Reserve Asset – Local Collectors Post http://www.localcollectorspost.org/ Tue, 18 Jan 2022 18:47:36 +0000 en-US hourly 1 https://wordpress.org/?v=5.8 https://www.localcollectorspost.org/wp-content/uploads/2021/03/locacollectorspost-icon-70x70.png Reserve Asset – Local Collectors Post http://www.localcollectorspost.org/ 32 32 PayPal Approaching Stablecoin Launch https://www.localcollectorspost.org/paypal-approaching-stablecoin-launch/ Tue, 18 Jan 2022 18:30:20 +0000 https://www.localcollectorspost.org/paypal-approaching-stablecoin-launch/

As reported on BNN Bloomberg, PayPal is approaching the launch of its stablecoin. This, as the company would develop the technology to offer more payment options for its platform.



Launch of PayPal Stablecoin

According to Bloomberg, this is all revealed after developer Steve Moser discovered something about PayPal Currency in the iOS app for PayPal.

After this discovery, Jose Fernandez da Ponte, senior vice president of crypto and digital currencies at PayPal, said: “We are exploring a stablecoin; if and when we seek to move forward, we will of course work closely with relevant regulators,” in a statement to Bloomberg.

The report goes on to say that a PayPal spokeswoman said the images and code discovered by Moser were part of a recent internal hackathon in its blockchain, crypto and digital currencies division. Whether PayPal goes ahead with this stablecoin or not, it seems the company is exploring the possibility.

This is an important step as cryptocurrency is increasingly accepted by more businesses and used by even more consumers. If PayPal chooses a stablecoin, it will ensure that the value will not fluctuate like other cryptocurrencies.

What is a Stablecoin

As the name suggests, a stablecoin seeks to establish the stability of a cryptocurrency by pegging to a reserve asset such as the US dollar or even gold. This means that the coin will always have the same value as the US dollar or the currency used when minting.

Comparatively, cryptocurrencies such as Bitcoin, Ethereum or Cardano are not indexed. And because of that, there is high volatility in these coins. And for businesses and consumers who want to use crypto as a merchant tool, the stability is high quality.

Currently, there are several stablecoins pegged to the US dollar. Some of the major coins are USD Coin (USDC), Binance USD (BUSD), Tether (USDT), Dai (DAI), TrueUSD (TUSD), TerraUSD (UST), and Digix Gold Token (DGX).

Even though there is great potential in stablecoins for payments, Bloomberg reports that Fernandez da Ponte said that PayPal has “…not yet seen a stablecoin purpose-built for payments.” Adding: “There would need to be some clarification on regulation, regulatory frameworks and the type of licenses needed in this space.”

Considering the 377 million users worldwide, PayPal will need a coin that can scale to this volume, as well as a robust security protocol.

More payment options

Whether it’s PayPal or a local small business owner, they both want more payment options. This ensures that customers aren’t turned down when they’re ready to pay. Beyond cash, credit cards and mobile payments, cryptocurrencies are the next payment solution and businesses want to know how to accept crypto payments.

As regulators refine the details, businesses of all sizes should wait and see how they can make full use of cryptocurrencies. Whether it is a regular or a stablecoin, there is pent-up demand waiting to be tapped.

Image: Depositphotos


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Central currency: the future of money https://www.localcollectorspost.org/central-currency-the-future-of-money/ Sat, 15 Jan 2022 06:31:00 +0000 https://www.localcollectorspost.org/central-currency-the-future-of-money/

In the process, the UAE and Saudi Arabia have rekindled the spotlight on a new trend sweeping the global financial industry and at the same time contributed to the learning quotient on CBDCs. They are part of a growing list of 90 countries committed to various stages of rolling out the CBDC – which is nothing more than virtual money backed by a country’s central bank. These include Sweden, South Korea and Cambodia which have launched pilots and countries such as Brazil, China, the United States and India which have signaled their intention. Together, they create the quotient of experiences to prepare for the launch of a CBDC.

However, the first of the blocs was the Eastern Caribbean Central Bank, which rolled out its pilot in April last year, and then in early December 2021 expanded it to two other islands, Dominica and Montserrat. DCash, the name of their CBDC, has launched in the islands of Antigua and Barbuda, Grenada, Saint Kitts and Nevis, and Saint Lucia. Other central banks are enthusiastic, but have not yet taken the plunge.

So the question is, why is there a sudden surge of interest among central banks around the world for a CBDC? The obvious logic from the outside is the growing popularity of decentralized currencies as a

cryptocurrency. The USP of cryptocurrencies by offering frictionless transactions – especially those involving cross-border transactions like remittances and simultaneously solving trust (the sine qua non of any central bank currency) through the use of a transparent mechanism like the blockchain – offers an alternative currency.

In short, private currencies are poised to compete with fiat currencies. This is something that could potentially shake up the world of finance. Presumably, central banks would prefer to be part of the solution, ensuring frictionless payments at little or no cost to consumers by leveraging the same technology – and thus staying ahead of potential competition. Especially since banning a cryptocurrency in a new world order where currency in the form of code does not recognize geography is hardly an option.

Speaking at a recent webinar hosted by the Vidhi Center for Legal Policy on the CBDC, Deputy Governor of the Reserve Bank of India (RBI), T Rabi Sankar quite frankly admitted this. “It is unclear what specific need these private VCs (virtual currencies) are serving that official money cannot satisfy as effectively, but that in itself may not impede their adoption. If these virtual currencies are recognized, national currencies with limited convertibility are likely to be threatened,” he said.

Blockchain logic

It is important to keep in mind that the only common aspect between CBDC and cryptocurrency is the underlying technology: the blockchain. In short, blockchain is driving this disruption, and cryptocurrency is just one example of its application. The technology can be used for a multitude of services, including the delivery of social benefits such as pensions, anti-poverty programs and unemployment benefits. Among other things, this will eliminate leaks due to corruption.

The geek definition, sourced from IBM, reads: “It is (the blockchain) a shared, immutable ledger that facilitates the process of recording transactions and tracking assets in a corporate network. An asset can be tangible (a house, car, money, land) or intangible (intellectual property, patents, copyrights, brand image).

Key terms are shared, ledger, and asset. Essentially, the technology enables the interconnection of a secure computer network to conduct transactions where each entity that is part of it has equal knowledge of every step of the transaction. The exact reason why it is also often called decentralized computing – DeFi or decentralized finance – is none other than a blockchain application in finance.

It’s a utopian world in which everyone knows what’s going on. Information is power, not by retaining it but by sharing it with all stakeholders. So, at some level, it becomes all the more difficult to carry out scams without the cover of anonymity. What this very obviously does is reduce the traditional risks associated with a business transaction and, of course, usher in the cost savings. And unlike a centralized system, there is no point vulnerability in the architecture.

At the same time, it is prone to cyberattacks. Nevertheless, dozens of cryptocurrencies have started to emerge. From less than ten a few years ago, a rough estimate puts them at just under 8,000 today. They apply the advantages, efficiency and accuracy of blockchain to the information sector – the only factor that affects competitiveness. As IBM succinctly explains the benefits: “The faster they are received and the more accurate they are, the better.”

Keeping with the previously mentioned definition of blockchain based on a shared digital network, a cryptocurrency is a digital currency created by a private entity — which issues a token, which then becomes the currency; Facebook, for example, calls its token Diem.

Think back to when private currencies existed, before they were replaced by sovereign currencies. This is exactly why cryptocurrency is considered a threat to central bank currencies around the world. In particular the “stablecoin” – one of the popular crypto-currencies – which imitates an official currency because its value is linked to a reserve asset which can be either the US dollar or gold: it is thus less sensitive to volatility, which is the norm with most tokens in circulation.

Unlike the case of a cryptocurrency, a CBDC is based on a private blockchain network and essentially resembles an Intranet. In effect, it will be like creating a PDF version of a printed magazine: the form is different but will do nothing more than fiat currency which is physical.

A cryptocurrency, on the other hand, uses a public blockchain network, which enables decentralized computing – something that is very similar to the global internet architecture. As David Wessel, Senior Fellow and Director of the Hutchins Center on Fiscal and Monetary Policy, Brookings Institution, pointed out in a recent webinar, a cryptocurrency combines network theory (which promotes efficiency), gain (creates incentives by issuing tokens like bitcoins for all participants in the transaction) and cryptography (which provides security).

It is these foundations that pose a threat to central bank-issued fiat currencies, which is exactly why they are moving quickly to close the efficiency gap central currencies face, especially with cross-border transactions involving exports. and imports. Any transaction funded by a CBDC will settle in real time as it is fiat and will not need to go through the rigors of interbank settlements.

This was also established by the Aber project jointly launched by Saudi Arabia and the United Arab Emirates.

Tipping point in global finance

The subtext for this apparent confrontation between cryptocurrencies and the CBDC is as Eswar Prasad, Senior Fellow, Brookings Institution, explained in his just-released book The Future of Money, a turning point in global finance.

“The era of cash is coming to an end and the era of central bank digital currencies has begun. Money, banking and finance are about to transform. Physical money is becoming a relic. The system of digital payment is becoming the norm worldwide The banking industry will change as other forms of financial intermediation gain prominence A large portion of the world’s population will have access to at least basic financial services, improving lines and economic forecasts,” he wrote.

Interestingly, several countries in the developing world are already pushing the boundaries, including enabling financial inclusion and real-time payments. In fact, several of them are ahead of developed countries like the United States when it comes to FinTech innovation. While Kenya’s M-Pesa enables mobile-based money transfer, India’s Unified Payments Interface (UPI) and the most recent launch of PIX, Brazil’s real-time payments, offer similar and effective solutions. All are also forcing a change in consumer behavior, the death of the leather wallet so to speak.

India’s UPI, for example, is capable of resolving any payment in denomination (including for a rupee) and a large volume of transactions. Currently, UPI usage is growing exponentially and is averaging around 2-3 billion transactions per month, but this transactional efficiency can be scaled up, if needed, to 2 billion per day. In fact, in terms of value, UPI was just shy of recording a record $1 trillion in transactions in 2021.

The proposed digital rupee to be issued by the RBI can instantly leverage the growing UPI platform to reach 200 million users – an elusive goal for any country. This could popularize the use of CBDC and enable the Reserve Bank of India to reach critical mass in record time.

Speaking at the seminar organized by Brookings, Prasad framed this competition between

the CBDC and cryptocurrencies favorably. Something where the two systems can actually complement each other and create a win-win for all.

“What is important in my opinion is really a new era of competition that could ultimately benefit both consumers and businesses, but it will come in the form of digital payments of all kinds. And that will be good no only for consumers and businesses within economies, but also for cross-border payments where there are a lot of frictions affecting, for example, economic migrants sending money home, exporters and importers. these barriers will become much smaller barriers to the flow of funding.

Anil Padmanabhan is a journalist based in New Delhi

Copyright © 2022 Khaleej Times. All rights reserved. Provided by SyndiGate Media Inc. (Syndigate.info).

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US Fed plays with fire – Bubbles may burst as bond yields and metals rally https://www.localcollectorspost.org/us-fed-plays-with-fire-bubbles-may-burst-as-bond-yields-and-metals-rally/ Thu, 13 Jan 2022 15:13:00 +0000 https://www.localcollectorspost.org/us-fed-plays-with-fire-bubbles-may-burst-as-bond-yields-and-metals-rally/

pabradyphoto / iStock via Getty Images

The tightening of monetary policy by the US Federal Reserve from a historically low interest rate has slowed US stock markets. As a result, traders are swiftly attempting to adjust their capital allocation levels as risky assets, technology, and major U.S. indices fall due to expected Fed rate hikes and other Hawkish activity.

We’ll explore how the US Fed’s comments and potential future actions can trigger meaningful market trends in 2022 and beyond. We will also try to identify how and when the US Fed can disrupt US markets. We know that the actions of the US Fed will cause significant trends over the next 12 to 24 months. We know that some assets are likely to rise in value as fear takes hold in the markets due to rising interest rates and deflating asset bubbles. It’s just a matter of understanding how the speculative asset bubble of the past 8+ years and how the US Fed may soon burst those speculative bubbles.

Assets are bubbling everywhere, global markets continue to bubble

Asset bubbles, such as those created in Cryptos, the US Stock Market, US Real Estate, and the Art / Collectibles Market over the past 5+ years, have visualized the results of the easy money from the US Fed in terms of bubbles.

Take a look at this chart showing the growth of some asset classes since the start of 2019. It’s amazing to think that these asset classes have recovered so far and so quickly in just over 35 months:

  • The grayscale Bitcoin ETF rose over 1200%.
  • The tech sector grew by more than 200%. Real estate grew by over 85%.
  • The S&P 500 rose more than 94%.

The US Federal Reserve’s decision to cut interest rates after the market collapse in 2018, which resulted in a Christmas low on December 24, 2018, sparked an incredible phase of rally where traders followed the US Fed. by stacking assets. As long as the US Fed continued to buy assets and kept interest rates close to zero, global traders had no reason to fight the US Fed.

Example of an asset bubble

Source: StockCharts.com

Is the US Fed about to burst the stratosphere bubble?

Our research suggests that the US Federal Reserve is changing its policy a bit late in the game. However, it appears that the US and global markets have already “turned around” in terms of growth trends and expectations. This SPY to QQQ ratio chart shows that the US markets entered a peak phase at the end of July / August 2020 and reached an ultimate peak in February 2021.

SPY TO QQQ chart

Source: TradingView.com

S&P 500 P / E Ratio suggests investors are all included for the next 90+ years

In other words, it looks like traders have hit their cap in terms of what they think the US Fed is capable of doing at this point in the rally. For example, the P / E ratio of the US stock market ending in 2021 ended just below 30, with an all-time high for 2021 close to 37. The all-time average is 15.96 – which is still relatively high for the US stock market.

Remember that a P / E level of 15.96 means that any investor buying at these levels would need a minimum of 15.96 years for a company to return “every penny of income” to the investor. (excluding all costs, salaries, taxes, fees and other operating charges) to cover the P / E multiple of the investment. So a P / E level of 30, as we see at the end of 2021, suggests that stock valuation levels are at least 60 to 90 years ahead of actual returns.

The only thing that can change this historic level of speculation in the markets is a deleveraging / revaluation event.

S&P 500 ratio

Source – multpl.com

From actions of the US Fed to how traders should prepare for changing markets

This first part of our ongoing research into what the US Fed is doing and where it is telegraphing its intentions will continue. Part II of this article will look at how traders should read these changing markets and where we try to highlight what has happened in the past 3-5 years.

We managed to experience an incredible event in history. I can only think of another time when a global superpower gave this kind of credit and support to the global economy. It was the Roman Empire several thousand years ago.

What we are going through for the next 20 to 40 years could be the biggest and most incredible opportunity of your life. The process of deleveraging all that debt and exploiting all that capital in global markets over the next several decades may present one of the most incredible investment / trading opportunities that we have seen in over all. 1500 years old.

Original message

Editor’s Note: The bullet points for this article were chosen by the editors of Seeking Alpha.

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Powell Says Fed To Tighten Trading Rules After Ethics Scandal https://www.localcollectorspost.org/powell-says-fed-to-tighten-trading-rules-after-ethics-scandal/ Tue, 11 Jan 2022 17:45:03 +0000 https://www.localcollectorspost.org/powell-says-fed-to-tighten-trading-rules-after-ethics-scandal/

Federal Reserve Chairman Jerome H. Powell told lawmakers at his appointment hearing on Tuesday that the central bank is changing the rules around financial transactions to prevent the type of mind-boggling dealings surrounding three senior Fed officials.

The Fed has come under fire for allowing central bank officials to trade securities for their own portfolios in 2020, a year in which the Fed actively rescued many asset classes and markets. This included notable transactions by two of the 12 chairmen of regional reserve banks and the deputy chairman of the Fed, who is a member of the Fed’s board of governors in Washington.

The mere possibility that officials might have benefited financially from the insider knowledge to which they had access as policy makers has sparked outrage and questions from lawmakers. The three officials in question resigned prematurely, one citing health concerns, the other giving no reason and the other explicitly referring to trade concerns.

Mr Powell has repeatedly acknowledged that the trade scandal created an appearance problem for the Fed, and he and his colleagues moved quickly to establish a new set of ethical rules. On Tuesday, he suggested those changes should exclude the types of transactions that have been called into question.