As part of our early-year focus on tokenisation and the game of catch-up being played by central banks to launch their own digital currencies (CBDCs) and related systems of regulation, we offer an excerpt from a news story by or friends at Finextra:
An investigation into the use of multiple wholesale CBDCs for cross-border payments and a DLT prototype for the distribution of tokenised green bonds to retail investors are among the projects on the agenda this year for the Bank for International Settlements Innovation Hub.
Set up in 2019 the BIS Innovation Hub has centres in Switzerland, Hong Kong and Singapore, with locations in Toronto, London, Frankfurt and Paris, and Stockholm on the horizon.
For the year ahead, the hub has identified six key areas it will work on in an effort to foster collaboration among central banks on financial technology: suptech and regtech; next-generation financial market infrastructures; CBDCs; open finance; cyber security; and green finance.
Specific projects already in the pipeline include the building of a proof of concept platform using multiple wholesale CBDCs to explore the feasibility of faster and cheaper cross-border payments, and the DLT-based tokenised green bonds programme.
In addition, the hub will work on a proof of concept for a regulatory reporting platform employing data analytics and visualisation to provide supervisors with deeper and more timely insights to address risks, and a research project and associated prototypes for tiered retail CBDC distribution architectures.
Benoît Cœuré, head, BIS Innovation Hub, says: “This work programme shows our commitment to exploring in the most practical ways how best to harness technological change for the benefit of central banks and create public goods to support the global financial system.”
Meanwhile, the hub has launched an innovation network to support its work and share knowledge about technology projects and discuss answers to problem statements relevant to central banks. All 63 BIS member central banks were invited to the first meeting.
Historical Performance And IFISA Process Guide
That figure is the result of over £20 million of loans facilitated on the site, as we bring individuals looking for a good return on capital together with carefully vetted small companies seeking funds for growth. Bear in mind that lenders’ capital is at risk. Read warnings on site before committing capital.
All loans on site are eligible to be held in a Money&Co. Innovative Finance Individual Savings Account (IFISA), up to the annual ISA limit of £20,000. Such loans offer lenders tax-free income. Our offering is an Innovative Finance ISA (IFISA) that can hold the peer-to-peer (P2P) business loans that Money&Co. facilitates. For the purposes of this article, the terms ISA and IFISA are interchangeable.
So here’s our guide to the process:
The ISA allowance for 2019/20 is unchanged from last tax year at £20,000, allowing a married couple to put £40,000 into a tax-free environment. Over three years, an investment of this scale in two Money&Co. Innovative Finance ISAs would generate £8,400 of income completely free of tax. We’re assuming a 7 per cent return, net of charges and free of tax here.
Once you have made your initial commitment, you might then consider diversifying – buying a spread of loans. To do this, you can go into the “loans for sale” market. All loans bought in this market also qualify for IFISA tax benefits.
Risk: Security, Access, Yield
Do consider not just the return, but the security and the ease of access to your investment. We write regularly about these three key factors. Here’s one of several earlier articles on security, access and yield.