Category Archives: Bank of International Settlements

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Fintech Deals Hit Record $117 Billion So Far This Year

The last five years have seen a rapid increase in global fintech-targeted mergers and acquisition volume, leading to a record high of USD 116.6 billion in 2019, according to research firm Dealogic.

Business Insider quotes Dealogic associate Chisa Tanaka who says that 87 deals this year have resulted in a four-fold increase from the USD 31.8 billion from 89 deals at the same time in 2018:

“Clearly, technological innovation is causing intensifying consolidation in the electronic payment services market, while the acquisition of data on customer’s purchasing and behavior trends further drives fintech acquisitions.”

Three fintech acquisitions from the USA have been the driver of this year’s record-setting period: Fidelity National Information Services’ USD 43.3 billion March purchase of Worldpay, Fiserv’s January acquisition of First Data for USD 39.4 billion, and Global Payments’ USD 26.2 billion May buy of Total System Services.

All of these feature a cashless method with electronic payments at the heart of their solutions. But while they are growing in use and popularity, experts think we have a long way to go from cashless societies, especially in emerging economies.

The Bank of International Settlements (BIS), for example, published a report in March that shows flat growth for ATM withdrawals in advanced economies but rising trends in emerging markets. Overall, it said, global consumers were relying “more and more” on e-payments:

“The use of e-payments is booming and technology companies as well as financial institutions are investing heavily to be the payment providers of tomorrow… [but there is] scant evidence of a shift away from cash… As the appetite for cash remains unabated, few societies are close to ‘cashless’ or even ‘less-cash’.”

France and the UK are not far behing the US in terms of fintech deals. Tanaka did say that the latter half og 2019 will make clear the “financial ability of the different players”.

 

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ECB Official Says Central Bank Crypto Could Positively Impact Financial Stability

ECB Official Says Central Bank Crypto Could Positively Impact Financial Stability

A Member of the Governing Council for the European Central Bank (ECB) has spoken positively about central bank crypto or central bank digital currencies (CBDC), labeling them as unique and more efficient offerings from global central banks.

Vitas Vasiliauskas specifically names distributed ledger technologies (DLT) as useful for having positive impacts on financial stability and mitigating the need for intermediaries, although did not extend these thoughts to decentralized cryptocurrency like Bitcoin, insisting that they were very different from central bank crypto.

He explained:

“The CBDC would be a novel type of central bank money. Although also digital, it should be distinguished a traditional reserve account. The CBDC would also be fundamentally different from private crypto assets. This is because it would be — money! It would serve as a medium of exchange, a means of payment and a store of value, just like the current forms of central bank money.”

He praised the characteristics of DLT features in would-be implementations of central bank crypto, saying that “wholesale CBDC” could enhance payments and make securities settlement more efficient, while reducing counterparty credit and liquidity risks. He elaborated:

“In terms of the retail CBDCs, different motivating factors are in play. Clearly, we live in an age characterized by the rise of electronic payment methods. Although these are often more convenient and efficient than paper banknotes, such digital payment solutions are based on commercial bank money.”

Vasiliauskas, who is also the chairman of the board for the Bank of Lithuania and a member of the Board of Governors of the International Monetary Fund, had made these comments at a central banker conference in Washington this week. The Bank of Lithuania falls under the purview of the Bank for International Settlements (BIS).

Last year, BIS made comments against the industry, when general manager Agustin Carstens, told cryptocurrency developers that they should leave the bankers to do the job of creating money.

 

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