BSG and SBI partner to create a global digital ecosystem

Boerse Stuttgart Group, the operator of the second-largest German stock exchange, and Japanese financial giant SBI has partnered to create a “global end-to-end ecosystem for digital assets”, although there is still no timeline when it might be created, reports.

“SBI will buy as soon as possible a 10.0% stake in Boerse Stuttgart Digital Exchange and will invest also in Boerse Stuttgart Digital Ventures, BSG disclosed last week. All stakeholders are selling their respective stakes, a spokesperson said, although details of the planned investment into BSDV are still to be evaluated.

Alexander Höptner, Chairman of the Management Board of BSG, said that besides the exchange of knowledge and technology, possible fields of collaboration include the cross issuance and listing of digital assets, trading and brokerage as well as the creation of the global custody bridge.

“The SBI Group, including its crypto-asset trading platform and other related business operating companies, will fully make use of the collaboration with Boerse Stuttgart Group, to well-establish the actual demands of the digital asset throughout the world,” Yoshitaka Kitao, President of SBI Holdings, who is also a board member of Ripple, a blockchain company focusing on the payments technologies.

In September, BSG launched BSDEX, the Germany’s first regulated trading venue for digital assets. While trading on the platform was initially launched for selected users, starting December it is now open to all investors based in Germany. BSDEX might be opened for other countries of the European Union in 2020, the spokesperson said.

“The next step is the creation of a primary market platform that will allow companies the issuance of digital tokens, for corporate financing or to represent rights and assets, for instance,” Dirk Sturz, CEO of Boerse Stuttgart Digital Exchange, told back then.

Boerse Stuttgart Digital Ventures is leading the digitization strategy of BSG. Its subsidiaries are Sowa Labs, who has developed the cryptocurrency trading app Bison, and blocknox, a custodian for digital assets.

Meanwhile, SBI has also been active in the crypto and blockchain industries since 2016. Last week, it was announced that SBI has struck a deal with OneConnect, part of the Chinese insurance giant Ping An Group. The companies have agreed to launch a recently established Japanese company, with the aim of revitalizing smaller, regional Japanese banks using blockchain technology and fintech solutions. Also, SBI is considering issuing XRP tokens as company-wide shareholder rewards.”

50% of world top 20 banks to trade digital assets in 2020, Garlinghouse says

Fiat currencies will go digital in 2020, with 50% of the biggest global banks set to work with digital assets, says Brad Garlinghouse, the CEO of Ripple, reports.

Garlinghouse has predicted that half of the world’s top 20 biggest banks will be actively holding and trading digital assets in 2020, while conventional currencies will be digitalized. The Ripple boss believes also at least one non-G20 currency will become fully digitized, betting on the Argentine peso. He also said that ‘the first real public engagement with digital assets began only a few short years ago in 2017.’

The senior vice president of Ripple’s developing subsidiary Xpring, Ethan Beard, also opined that 2020 will see at least one central bank take the plunge with a digital fiat launch.

The Ripple executives believe new technological breakthroughs and applications are coming for digital assets in 2020, with evolution continuing in the crypto industry. An increasingly fast rate of institutional adoption will help blockchain and digital currencies continue ‘to emerge as core underpinnings of the world’s financial future,’ they say.

Institutional adoption will help the technology survive long-term, says Ripple which expects a wave of adoption next year as traditional firms start utilizing blockchain and digital assets, especially trusted custody brands, such as State Street or Bank of New York, opined Breanne Madigan, Ripple’s Head of Global Institutional Markets.

Predictably, the company forecasts a good year for the XRP token, but it also thinks other tokens will also enjoy a surge in popularity.

A decade of QE policies has paved the way for digital currencies

We report a survey by Michael J. Casey published on, where the analysts writes about the adverse effect of a decade of quantitative easing policy and its incentive to pave the way for digital currencies.

“For most capital market investors, the past 10 years are perhaps best described as the “decade of QE.” Through a radical policy of “quantitative easing” introduced to counter the “zero lower bound” problem in interest rates, the central banks of the U.S., the euro zone, and Japan have added almost $10 trillion in assets to their balance sheets since the end of 2009.

Given that massive surfeit, nothing else mattered much to financial markets. Stocks, bonds and commodities moved in ever closer correlation to one another. Mostly they rose, though sometimes they fell, all in lock-step dependence on monetary policymakers administering the drug of QE.

There are many reasons to believe that this massive intervention has created a giant distortion. One that gets attention is the fact that, at one point, $17 trillion of dollars in bonds traded at negative yields this year, meaning that investors had too much cash and were willing to pay “safe” creditors for the privilege of taking their money.

But there are other warning signs that the QE-fueled market runup is starkly out of line with the realities of the world. As Bank of America chief strategist Michael Harnett put it in a recent research report, “We enter the next decade with interest rates at 5,000-year lows, the largest asset bubble in history, a planet that is heating up, and a deflationary profile of debt, disruption, and demographics.”

So, while the decade of QE might seem like the ultimate expression of central bank power and influence, the next decade may produce the opposite: a reversal that reveals central bankers’ impotence. The fear is that monetary authorities have spent all their ammunition, leaving nothing for the next crisis.

That would mean a paradigm shift is coming. What would it look like?

A new class of investor that emerged this past decade believes it knows the answer. They’d call the past ten years the “decade of cryptocurrency,” and they’d have a strong case.

In the future, when we look back on the emergence of bitcoin, we may well conclude it was the most important financial development of our time. Like nothing else, it changed the way we think about money.

That said, I’m not convinced the post-QE era will be the bitcoin era.

Bitcoin’s daily transaction flow, usually in the low billions of dollars, pales in comparison to the trillions in fiat currencies traded each day in foreign exchange markets. More likely than bitcoin becoming the new global monetary standard, I’d say, is that it becomes digital gold. In other words, that bitcoin will be to the digital era what gold was to the analog era: a safe-haven store of value that’s free from government interference.

Even so, to believe bitcoin is having no impact on the broader world of money is naïve. The biggest, most important developments in finance right now – namely, the digital currency aspirations of central banks such as the People’s Bank of China and the European Central Bank, as well as the Libra project launched by Facebook – trace a direct line to bitcoin and its crypto imitators.

Those fiat-backed prototypes are fundamentally different from decentralized cryptocurrencies in that their record-keeping and monetary policy features are centrally managed. Yet they still borrow heavily from the core breakthroughs that bitcoin established.

The protocols behind these new fiat-backed digital coins will, for example, create digital scarcity, meaning that, like cryptocurrencies, they can function as a de facto form of cash or bearer instrument. That’s quite different from the bank-issued IOUs of our current payments system. Also, they’ll essentially be programmable, which when combined with smart contracts and wallet-enabled internet-of-things (IoT) devices will transform the world’s commerce.

But the biggest, most politically important disruption will be to the dollar- and banking-led world of finance.

If digital fiat currencies become commonplace for payments, they’ll eventually remove banks for that core function of economic exchange, relegating them to longer-term lending functions. That will, in turn, mean that banks are no longer engaged by central banks as the core intermediaries for managing our monetary conditions.

Also, if coin-to-coin atomic swaps and smart contract-based escrow solutions are used in cross-border transactions, the rise of digital fiat might quickly spell the end of the dollar’s dominance of global trade, with profound implications for the United States.

The upshot of all this is that central banks will initially acquire even more direct control over monetary conditions. However, they will do so within a digitized environment in which no single currency enjoys global hegemonic dominance and in which users can more easily move in and out of state, private or decentralized currencies of their choosing. That increased currency competition should, in theory, impose a constraint on each sovereign’s capacity to debase their citizens’ money.

We face a paradigm shift, in other words.

When they come to write about this period, my guess is that historians will look upon the 2010s as the decade that set up that shift. Explaining it, they’ll point to two main developments: that QE exposed the limitations of the existing, bank-centric system and that cryptocurrencies emerged to posit an alternative model.”

Related Articles

Crypto carry trade (part one)
The current international monetary environment is characterized by ultra-expansionary monetary policies undertaken by…

Read more >
Passive and Aggressive orders
In forex trading, traders often use passive and aggressive orders in their daily…

Read more >
The Rate-of-Change (ROC)
In the technical analysis of forex markets, the Rate-of-Change (ROC) is a momentum…

Read more >