Your Friday fix for global fintech and payments news
The Bank of England announces plans to potentially introduce a new central bank digital currency (CBDC). This would allow households and businesses to make electronic payments using money, issued by the Bank of England, where formerly this was a right reserved by other banks and select financial institutions. In other news, three major US banks announce 20% declines in credit card purchases in their second quarter, and recent speakers at PayExpo give their thoughts on new trends and regulatory responses in the payments and banking industry.
Our weekly round-up brings you a dose of some of the biggest news announcements from the past seven days so you can keep an eye on all that’s shaping our world this week.
- Bank of England mulling new digital currency post-Brexit
- Big banks see credit card purchases plunge by more than 20%
- Covid-19 will ignite new agendas for payment trends and regulations
The governor of the Bank of England, Andrey Bailey, has revealed that they plan to introduce a central bank digital currency (CBDC). A CBDC would allow people to make electronic payments using money issued by the Bank of England. The bank currently provides electronic money, which presently can only be used by banks and selected financial institutions.
In a previous statement by the bank, they claimed that were a CBDC to be introduced, it would be denominated in pounds sterling. Effectively, £10 of CBDC would always be worth the same amount as a £10 note. In a statement, the Bank stated that “CBDC is sometimes thought of as equivalent to a digital banknote, although in some respects it may have as much in common with a bank deposit. Any CBDC would be introduced alongside – rather than replacing – cash and bank deposits.”
Three of the US’ largest banks have reported that their credit card purchase volumes fell by more than 20% in their second quarter. JP Morgan Chase & Co., Citigroup Inc., and Wells Fargo and Co. have all reported decreases in credit card sales by 23%, 21%, and 22% respectively.
Jennifer A. Piepszak, Chief Financial Officer at JP Morgan Chase and Co., said that: “Debit and credit card sales volume, while overall still down, has consistently trended upward since the trough in the second week of April to down just 4% year-on-year in the last two weeks of June.”
As part of PayExpo’s digital event, professionals shared their views on what lies ahead in the banking and payments industries. The decline in use of cash has accelerated with new products and services emerging to respond to such trends. While exciting news for some, there have been qualms about where this leaves the unbanked members of society. However, with new products come new regulations. PayExpo speakers commented on the challenge regulators now face in walking a fine line between consumer protection and fostering innovation in the industry.
On the unbanked population, Ritesh Jain, Former Head of Global Technology at HSBC, believes that the pandemic has shone a spotlight, stating that: “We definitely need significant initiatives on how we can serve underbanked people. In the past, we have always seen fintechs working in this space, but they alone cannot fulfil the gap because we need significant improvements from a regulatory and compliance perspective.”