Seeds of Wisdom RV and Economic Updates Friday Morning 11-1-24

November 1, 2024 DINARRECAPS8

Good morning Dinar Recaps,

UBS ISSUES TOKENIZED USD MONEY MARKET FUND USING ETHEREUM TECH

Today UBS Asset Management announced the launch of its “UBS USD Money Market Investment Fund Token” (“uMINT”) which is “built on Ethereum distributed ledger technology”.

The Singapore fund will only be available through authorized distribution partners. That’s the case for most regulated entities, including BlackRock’s BUIDL money market fund where Securitize is a partner.

Previously UBS has actively engaged with the public Ethereum blockchain, using tokens that require permissions. However, Ethereum technology is also available in private environments. UBS uses both as part of UBS Tokenize, hence we’ve requested clarification, although the fund likely uses public blockchain.

“We have seen growing investor appetite for tokenized financial assets across asset classes,” said Thomas Kaegi, Co-Head of UBS Asset Management APAC. “Through leveraging our global capabilities and collaborating with peers and regulators, we can now provide clients with an innovative solution.”

Tokenized money market funds such as BUIDL, Franklin Templeton’s FOBXX, and now uMINT, currently mainly target the crypto investor class. The funds provide a safe place to park cash and earn yield.

However, in the future there will be a broader demand for these sorts of funds, especially those that are transferrable, enabling the ability to switch in and out of the funds almost instantly.

That compares to typical funds that tend to have once a day redemptions. This feature is appealing beyond crypto investors to corporate treasurers and institutions.

UBS and tokenization
Meanwhile, UBS Asset Management has been active in tokenization for some time. Last year UBS Hong Kong worked with Bank of China Investment (BOCI) for BOCI’s issuance of CNH 200 million ($28m) in digital structured notes on the Ethereum public blockchain.

As part of Singapore’s Project Guardian initiative, UBS has engaged in several pilots. These included the pilot issuance of a tokenized money market fund by UBS Asset Management on the Ethereum blockchain using a Singapore variable capital company (VCC) structure.

Plus, the bank was involved in the first institutional cross border repo trade on a public blockchain in conjunction with DBS and SBI Digital Asset Holdings.

UBS is also engaged in tokenized cash. It was one of the founders of Fnality, the institutional settlement network that tokenizes balances held at a central bank account.

@ Newshounds News™

Source: Ledger Insight

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BIS DISTANCES FROM PROJECT MBRIDGE AMID BRICS SANCTIONS CONCERNS

Economic sanctions have a profound effect on international financial architecture, it turns out.

The Bank for International Settlements (BIS) has “graduated out” of Project mBridge, the wholesale central bank digital currencies (CBDCs) bridge its Innovation Hub has helped develop since 2021. Nonetheless, the project is many years away from becoming operational, BIS general manager Augustín Carstens said on Oct. 31.

Project mBridge, which uses technology developed by the Hyperledger Foundation, reached the status of minimum viable product and invited private sector participation in June. Banks in China and the United Arab Emirates have heeded the call to join.

Besides the BIS, founding members of the project include the central monetary authorities of China, Hong Kong, Thailand and the UAE. Saudi Arabia joined as a full member in June, and the project has over 25 observing members.

BIS insists it backs sanctions
The reason for Carstens’ eagerness to distance his organization from such a promising project and downplay its significance was obvious at the fireside chat at the Santander International Banking Conference where Carstens was speaking. He was asked:

“I have noted media speculation recently that one of your projects — Project mBridge — could provide the basis for a BRICS initiative to circumvent sanctions. Is that plausible?”

“With respect to political aspects, the noise out there, mBridge is not the ‘BRICS bridge’ — I have to say that categorically,” Carstens answered.

Rather, mBridge was designed to meet the needs of central banks. But Carstens did not say circumventing sanctions with Project mBridge was implausible. Instead:

“The BIS does not operate with any countries, nor can its products be used by any countries that are subject to sanctions […] And all central bank members are in this mindset.”

BRICS — the intergovernmental organization named for founding members Brazil, Russia, India, China and South Africa — has been discussing de-dollarization for years. In that time, Iran, Egypt, Ethiopia, Saudi Arabia and the UAE have joined it, meaning that BRICS and Project mBridge share nearly half their members.

BRICS has long promoted efforts toward de-dollarization of the international financial system. While it has had little success so far in reaching that goal, the emphasis on alternative currency options shown at the group’s summit in Kazan, Russia, earlier in October made international observers shudder.

Reconsidering international transfers
The appeal of Project mBridge for potential sanctions evaders is its circumvention of the correspondent banking system, which is the practical mechanism for imposing sanctions.

Carstens was eager to direct attention to another BIS undertaking — Project Agora — that could provide a basis for the “Finternet” concept of international financial architecture he introduced in April.

The Bank of France (representing the Eurosystem), Bank of Japan, Bank of Korea, Bank of Mexico, Swiss National Bank, Bank of England and the Federal Reserve Bank of New York are the participants in Project Agora — no BRICS members. Crucially, Project Agora maintains the correspondent banking system.

@ Newshounds News™