Commercial banks – Nioga http://nioga.net/ Thu, 24 Nov 2022 12:53:36 +0000 en-US hourly 1 https://wordpress.org/?v=5.9.3 https://nioga.net/wp-content/uploads/2021/10/icon-120x120.jpg Commercial banks – Nioga http://nioga.net/ 32 32 Kenya’s commercial banks match credit rating for borrowers https://nioga.net/kenyas-commercial-banks-match-credit-rating-for-borrowers/ Wed, 23 Nov 2022 10:05:52 +0000 https://nioga.net/kenyas-commercial-banks-match-credit-rating-for-borrowers/ By LUKE ANAMI Kenyan commercial banks are directing the use of background credit information on borrowers with the aim of classifying loans according to risk, rather than imposing blanket denials on defaulters. And the new policy announced by 23 Kenyan lenders, with affiliates in the region, could adjust perception against Credit Reference Bureaus (CRBs), the […]]]>

By LUKE ANAMI

Kenyan commercial banks are directing the use of background credit information on borrowers with the aim of classifying loans according to risk, rather than imposing blanket denials on defaulters.

And the new policy announced by 23 Kenyan lenders, with affiliates in the region, could adjust perception against Credit Reference Bureaus (CRBs), the traditional repositories of basic borrower information but which often charge hefty fines. to give a certification on the risks.

The decision to use a rating model to determine credit worthiness is a shift from negative defaulter lists to a new credit scoring system that does not deny borrowers credit based on their credit bureau reference scores. credit.

This can benefit everyone, but more importantly ensure the survival of the CRBs themselves who have recently been in the eye of the storm for negatively listing people, including billionaires, who were then denied loans from the part of the banks. The new model will still allow CRBs to charge their fees, but their negative rating will provide a lower score which implies higher risk, and therefore, higher interest on borrowed loan repayments, rather than outright rejection.

Credit score

This means that credit score will now be determined by a number of factors, including whether you pay your bills on time, every time, keeping your credit card balance well below the limit, and paying off your debts. as quickly as possible, among other factors.

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The change is in line with President William Ruto’s directive last month to the Central Bank of Kenya to abolish the borrower blacklist and instead have a scoring method where defaulters will be given a lower rating instead of a higher rating. be excluded from the financial system.

The CBK is concerned about the continued use of adverse credit reports issued by Credit Reference Bureaus (CRBs) which are seen as being used to deny borrowers credit. This is despite recent enhancements to the Credit Information Sharing (CIS) framework.

“The CBK remains concerned about this perception and is taking concrete steps to address it and strengthen the CIS framework,” a CBK statement said.

Working on two fronts

Accordingly, CBK has worked on two fronts: First, CBK has mandated all CRBs to include a standard statement at the top of every credit report stating that a customer’s credit score should not be used as the sole reason by a lender to deny a customer a loan.

In addition, the CBK is working with the CRBs to improve the quality of credit reports, and in particular, to strengthen the robustness of their credit scoring models and align them with best practices.

“Second, the CBK is working closely with banks in implementing risk-based credit pricing,” the statement read.

“In this context, banks are required to consider a borrower’s credit rating in addition to other factors when making a lending decision. This approach would allow borrowers and in particular micro, small and medium enterprises to access credit at an appropriate price.

Data from the country’s three CRBs showed that borrowers who defaulted on digital loans under Ksh 1,000 made up the bulk of the 4.6 million blacklisted borrowers at the time.

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“Many commercial banks are reviewing their models. So far, we have at least 23 banks whose models have been approved (by the CBK),” said Habil Olaka, CEO of Kenya Bankers Association.

“Each bank will of course have its unique model having the same principles but having a unique model in its own way due to its own portfolio.”

More than four million defaulting debtors were to be removed from the CRB’s blacklists as part of President Ruto’s plans to reform the country’s credit market.

This follows the end of the one-year suspension of the negative list of defaulters up to Ksh 5 million by the administration of former President Uhuru Kenyatta, whose relief period for such defaulters has ended. September 30.

Negative information only

Lenders say the directive suspending default reporting on loans has hampered the rollout of the differentiated lending framework on mass market loans due to the inability to use the credit reporting system.

“The so-called CB listing should never have happened. In the early days of CRB, banks were mandated to provide negative information. This was the law when the CRB was introduced, as it required banks to show only negative information. Positive information, you had to get the client’s consent for you to release it,” Olaka explained.

“Only ‘negative’ people had their data there; most of the information was hidden. So, people grew up knowing not to go there. It’s unfortunate that the way it was introduced created these issues, but now we need to fix them. But with the new regulations, that will now be a thing of the past,” Olaka said.

“The way the framework should be developed is such that I should be proud of my name because I can use this information to get better terms and better access to credit and all that.”

The use of credit scores by lenders and potential creditors, such as banks, credit card companies or car dealerships, as a factor when deciding whether to offer you a loan or credit card is welcome to market players as it will help demystify the idea. of “CRB list”.

“Everyone should get credit; it’s just the question of risk versus return, where the higher the risk, the higher the cost of credit and the market is already showing us that. But by adopting the price risk model, it is one factor among many to help them (the banks) determine how likely you are to repay the money they lend,” said Ndiritu Muriithi, economist and former governor of Laikipia County.

Financial ecosystem

“The risk pricing model will help lenders assess credit quickly. It is a tool whose purpose is to be able to assess solvency and to be able to price risk.

Muriithi said CRBs were created to make it easier for financiers to lend to borrowers, especially in the SME sector, and should not be used to deny credits/loans to borrowers, saying the current debate points to misunderstanding and misuse of credit ratings.

Last month, President Ruto ordered the CBK to abolish the borrower blacklist and instead have a scoring method where defaulters get a bad grade instead of being locked out of the financial system. The president said the goal was to move from negative defaulter lists to a new credit scoring system that doesn’t deny borrowers credit.

“The CBK urges the public to honor their payment obligations on its credit facilities as they come due. This will allow them to build a good credit history based on their payment behavior and thus obtain loans at better rates,” the CBK said in a statement dated October 10.

“When borrowers are having difficulty repaying their loans, they should proactively engage their lenders directly.”

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SBV asks commercial banks to support fuel traders | Company https://nioga.net/sbv-asks-commercial-banks-to-support-fuel-traders-company/ Fri, 11 Nov 2022 08:41:00 +0000 https://nioga.net/sbv-asks-commercial-banks-to-support-fuel-traders-company/ People line up for fuel at a station in Hanoi. (Photo: VNA) Hanoi (VNS/VNA) – The State Bank of Vietnam (SBV) issued a document ordering commercial banks take all measures to support fuel traders. SBV underlined the importance of fuel as key product with a direct and significant influence on the country’s macro-economic stability and […]]]>

People line up for fuel at a station in Hanoi. (Photo: VNA)

Hanoi (VNS/VNA) – The State Bank of Vietnam (SBV) issued a document ordering commercial banks take all measures to support
fuel traders.

SBV underlined the importance of fuel as key product with a direct and significant influence on the country’s macro-economic stability and people’s daily lives, the document says.

Since the beginning of the year, SBV has been working closely with commercial banks to extend lines of credit to fuel traders and provide them with favorable exchange rates.

As the global oil price continued to be volatile and the market faced supply disruptions, the government of Vietnam made it a priority to ensure stable supply for the domestic market.

The central bank needed to implement financial support policies to best support fuel traders in accordance with the regulations. Traders have been advised to stay in close contact with commercial banks to plan ahead for their financial needs.

Meanwhile, banks were to conduct comprehensive reviews to stay on top of the situation in a bid to streamline the process to ensure merchants’ financial needs are met in a timely manner.

The central bank is awaiting monthly reports from commercial banks on how and when they plan to support traders, including retailers and importers who have been encouraged to report to the SBV if they encounter any problems or delays.

In a discussion at the National Assembly, Industry and Trade Minister Nguyen Hong Dien said central bank support should play a crucial role in boosting the financial capacity of traders and the economy. alleviation of the current fuel shortage across the country.

The National Assembly (NA) tasked Dien and his ministry with coming up with a plan to establish a stable fuel supply and efficiently operate the country’s fuel network.

Early last month, Finance Minister Ho Duc Phoc proposed giving the Ministry of Industry and Trade (MoIT) full power to adjust fuel prices, instead of the current joint authority between the MoIT and the Ministry of Finance. Phoc said this would help streamline procedures and increase fuel management efficiency.

Some industry experts have voiced support for the minister’s proposal, saying it could end the recent backlash between the two departments. Furthermore, the MoIT, which currently oversees fuel trading and retailing activities, was in a much better position to propose a price adjustment mechanism that balances the rights and benefits of traders and consumers.

“The proposal reduces the workload of the Ministry of Finance. Besides, it makes sense that the ministries responsible for adjusting the prices of certain commodities,” said NA MP Tran Van Lam, a member of the committee. finance and budget of the NA.

A number of petrol stations have closed in recent weeks, with traders citing numerous difficulties in securing inventory and suffering heavy financial losses since the start of the year./.

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SBV asks commercial banks to support fuel traders https://nioga.net/sbv-asks-commercial-banks-to-support-fuel-traders/ Fri, 11 Nov 2022 07:11:00 +0000 https://nioga.net/sbv-asks-commercial-banks-to-support-fuel-traders/ VIETNAM, November 11 – HÀ NỘI — The State Bank of Việt Nam (SBV) has issued a document ordering commercial banks to take all measures to support fuel traders. SBV underscored the importance of fuel as a key product with a direct and significant influence on the country’s macro-economic stability and people’s daily lives, the […]]]>

VIETNAM, November 11 – HÀ NỘI — The State Bank of Việt Nam (SBV) has issued a document ordering commercial banks to take all measures to support fuel traders.

SBV underscored the importance of fuel as a key product with a direct and significant influence on the country’s macro-economic stability and people’s daily lives, the document said.

Since the beginning of the year, SBV has been working closely with commercial banks to extend lines of credit to fuel traders and provide them with favorable exchange rates.

As the global oil price continues to be volatile and the market faces supply disruptions, the government of Việt Nam has made it a priority to ensure a stable supply to the domestic market.

The central bank needed to implement financial support policies to best support fuel traders in accordance with the regulations. Traders have been advised to stay in close contact with commercial banks to plan ahead for their financial needs.

Meanwhile, banks were to conduct comprehensive reviews to stay on top of the situation in a bid to streamline the process to ensure merchants’ financial needs are met in a timely manner.

The central bank is awaiting monthly reports from commercial banks on how and when they plan to support traders, including retailers and importers who have been encouraged to report to the SBV if they encounter any problems or delays.

During a discussion in the National Assembly, Minister of Industry and Commerce Nguyễn Hồng Diên said that central bank support should play a crucial role in strengthening the financial capacity of traders and mitigating of the current fuel shortage across the country.

The National Assembly (NA) tasked Diên and his ministry with coming up with a plan to establish a stable fuel supply and efficiently operate the country’s fuel network.

Early last month, Finance Minister Hồ Đức Phớc proposed giving the Ministry of Industry and Trade (MoIT) full authority to adjust fuel prices, instead of the current joint authority between the MoIT and the Ministry of Finance. Phớc said it would help streamline procedures and increase fuel management efficiency.

Some industry experts have voiced support for the minister’s proposal, saying it could end the recent backlash between the two departments. Furthermore, the MoIT, which currently oversees fuel trading and retailing activities, was in a much better position to propose a price adjustment mechanism that balances the rights and benefits of traders and consumers.

“The proposal reduces the workload of the Ministry of Finance. Moreover, it is logical that the ministries which are in charge of adjusting the prices of certain products,” said NA MP Trần Văn Lâm, member of the NA finance and budget committee.

A number of petrol stations have closed in recent weeks, with traders citing numerous difficulties in securing stock and suffering heavy financial losses since the start of the year. —VNS

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The safest commercial banks in the world 2022 https://nioga.net/the-safest-commercial-banks-in-the-world-2022/ Wed, 02 Nov 2022 19:05:39 +0000 https://nioga.net/the-safest-commercial-banks-in-the-world-2022/ The success of this year’s 50 safest commercial banks is based on diversified businesses and newly imagined products. The resilience of the institutions represented in this year’s ranking of the safest commercial banks will again be tested as the global economic outlook deteriorates. These commercial banks derive considerable stability from their diversified […]]]>

The success of this year’s 50 safest commercial banks is based on diversified businesses and newly imagined products.



The resilience of the institutions represented in this year’s ranking of the safest commercial banks will again be tested as the global economic outlook deteriorates. These commercial banks derive considerable stability from their diversified business models which include wealth and investment management, capital markets, trust and custodial services, but do not enjoy state support.


Many institutions emerged from the peak of the pandemic with refocused business models to provide improved products and services to their retail and corporate customers, and bank performance recovered as lending increased and profitability improved. . This progress faces a potentially rapid reversal given aggressive central bank rate hikes to fight inflation that will dampen global growth for the remainder of 2022 and into next year. As interest rates have risen, these commercial banks have benefited from increased net interest margins as variable rate loans are repriced and new loans are taken out at higher rates. While margins are expected to remain elevated through 2023, given the frequency and depth of restrictive monetary policy by global central banks, this advantage is likely to be offset by declining loan portfolios and rising credit costs as global economies contract.


This year’s ranking of the safest commercial banks includes some notable changes. Royal Bank of Canada rose to the top after an upgrade brought the giant bank’s score on par with smaller institutions. In its rationale for the January upgrade, Moody’s cited the bank’s robust and stable profitability, its diversified business model with dominant market shares in Canada, as well as a growing presence in the United States thanks to its City National Bank franchise. Canadian banks are consistently well represented in our annual rankings and RBC has held the top spot in three of the past four years, while three Canadian banks have made the top 10.


Two German entities fell in our ranking, with Moody’s downgrading DZ Bank (down four places to No. 11) and Deutsche Apotheker-und Aerztebank (down 10 places to No. 18) due to lower cushions. absorption of losses. As a result, the banks that complete our top 20 have moved up one or two positions.


Sweden returns three entities with Svenska Handelsbanken at No 4 while SEB fell 10 places to No 25 after the government eased regulatory requirements. On the other hand, Swedbank moved up six positions, to 26th place, with Fitch acknowledging the bank’s progress in strengthening anti-money laundering risk controls with an upgrade.


Australia’s four largest banks retained their positions based on rating stability, but Suncorp-Metway dropped out of our rankings as Fitch downgraded the bank’s rating following its planned sale to ANZ Group. The National Bank of Kuwait also dropped following Fitch’s downgrade following the downgrade of Kuwait’s sovereign rating in January. These actions helped Bank of China (Hong Kong) and NongHyup of South Korea enter this year’s rankings at 39th and 49th, respectively.


Methodology: Behind the rankings


According to the World’s Safest Banks ranking methodology, commercial banks that are majority state-owned or sponsored by their governments or regional bodies are excluded. Institutions here can operate in the same markets as state-sponsored competitors, but do not enjoy government support. In addition, institutions 100% owned by their parent company are not eligible under our criteria.


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Inflation eats away at Nigerians’ savings in commercial banks ahead of holiday shopping https://nioga.net/inflation-eats-away-at-nigerians-savings-in-commercial-banks-ahead-of-holiday-shopping/ Wed, 19 Oct 2022 23:14:49 +0000 https://nioga.net/inflation-eats-away-at-nigerians-savings-in-commercial-banks-ahead-of-holiday-shopping/ The pace at which the prices of goods and services are rising has reached a new high Latest data from the National Bureau of Statistics shows inflation figures hit their highest level in 17 years in September Rising inflation has severely eaten away at Nigerians’ savings in commercial banks ahead of holiday shopping Nigerians are […]]]>
  • The pace at which the prices of goods and services are rising has reached a new high
  • Latest data from the National Bureau of Statistics shows inflation figures hit their highest level in 17 years in September
  • Rising inflation has severely eaten away at Nigerians’ savings in commercial banks ahead of holiday shopping

Nigerians are expecting a tougher festive season due to rising inflation, which has eroded their savings.

The National Bureau of Statistics announced on Tuesday, October 17, 2022 that Nigeria’s inflation rate rose to 20.77% in September.

The last time Nigeria’s headline inflation rate exceeded 20% was in 2005, 17 years ago.

Inflation in Nigeria hits highest level in 17 years Reports: BNS
Source: Facebook

How Inflation Affects Savings

The Central Bank of Nigeria recently asked the banks to raise the interest rate savings deposits at 4.2%.

Read also

UK inflation back above 10%

PAY ATTENTION: Share your amazing story with our editors! Please contact us via info@corp.legit.ng!

This means if a bank customer has N100 in a savings account paying 4.2% interest. The bank customer will have at least N104 in their account after one year.

However, with an inflation rate of 20.77%, a Nigerian would need at least N120 to have the same purchasing power.

Yes, a bank customer has made money, but inflation has reduced his purchasing power.

Indeed, you will lose money if your savings do not increase at the same rate as inflation.

An expert talks about the impact of the inflation rate

Financial experts fear that rising inflation rate in Nigeria will affect the standard of living of Nigerians.

According to Paul Alaje, Senior Economist at SPM Professionals, the high rate of inflation means that someone who had N100,000 at this time last year has less than N85,000 this year for no crime.

Read also

Flood crisis in some states will force Nigeria’s inflation rate to rise

Mr. Alaje said that this situation may put several families at risk as some members may lose their jobs due to non-payment of their employees due to a drop in sales.

Furthermore, Ben Ekeyi, a public financial management consultant, said that Nigeria’s inflation rate has hurt the purchasing power of Nigerians in various ways.

Ekeyi noted that one of the impacts includes reduced ability to purchase necessary and required goods and services, especially when there has not been a corresponding increase in income.

States with highest food inflation in Nigeria

In another report Legit.ng revealed that food inflation remained the biggest inflationary spike in Nigeria.

According to reportNigerians were forced to increase their food budgets nationwide in September 2022.

Although the problem is widespread, some states have experienced the highest levels of inflation.

Source: Legit.ng

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OCIC, CAIC and 5 commercial banks sign a bond placement guaranteed by TIA https://nioga.net/ocic-caic-and-5-commercial-banks-sign-a-bond-placement-guaranteed-by-tia/ Sat, 15 Oct 2022 07:00:00 +0000 https://nioga.net/ocic-caic-and-5-commercial-banks-sign-a-bond-placement-guaranteed-by-tia/ The Overseas Cambodian Investment Corporation (OCIC), Cambodia Airport Investment Co., Ltd (CAIC) and five major banks on Friday signed the guaranteed bond for investment in Techo International Airport (TIA) in Kandal province. . OCIC, CAIC and five commercial banks including Cathay United Bank, First Commercial Bank, Mega International Commercial Bank, Taiwan Cooperative Bank and Union […]]]>

The Overseas Cambodian Investment Corporation (OCIC), Cambodia Airport Investment Co., Ltd (CAIC) and five major banks on Friday signed the guaranteed bond for investment in Techo International Airport (TIA) in Kandal province. .

OCIC, CAIC and five commercial banks including Cathay United Bank, First Commercial Bank, Mega International Commercial Bank, Taiwan Cooperative Bank and Union Commercial Bank have signed an investment agreement in TIA.

Under the agreement, the Big Five banks subscribed for a total of $23 million in the TIA-backed bond, which is guaranteed by OCIC.

The TIA covered bond has a coupon rate of 5.5% with 3 years.

The funds from the TIA Guaranteed Bond will be used for the construction of the new international airport in the province of Kandal.
So far, the TIA project has achieved 40 percent. CAIC has invested $524 million (excluding land) to date.

Overseas Cambodian Investment Corporation (OCIC) core businesses and expertise include real estate development, infrastructure, construction, property management, education, healthcare, media, shopping malls, hotels, rice mills, glass factories, etc. Notable projects include Techo International Airport. , Diamond Island Satellite City, Norea Island Satellite City, Chroy Changvar Satellite City and Olympia City etc.

Cambodia Airports Investment Corporation (CAIC) is a joint venture between the Royal Government of Cambodia, represented by the State Secretariat for Civil Aviation (SSCA), and the Overseas Cambodian Investment Corporation (OCIC).

The Royal Government of Cambodia has granted CAIC the exclusive rights to finance, build, operate and own Techo International Airport.

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why commercial banks will be key players https://nioga.net/why-commercial-banks-will-be-key-players-2/ Mon, 10 Oct 2022 21:12:53 +0000 https://nioga.net/why-commercial-banks-will-be-key-players-2/ By Jeremy Boot, Head of Digital Assets at Temenos Central Bank Digital Currencies (CBDCs) – a digital form of central bank money – are firmly entrenched in the wallets of central banks around the world. According to Atlantic Council over 100 countries are actively exploring a CBDC. Many are further along in their journey and […]]]>

By Jeremy Boot, Head of Digital Assets at Temenos

Central Bank Digital Currencies (CBDCs) – a digital form of central bank money – are firmly entrenched in the wallets of central banks around the world. According to Atlantic Council over 100 countries are actively exploring a CBDC. Many are further along in their journey and some have already started. But why do we need it? And what role will commercial banks play?

Types of CBDCs

First, let’s clarify the different types of CBDCs. Retail CBDCs are national networks aimed at facilitating financial inclusion and digital payments in a given country. This is where we have live CBDCs today, such as in Nigeria, Jamaica and the Eastern Caribbean

Wholesale CBDCs are intended for the settlement of interbank wire transfers and related wholesale transactions. Conversely, they tend to be low volume/higher value compared to retail. Several research projects are underway.

mCBDC (multiple CBDC) is fully cross-border, connecting CBDC networks across jurisdictions for international settlements, using either interoperable platforms or single platforms with multiple subnets. These promise huge potential to shake up the inefficiencies of the existing correspondent banking model, although challenges remain in areas such as governance and standards.

In this article, we will look at retail CBDCs. So why do we even need it?

Why do we need retail CBDCs?

The answer varies depending on where you are in the world. Financial inclusion is often cited as a key driver, and this is particularly relevant for countries with larger unbanked populations and those that do not yet have digital payment networks.

In these countries, retail CBDCs can help facilitate payments for these populations and stimulate digital economies. Arguably it is also worth preserving monetary sovereignty by protecting against the rise of alternatives that could fill the void – currency stablecoins or CBDCs, or crypto for example.

Central banks might like the idea of ​​CBDCs gradually replacing cash in an effort to reduce the costs of minting, distributing and storing physical cash. Other arguments include the programmable nature of CBDC as a direct monetary policy tool and a building block of mCBDC as it evolves.

Of course, some countries already have effective digital payment solutions. For example, here in Switzerland, we have Twint. At my local cafe, I open my phone, scan a QR code, swipe, and buy my coffee. Quick, easy and efficient. Other countries have similar systems. So in such places, do we really need another system such as a retail CBDC?

This may come down to the future role of public money. As cash usage declines, should the state preserve access to central bank money through a digital equivalent? Does the average person understand (or care about) the difference between having a claim on deposits with an institution and a bearer instrument with a direct claim on the central bank? Is it too dangerous to leave the money in the hands of the private sector alone?

These are questions that policy makers are asking. In Europe, the attitude of the ECB seems to be well oriented towards the launch of the CBDC. Fabio Panetta of the ECB’s Executive Board recently said “CBDC issuance risks becoming a necessity”.

Of course, beyond just launching a CBDC, success will lie in convincing people to actually use it. And to achieve this, privacy issues must be taken into account and there must be real added value compared to alternatives.

In summary, there remain questions about retail CBDCs in digitalized economies; but in many parts of the world, momentum is building. So, as retail CBDCs are launched, how will they work?

How will retail CBDCs work?

The evolving standard is the 2-tier model, where the central bank mints and issues CBDCs to licensed intermediaries such as commercial banks, who maintain the relationship with the user and act as distributors. Issuance mechanisms could involve the direct exchange of CBDCs for reserves held at the central bank. This would allow the CBDC to be added as a new currency option without impacting the base money supply.

The intermediary is then able to keep the CBDC ready for distribution to the general population. They would also play the role of customer onboarding and wallet opening, and provide exchange facilities to enable conversion between CBDC and regular money. Once the client has the CBDC in their wallet, they can send it to another person or use it for payments. And then the reverse process: the user can convert the CBDC back into cash, the intermediary can buy it back from the central bank, who can then reissue it or withdraw it from circulation according to policy.

We may see several types of intermediaries participating in CBDC networks and providing wallet facilities. Nevertheless, commercial banks should be key players.

Why commercial banks will be key players

Commercial banks are the natural candidates to distribute CBDC to the population of a given country.

First, commercial banks have the means to participate. They have the liquidity in the form of reserves, which means that if a CBDC is launched, they can participate quickly and keep the CBDC ready for distribution.

Banks have a large existing customer base which extends in many countries to most of the population. They can thus support public accessibility to the CBDC. Additionally, they have experience with account opening, KYC processes, and client management, areas that the central bank would generally not want to get involved in.

Banks hold customer deposits and are therefore ideally placed to provide the on- and off-ramps and conversion facilities between these deposit accounts and CBDC wallets. Linking bank accounts to wallets with direct conversion also solves the tricky problem of receiving payments that exceed wallet balance limits.

And then banks have the high regulatory and operational standards that would be a prerequisite for participating in CBDC systems. For example, to connect to infrastructure which might involve hosting and operating a node on a DLT network.

Thus, banks are well placed to participate, but for them, offering such services would require investment, it is not free. This raises the interesting question of what’s in it for banks? How could they justify the cost and what kind of services could they offer? These are questions we will explore in Part 2 of this article.

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why commercial banks will be key players https://nioga.net/why-commercial-banks-will-be-key-players-4/ Mon, 10 Oct 2022 07:00:00 +0000 https://nioga.net/why-commercial-banks-will-be-key-players-4/ By Jeremy Boot, Head of Digital Assets at Temenos Central Bank Digital Currencies (CBDCs) – a digital form of central bank money – are firmly entrenched in the wallets of central banks around the world. According to Atlantic Council over 100 countries are actively exploring a CBDC. Many are further along in their journey and […]]]>

By Jeremy Boot, Head of Digital Assets at Temenos

Central Bank Digital Currencies (CBDCs) – a digital form of central bank money – are firmly entrenched in the wallets of central banks around the world. According to Atlantic Council over 100 countries are actively exploring a CBDC. Many are further along in their journey and some have already started. But why do we need it? And what role will commercial banks play?

Types of CBDCs

First, let’s clarify the different types of CBDCs. Retail CBDCs are national networks aimed at facilitating financial inclusion and digital payments in a given country. This is where we have live CBDCs today, such as in Nigeria, Jamaica and the Eastern Caribbean

Wholesale CBDCs are intended for the settlement of interbank wire transfers and related wholesale transactions. Conversely, they tend to be low volume/higher value compared to retail. Several research projects are underway.

mCBDC (multiple CBDC) is fully cross-border, connecting CBDC networks across jurisdictions for international settlements, using either interoperable platforms or single platforms with multiple subnets. These promise huge potential to shake up the inefficiencies of the existing correspondent banking model, although challenges remain in areas such as governance and standards.

In this article, we will look at retail CBDCs. So why do we even need it?

Why do we need retail CBDCs?

The answer varies depending on where you are in the world. Financial inclusion is often cited as a key driver, and this is particularly relevant for countries with larger unbanked populations and those that do not yet have digital payment networks.

In these countries, retail CBDCs can help facilitate payments for these populations and stimulate digital economies. Arguably it is also worth preserving monetary sovereignty by protecting against the rise of alternatives that could fill the void – currency stablecoins or CBDCs, or crypto for example.

Central banks might like the idea of ​​CBDCs gradually replacing cash in an effort to reduce the costs of minting, distributing and storing physical cash. Other arguments include the programmable nature of CBDC as a direct monetary policy tool and a building block of mCBDC as it evolves.

Of course, some countries already have effective digital payment solutions. For example, here in Switzerland, we have Twint. At my local cafe, I open my phone, scan a QR code, swipe, and buy my coffee. Quick, easy and efficient. Other countries have similar systems. So in such places, do we really need another system such as a retail CBDC?

This may come down to the future role of public money. As cash usage declines, should the state preserve access to central bank money through a digital equivalent? Does the average person understand (or care about) the difference between having a claim on deposits with an institution and a bearer instrument with a direct claim on the central bank? Is it too dangerous to leave the money in the hands of the private sector alone?

These are questions that policy makers are asking. In Europe, the attitude of the ECB seems to be well oriented towards the launch of the CBDC. Fabio Panetta of the ECB’s Executive Board recently said “CBDC issuance risks becoming a necessity”.

Of course, beyond just launching a CBDC, success will lie in convincing people to actually use it. And to achieve this, privacy issues must be taken into account and there must be real added value compared to alternatives.

In summary, there remain questions about retail CBDCs in digitalized economies; but in many parts of the world, momentum is building. So, as retail CBDCs are launched, how will they work?

How will retail CBDCs work?

The evolving standard is the 2-tier model, where the central bank mints and issues CBDCs to licensed intermediaries such as commercial banks, who maintain the relationship with the user and act as distributors. Issuance mechanisms could involve the direct exchange of CBDCs for reserves held at the central bank. This would allow the CBDC to be added as a new currency option without impacting the base money supply.

The intermediary is then able to keep the CBDC ready for distribution to the general population. They would also play the role of customer onboarding and wallet opening, and provide exchange facilities to enable conversion between CBDC and regular money. Once the client has the CBDC in their wallet, they can send it to another person or use it for payments. And then the reverse process: the user can convert the CBDC back into cash, the intermediary can buy it back from the central bank, who can then reissue it or withdraw it from circulation according to policy.

We may see several types of intermediaries participating in CBDC networks and providing wallet facilities. Nevertheless, commercial banks should be key players.

Why commercial banks will be key players

Commercial banks are the natural candidates to distribute CBDC to the population of a given country.

First, commercial banks have the means to participate. They have the liquidity in the form of reserves, which means that if a CBDC is launched, they can participate quickly and keep the CBDC ready for distribution.

Banks have a large existing customer base which extends in many countries to most of the population. They can thus support public accessibility to the CBDC. Additionally, they have experience with account opening, KYC processes, and client management, areas that the central bank would generally not want to get involved in.

Banks hold customer deposits and are therefore ideally placed to provide the on- and off-ramps and conversion facilities between these deposit accounts and CBDC wallets. Linking bank accounts to wallets with direct conversion also solves the tricky problem of receiving payments that exceed wallet balance limits.

And then banks have the high regulatory and operational standards that would be a prerequisite for participating in CBDC systems. For example, to connect to infrastructure which might involve hosting and operating a node on a DLT network.

Thus, banks are well placed to participate, but for them, offering such services would require investment, it is not free. This raises the interesting question of what’s in it for banks? How could they justify the cost and what kind of services could they offer? These are questions we will explore in Part 2 of this article.

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NDIC wants Nigerians with funds trapped in 20 failing commercial banks to come and get their money, process reveals https://nioga.net/ndic-wants-nigerians-with-funds-trapped-in-20-failing-commercial-banks-to-come-and-get-their-money-process-reveals/ Sun, 09 Oct 2022 05:00:38 +0000 https://nioga.net/ndic-wants-nigerians-with-funds-trapped-in-20-failing-commercial-banks-to-come-and-get-their-money-process-reveals/ Nigerians who have savings in 20 failing commercial banks now have the option of recovering their funds. The NDIC guaranteed that no customer funds would be lost and that anyone filing a claim should provide identification One of the major concerns of Nigerians with bank accounts is the safety of their funds The Nigeria Deposit […]]]>
  • Nigerians who have savings in 20 failing commercial banks now have the option of recovering their funds.
  • The NDIC guaranteed that no customer funds would be lost and that anyone filing a claim should provide identification
  • One of the major concerns of Nigerians with bank accounts is the safety of their funds

The Nigeria Deposit Insurance Corporation (NDIC), a parastatal under the Nigerian Ministry of Finance, recovered customer deposits from 20 failed banks.

Bello Hassan, Managing Director/CEO of NDIC disclosed this during a speech at the Abuja International Trade Fair.

Leadership reports that Hassan described the recovery as the NDIC fulfilling its promise to protect depositors in the event of bank failures.

Banking hall in Lagos Credit: Dailytrust

The Director General of the NDIC, who was represented by Director of Business Services, Nuhu Bashi, also pledged to fully pay consumers who come forward to claim their money held in banks.

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His words:

“The implication of this is that through our relentless liquidation activities, the company has realized sufficient funds to pay all bank depositors in full.”

List of Failed Banks in Nigeria

The banks involved are ABC Merchant Bank Limited; Allied Bank of Nigeria; Photo by Alpha Merchant Bank; Friendly Bank of Nig. Limit; Commercial bank; Commercial Trust Bank Limited; Continental Merchant Bank Photo: Cooperative & Commerce Bank Plc and Eagle Bank; Financial Merchant Bank Limited.

Others are Icon Limited (Merchant Bank); Ivory Merchant Bank; Capital Merchant Bank Limited; Merchant Bank of Nig. Plc. ; Merchant Bank of Africa Limited; Nigeria Merchant Bank Plic. ; Pan African Bank Limited; Premier Commercial Bank Limited; Progress Bank of Nigeria; and Rims Merchant Bank Limited.

What should customers of failing banks do?

The NDIC has called on depositors, creditors and shareholders of listed closed banks to avail themselves of verification platforms provided by the Company to claim their funds, The Guardian reports.

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Hasan says:

“Notices have also been sent to creditors of seven depository banks (DMBs) in liquidation as well as depositors and former staff of two micro-finance banks (MFBs) and one main mortgage bank (PMBs) to that they come forward for settlement of their funds trapped in failing banks.

“Affected individuals are free to physically go to one of the company’s nearest offices or use the NDIC online application or visit the complaints page on our website: www.ndic.gov. ng, to expedite the processing of their complaints.”

Zenith and Gtbank Top List of Nigeria’s Most Valuable Banks

Meanwhile, a previous report by Legit.ng show Zenith Bank kicked off 2022 as Nigeria’s Most Valuable Commercial Bank.

Guaranty Trust Bank is the second most valuable bank, followed by Stanbic IBTC Holdings to complete the top three most valuable banks.

Furthermore, the aggregate market capitalization of all the banks examined increased by 46.6 trillion naira to 3.84 trillion naira.

Source: Legit.ng

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Commercial banks offer financing of Rs 2.013 trillion https://nioga.net/commercial-banks-offer-financing-of-rs-2-013-trillion/ Fri, 07 Oct 2022 04:51:01 +0000 https://nioga.net/commercial-banks-offer-financing-of-rs-2-013-trillion/ CARACHI: Commercial banks offered cash-strapped government funding of Rs 2.013 trillion after two months of holding prices at an all-time high. The move comes after a slight drop in inflation was seen and the finance minister expressed his taste for a low benchmark interest rate in Pakistan. The government borrows from commercial banks by selling […]]]>

CARACHI:

Commercial banks offered cash-strapped government funding of Rs 2.013 trillion after two months of holding prices at an all-time high. The move comes after a slight drop in inflation was seen and the finance minister expressed his taste for a low benchmark interest rate in Pakistan.

The government borrows from commercial banks by selling sovereign debt securities, including treasury bills.

Threshold yields (bank to government funding prices) on three- to 12-month Treasury bills were cut by around 24-26 basis points to 15.73-15.75% at the latest auction of bonds. The drop in the rate prompted the government to borrow a higher amount at Rs877 billion against a target of Rs650 billion.

Talk to Express Grandstand, Topline Securities CEO Muhammad Sohail said: “After a two-month hiatus, treasury bill auctions saw lower cut-off yields at today’s (Wednesday) auction.”

“CPI (monthly inflation reading) figures that were lower than expected in September and expectations of no change in the central bank’s key rate forced investors to hoard treasury bills at lower yields than expected. from the last auction,” he added.

A senior analyst added that in anticipation of the central bank’s announcement not to change the benchmark policy rate on Monday (October 10th), commercial banks were encouraged to lower their prices.

Earlier, Finance Minister Ishaq Dar expressed an indication to ease the key rate which currently stands at 15%. “Dar’s comments sent signals to the market that even if the rate isn’t cut, it won’t go up in the current situation,” the analyst said.

Published in The Express Tribune, October 7e2022.

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