Interbank Market News Scan: Awaiting the Fed; Central banks consider or start their asset purchase taper as they increase interest in central bank digital currencies …

Foreign currency exchange rates of interest …

Currency PairsRates as of 6:20 am EST 27 April 2021Rates as of 10:28 am EST 28 April 2021Increase/decrease in pips
EUR/USD1.18971.1877-20
GBP/USD1.38551.3896+41
USD/CAD1.25681.2546-22
AUD/USD0.76130.7613No change
USD/JPY110.6250110.6250No change
USD/NOK8.51868.5194+8
USD/CHF0.94210.9295-126
USD/SEK8.71668.7166No change
USD/MEX20.295320.2571-382
USD/XCD2.70002.7000No change
USD/JMD145.1800147.1020+19,220
USD/DOP56.316456.1575-1,589
USD/HTG79.085979.3382+2,523
USD/BSD1.00001.0000No change
Source: OANDA

News links you should be following …

Payment systems. SIBS actively pursues its contribution to payments digitization on a global scale with the development and operationalization of a new payments platform in the African continent, supporting the national payment system of São Tomé and Príncipe. Sibs to launch payments system in São Tomé and Príncipe (finextra.com)

Payment systems. Jim Aramanda, president and CEO of The Clearing House, explains why the RTP (Real-Time Payments) network is the payments system built for the 21st-century digital economy. In this excerpt from The Connected Economy’s Power Source – CEO Edition, Aramanda shares his insights on the growing need for financial inclusion and greater payments control for consumers. 21st-Century Payments System For Digital Economy | PYMNTS.com

Central banks. The Bank of Canada set the taper ball rolling last week, becoming the first major central bank to cut back on pandemic-era money-printing stimulus programmes. So who’s next? The Great Exit: Central Banks Line up to Taper Emergency Stimulus | Investing News | US News

Central banks. The world’s biggest central banks are revving up work on issuing digital cash, aiming to fend off emerging threats to traditional money and to make payments systems smoother. Explainer: an E-Yuan, Euro or Dollar? Central Banks Get to Grips With Digital Cash | Technology News | US News

Central banks. JPMorgan has created a new company to tackle cross-border payments using blockchain technology with Singapore state-backed fund Temasek and DBS. JPMorgan launches blockchain venture with Temasek for central bank digital currencies – Financial News (fnlondon.com)

Central banks. Egypt’s central bank kept its key interest rates on hold on Wednesday, the bank said in a statement. Egypt’s central bank keeps key interest rates on hold – statement | Reuters

Interbank Market News Scan: Iran finds an end around on US sanctions by providing crypto an underlying economy…

Foreign exchange rates of interest ….

Currency PairsRates as of 4:46 pm EST 26 April 2021Rates as of 6:20 am EST 27 April 2021Increase/decrease in pips
EUR/USD1.18901.1897+7
GBP/USD1.38691.3855-14
USD/CAD1.25681.2568No change
AUD/USD0.76020.7613+11
USD/JPY110.5960110.6250+290
USD/NOK8.52458.5186-59
USD/CHF0.94170.9421+4
USD/SEK8.71778.7166-7
USD/MEX20.284420.2953+109
USD/XCD2.70002.7000No change
USD/JMD144.9940145.1800+1,860
USD/DOP56.316456.3164No change
USD/HTG79.085979.0859No change
USD/BSD1.00001.0000No change
Source: OANDA

News links you should be following …

Payment systems. The share of Russian exports settled in US dollars has dropped below 50%. The decline, recorded in the fourth quarter of 2020, reflects Moscow’s policy of cutting the Russian economy’s reliance on the greenback. Most Russian exports have now kicked reliance on US dollar as payment currency — RT Business News

Payment systems. Amazon is expanding its palm-scanning payment system to a Whole Foods store in Seattle, the company announced Wednesday, the first of many planned rollouts at other locations. Amazon will initially roll out Amazon One at the Whole Foods in Seattle’s Capitol Hill neighborhood, not far from the company’s headquarters, before launching the system at seven Seattle-area Whole Foods in coming months. Amazon is bringing palm-scanning payment system to Whole Foods stores (msn.com)

Payment systems. Business technology company Deluxe (DLX) has agreed to acquire First American Payment Systems for $960 million in cash, the company said in a statement. Deluxe believes that this deal will accelerate the company’s transformation into a leading payments technology company as part of its “One Deluxe” strategy. Deluxe To Buy First American Payment Systems For $960 Mln Cash | Nasdaq

Central banks, Riksbank. Sweden’s central bank kept monetary policy unchanged on Tuesday as expected, vowing to support the economy as long as needed amid uncertainty over the speed of recovery from the effects of the pandemic. Swedish central bank leaves policy unchanged amid COVID uncertainty | Nasdaq

Central banks, Central Bank of Iran. A developing strategy to mitigate the crippling effect of economic sanctions could see cryptocurrencies being used by Iranian firms to pay for imports such as raw materials and electronics. Iran is continuing to explore the potential use of cryptocurrency as a tool for mitigating the devastating impact of economic sanctions imposed by the United States.  Iran’s central bank says officially mined crypto can be used to pay for imports (cointelegraph.com)

Central banks, Riksbank. A period with inflation over the 2% target of the Swedish central bank would not be a big problem, Governor Stefan Ingves said on Tuesday after the central bank kept policy unchanged. Swedish c.bank’s Ingves says not big worry if inflation overshoots (msn.com)

Interbank market news scan: Could banks be relegated to money changers and merchant lending?

Links to follow today …

Banks, yields. Shares of banks and other financial institutions ticked down as Treasury yields remained well below recent highs. Financials Down As Treasury Yields Remain Under Pressure – Financials Roundup | Morningstar

Central banks, digital currency. Wall Street is warming up to the idea that the next big disruptive force on the horizon is central bank digital currencies, even though the Federal Reserve likely remains a few years away from developing its own. https://www.cnbc.com/2021/04/19/central-bank-digital-currency-is-the-next-major-financial-disruptor.html

Central banks, economy. The aggressive rebound in global economic growth still isn’t enough for most of the world’s central banks to pull back on their emergency stimulus. https://finance.yahoo.com/news/robust-rebound-won-t-augur-230100088.html?guccounter=1&guce_referrer=aHR0cHM6Ly93d3cuZ29vZ2xlLmNvbS8&guce_referrer_sig=AQAAANIO_W4fWKspPdO0lmCF0BtRtybmUhLQrCrS7IiHsU3ox1D7lAQb3Wr7TRZVJl15aCZ4xuL-XKYMkGxjA9ibNTxZoMNfYd4a7dwMtWJG6VTw9RAdKO8fNl33Lu9oNBs6ZyOcLW0nqTwH9A17TmPzaaGMMUFN9VmVdSnCPC9aRR6X

Central banks, economy, pandemic. With a policy change pretty much off the table this week, European Central Bank watchers will have to closely monitor finer details about its pandemic stimulus program as policymakers wait for more data before taking decisive action. https://www.cnbc.com/2021/04/21/european-central-bank-meets-as-covid-lockdowns-complicate-recovery.html

The market opening. The rates to start your day ….

As of 9:40 am EST, Bloomberg reports that the yield on the three-month Treasury note is at 0.03% while the two-year note comes in at 0.15%. The ten-year and thirty-year Treasurys are trading at 1.56% and 2.25%, respectively.

The Federal Funds rate, the rate at which banks lend to each other overnight in support of their reserve requirements, is at .07%, while the Fed Funds target rate is still at .25%. The prime lending rate is 3.25%.

Exchange rates of interest as of 9:55 am EST….

Currency PairsRates as of 9:55 am EST 21 April 2021
EUR/USD1.2024
GBP/USD1.3891
USD/CAD1.2629
CAD/XCD2.1462
USD/XCD2.7000
USD/TTD6.6721
USD/BBD2.0000
CAD/TTD5.3012
CAD/BBD1.5986
Source: OANDA

The Opening Takeaway: Could banks become mere currency agents?

Yesterday I shared my expectations on the possibility of the Federal Reserve, the US Treasury, and other central banks and finance ministries prohibiting cryptocurrency as a medium of exchange. Using the policy rationale of the government being the sole issuer of currency, cryptocurrency issuers may find themselves limited to generating digital assets for sale as investments or safe havens. But what about the banks? What would their role be?

Wall Street appears to be hedging its bets on digital currencies (see second link above) as they prepare for the disruption a central bank issued digital currency could cause. Cryptocurrency exchanges such as Coinbase (Nasdaq: COIN) were receiving big boosts from what appears to be growing acceptance of cryptocurrency as at least a digital asset. Uncertainty in the markets drove capital toward bitcoin and other crypto-assets, making crypto the equivalent of gold in some minds. But with the vaccine rollouts and increases in the number of people, at least in western European countries and the United States on the increase, “risk on” seems to be the quiet rally cry accompanying a pullback in crypto prices. Acompanying the pull back are an increasing number of central banks exploring issuing a digital currency.

One arguable benefit from a central bank issued digital currency is the likelihood of turning more consumers into bank deposit holders. Rather than holding a deposit at a commercial bank, the “unbanked” along with those already holding commercial bank accounts, would have a default account at one of the Federal Reserve’s 12 central banks. yes, more account holders but not necessarily account holders at commercial banks. If the efficiencies promised by a central bank issued digital bank come to fruition, then why bother with holding another account? As part of the payment system, the check I write to and deposit into my son’s account goes through the Federal Reserve’s payment system anyway so why include another middle man? Commercial banks will have to consider these scenarios spawned by digital coin efficiencies when contemplating their new roles.

I see the larger banks easily leveraging their scale to ramp up already existing roles. They could focus more on lending, hopefully in a higher yield environment. They could also lobby for relaxation of Dodd-Frank restrictions on proprietary trading, opening up additional income making opportunities to offset income (if any) made currently from depositors. Large banks will not want to waste investments in their infrastructure by being relegated to mere currency issuer status, competing with check cashing facilities located at Walmart or around the corner at a pawnshop.

For the smaller banks, they will want to leverage their community relationships to counter any new found competition from larger banks as they face the irony of central bank issued digital coin taking away their customers.

Alton Drew

Interbank market news scan: Cryptocurrency advocates moving to bolster their advocacy prowess in DC …

Digital currency. Atlas Organization founder Dr. Jonathan Ward, an expert on Chinese global strategy, discussed how the Biden administration can create competitive policies against China and argued that creating its own digital currency that is controlled by its central bank will “offset” U.S. sanctions, during an interview on FOX Business’ “Mornings with Maria.” China creating own digital currency will ‘offset’ US sanctions: Jonathan Ward | Fox Business

Foreign exchange, digital yuan. The United States’ reliance on economic sanctions to coerce other countries is gradually losing its effectiveness and slowly degrading one of Washington’s most influential tools in international affairs, the power of the U.S. dollar, experts told Newsweek. Sanctions Are Destroying U.S. Dollar’s Status as World’s Top Currency (newsweek.com)

Cryptocurrency. Even as cryptocurrencies steadily gain support on Wall Street, they’re still regarded by regulators as a tool for criminals to conceal shady transactions — posing a challenge to the nascent industry as it seeks to win wider respect. Bitcoin (BTC USD) Cryptocurrency Price News: Industry Forms Lobby to Shed Image – Bloomberg

Digital currency. A cyber yuan gives Beijing power to track spending in real time. Importantly, it’s money that isn’t linked to the dollar-dominated global financial system. Anxiety in the US as China Creates the First Major Digital Currency (thestreet.com)

Foreign exchange, India. Currency exchange rates can turn out to be a real dealbreaker and can cause a dent in an individual’s pocket who is traveling overseas. Even a difference of a few paise while doing currency conversion can make a huge difference in the budget for the trip. It becomes crucial to be aware of the various options while doing currency exchange. Currency Exchange and the related details (msn.com)

Cryptocurrency, Ethereum. Blockchain technology Ethereum has seen its price reach a new all-time high of $2,150 following Visa’s decision to allow cryptocurrency for transactions on its platform. World’s second-biggest cryptocurrency Ethereum hits new high of $2,150 after Visa agrees to allow crypto-payments on its network (msn.com)

Digital currency, Bank of Japan. Japan’s central bank has started trials of a new digital currency in an effort to experiment with how it might be used, the Bank of Japan announced on Monday. The announcement comes after the Chinese government revealed it was doing something very similar with a digital yuan in early March. Japan’s Central Bank Launches One-Year Test of Digital Currency (gizmodo.com)

Currency PairsRates as of 2:30 pm 6 April 2021
EUR/USD1.1853
AUD/USD0.7661
GBP/USD1.3809
USD/JPY109.8700
NZD/USD0.7044
USD/CHF0.9322
USD/NOK8.5005
USD/SEK8.6312
USD/CAD1.2553
  
Selected Rates 
Fed Funds.07
Bank prime rate3.25
Discount window.25
2-yr Treasury.16
10-yr Treasury1.65
30-yr2.31
Source: Bloomberg, Reuters

Interbank market news scan: Fed chair opines on necessity for an improved payments system and testing central bank digital currencies…

The Takeaway: Soon after issuing a statement on the fed funds rate and how warranted attention paid to rising yields should be, Federal Reserve Board chairman Jerome Powell remarked today about the need to further strengthen the global payments system with emphasis on its cross border nature. Mr Powell also provided an update on the testing of central bank digital currencies. Stakeholders in the payments system may want to pay attention to how intermediaries are treated in a central bank digital currency regime.

To see what we’re following, follow the links …

Crypto Exchanges: “Bitcoin is the most talked about cryptocurrency but Ethereum [the blockchain] has more features, including being more flexible” in its hosting of decentralized finance (DeFi) than the Bitcoin blockchain, according to Bank of America. Bank of America Sees DeFi ‘Potentially More Disruptive Than Bitcoin’ – CoinDesk

Decentralized Finance: Reputation-based lending is coming to decentralized finance (DeFi) next month with the release of Maple Finance’s “Pool Delegates” lending suite. Maple Finance Raises $1.4M for Its Reputation-Based DeFi Lending Platform (yahoo.com)

Crypto Exchanges: A number of venture capital giants have completed a financing round for Ethereum-based volatility and derivatives protocol Volmex Finance. Volatility derivatives project Volmex Finance attracts backing from VC giants (cointelegraph.com)

Crypto Prices: Bitcoin’s (BTC) price slid Thursday, retreating along with U.S. stocks and oil prices as U.S. Treasury yields touched some of the highest levels in a year. https://www.coindesk.com/market-wrap-bitcoin-loses-steam-60k-bond-yields

Yields: Rising U.S. bond yields will not hurt Asia’s emerging markets as badly as they did during the “taper tantrum” eight years ago, according to a report by S&P Global Ratings. https://www.cnbc.com/2021/03/18/asias-emerging-economies-can-withstand-rising-us-yields-says-sp.html

Central Banks: Both of the Federal Reserve and the Bank of England vowed to keep liquidity plentiful and not to taper support in the face of rising inflation until they see prolonged signs of an economic recovery. The FOMC served up a surprise with the majority of the dots flat through 2023. Both USD and GBP fell sharply after their respective central banks’ decisions before later stabilizing. Fed, BoE step back, yields push up (fxstreet.com)

Payments System: Federal Reserve chairman Jerome Powell offers remarks on improving the payments system. Closing remarks by Chair Powell at a conference hosted by the Committee on Payments and Market Infrastructures – Federal Reserve Board

Currency pairs that include top countries with foreign direct investment in the US …

The majority of foreign direct investment in the United States is held by Japan, the United Kingdom, Canada, the Netherlands, Germany, France, and Luxembourg. Since the Biden administration has taken office, the dollar-yen and dollar-euro have seen appreciation (4.9% and 1.5%, respectively), while the dollar-pound and the dollar-loonie have fallen, 2.4% and 2.3%, respectively.

Currency pair20 January 202119 March 2021Percentage change
USD/JPY103.9300108.99004.9
USD/GBP0.73450.7170-2.4
USD/CAD1.27311.2433-2.3
USD/EUR (1)0.82540.83741.5
Source: OANDA (1) The euro is the currency of France, German, and Luxembourg

18 March 2021, 9:46 pm EST

Interbank market news scan: Will Ripple, XRP facilitate development of central bank digital currencies?

Bitcoin and Ethereum exchange rates as of 10 March 2021, 5:30 am EST

ETH/USD: 1,818.90 BTC/USD: 53,961.00

ETH/EUR: 1,530.63 BTC/EUR: 45,408.90

ETH/GBP: 1,311.22 BTC/GBP: 38,899.80

ETH/AUD: 2,365.32 BTC/AUD: 70,171.70

ETH/CHF: 1,695.32 BTC/CHF: 50,294.90

ETH/JPY: 197,890.00 BTC/JPY: 5,870,770.00

ETH/CNY: 11,848.20 BTC/CNY: 351,500.00

Source: OANDA

For what I am following, follow the links …

The Central Bank of Nigeria (CBN) has announced a scheme that seeks to boost international remittances as well as to encourage the use of official corridors when retrieving funds. The CBN’s move to incentivise recipients follows the plummeting of the country’s official remittances inflows as recipients opt for non-traditional corridors such as cryptocurrencies. Nigeria to Pay 1.2 Cents for Each Dollar Remitted to the Country to Combat Cryptocurrency Use – Emerging Markets Bitcoin News

The worldwide cryptocurrency market size is anticipated to arrive at USD 1,758.0 million by 2027, displaying a CAGR of 11.2% during the estimated time frame. The developing tendency of people in created nations towards virtual cash trade strategies will immensely affect the market during the gauge time frame. Cryptocurrency Market to Expand with Increasing Internet Penetration, says Fortune Business Insights (yahoo.com)

Banque de France, the central bank of France, has reportedly discussed XRP and Ripple for the launch of a central bank digital currency (CBDC). The central bank is planning to prefer XRP over Bitcoin and Ethereum. Bank of France, Likely to Prefer XRP over Bitcoin and Ethereum | Finance Magnates

Bitcoin’s value surpassed $1 trillion on Tuesday as the price of the cryptocurrency jumped. Bitcoin (BTC) value exceeds $1 trillion for second time (cnbc.com)

10 March 2021

Interbank market scan: Ether makes headway ahead of Bitcoin …

Follow the links …

Ethereum blockchain developers approved one of the biggest changes to the network since its inception in 2015, a shift that could spur even bigger gains in the price of its native cryptocurrency Ether. Crypto Coin Outperforming Bitcoin Is About to See Supply Reduced – Bloomberg

With expectations for inflation and growth taking flight, traders are signaling that they anticipate the Fed may have to respond more quickly than it’s indicated. Eurodollar futures now reflect a quarter-point hike in the first quarter of 2023, but they’re starting to suggest that it could come in late 2022. Fed officials have projected they’d keep rates near zero until at least the end of 2023. Bond Traders Go All-In on U.S. Treasury Market’s Big Short Bet – Bloomberg

Central banks helped save the world economy from depression as the pandemic struck. Now they are dealing with the hard part: managing the recovery amid a difference of opinion with investors. Central Banks Face Jumpy Bond Market With 10 Days of Decisions (yahoo.com)

Earlier, there was an impression that it was due to pent-up and festival demand. But now, it is genuine demand that is visible. The vaccination drive is giving greater confidence to consumers, so the demand is expected to sustain. The only downside risk is the recent spike in the number of Covid cases in certain parts of the country. Central banks in no rush to raise rates, will back growth: Shaktikanta Das (msn.com)

But I think we have to scratch a little bit below the surface, and what you will find is that despite the good news, which is predominantly in the US and in China, this is still a very incomplete recovery globally. What you see is yes, the US and China will have complete recoveries, but the global economy despite this improved outlook is still going to be about 4 percentage points below the pre-pandemic path, which is great. Now that fiscal policy has come to forefront, central banks need to step back a little: Sajjid Z Chinoy (msn.com)

What is the DYX Index? What Is The DXY Index? (yahoo.com)

7 March 2021

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

Interbank market news scan: Asia buffs up its foreign reserves …

Foreign exchange rates as of 26 February 2021, 8:29 EST

AUS/USD : .7950

GBP/USD: 1.4113

EUR/USD: 1.2193

USD/CAD: 1.2523

USD/JPY: 106.1000

USD/MXN: 20.6400

USD/NOK: 8.3953

USD/DKK: 6.0978

Source: OANDA

Bitcoin and Ethereum rates as of 26 February 2021, 8:29 EST

BTC/USD: 49,968.1

ETH: 1,596.59

Source: OANDA

Interest rates of interest ….

Effective Federal Funds Rate: .07

Prime Rate: 3.25

Discount Window Rate: .25

Two-year Treasury: .12

Ten-year Treasury: 1.38

Thirty-year Treasury: 2.24

Source: Federal Reserve

Follow the links …

Central banks in Asia’s emerging economies added $467.7 billion to their foreign-exchange reserves last year, the most since 2013 when the region’s markets were rattled by the taper tantrum. Asia’s Central Banks Build Taper Tantrum Levels of Reserves (bloombergquint.com)