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Japan’s Cautious Approach to CBDC Could Have Ripple of Implications

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Central Bank Digital Currency (CBDC) - Investors King

Recently, it was reported that Hideki Murai, head of Japan’s ruling party’s panel on digital currency, offered a lengthy time frame before there would be greater clarity on the digital yen. He said to expect more details by the end of 2022, noting that any decision would have a huge impact on financial institutions. Additionally, he suggested that, if a digital yen was developed, it would need to be compatible with CBDCs of other developed nations.

“Japan is in an interesting spot because they are currently experiencing a number of changes within their financial system, so I think that their intuition is telling them to tread lightly. On the other hand, neighboring China is forging ahead with the e-Yuan. The danger, if Japan is left behind, is that China’s digital currency could gain favor across the region,” noted Richard Gardner, CEO of Modulus, a US-based developer of ultra-high-performance trading and surveillance technology that powers global equities, derivatives, and digital asset exchanges.

“CBDC has the potential to completely reshape changes occurring in Japan’s financial industry… If a digital yuan becomes so convenient it’s frequently used by tourists or becomes a main settlement means for trade, the relationship between the yen and yuan could change” and erode the yen’s status as a safe-haven currency,” Murai said.

“I think it is important for countries to find a balance. On the one hand, you don’t want to go off and launch a CBDC before you’re ready, technologically or economically. On the other hand, you don’t want to be left behind, either. Eighteen months is a long time, and a long list of things can play out before then, not the least of which being the results of China’s own move towards digital assets,” Gardner said.

“This is a once in a generation kind of technological advancement. The technology is way ahead of the bureaucracy and the regulatory environment. But, if you’re a politician, you can’t let this get away from you. Ignoring the coming wave of CBDCs is the equivalent of passing on the Race to Space. This is a brand new frontier. Technologically, yes. But, it also could open up a brand new sector of the economy and completely change the face of fintech,” Gardner said.

Modulus is known throughout the financial technology segment as a leader in the development of ultra-high frequency trading systems and blockchain technologies. Over the past twenty years, the company has built technology for the world’s most notable exchanges, with a client list which includes NASA, NASDAQ, Goldman Sachs, Merrill Lynch, JP Morgan Chase, Bank of America, Barclays, Siemens, Shell, Yahoo!, Microsoft, Cornell University, and the University of Chicago.

“Government is built, by design, to move slowly. CBDCs, however, are an area where government needs to partner with the private sector. They need to embrace innovators and work with them to design a plan that keeps the public safe while ensuring that they aren’t left behind as blockchain technology related products and services continue to boom,” Gardner said.

CEO/Founder Investors King Ltd, a foreign exchange research analyst, contributing author on New York-based Talk Markets and Investing.com, with over a decade experience in the global financial markets.

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Cryptocurrency

Today’s Cryptocurrency Investors are Tomorrow’s Masters of the Metaverse

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Cryptocurrency - Investors King

Cryptocurrency investors of today are likely to be the “masters of the metaverse”, which has the potential to change how we live, interact and do business, predicts the CEO of one of the world’s largest independent financial advisory, asset management and fintech organisations.

The prediction from Nigel Green, the CEO and founder of deVere Group, comes as Facebook announces plans to hire 10,000 people in the European Union to develop a so-called metaverse.

“The metaverse has the potential to help unlock access to new creative, social and economic opportunities,” the tech giant said in its blog.

The term ‘metaverse’ gives a virtual parallel to physical reality where a community of people can interact in the form of avatars. It refers to the merging of physical, augmented, and virtual reality in a shared online environment.

Mr Green says: “Facebook’s announcement once again underscores that the metaverse is not being seen by those-in-the-know as an ‘extension’ of the internet, but as its successor.

“It will become the entrance to almost all digital experiences and an integral part of most physical ones, meaning it will fundamentally change the way we live, interact with each other and do business.

“It will revolutionise economies, it will be the key to the creation of whole new generations of companies, and this is why the big tech firms are jumping in – no one wants to be left behind something so monumental.”

He continues: “The metaverse is being built and run on blockchains and decentralised applications, which is the same cutting-edge technology used by cryptocurrencies like Bitcoin and Ethereum.

“In addition, in the virtual worlds which will reshape how we spend our time and our money, financial transactions will, of course, have to be digital.

“This means that cryptocurrencies are likely to become the sole legal tender accepted in the metaverse.

“All of this is a huge advantage to anyone investing in crypto today.  Prices of major cryptocurrencies are likely to soar enormously in the next few years.  As such, those buying now will be taking advantage of the lower entry points.

“Their purchasing power within the digital space can be expected to be huge as a result: they will be the ones who are the Masters of the Metaverse.”

Everything is very much still in the early stages, and it might be another decade or so until the potential of the metaverse is fully realised.

But, concludes Nigel Green, there is a “massive advantage” for early adopters of new tech – “just ask Facebook boss Mark Zuckerberg” – as well as those who “invest earlier on in the currencies of the future.”

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Bitcoin Near $60,000 Per Coin After Bloomberg Report Favour Bitcoin ETF

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Bitcoin Price - Investors King

Bitcoin, the world’s most capitalised cryptocurrency, rallied near $60,000 per coin after a report by Bloomberg said bitcoin futures exchange-traded fund (ETF) will clear the U.S. Securities and Exchange Commission (SEC) late on Thursday.

Cryptocurrency’s most dominant coin rose to $59,961 per coin before pulling back to $59,258.38 at the time of writing.

The SEC is reviewing around 40 bitcoin ETF filings with multiple decision deadlines on futures-linked products hitting next week. According to Bloomberg, the regulator is expected to approve at least some of them, clearing the way for trading to begin.

The SEC does not need to take any formal action to approve the filings. Under federal law, applications can become effective if the SEC allows a mandated deadline to pass by without requesting changes or directing the aspiring issuer to pull the filing.

Bloomberg named applications by ProShares and Invesco as two proposals that may be allowed to launch under this law next week.

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Cryptocurrency

G7 Finance Officials Endorse Principles For Central Bank Digital Currencies

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Central Bank Digital Currency (CBDC) - Investors King

G7 finance officials on Wednesday endorsed 13 public policy principles for retail central bank digital currencies, saying they should be grounded in transparency, the rule of law and sound economic governance, the Treasury Department said.

“Innovation in digital money and payments has the potential to bring significant benefits but also raises considerable public policy and regulatory issues,” Group of Seven finance ministers and central bankers said in a joint statement.

“Strong international coordination and cooperation on these issues help to ensure that public and private sector innovation will deliver domestic and cross-border benefits while being safe for users and the wider financial system.”

The finance officials met in person, with some joining by video, in Washington on Wednesday during the annual meetings of the International Monetary Fund and World Bank under the leadership of British finance minister Rishi Sunak.

In their joint statement, the G7 officials said central bank money in the form of Central Bank Digital Currencies, or CBDCs, would complement cash and could act as a liquid, safe settlement asset and an anchor for the payments system.

They said the principles were meant to support policy and design deliberations within and beyond the G7, complementing recently published work by a group of central banks and the Bank for International Settlements.

No G7 authority has decided to issue a CBDC, and careful consideration of the potential policy implications will continue, the statement said.

“We reaffirm that any CBDC should be grounded in our long-standing public commitments to transparency, the rule of law and sound economic governance,” the statement said. “Any CBDC must support, and ‘do no harm’ to, the ability of central banks to fulfill their mandates for monetary and financial stability.”

The G7 officials stressed the importance of rigorous privacy standards, cybersecurity, the need to protect users’ data and transparency on how the information will be secured and used.

They said such currencies must be energy efficient and operate in an open, transparent and competitive environment while underscoring the importance of interoperability on a cross-border basis and the need to minimize any harmful spillovers to the international monetary and financial system.

They reiterated that no global stablecoin project should begin operation until it addresses legal, regulatory and oversight requirements, echoing a similar statement made by the larger Group of 20 finance officials earlier Wednesday.

Stablecoins are a type of digital coin pegged to traditional currencies.

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