Daily Dash: Spanish Stablecoin Project Gets Go-Ahead

January 20, 2023
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Banco de Espana has approved a euro-backed stablecoin project, the UK’s Treasury minister has talked up the benefits of open banking and the EU’s banking watchdog has revealed a record number of high earners in the sector.

Spanish Regulator Approves MONEI Stablecoin Plans

Banco de Espana’s Financial Sandbox has given the green light to MONEI, the Spanish fintech specialising in digital payments, to launch a euro-backed stablecoin. 

“This is our opportunity to show the rest of Europe and the world that we are at the forefront,” said Álex Saiz Verdaguer, MONEI chief executive. 

Named EURM, the project is a participant in the central bank’s Controlled Testing Space. According to MONEI, the project facilitates Europe-wide sending of euros and online payments by creating a token using Ethereum and Polygon blockchain technology. 

In the test phase, users enter a phone number, verify their identity through video identification, and load their wallet with real euros via Bizum, a provider of instant payment services in Spain. 

Automatically, the same amount of EURM is created as the number of real euros deposited by the user and they can send EURM to the other registered users.

Users will be individuals and will be able to issue €10 per participant. 

Each token will represent one physical euro, the total of which will be held in two safeguarding accounts at leading Spanish banks, BBVA and Caixabank.

EURMs can be exchanged for euros at any time. In addition, there will always be the same number of EURMs as euros backing them.

“EURM is the ultimate pan-European solution that will allow citizens and businesses across the continent to send and receive money instantly,” said Saiz Verdaguer. 

Open Banking Success Shows UK Innovation Potential, Says UK Treasury Minister

Open banking success has cracked the code for more technology innovation in the UK, Andrew Griffith, the UK’s economic secretary for HM Treasury, has said. 

Using an op-ed in City AM, a financial newspaper in the UK, Griffith heaped praise on open banking as a “fantastic example of the seemingly hidden benefits new technologies can bring”.

“My task now is not just to lock in this progress — but to build on it to ensure the benefits of open banking technology and broader innovation are felt by as many people and businesses in the UK as possible,” the Conservative lawmaker, who began his role during the Summer 2022, said.

Banking High Earners In EU Increase Post-Brexit

There was a significant increase in the number of high earners across EU banks in 2021, a report by the European Banking Authority (EBA) has found

The analysis shows a significant increase in the number of individuals working for EU banks and investment firms who received a remuneration of more than €1m. 

The number of high earners receiving €1m or more increased from 1,383 in 2020 to 1,957 in 2021. This is the highest number for the European Economic Area since the banking watchdog started its data collection in 2010.

This increase is linked to the continuing relocations of staff from the UK to the EU, as well as the overall good performance of institutions, in particular in the area of investment banking and trading and sales, and a general increase in salaries.

The number of high earners in France increased from 228 in 2020 to 371 in 2021, a jump of 63 percent. Meanwhile in Spain, the number of high earners increased 73 percent from 128 in 2020 to 221 in 2021.

US Fed Climate Scenario Analysis Unfolds

The US Federal Reserve has provided additional details on how it plans to carry out its pilot climate scenario analysis.

As part of the pilot, the six largest US banks will analyse the impact of scenarios for both physical and transition risks related to climate change.

This will focus on specific assets in their portfolios. 

Meanwhile, the Fed will gather qualitative and quantitative information, including details on governance and risk management practices, measurement methodologies, risk metrics, data challenges and lessons learned.

The pilot was originally announced in September.

Last week, Jerome Powell, the Fed’s chief, said that the reserve bank has narrow but important responsibilities regarding climate-related financial risks. This was echoed in this latest announcement by Michael Barr, the Biden-nominated vice-chair for supervision at the Fed.

Lithuania Passes MONEYVAL Report With Flying Colours

Lithuania has made progress in the fight against money laundering and terrorist financing, according to the latest MONEYVAL report issued by the Council of Europe.

It indicates that Lithuania has improved compliance with two recommendations of the Financial Action Task Force (FATF).  

These relate to the transparency of the beneficiaries of legal entities and the control of cash transportation.

In addition, by increasing the authority of customs to request and receive additional information, Lithuania eliminated a previously identified significant deficiency, while the Baltic country has also strengthened the coordination mechanism between the Customs and Migration Department and the Financial Intelligence Unit. 

'An Open Question' - BoE’s Andrew Bailey Unconvinced Of Need For CBDC

The governor of the Bank of England (BoE) has said he is not convinced by the need for a central bank digital currency (CBDC), and has reaffirmed that the bank has no plans to abolish cash.

Speaking at a Treasury Select Committee hearing this week, Bailey said that investment in modernising the bank’s real-time gross settlement system (RTGS) may suffice instead.

“I think it is an open question whether a wholesale central bank digital currency is needed, because we have a wholesale central bank money settlement system that we are doing a major upgrade on,” he said.

He added: “To be clear, we are not trying to abolish cash or banknotes. I am not necessarily convinced that the retail payment systems need this sort of upgrade at the moment.”

US Agency Consults On Beneficial Ownership Register ID

The Treasury’s Financial Crimes Enforcement Network (FinCEN) is seeking comments on the application process for a FinCEN identifier.

The identifier is part of the agency’s exercise to create rules for a US beneficial ownership register. It allows businesses to report their beneficial owners.

Although getting a FinCEN identifier is voluntary, the rule requires individuals who want to set up an identifier to file an application with FinCEN and keep their submission information up to date. 

The notice, published in the Federal Register on January 17, gives the public an opportunity to comment on the process of applying for a FinCEN identifier and the estimated burden involved.

The consultation period runs until March 20.

Ingenico And Klarna Team Up On POS Payments

The companies have announced a global strategic partnership that will facilitate the rollout of Klarna’s buy now, pay later (BNPL)  payment options at the point of sale (POS) using Ingenico’s Payments Platform as a Service product (PPaaS).

In-store shopping remains the primary channel for consumers, and by 2025 in-store sales are expected to continue to account for almost three-quarters of total retail spending worldwide, the press release says

“Historically, change in the in-store payments experience has been slow,” said Kristina Elkhazin, North America’s Klarna chief. “We see Ingenico’s PPaaS as a significant accelerator that will allow us to bring Klarna’s innovative payment solutions wherever customers want to shop, including on the shop floor.”

According to Ingenico PPaaS chief Giulio Montemagno: “Klarna has been an industry innovator in extending payment options to consumers online, and now it’s doing that in-store,” he said. “This brings value to consumers and retailers alike, and we look forward to enabling Klarna payment options at the point of sale for clients in our different markets.”

Mastercard Partners With Tradeling In UAE E-Commerce Deal

Tradeling, the largest B2B e-commerce platform in the Middle East and North Africa (MENA), has announced a new partnership with Mastercard to promote small and medium-sized enterprise (SME) payments in the UAE.

When buying goods using Tradeling, UAE-based customers who pay using a Mastercard SME or business credit, debit or prepaid card will receive a 5 percent discount on all purchases.

Mastercard has pledged to invest $250m in the global SME sector, and has committed to connecting 50m MSMEs to the digital economy by 2025.

Airwallex To Accept Amex Card Payments Following New Partnership

Airwallex, a global fintech based in Australia, has announced that its users can now accept American Express payments following a new partnership with the US credit card giant.

In a statement, Airwallex said customers in Australia, Hong Kong, Singapore and the UK can now accept Amex card payments through payment links, Xero invoice payments and e-commerce shopping extensions.

Airwallex, a multi-currency cross-border payment provider, said the partnership was based on popular demand from Airwallex merchants who wanted to accept payments from Amex’s higher-spending, premium customers.

Using the Airwallex platform, merchants can collect money from bank transfers and online payments, hold multiple currencies and spend those currencies via debit card or bank transfer. Airwallex allows settlement in eight currencies, including USD, AUD, GBP and HKD.

Republican House Creates New Crypto Subcommittee, Scraps Diversity One

Patrick McHenry (R-NC), chairman of the US House of Representative’s most influential Financial Services Committee, has announced the list of subcommittees for the new Congress, signalling what topics are, and what are not, on the Republican agenda.

McHenry created a subcommittee on digital assets, financial technology and inclusion, which is in line with his previously stated priorities.

Pro-crypto congressman French Hill (R-AR) will lead the subcommittee, which will focus on setting up clear rules for the digital asset ecosystem and developing policies that promote financial technology to reach underserved communities.

Meanwhile, inclusion and diversity, which ranked high on the Democratic committee’s agenda, did not get its own subcommittee this time. 

The diversity and inclusion subcommittee was created by Democratic Maxine Waters in 2019 to combat inequities in financial services systems. Waters said she is “deeply disappointed and disturbed to hear that Committee Republicans plan to eliminate” the subcommittee.

Although the new Congress will go on without a subcommittee dedicated to diversity and inclusion, it should be noted that McHenry made diversity a component of each of the six sub-panels.

“Committee Republicans are ready to deliver on our promises made to the American people,” said McHenry. “This slate of subcommittee chairs will be the drivers of our policy agenda centered around economic prosperity for all Americans.”

Maltese Authorities Fine Another Bank Nearly €190,000 For AML Failures

The Maltese Financial Intelligence Analysis Unit (FIAU) has fined yet another financial institution for anti-money laundering (AML) failures. 

BNF Bank, which is headquartered on the Mediterranean island, has been slapped with an administrative penalty of €189,274, as well as a reprimand and a remediation directive.

As with previous sanctions, this case stems from a 2020 offsite compliance review. 

In particular, the FIAU noticed failures with regard to the bank’s transaction monitoring. For example, in 2014, a total aggregate amount of around €4m was withdrawn by the same customer and the bank did not obtain sufficient reassurance of the purpose as stated by the customer.

The FIAU also pointed out that BNF had not flagged 19 large transfers ranging from €50,000 to €1m which should have required additional information.

Meanwhile, the watchdog uncovered that the bank was taking on customers without carrying out a customer risk assessment at the onboarding stage, which was in violation of not only its own policies but also its legal obligations. 

The bank can now choose to appeal the fine.

All Central Banks Should Scrap CBDC Plans, Says Former BoE Advisor

An economist and former senior advisor to the Bank of England (BoE) has urged all central banks to drop their plans to launch central bank digital currencies (CBDCs), arguing that they are not worth the cost or the risks.

Tony Yates, writing for the FT, said the “most compelling” arguments for CBDC are in reducing payments and settlement costs, but even here, the risks outweigh the potential benefits.

“It would be a colossal undertaking for the central bank to employ the staff to build and manage the hardware and the software of a new payments system,” he said. “So this will be contracted out to the private sector — not everyone’s ideal construct.

“If there are efficiency wonders to be had in terms of systems, what is it about CBDCs that cannot be got through existing ones? If the major players are taking too big a cut in the payments business, why not just tax the excess away?”

Yates went on to say that CBDCs may enable some interesting monetary policy features, such as applying negative interest rates directly to CBDC during a recession, but once again there is no need for central banks to risk their reputations, or budgets, to acquire these features.

EU Regulators Offer Advice On Countering Fraud, Scams And Cyber Risk

The European Banking Authority, the European Insurance and Occupational Pensions Authority and the European Securities and Markets Authority have published a new joint report, looking at member state responses to fraud, scams and cybersecurity. 

Without appropriate digital financial skills and the ability to ensure that they are cyber secure, consumers are more at risk of becoming victims of scams and fraud, the authorities state. 

Within the report, they have identified 12 good practices to enhance financial education and reduce risk. 

These include publishing a blacklist of fraudulent providers to help consumers properly assess the financial risks arising from financial products and services linked to new technologies, such as crypto-assets.

In addition, the authorities have recommended that national regulators communicate their financial education initiatives appropriately to increase their reach. For instance, by including entertaining elements, such as games. 

Amex To Acquire B2B Payments Automation Company Nipendo

American Express has announced that it has entered into an agreement to acquire Nipendo, a Israeli company used by businesses to automate B2B payments processes.

In a statement, Amex said the transaction is its latest step toward its goal of creating a leading end-to-end B2B platform for both buyers and suppliers that will make business payments easier and more efficient.

Nipendo’s platform allows businesses to connect, communicate and automate Procure-to-Pay processes, including accounts payable and receivable. It works alongside a company’s existing systems, allowing customers to maintain their current payments infrastructure.

“Our extensive direct relationships with both buyers and suppliers puts us in a unique position to transform the way companies pay for goods and services,” said Anna Marrs, a global credit and fraud risk executive at Amex.

France Probes Riviera Properties Over Russian Sanction Evasion

A French regulator is investigating real-estate agencies in the Alpes-Maritimes region on suspicion that they failed to comply with EU sanctions against Russia.

According to the Ministry of Economics and Finance’s general directorate for competition policy, consumer affairs and fraud control (DGCCRF), 60 percent of the real-estate agents in the Alpes-Maritimes region of France, which includes Nice and parts of the Côte d’Azur, were unaware of their sanctions obligations or did not comply with them.

For instance, real-estate firms did not verify the names of property owners on the national register of sanctioned Russians, and failed to immediately freeze sanctioned assets or report them to the Treasury.

According to a Bloomberg report in March, several Russian oligarchs have villas on the French Riviera, including former Chelsea FC owner Roman Abramovich and Alexander Ponomarenko, chairman of Russia’s biggest airport.

The probe was carried out in September, but announced on January 12.

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