Where Finance Finds Its Future

InvestaX is a tokenisation platform for real and privately managed asset funds based – where else? – in Singapore, the financial centre that is doing more than any other jurisdiction to turn the idea of tokenisation into a reality. Like others in Singapore, including the regulators, the founders of InvestaX believe that DeFi innovations such as automated market-making have an institutional future – and not only because their experience dates back to the ICO boom of 2017-18, that intensely creative period in which the origins of tokenisation lie. To be part of its institutional future, InvestaX has secured operating licences from the regulators and chosen to work with regulated institutions on both the cash and custody sides of its business. And they are operating in the most progressive financial eco-system on the planet, where institutional DeFi is being built by regulators and regulated. Dominic Hobson, co-founder of Future of Finance, spoke to Alice Chen, co-founder, chief operating officer and general counsel at InvestaX. Hosted on Acast. See acast.com/privacy for more information.

130 central banks around the world are now exploring the merits of issuing a Central Bank Digital Currency (CBDC) but as recently as 2015 not a single one was doing that, even though the idea of digital money dates back to the 1990s. The founders of eCurrency, on the other hand, a Dublin-headquartered company with deep roots in Silicon Valley, have been thinking about CBDCs ever since the great financial crisis of 2007-09. Unlike Satoshi Nakamoto, however, their concern was not to use technology to create a trustless, peer-to-peer alternative to the failed fiat currency system controlled by central bank and commercial bank intermediaries, but to rejuvenate central bank money by making it available to households and consumers via the Internet. eCurrency now offers a technology that enables central banks to mint a purely digital form of fiat currency that functions as a bearer instrument – an Internet version, if you like, of physical notes and coins. Dominic Hobson, co-founder of Future of Finance, spoke to Jonathan Dharmapalan, CEO of eCurrency. Hosted on Acast. See acast.com/privacy for more information.

Download the Future of Finance Stablecoins Paper NowRegulated banks are waking up to the threats and opportunities created by the decision to bring Stablecoins within the regulatory perimeter. In both domestic and international payments and securities markets, regulated Stablecoins offer liberation from the status quo as well as the threat of disintermediation. Where doing nothing is not a survivable option, understanding exactly what is going on is essential to the formulation of a viable strategy.What topics were discussed?Have Stablecoins escaped their origins in the cryptocurrency markets?What makes Stablecoins unstable?Are Stablecoins a vector of contagion that threatens financial stability?How do tokenised deposits differ from Stablecoins?How do Stablecoins create credit?Could Stablecoins develop into a shadow banking system?How will Stablecoins inter-operate with central bank digital currencies?For banks, are Stablecoins friend or foe?Do Stablecoins threaten non-bank incumbents in the payments industry?How are Stablecoins being regulated in the major financial centres?What is the capital treatment of Stablecoins?Must non-bank issuers of Stablecoins secure banking licences?Are Stablecoins the future of international and/or domestic payments?Are Stablecoins the key to the growth of tokenised digital assets markets?Are Stablecoins an end-state or an intermediate stage in the evolution of money?Download the Future of Finance Stablecoins Paper NowThe panelGilbert Verdian CEO at Quant https://www.linkedin.com/in/gverdian/Amarjit Singh Partner | EMEIA Assurance Blockchain Leader | Financial Services at EY https://www.linkedin.com/in/amarjit-singh-jeet/Ricardo Correia Senior Technology Executive at R3 https://www.linkedin.com/in/ricardo-m-correia/Keith Bear Fellow at the Centre for Alternative Finance at Judge Business School, University of Cambridge https://www.linkedin.com/in/keith-bear-2b7407/Moderated by Dominic Hobson Co-Founder at Future of Finance https://www.linkedin.com/in/dominic-hobson-49b8222/ Hosted on Acast. See acast.com/privacy for more information.

The asset management industry has grown fat on a quarter-century of exceptionally loose central bank monetary policies. Ever-rising asset values have allowed managers to largely ignore shrinking fees, rising costs, failed outsourcing and offshoring arrangements and a long-term secular trend from high margin active investment strategies to low-margin passive alternatives. But now a combination of rising interest rates, the reversal of quantitative easing and geopolitical and market uncertainties have exposed a fragile business model, putting profitability on a downward trajectory. The threat has woken asset managers to the need for radical change. Vendors that once found it hard to interest the industry in new ways of generating revenue and cutting costs are getting more than a hearing – they are taking on clients. One of the newcomers is FundGuard, a Cloud-based software as a service platform for investment management and administration whose initial mission is to transform an area that once seemed immune to technological change: fund accounting. Dominic Hobson, co-founder of the Future of Finance, spoke to FundGuard president John Lehner.  Hosted on Acast. See acast.com/privacy for more information.

The existence of Montis, which is building an infrastructure to support the issuance, settlement, safekeeping and servicing of digital assets, is a measure of the transformative potential of tokenisation. Yet Montis is also a measure of the curious lack of interest of most established central securities depositories (CSD) in tokenisation, as threat let alone as opportunity. The newcomer, unaffected by apparent setbacks in the CSD industry such as ASX and ID2s, is backed by a widening array of engaged incumbents as well as issuers and investors and operating in an increasingly supportive legal and regulatory environment. Dominic Hobson, co-founder of Future of Finance, spoke to Martin Watkins, chief executive officer at Montis Group Limited, about why Montis exists, what benefits it brings, what products and services it offers, how it is working with regulators and within evolving legal regimes, and how its positioning and strategy has adapted to the changing shape of the tokenisation opportunity set.   Hosted on Acast. See acast.com/privacy for more information.

SDX, the exchange for digital assets built and operated by Swiss stock exchange SIX, is working to accelerate the tokenisation of financial assets in Switzerland, Singapore and Germany, three locations whose legal and regulatory environments are accommodating of the new method of raising capital. Interestingly, the SDX strategy is an open one that looks to embrace competitors as well as issuers and investors as the company builds a network of networks of tokenisation platforms and their users. Dominic Hobson, co-founder of Future of Finance, spoke about the SDX strategy with Alex Kech, who took up the post of Head of Digital Securities at SDX in November 2022. Hosted on Acast. See acast.com/privacy for more information.

It is easy to fall into the trap of treating monetary innovations such as Stablecoins in isolation, or as a final destination, when innovation is in fact constant and individual innovations are merely components of much larger secular trends driven by technology and the interaction of technology with the wants and needs of households and businesses. One organisation that has not made this mistake, and places Stablecoins firmly in the context of a financial system evolving towards programmable money, is Quant. Dominic Hobson, co-founder of Future of Finance, spoke to Gilbert Verdian, CEO of Quant, about what he sees in the Stablecoin phenomenon. Hosted on Acast. See acast.com/privacy for more information.

When it came to digital money useable on blockchain networks, the choice between central bank money and commercial bank money used to feel binary: Stablecoins and tokenised deposits and e-money were stopgaps pending the introduction of CBDCs. But as the threat of Stablecoins that were either global or issued by unregulated non-banks has receded, a more traditional hierarchy of money has asserted itself. CBDCs are likely to become the central bank digital money foundation on which myriad forms of digital commercial bank money will blossom.Central bank digital currencies (CBDCs) originated in need (to put fiat currency on blockchain networks) but also fear. Central banks were fearful that private forms of money based on blockchain technology would rob them of control of national and international monetary conditions. These fears were crystallised by the prospect of Facebook issuing a multi-currency Stablecoin called Libra.Having crushed Libra – whose remnants were sold to digital asset bank Silvergate in January 2022 – developed market central banks around the world are now bringing Stablecoins within the regulatory perimeter by privileging banks as issuers and prescribing what assets they can use to back a Stablecoin. This has released much of the pressure on the major central banks to issue CBDCs.There are currently just four CBDCs actually in issue – the Bahamas Sand Dollar, the Eastern Caribbean Dcash, the Nigerian eNaira and the Jamaican JAM-DEX – and all are developing slowly, with limited take-up. Significantly, all four were issued in developing economies, where the benefits of CBDCs in promoting financial inclusion and fighting financial crime are easiest to capture.Of another 93 countries exploring a CBDC – as monitored by the Atlantic Council CBDC Tracker – the most advanced (Brazil and Kazakhstan) fit the pattern. In all, just 17 are at the pilot testing stage. Of them, the Swedish eKrona project is the only one being pursued by a Western economy. 72 central banks are still developing or researching their plans, and the rest have stopped doing even that. True, the Bank for International Settlements (BIS) website records ten CBDC experiments in progress, with various combinations of banks and central banks taking part, and it is not hard to find others where the BIS is not involved. So the leading central banks have not lost interest in CBDCs, but they do now seem relaxed enough to let the private sector lead the digitisation of money.This reflects a consensus that a CBDC in a developed market must not disintermediate the commercial banks through which central banks influence monetary conditions. Nor are most central banks credible providers of customer-facing services such as digital wallets, foreign exchange and checking customers are not money launderers, terrorists or sanctioned businesses or individuals.There is an even more profound sense in which central banks are content to cede the leadership role, and it is this: CBDCs are emerging as the foundation of a layered system of issuance and distribution in which asset-backed Stablecoins issued by regulated banks, tokenised cash on deposit at regulated banks and e-money backed by cash held at regulated banks will provide the bulk of digital monies.To carry on reading, go to : https://futureoffinance.biz/is-this-how-cbdcs-will-happen-in-the-major-global-currencies/PanellistsRicardo CorreiaSenior Technology Executive at R3 Gilbert VerdianCEO at QuantBarney ReynoldsPartner, Global Head Financial Institutions, Governance & Advisory at Shearman and SterlingKeith BearFellow at the Centre for Alternative Finance, Judge Business School at the University of Cambridge Hosted on Acast. See acast.com/privacy for more information.

There is now widespread acceptance that digital assets are going to co-exist alongside traditional assets for a long time. That implies that issuers and investors will need a market infrastructure that renders issuers indifferent as to whether a source of liquidity is digital or traditional and investors indifferent as to whether an exposure is available in digital form or in traditional form. Both sides of the market just need something that works efficiently at low cost with minimal disruption to the status quo. D7, the Cloud-based post-trade infrastructure Clearstream is building to link the digital and the traditional securities markets, aims to provide exactly that. Dominic Hobson, Co-founder of Future of Finance, spoke to Michael Crezelius, Head of the Issuer CSD at Clearstream, and Thilo Derenbach, Head of Commercialisation and Digitisation at Clearstream, about how D7 does what it does now – the service is in production already - and what it will do in the future. Hosted on Acast. See acast.com/privacy for more information.

The decision by regulators to bring bank-issued Stablecoins within the scope of regulation is helping to fashion a vision of the future of money in which central bank digital currencies (CBDCs) play a role not unlike the one existing forms of central bank money play in the money markets of today: underpinning innovation and experimentation in different forms of money and different ways of making payments by both banks and non-banks without putting monetary, financial and operational stability at risk. Dominic Hobson, co-founder of Future of Finance, spoke to Ricardo Correia, Head of Digital Currencies at R3, where he leads a team that is working with central banks, banks and financial market infrastructures on a variety of projects exploring the potential of CBDCs and fiat-backed Stablecoins.  Hosted on Acast. See acast.com/privacy for more information.