Interbank market news scan: Foreign exchange and cryptocurrency rates …

As of 4:17 pm EST, these are prices for top traded currency pairs:

EUR/USD=1.1850

GBP/USD=1.3826

AUD/USD=0.7649

USD/CAD=1.2669

USD/CHF=0.9351

USD/JPY=108.8600

USD/CNY=6.5250

Source: Reuters

As of 4:30 pm EST, these are select prices for Ethereum and Bitcoin:

ETH/USD=1548.18 BTC/USD=49112.00

ETH/EUR=1299.20 BTC/EUR=41,213.70

ETH/GBP=1118.47 BTC/GBP=35,480.40

ETH/AUD=2011.80 BTC/AUD=63,818.80

ETH/CAD=1958.59 BTC/CAD=62,130.80

ETH/CHF=1439.56 BTC/CHF=45,666.20

ETH/JPY=167,662.00 BTC/JPY=5,318,610.00

ETH/CNY=10,049.70 BTC/CNY=318,798.00

Source: OANDA

8 March 2021

A problem for the US government is that in twenty years time, the dollar may be a reserve currency for the unwashed…

The current crypto play …

Bitcoin and Ethereum continued their gains this week. The BTC/USD pair has climbed 10.4% to 50,415.50 USD from its value on 1 March 2021, while the ETH/USD pair has climbed 9.6% to 1,565.26 USD over the same period. The BTC/EUR and ETH/EUR pairs also climbed 10.4% and 9.6%, respectively between 1 March and 4 March 2021. The BTC/GBP and ETH/GBP pairs have followed suit with increases of 10.2% and 9.4%, respectively.

Source: OANDA

Another example of more practical crypto use: NFTs

Rock group Kings of Leon recently announced that they are dropping a new album in the form of a non-fungible token, A non-fungible token is a type of cryptocurrency that holds assets like art, tickets, or music and operates on blockchain technology. According to an article in The Rolling Stone, music groups are exploring NFTs as a way to offset two decades of losses due in great part to streaming where consumers are gaining access to an artist’s product at next to nothing costs.

While some may view this type of cryptocurrency as nothing by coupons on steroids, I believe the ability of individuals, groups, and institutions to turn their brands into micro-economies creates a long term problem for governments. For example, as a Kings of Leon NFT comprised of intricate digital art work grows in popularity over the years, it becomes a tradeable asset with increasing gains. Not only will it be tradeable for dollars, but it will be traded for other NFTs or other digital assets issued by your “utility” platforms. Kroger, Southern Company, and Delta may accept from a resident of Atlanta a NFT in exchange for a certain amount of groceries, energy, or airline tickets.

In the future, for consumers who are denied access to private platforms where they can trade for NFTs or other digital assets, they may be stuck with the dollar as their only currency. The future problem for the US government could be that a reduced network effect resulting from a fall off in use of its payment system may find government forced to shift more of the cost burden onto poorer citizens with no access to private platforms. Will government have to redesign its purpose in order to meet a potential shift in the use of its payment systems? And if so, how should that shift look?

4 March 2021, 1:22 pm EST

Individual brands becoming their own “crypto-banks” not a far off possibility …

Data from OANDA, a brokerage, sees the dollar, euro, and pound values of Bitcoin continued their climb this week. The BTC/USD pair increased by 6.4% from 45,657.60 USD on 1 March 2021 (10:30 am EST) to today’s 48,609.70 USD. The BTC/GBP pair jumped 6.6% over the same period, from 32,761.20 GBP to 34,919.20 GBP. The BTC/EUR pair was not to be outdone with a 6.7% increase from 37,809.80 EUR to 40,353.90 EUR.

The Ethereum trade saw higher increases percentage wise. The ETH/USD came in today at 1,532.36 USD, up 7.3% from 1 March. The ETH/GBP and ETH/EUR were up 7.4% and 7.6%, respectively, over the same period.

Volatility will remain an issue for some time as the business media reports cryptocurrency as prominently a speculative play even as mainstream investment bank willingness to facilitate trade in cryptocurrency increases. What will quiet volatile moves in cryptocurrency prices is if more consumers see crypto as part of the mainstream payment system.

A recent article in Vogue sheds some light on that possibility. The article addresses up front the taint that crypto has to shake; that it is a medium for money laundering, drug trafficking, and tax evasion. But the article also points out that activity such as online gaming and the issuance of nonfungible tokens (NFT) are driving Bitcoin resurgence.

A NFT is published on an Ethereum blockchain ledger, is certifiably singular, and prevents replication by others.

The article points out that fashion is making inroads into the metaverse, the virtual world where participants interact via avatars, and following the trend where physical assets e.g., collectibles, are represented in digital form.

The takeaway that got me excited was the finding among individuals interviewed in the article that platforms and individuals are moving toward issuing their own currencies. “Cryptocurrencies are like air miles in that they can only be used within the infrastructure of specific companies, ” notes the author, Kati Chitrakorn. Firms are taking the opportunity to launch their own currencies where their inventory is limited and they provide their fans with short windows on certain purchases.

“Imagine only being able to purchase a must-have product via the brand’s coin or getting access only if you hold a certain amount of these coins”, says Mahesh Vellanki of Rally, a blockchain platform. “Brands and creators might prefer to use their own tokens to build their own economies and interact with fans on their terms.”

Another takeaway from the article is a third way for the consumer to obtain Bitcoin or other cryptocurrencies. We are familiar with the mining aspect, where as part of validating a transaction a mathematical problem is solved by a “miner” who receives Bitcoin as compensation. We are seeing a lot of buying as the second option. The third option often overlooked in mainstream media is obtaining a loyalty token on certain platforms.

In the short term I see where operating within the current jurisdictional environment places a severe limit on these platforms to grow and their currencies maximized. Large platforms such as Amazon and Facebook already start with a huge advantage as non nation-state platforms were goods and services are exchanged. For the individual sovereign, their wealth generated by their ability to leverage their brand to issue currency is limited by the taxing authority they reside under.

Question is, can the individual, as a physical asset, digitize into an alternative space and create their own jurisdiction?

The problem with regulating cryptocurrency. Like any currency, it is speech. Why regulate its movement?

Currency is more than just paper authorized by the government to be put in circulation around a country. Currency says something about the value of the issuer. A currency tells its holder that the issuer brings to the market a level of economic value. That value is captured in the goods the issuer produces. The value is reflected in the laws that protect the markets within which the products are bought and sold. Currency communicates a message as to how well its underlying economy is doing and the prices paid for currency reflect how well these messages are received by other countries and potential holders.

Currency is speech …

The United States, by law, puts restraints on its government by a constitutional requirement that its Congress make no law “abridging the freedom of speech.” Article 19 of the United Nation’s Universal Declaration of Human Rights provides that:

“Everyone has the right to freedom of opinion and expression; this right includes freedom to hold opinions without interference and to seek, receive and impart information and ideas through any media and regardless of frontiers.”

And I would argue that currency is such a medium for conveying information and ideas. As discussed prior, it conveys information, thoughts, ideas about its underlying economy. Its use tells us that someone has decided to use it as a store of wealth, as a unit of account, and is willing to use it as a medium of exchange for the aforementioned reasons.

Cryptocurrency does the same thing that the paper currency we are used to does. Rather than an analog-based paper currency, crypto is digital created and transmitted or exchanged digitally. The information it conveys is written in encrypted code. Unlike paper currency, cryptocurrency is not yet accepted as ready for prime time even though recent moves by individuals e.g., Elon Musk tweeting support for bitcoin and Dogecoin; corporations e.g., Subway accepting bitcoin as payment for sandwiches; and investment banks, e.g., Goldman Sachs starting a bitcoin trading desk, indicate investors are warming to the idea of cryptocurrency as a store of value or even a medium of account.

It is taking a little longer for the public to see bitcoin as a medium of exchange. The general public has to get its head around the idea that a sandwich can be bought with bitcoin or services rendered can be compensated with Ethereum. When it comes to mainstream use as a medium of exchange, the speech we are hearing is more like the babbling of an 18-month old, but we are reminded that the leap from toddler chat to adult yak and the move from cowry shells to paper currency was eventually made.

In the meantime, I believe that proponents should head off increased regulation of cryptocurrency by making the argument to regulators such as the Commodity Futures Trading Commission, the Securities and Exchange Commission, and the U.S. Treasury with the speech argument for starters. Individuals should be able to convey how they value their wealth by being able to finance and trade cryptocurrency. Currency is merely a medium and just like the American broadcast and communications systems have abandoned analog and have embraced digital for its flexibility and data capacity, so too should the American public by embracing crypto as a way to express wealth, value, and economy.

Interbank market news scan: central banks, banks, cryptocurrencies …

Cryptocurrency exchange rates at 11:46 am EST …

BTC/USD=47,627.90

ETH/USD=1,485.88

BTC/EUR=39490.20

ETH/EUR=1,232.00

BTC/GBP=34,138.00

ETH/GBP=1,065.03

Source: OANDA

Follow the news links …

Due to bitcoin’s potential to satisfy the three functions of money, bitcoin users expect them to replace paper currency in the long run. However, all of the above may be some of the reasons why Central banks and monetary authorities have been worried about the increasing adoption of Cryptocurrency around the world. Moreover, economists have been worried about how cryptocurrencies could transform the role of Central banks. Wait a minute! Can cryptocurrencies replace paper money? (msn.com)

“But I have to say, regulation is in its early innings – if there is no final use case for bitcoins, [and] I don’t think it’s going to be, [then] ultimately this bubble will pop, but it could take a decade.” Harvard Professor Kenneth Rogoff Warns Central Banks Will Never Allow Bitcoin to Go Mainstream – Regulation Bitcoin News

More cryptocurrency trading goes on in Nigeria than almost anywhere else in the world, reflecting a loss of faith in more traditional forms of investment, as Ijeoma Ndukwe reports. Cryptocurrencies: Why Nigeria is a global leader in Bitcoin trade (yahoo.com)

2 March 2021

Interbank market news scan: Cryptocurrencies and central banks …

Today’s crypto exchange rates …

BTC/USD: 45,657.60

BTC/EUR: 37,809.80

BTC/GBP: 32,761.20

ETH/USD: 1,428.01

ETH/EUR: 1,182.56

ETH/GBP: 1,024.66

Follow the links ….

The price of Bitcoin was up nearly 10% in trading Monday after Citibank said in a note to clients that it thinks the cryptocurrency is at a “tipping point” and could one day “become the currency of choice for international trade.” Baystreet.ca – Bitcoin Jumps After Citibank Says The Cryptocurrency Is At A “Tipping Point”

With insane prices, Bitcoin makes its headlines every year. In fact, we forget that each beginning of the year, Bitcoin soars to new heights, as investors seek new means and assets on which to bet and scale. This year is no exception, but the increase is stronger than ever. And this is not related to the covid, but rather to its indirect effect on central banks. Bitcoin can thank central banks (housseniawriting.com)

As the world is moving towards a cashless society, the payment system around us is transforming into a digital economy. Currently, only a small percentage of global money is expressed as physical forms of currency, with the majority of money being exchanged electronically through online payment apps, online, or using debit cards. Despite the fact that society today is on the verge of becoming an advanced economy, only a small percentage of people understand how cryptocurrencies vary from fiat currencies. Difference Between Fiat Currency and Cryptocurrency – Goodreturns

1 March 2021, 10:54 am EST

Going forward toward digital solutions …

Starting today, my focus will be on digital platforms and the exchange of value across these platforms in the form of digital currencies and assets. My consultations will focus on solving problems in the digital space including finding ways to promote acceptance of digital assets as currency. I am so committed to this task that starting on 15 March I will accept bitcoin, Ethereum, silver, or gold as payment for my consulting services.

Thanks for joining me on this venture….

Interbank market news scan: Central banks, foreign exchange; New Zealand stands pat on interest rates …

Follow the links …

The Central Bank of Nigeria (CBN) sold a total of $10.308 billion in the foreign exchange (FX) market in the first six months of 2020. Nigeria: FX Market – CBN Intervened With U.S.$10.308 Billion in Six Months – allAfrica.com

A Canadian energy firm became the world’s first nonfinancial issuer to sell debt linked to the main LIBOR alternative, a boost for policymakers in their struggle to encourage market adoption of the new financial benchmark. Corporate Bond Sale Boosts Campaign to Kill off LIBOR | Treasury & Risk (treasuryandrisk.com)

Central bank support for pandemic-hit economies looks to endure well past the recovery in output, leaving investors little option but to keep chasing a parabolic bull market until the fabled “punch bowl” is eventually removed. Column: Central Bank ‘Punch Bowl’ Still Brimming for Markets | Investing News | US News

New Zealand’s central bank is expected to leave interest rates unchanged at its first monetary policy decision of 2021 next week, as the economy rebounds faster from the coronavirus pandemic, but any tightening is still a long way off. New Zealand central bank to stand pat as economy rebounds – Reuters poll (msn.com)

Northern Trust (Nasdaq: NTRS) is experiencing strong demand for its Foreign Exchange (FX) currency management services with a number of significant new mandates over the past 12 months. Northern Trust Expands Foreign Exchange Currency Management Services Footprint with Key New Mandates (apnews.com)

Currency pairsExchange Rate as of 4:15 pm 16 February 2021(1) As of 8:24 am EST Exchange Rate as of 19 February 2021(2)(3)
AUD/USD0.7762 0.7859
USD/CAD1.2694 1.2612
USD/CNY6.4567 6.4540
EUR/USD1.2126 1.2135
USD/INR72.6000 72.4710
GBP/USD1.3855 1.4001
USD/JPY104.9400 105.3800
USD/MXN19.9300 20.3620
USD/DKK6.1325 6.1264
USD/NOK8.4558 8.4253
BTC/USD  51,893.7000
ETH/USD  1,896.1500
Sources: Federal Reserve(1); Reuters-FX rates(2), OANDA-crypto rates(3)

Interbank market news scan: Central banks, foreign exchange; Peoples Bank of China not afraid of enough liquidity …

Follow the links …

Naci Agbal, Turkey’s new central bank governor, began his career as a financial inspector three decades ago. He hopes such devotion to the rules will see him – and the economy – through one of the trickiest turnaround jobs in emerging markets. NEWSMAKER-Back-to-basics Agbal hopes this time is different at Turkey’s central bank | Nasdaq

China provided medium-term funds to lenders on Thursday, giving banks some relief after its cash drainage last month triggered the country’s worst liquidity squeeze since 2015. China Rolls Over $31 Billion in Medium-Term Loans to Banks – Bloomberg

Zambia became the second country in the world to increase its benchmark interest rate this year as it seeks to bring down “spiraling” inflation that’s at a five-year high. Zambia Central Bank Hikes Rate to Fight Surging Inflation – Bloomberg

Weakness in both the dollar and euro is posing a dilemma for investors about which is the best source of funding for emerging-market carry trades. On balance, the U.S. currency is still first choice. Carry Traders Clash Over Which Major Currency Has Most to Lose – Bloomberg

New York Attorney General Letitia James announced on Wednesday her office has sued to shut down Coinseed, a cryptocurrency-trading app that prosecutors allege ignored securities laws and defrauded thousands of investors. NY AG sues to shut down crypto app Coinseed alleging it sold a worthless currency and defrauded investors (msn.com)

Economist Nouriel Roubini, known as “Dr. Doom” for his pessimistic market views, said “the Flinstones had a better monetary system than bitcoin” in an interview with Bloomberg Wednesday morning. The NYU professor argued bitcoin and other digital tokens shouldn’t even be considered currencies because they lack many of the basic traits currencies must possess. ‘Dr. Doom’ economist Nouriel Roubini says ‘the Flintstones had a better monetary system than bitcoin’ and the token should not be considered a currency (msn.com)

Currency pairsExchange Rate as of 4:15 pm 16 February 2021(1) As of 2:10 am EST Exchange Rate as of 18 February 2021(2)(3)
AUD/USD0.7762 0.7754
USD/CAD1.2694 1.2699
USD/CNY6.4567 6.4505
EUR/USD1.2126 1.2044
USD/INR72.6000 72.7270
GBP/USD1.3855 1.3851
USD/JPY104.9400 105.9000
USD/MXN19.9300 20.2248
USD/DKK6.1325 6.1742
USD/NOK8.4558 8.4960
BTC/USD  48,358.6000
ETH/USD  1,700.6400
Sources: Federal Reserve (1), Reuters-FX rates (2), OANDA-Crypto rates (3)

Interbank market news scan: Central banks can step-up their data analytics game …

Follow the links …

Keeping up with data collection, capture, normalization and storage is an enormous task. In the best-case scenario, central banks systematically collect structured data electronically through reporting systems and directly from banks, brokers and market data feeds. However, in many instances, data collection is ad hoc, poorly structured, or in a non-electronic form. Leveraging Technology for Central Bank Surveillance | Nasdaq

Central bank digital currencies (CBDCs) may signal the end of physical cash and thus propel interest in cryptocurrency from the darker side of society, according to Mike Dolan, editor-at-large for finance and markets at Reuters.

Namibia’s central bank held its benchmark interest rate at a record low in its first meeting of the year, striking a balance between supporting the economy and protecting its currency’s peg to the South African rand. Namibia Holds Interest Rate at 3.75% for Third Straight Meeting – Bloomberg

The National Bank of Hungary is likely to leave interest rates unchanged next Tuesday after a recent increase in closely watched inflation measures and continued volatility in prices and financial markets. Hungarian central bank to leave rates steady as inflation creeps higher | Reuters

Currency pairsExchange Rate as of 4:15 pm 16 February 2021(1) As of 11:35 am EST Exchange Rate as of 17 February 2021(2)(3)
AUD/USD0.7762 0.7729
USD/CAD1.2694 1.2724
USD/CNY6.4567 6.4542
EUR/USD1.2126 1.2032
USD/INR72.6000 72.8130
GBP/USD1.3855 1.3843
USD/JPY104.9400 106.0900
USD/MXN19.9300 20.2760
USD/DKK6.1325 6.1762
USD/NOK8.4558 8.5090
BTC/USD  46,403.2000
ETH/USD  1,686.7300