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Sunday 7th March, 2021

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Fintech

MasterCard Launches Central Bank Digital Currencies (CBDCs) Testing Platform

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Photo: WazeerX

With the global economy racing to embrace digital payments, Central Banks also are looking to the future and investigating how to support innovation while maintaining monetary policy and financial stability as they issue and distribute currency.

A recent survey by the Bank for International Settlements showed that 80 per cent of Central Banks surveyed are engaging in some form of Central Bank Digital Currencies (CBDCs) work, and about 40 per cent of Central Banks have progressed from conceptual research to experimenting with concept and design.

MasterCard on Wednesday announced a proprietary virtual testing environment for Central Banks to evaluate CBDC use cases.

The platform enables the simulation of issuance, distribution and exchange of CBDCs between banks, financial service providers and consumers.

Central Banks, commercial banks, and tech and advisory firms are invited to partner with MasterCard to assess CBDC tech designs, validate use cases and evaluate interoperability with existing payment rails available for consumers and businesses today.

MasterCard is a leader in operating multiple payment rails and convening partners to ensure a level playing field for everyone – from banks to businesses to mobile network operators – in order to bring the most people possible into the digital economy.

MasterCard wants to harness its expertise to enable the practical, safe and secure development of digital currencies.

“Central Banks have accelerated their exploration of digital currencies with a variety of objectives, from fostering financial inclusion to modernizing the payments ecosystem,” said Raj Dhamodharan, Executive Vice President, Digital Asset and Blockchain Products and Partnerships, MasterCard.

“MasterCard is driving innovation with the public sector, banks, fintechs, and advisory firms in the exploration of CBDCs, working with partners that are aligned to our core values and principles.

“This new platform supports Central Banks as they make decisions now and in the future about the path forward for local and regional economies,” Dhamodharan added.

Sheila Warren, Head of Blockchain, Digital Assets and Data Policy at the World Economic Forum, said: “Collaborations between the public and private sectors in the exploration of Central Bank Digital Currencies can help Central Banks better understand the range of technology possibilities and capabilities available with respect to CBDCs.

“Central Banks can benefit from support in exploring the options set available to them with respect to CBDCs, as well as gaining insight into what opportunities may be forthcoming.”

CBDCs are designed to be equivalent in value to a nation’s paper currency and subject to the same government-backed guarantees.

In addition to printing money, Central Banks can issue CBDCs as a digital representation of a country’s fiat currency.

While a variety of potential operating models exist, the primary approach sees Central Banks issuing and distributing currency, including digital currencies, through commercial banks and other licensed payments providers.

MasterCard understands every Central Bank differs in its exploration of CBDCs, and the platform stands ready to explore whether CBDCs fit with the needs of a region or country.

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Facebook And Google Eye Indian Digital Payment Network

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Facebook and Google are teaming up with Indian firms, Infibeam and Reliance Industries on an application to set up a national digital payment network in the South Asian country, according to the Economic Times.

The Reserve Bank of India has invited companies to create new umbrella entities (NUEs) that build payments networks that offer an alternative to the bank-owned not-for-profit National Payments Council of India.

Citing sources, the Economic Times says that Google, Facebook, conglomerate Reliance and fintech firm Infibeam are at an advanced stage in submitting their plan to the central bank.

Google and Facebook (through WhatsApp) are already significant players in the fast-growing Indian digital payments market.

Another American giant, Amazon, is rumoured to have teamed up with ICICI Bank to explore its own NUE play. The Reserve Bank is expected to award two licences.

 

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MoneyGram Suspends Ripple Pact Over SEC Suit

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MoneyGram has suspended trading on Ripple’s platform over concerns about the latter’s litigation with the Securities and Exchange Commission, according to a Finextra report.

In 2019, Ripple agreed to invest up to $50 million in MoneyGram as part of a two-year partnership that has seen the old-school money transfer player tap the blockchain startup’s XRP digital currency for cross-border payment and foreign exchange settlement.

Ripple has effectively been paying MoneyGram to use its on-demand liquidity service, with the money transfer outfit seeing a “net expense benefit” of $12.1 million from Ripple market development fees in the first quarter of 2020.

However, late last year the SEC filed a regulatory lawsuit against Ripple Labs Inc. and two of its executives, alleging that they “raised over $1.3 billion through an unregistered, ongoing digital asset securities offering.”

The complaint mentions the MoneyGram arrangement, although not the company by name, saying: “The Money Transmitter became yet another conduit for Ripple’s unregistered XRP sales into the market, with Ripple receiving the added benefit that it could tout its inorganic XRP ‘use’ and trading volume for XRP.”

Reporting its fourth-quarter results, MoneyGram now says: “The Company is not planning for any benefit from Ripple market development fees in the first quarter. Due to the uncertainty concerning their ongoing litigation with the SEC, the Company has suspended trading on Ripple’s platform.”

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Opera Prepares For Roll Out Of Fintech Banking Service

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Opera, an Internet company is moving into financial services with the launch of Dify, an in-browser cashback service and digital wallet for online shopping.

Launching first in Spain, the initial version of the Dify app ships with a current account, a free virtual debit card issued by MasterCard, as well as Google Pay support for offline spending.

The company intends to expand the service across the EU, where it currently claims 50 million active users.

The business developments that preceded the launch included the January 2020 acquisition of Estonian banking-as-a-service startup, Pocosys and takeover terms for the buyout of Lithuanian digital bank Fjord Bank.

“The total size of Opera’s investment into Dify is expected to exceed $100 million over the next few years, given we scale as expected,” says spokesperson Krystian Kolondra, EVP browsers & EEA fintech at Opera.

“This includes acquisitions, development cost and our marketing and distribution plans.”

The first version of the Dify app will allow consumers to receive eCommerce cashback for purchases made on partner websites accessed through the Opera browser.

Partner brands, which include Nike, Sephora and Asos, will appear in a new shopping-related tab on the Opera browser.

Says Kolondra: “Every day millions of people shop online and make their payments using the Opera browsers. With Dify, we are making the browser and a superior wallet work better, together, to improve users’ shopping experience and also make it financially rewarding.”

In the future, Opera’s plans include offering more wallet services like savings management, credit, investment opportunities and instant cashback.

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