing forward, the BoK advises calm. Even successful test runs would not necessarily lead to an actual introduction of the digital currency.
„We’re working on it“ – US Vice Secretary of the Treasury discusses plans for central bank currency
Whether a mere trial or serious test runs – on the other side of the Pacific, however, such news falls on careful ears. The US does not want to be accused of inaction in the global race for digital central bank currencies. At least the US Treasury Department gives that impression. At an event organized by the Atlantic Council think tank last week, Vice Minister Justin Muzinich emphasized that his agency was currently working with the US Federal Reserve on issuing a digital dollar. Before that, however, important construction sites and, above all, safety concerns would have to be cleared up. This also applies to the regulation of other crypto currencies.
ETF – SEC takes a position on tokenized index funds
The US securities regulator SEC recently proved that the proverbial path from Saul to Paul can be faster than some would have expected . For a long time, the authority was considered anything but crypto-savvy. The surprising turnaround came in the course of a webinar. The SEC chairman Jay Clayton announced straightforwardly that „all securities could be tokenized“ in the future. This made observers dream of the coming green light for a Bitcoin ETF. However, it will be some days before the authorities follow their words with deeds.
Protective measure: FCA prohibits the sale of crypto derivatives to retail investors
Star investor Warren Buffet is often quoted as saying that derivatives are “financial weapons of mass destruction”. The British financial regulator FCA seems to have taken this advice to heart. In any case, the authority has now put a stop to trading in crypto derivatives for small investors. In the opinion of the authority, the risks for ordinary consumers are simply too high. Cyber theft is also a danger.