Daily Digest - 26 June 2023

Headlines

▌Federal Reserve Governor Bowman: Bank regulation is preferable to capital rules

Federal Reserve Governor Bowman said the US banking industry needs better regulation, not higher capital requirements, which could hinder lending and competition. She also reiterated calls for an independent review of recent bank failures. We need to consider whether examiners have the proper tools and support to spot important problems and demand immediate correction, she said, adding that raising capital requirements would not address fundamental concerns about regulatory effectiveness. Federal Reserve Chairman Jerome Powell told Congress that the largest US banks could face roughly a 20% increase in capital requirements and that they must set aside funds. The changes are part of an overhaul of international capital rules that began more than a decade ago in response to the 2008 financial crisis. With several US banks failing, they were a top priority this year. Bowman reiterated his call for an independent third-party agency to investigate the recent US bank failures and criticized the Fed's internal efforts to investigate the issues.

Cryptocurrency

▌Bank of Italy launches CBDC pilot project

The Bank of Italy has launched a pilot to assess the viability of a central bank digital currency (CBDC). The pilot project, called Project Leonidas, also involved 18 Italian commercial banks and the Association of Italian Banks (ABI). The stated goal of the pilot is to "explore blockchain applications that promote financial stability and protect consumers." Participating banks will use a shared ledger for interbank payments to streamline the process. This is not the first digital asset pilot involving ABI. The association launched Project Spunta three years ago, involving more than 100 banks and sharing reconciliation books for interbank payments. Several CBDC pilots are also underway across Europe, the most recent of which involve the Bank of England and the Bank for International Settlements.

▌BVNK announces expansion into the Asia-Pacific region

Global payments company BVNK has announced its expansion plans in the Asia Pacific (APAC) region. With the appointment of Anthony Man as the new general manager of the Asia-Pacific region, in May, BVNK submitted an application for the MPI (Major Payment Institution) license to the Asia-Pacific region, marking an important step for its business in the region. BVNK combines traditional payment infrastructure with distributed ledger technology (DLT) to create a modern money transfer tool that enables its customers to seamlessly send, receive and convert traditional and digital currencies in more than 61 countries.

▌IMF suddenly flips On crypto As Wall Street fuels a $200 Billion Bitcoin, Ethereum and crypto price rally

Bitcoin, Ethereum and other major cryptocurrencies have exploded in recent weeks as the market braces for a $15 trillion earthquake. The Bitcoin price has almost doubled this year (sparking fears the investment "window" may be closing) as traders abandon smaller cryptocurrencies in favor of bitcoin and its nearest rival Ethereum following a US crackdown that some think is part of a plot to destroy the market. Now, as the world's largest asset manager leads a surprise Wall Street charge into Bitcoin and crypto, the International Monetary Fund (IMF) has suddenly softened its previous attitude toward crypto bans, warning they "may not be effective."

▌Illegal crypto mines busted in Libya

Local media outlets reported that as many as fifty Chinese nationals had been detained in relation to the raid on a crypto farm in the city of Zliten. The latest bust follows the discovery by law enforcement of similar underground crypto farms in Misrata and Tripoli earlier in the week. Footage circulating online appears to show a vast industrial building kitted out with rows of server racks that could be used to mine Bitcoin or other cryptocurrencies. According to the Italian newspaper Agenzia Nova, the Zliten farm was operating out of an abandoned iron factory.