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 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

Interbank market news scan: Digital currency won’t replicate cash characteristics …

It would be misguided to expect cash-like features of a central bank digital currency, according to one of the monetary authorities furthest ahead in exploring such a system. Central Bank Digital Money Won’t Replicate Cash, Sweden’s Riksbank Says (msn.com)

Fluency, the UK-based fintech created by Polish emigrants, plans to sell its cryptocurrency banking business and focus on working with central banks’ digital currency efforts, newspaper Puls Biznesu reported on February 15. bne IntelliNews – Polish-UK fintech Fluency to focus on central banks’ digital currency

Democratic Republic of Congo’s economy grew 0.8% in 2020 on the back of strong performance in its mining sector, and is projected to grow 3.2% this year, a central bank advisor said on Tuesday. Congo’s economy grew 0.8% in 2020, to rise 3.2% this year, says central bank | Reuters

Bank of Governor Haruhiko Kuroda said on Tuesday the recent stock price rally reflected market optimism over the global economic outlook, brushing aside views its ultra-loose monetary policy was fueling an asset price bubble. BOJ’s Kuroda says stock boom reflects economic optimism, defends ETF scheme (cnbc.com)

With global demand returning and supply bottlenecks likely to drive up shipping, food and energy prices, Bank of America believes emerging market inflation could be on the horizon. BofA recommended buying currencies backed by hawkish central banks or a robust balance of payments — namely the Brazilian real, Chinese yuan, Czech koruna and South Korean won — along with oil exporters, most notably the Russian rouble and Russian equities. Bank of America names the emerging market currencies to back as inflation risks mount (cnbc.com)

Currency pairsExchange Rate as of 4:15 pm 8 February 2021(1) As of 12:36 pm EST Exchange Rate as of 16 February 2021(2)(3)
AUD/USD0.7656 0.7759
USD/CAD1.2781 1.2698
USD/CNY6.4664 6.4542
EUR/USD1.2035 1.2102
USD/INR72.8500 72.8160
GBP/USD1.3714 1.3905
USD/JPY105.4400 105.8800
USD/MXN20.1300 20.2100
USD/DKK6.1785 6.1383
USD/NOK8.5428 8.4407
BTC/USD  45,471.7000
ETH/USD  1,683.8900
Sources: Federal Reserve (1) ; Reuters-foreign exchange rates (2); OANDA-crypto rates (3)

Interbank market news scan: Australian central bank wants to see a tighter labor market …

Follow the links …

Australia’s central bank believes it will take a significant and sustained tightening in the labor market to lift inflation to more comfortable levels, a tough task that could take years to achieve. Australia’s central bank says tighter labor market will lift inflation (cnbc.com)

A body representing cryptocurrency and blockchain stakeholders in Nigeria has joined other crypto industry players in assailing the recent Central Bank of Nigeria (CBN) directive to banks. The CBN order, which seeks snuff out crypto entities from the banking system, took effect on February 5, 2020. Nigeria Crypto Ban: Stakeholder Body, Politicians Assail Central Bank’s Directive to Financial Institutions – Emerging Markets Bitcoin News

Indonesia’s central bank is seen trimming its benchmark rate for the first time this year on Thursday, on top of the five rate cuts it has delivered since the start of the coronavirus pandemic, according to a majority of analysts in a Reuters poll. Indonesia’s central bank seen making this year’s first rate cut | The Star

As cryptocurrencies increasingly go mainstream, pressure is growing on the world’s biggest central banks to move forward with their plans to issue digital cash and fend off private sector threats to traditional money. Bitcoin’s mainstream charge raises stakes for central bank digital cash – Technology – Dunya News

Currency pairsExchange Rate as of 4:15 pm 8 February 2021(1) As of 12:23 am EST Exchange Rate as of 16 February 2021(2)(3)
AUD/USD0.7656 0.7803
USD/CAD1.2781 1.2619
USD/CNY6.4664 6.4542
EUR/USD1.2035 1.2139
USD/INR72.8500 72.6320
GBP/USD1.3714 1.3939
USD/JPY105.4400 105.5800
USD/MXN20.1300 19.9410
USD/DKK6.1785 6.1255
USD/NOK8.5428 8.3658
BTC/USD  45,471.7000
ETH/USD  1,683.8900
Sources: Federal Reserve (1) ; Reuters-exchange rates (2) ; OANDA-cryptocurrency (3)

16 February 2021

Interbank market news scan: Central banks and Foreign exchange …

Follow the links …

Central banks in emerging economies are set to move in different directions this year: Some remain in an easing mode and are expected to lower borrowing costs further, with Bloomberg Economics predicting cuts in China, Indonesia, India and Mexico. Emerging-Market Central Banks Are Set for a Hawkish Turn (msn.com)

Climate activists are warning that central banks are taking a “risky gamble” with their strategies for addressing the financial risks from global warming. Central Banks Criticized for Risky Gamble on Climate Fight (msn.com)

The truth about capital flows is worth revisiting and remembering as economists, media members and politicians continue to waste so much brain space and emotion on the doings of central banks. They’re mistaken. Central banks quite simply do not matter. Jack Ma’s Ant Group Further Exposes The Fed And Central Banks As Afterthoughts (forbes.com)

India’s foreign exchange reserves declined by $6.240 billion during the week ended February 5. According to the Reserve Bank of India’s (RBI) weekly statistical supplement, the reserves decreased to $583.945 billion from $590.185 billion reported for the week ended January 29. India’s foreign exchange reserves plunges by over $6 bn (sify.com)

The amount of money repatriated by Filipinos abroad fell last year for the first time since 2001 as the pandemic upended the global job market. Philippine Remittances See First Drop Since 2001 (msn.com)

The safe-haven dollar started the week near two-week lows on Monday, as optimism about COVID-19 vaccine rollouts and a planned $1.9 trillion U.S. stimulus package drove up riskier currencies and stock markets across Europe and Asia. Dollar weakens as market optimism lifts riskier currencies | Reuters

Currency pairsExchange Rate as of 4:15 pm 8 February 2021(1) As of 9:30 am EST Exchange Rate as of 15 February 2021(2)(3)
AUD/USD0.7656 0.7782
USD/CAD1.2781 1.2658
USD/CNY6.4664 6.4542
EUR/USD1.2035 1.2123
USD/INR72.8500 72.6140
GBP/USD1.3714 1.3895
USD/JPY105.4400 105.3900
USD/MXN20.1300 19.9260
USD/DKK6.1785 6.1259
USD/NOK8.5428 8.4119
BTC/USD  45,583.4000
ETH/USD  1,743.7500
Sources: (1) Federal Reserve ; (2) Reuters-currency rates; (3) OANDA-crypto rates

15 February 2021

Interbank market news scan: Foreign exchange brokers …

Follow the links …

London was overtaken by Amsterdam as the main European market centre in January, as more shares were traded in the Dutch capital. The shift, which initially looked ominous for City traders, comes as Brussels still refuses to recognise most UK regulatory systems as equivalent to its own post-Brexit. London dominating EU with almost half of world’s currency trading despite Amsterdam surge (msn.com)

From January 3rd and long term forecasts, the last 4 weeks trade ranges are viewed in relation to significant MA”s to complete a full month. To AUD/USD, GBP/USD and EUR/USD was added 5 year averages. Overall, EUR/USD was the first currency in August 2020 to break above its 5 year average  at 1.1300’s then the 10 year average in December 2020 at 1.2100’s. EUR/USD is categorized in the class of a risk asset and non USD currency. Currency Market: Weekly FX round up (fxstreet.com)

As issues continue to surround the recent order by the Central Bank of Nigeria to banks not to provide financial services to crypto currency businesses, in this report take accounts of how some low-income Nigerians have had a life changing experience from trading in crypto currency within the past few years, despite its volatility. How Low-income Nigerians get lifeline from trading Crypto currencies – The Sun Nigeria (sunnewsonline.com)

Blockchain analysis firm, Chainalysis’ latest crime report has named Mirror Trading International (MTI) as the biggest cryptocurrency scam of 2020. Mirror Trading International Named Biggest Crypto Scam of the Year After Raking in $589 Million – Regulation Bitcoin News

Currency pairsExchange Rate as of 4:15 pm 8 February 2021(1) As of 10:09 pm EST Exchange Rate as of 14 February 2021(2)
AUD/USD0.7656 0.7768
USD/CAD1.2781 1.2678
USD/CNY6.4664 6.4542
EUR/USD1.2035 1.2128
USD/INR72.8500 72.5700
GBP/USD1.3714 1.3868
USD/JPY105.4400 105.0400
USD/MXN20.1300 19.9154
USD/DKK6.1785 6.1338
USD/NOK8.5428 8.4263
BTC/USD Does not report 47,982.5000 *
ETH/USD Does not report 1,835.5300 *
Sources: Federal Reserve (1) ; Reuters (2); *ONADA

Interbank market scan: Lagarde sees holding crypto as “unlikely.” Central Bank of Nigeria explains “no to crypto.” India pursues crypto law

Follow the links …

European Central Bank President Christine Lagarde on Wednesday said she didn’t consider bitcoin to be a real currency, adding that central banks won’t be holding it as reserve currency anytime soon. ECB president Christine Lagarde says it’s ‘very unlikely’ that central banks will hold bitcoin in the near future (msn.com)

Following its ban on cryptocurrency-related transactions in the country, the Central Bank of Nigeria has explained why it was done. CBN  boss disclosed that the digital currency is used for money laundering and terrorism. CBN explains why cryptocurrency transactions were banned (withinnigeria.com)

Kingsley Moghalu, former deputy governor of the Central Bank of Nigeria (CBN) has condemned the apex bank’s reason for stopping cryptocurrency transactions in the country. Moghalu condemns CBN’s reason for banning cryptocurrency transactions (withinnigeria.com)

On Tuesday (February 9), minister of state for finance Anurag Singh Thakur said that a cryptocurrency bill was being finalised and it would be sent to Union Cabinet soon. Cryptocurrency bill: Here’s what you need to know (msn.com)

Are central banks on the verge of a currency war with the U.S? Global central bank interventions raise specter of ‘currency war’ | Morningstar

“Bitcoin needs a couple more big endorsements, and that could be the key to take prices above the $50,000 level,” Edward Moya, senior market analyst for the foreign-exchange broker Oanda, wrote Tuesday.  First Mover: As Wall Street Fixates on Inflation Hedges, Good Luck Finding Bitcoin | Nasdaq

Bitcoin ‘can’t be stopped’: Nigerians look to peer-to-peer exchanges after crypto ban. Some Nigerians plan to continue using bitcoin and other cryptocurrencies despite a directive issued by the Central Bank of Nigeria last week ordering banks to close down accounts associated with cryptocurrencies. First Mover: As Wall Street Fixates on Inflation Hedges, Good Luck Finding Bitcoin | Nasdaq

The Federal Reserve Board on Tuesday announced the second extension of a rule to bolster the effectiveness of the Small Business Administration’s (SBA) Paycheck Protection Program (PPP). Like the earlier extensions, this one will temporarily modify the Board’s rules so that certain bank directors and shareholders can apply to their banks for PPP loans for their small businesses. Federal Reserve Board – Federal Reserve Board announces the second extension of a rule to bolster the effectiveness of the Small Business Administration’s Paycheck Protection Program (PPP)

Currency pairsExchange Rate as of 4:15 pm 8 February 2021 As of 1:00 pm EST Exchange Rate as of 10 February 2021
AUD/USD0.7656 0.7727
USD/CAD1.2781 1.2690
USD/CNY6.4664 6.4576
EUR/USD1.2035 1.2134
USD/INR72.8500 72.8500
GBP/USD1.3714 1.3841
USD/JPY105.4400 104.6600
USD/MXN20.1300 20.0543
USD/DKK6.1785 6.1317
USD/NOK8.5428 8.4504
Sources: Federal Reserve, Reuters

10 February 2021

Interbank market news scan: Tesla adds bitcoin to its balance sheet; Central banks, foreign exchange, cryptocurrency …

In the news …

Tesla’s move to invest $1.5 billion in bitcoin further solidifies cryptocurrency as an emerging reserve currency for technology companies. Tesla’s $1.5 billion bitcoin purchase points to crytocurrency as tech company reserve currency | ZDNet

The Group of Seven (G7) financial leaders would kick off debate on Friday on emerging market debt problems, implementation of digital taxation and central bank digital currency, Japanese Finance Minister Taro Aso said on Tuesday. Japan finance minister: G7 focus on emerging market debt, digital taxation and digital currency | Reuters

The French economy is still on course to rebound 5% this year despite the uncertainty created by the coronavirus pandemic, the head of the central bank said on Tuesday, reiterating its December forecast. French economy still on track for 5% growth this year: central bank (msn.com)

The U.S. Federal Reserve is beginning to incorporate the impacts of global warming into its regulatory writ, following in the footsteps of its global peers, according to a paper published Monday by the San Francisco Fed. Fed to weave ‘inescapable’ climate change risk into bank oversight (msn.com)

The Central Bank of Ireland (CBI) has told investment firms to beef up their surveillance of insider trading and market manipulation this year or face fines and other sanctions from the regulator. Central Bank aims to curb abuse as amateurs flood markets (msn.com)

Emerging market central banks delivered just one interest rate cut in December, signalling the fading out of an easing cycle that had started in 2019 and had exceeded the cuts during the 2008 financial crisis and the 2010 euro crisis. Emerging market central bank rate cuts fade further in January | Reuters

2:33 am EST, 9 February 2021

Interbank market scan: Ethereum hits all time high; central banks, foreign exchange, cryptocurrency

Turkish inflation quickened for a fourth month as the lingering impact of a weak lira led to a broad-based rise in prices. Turkish Inflation Pressures Central Bank to Keep Policy Tight – Bloomberg

China drained funds from the financial system after a key cost of short-term borrowing tumbled from its highest level since 2015, showing officials remain wary of excess liquidity. China Drains Funds From Banking System as Cash Crunch Eases (msn.com)

Ethereum hit all-time highs on Wednesday, breaking above $1,500, as traders bought the cryptocurrency ahead of the launch of ethereum futures on the Chicago Mercantile Exchange next week. Cryptocurrency Ethereum hits record high ahead of CME futures launch (msn.com)

Blockchain technologies have already been seamlessly integrated into many industrial companies, and the online gambling sector is the latest to have been revolutionised by this technology. The Impact of Cryptocurrency on the Gambling Industry | Finance Magnates

Shares of several companies with deep ties to the cryptocurrency market soared on Tuesday, Feb. 2. The stocks are surging because many of the leading cryptocurrency tokens are on the rise today, which should translate into stronger financial results for all of these companies. Why Cryptocurrency Stocks Are Soaring Today (msn.com)

ING expects that the bearish dollar trend will be tested further over the remainder of this quarter and has adjusted its currency forecasts slightly. The bank expects confidence in the economic rebound to strengthen again in the second quarter. Updated Currency Exchange Rate Predictions 2021-2022: ING (exchangerates.org.uk)

Much occurred in 6 months: elections, change from Republicans to Democrats, Covid, lockdowns, gazillions of central bank meetings, average Inflation Targets. The market and the target price doesn’t care to such things and will never care in the future. The target price and the price path to target is the only concern. Currency market: S&P’s 24 hour trade (fxstreet.com)