Dec 27, 2017  -  If 2017 was the year of the ICO, 2018 will be the year of the great ICO hangover.  It will also be the year major financial institutions adopt digital assets, and mark the birth of hybrid blockchains.

Dec 21, 2017  -   The Reserve Bank today registered China Construction Bank Corporation to provide banking services in New Zealand. China Construction Bank Corporation is incorporated in the People’s Republic of China and will operate in New Zealand as a branch. A New Zealand subsidiary of the China Construction Bank Corporation has been registered to provide banking services in New Zealand since July 2014. There are now 25 registered banks in New Zealand. More information: Register of banks.

| A RBNZ release  ||  December 21, 2017   |||

Dec 20, 2017  -  SBN’s work on New Zealand’s transition to a circular economy has received a vital boost. Fuji Xerox, 3R Group and Auckland Council have become Foundation Partners of the newly launched Circular Economy Accelerator.  The announcement represents a significant investment in scaling and accelerating New Zealand’s transition to a circular economy.

SBN has been working in this area for the last few years. A circular economy is where the lifecycle of materials is maximised, usage optimised and end of life materials reutilised to create a continuous flow.

The new Circular Economy Accelerator launches today. It brings together all SBN’s work on this initiative on a new platform. It will inspire, influence and enable New Zealand organisations to benefit from this globally emergent way of thinking and working.

The new Going Circular Award at this year’s NZI Sustainable Business Network Awards was sponsored by Auckland Council. It received the most entries of any award in SBN’s 15-year history. Project lead James Griffin is delighted by the early-stage investment, which has enabled the launch of the Circular Economy Accelerator.

“This marks a significant step-change in our efforts to scale and speed up this transition,” he says. “It’s also a tribute to the foresight of the companies involved. The Circular Economy is the economy of the future, but it is emerging right now. The companies that get to grips with it early will form the next wave of global success stories.”

Projects such as the Circular Economy Model Office and the Circular Economy Opportunity for Auckland initiative will now be driven on by the Accelerator. The new resource will also provide knowledge, support, connections, events and inspiration.

Peter Thomas is Managing Director of Fuji Xerox New Zealand. He says:

“Fuji Xerox is committed to supporting a circular economy both in New Zealand and across the Asia Pacific region. At Fuji Xerox New Zealand, we believe that our Ministry for the Environment-accredited Product Stewardship Scheme is the first step to a circular economy. We take back our equipment and refurbish it to extend its life. At end of life, we recycle over 99.5% of the equipment and toner cartridges we get back.

“We believe in innovation and working in partnership with our customers and our suppliers. That's why we are delighted to be the first Foundation Partners of the Circular Economy Accelerator. It will be a platform for collaboration, knowledge sharing and inspiration to make NZ a circular economy.”

Adele Rose is Chief Executive of 3R Group. She says “We’re proud to take a leadership position along with Fuji Xerox, Auckland Council and SBN. Moving from a ‘take, make, waste’ model to a circular economy opens up an exciting new way of doing business. It brings with it a wealth of opportunities for New Zealand companies. It will take a collaborative approach, which we fully embrace as we work with small and large businesses alike on reimagining our resource use.”

Parul Sood is Auckland Council’s General Manager, Waste Solutions. She says industry-led product stewardship is a vital component in efforts to reduce the volume of commercial waste going to landfill.

“Auckland Council is committed to promoting the principles of Circular Economy. We are delighted to be partnering with SBN, Government and industry leaders in this work.”

James adds: “The circular economy represents a viable and low carbon economic solution for the world. New Zealand has the opportunity to demonstrate leadership in the inevitable transition to the circular economy from the outdated linear model.

“There are some exciting plans for 2018, including a major event and new systems innovation projects. We look forward to working with all our partners and SBN members on this.”

Go to circulareconomy.org.nz now to find out more.

| A sustainable.org release  ||  December 20, 2017   |||

Dec 19, 2017  - The Reserve Bank today released a Bulletin article by Dr Chris Hunt, ‘Independence with accountability: financial system regulation and the Reserve Bank’. This article discusses the main reasons for delegating certain financial system-related functions and objectives to an agency that sits at arm’s length from government. The article outlines the Reserve Bank’s role as New Zealand’s single integrated prudential regulator and supervisor, and the important accountability arrangements that sit alongside the tasks delegated by Parliament to the Reserve Bank. Read the article: Independence with accountability: financial system regulation and the Reserve Bank.

| A RBNZ release  ||  December 19, 2017   |||

Dec 18, 2017  - New Zealanders’ wealth rose at its fastest pace in a decade, mainly driven by rising property values, Stats NZ said today.  New Zealanders’ net worth rose $136 billion to $1.5 trillion in the year to 31 March 2016. The total net worth is equal to about $330,000 per person, mainly reflecting the value of property ownership.

“Net worth is the balance of what New Zealanders own over what they owe, and this is the biggest increase experienced in the last 10 years,” national accounts senior manager Gary Dunnet said.

Data used in this release comes from a range of sources, some of which is only available up to 2016. Therefore, the integrated data presented is up to the March 2016 year.

Household net worth increased 11 percent (or $134 billion). This was largely driven by rises of $84 billion in property values and $14 billion in currency and deposits, offset somewhat by additional loans of $12 billion.

Households own property worth $680 billion, about 45 percent of total household assets of $1,495 billion. The other main household assets are shares and other equity (38 percent), currency and deposits (10 percent), and insurance and pension funds (nearly 6 percent of total household assets).

From March 2015 to 2016, household deposits increased 10 percent to $154 billion, and provided an increased share of banking funding.

Financial assets, including bank deposits and shares, held by New Zealanders rose from $1,780 billion in 2007 to $2,575 billion in 2016 (up 45 percent). Most financial assets are held in equity ($1,045 billion) and loans ($769 billion).

Similarly, non-financial assets, including property, are $1,697 billion at March 2016, up 44 percent from $1,182 billion in 2007.

Meguerditch Bouldoukian is considered in the West the leading Arabic-language authority on banking in the Middle East. He now takes our Five Questions on the pending flotation of Aramco and the economic circumstances in which it will take place……

The Saudis appear to have valued Aramco at US$2 trillion. Western commentators have claimed that it is over valued?

The issue of valuation of a company in investment banking criteria has more than six methods. We can say here though that if the two or more sides agree on a method to value ARAMCO then we can wish them good luck. From a conservative approach to the most liberal, its market capitalization is reported to extend from $1.5 trillion to $10 trillion.

Dec  13, 2017  -  Earlier this year, we committed to placing 55 billion XRP in a cryptographically-secured escrow account to create certainty of XRP supply at any given time. As promised, today we completed the lockup.  By securing the lion’s share of XRP in escrow, people can now mathematically verify the maximum supply that can enter the market. While Ripple has proved to be a responsible steward of XRP supply for almost five years – and has clearly demonstrated a tremendous track record of investing in and supporting the XRP ecosystem – this lockup eliminates any concern that Ripple could flood the market, which we’ve pointed out before is a scenario that would be bad for Ripple!

This move underscores Ripple’s commitment to building XRP liquidity and a healthy and trusted market. Long term, the value of digital assets will be determined by their utility. XRP has emerged as the only digital asset with a clear institutional use case designed to solve a multi-trillion dollar problem – the global payment and liquidity challenges that banks, payment providers and corporates face.

Unlike other digital assets purely driven by unexplained speculation, real institutional customers are already using and finding value in XRP, and governments, regulators and central banks are increasingly recognizing the role it could play in the global system.

XRP goes beyond what Bitcoin does well — a store of value — and delivers transaction speed and throughput that is orders of magnitude faster than BTC or ETH. While other digital assets continue to bump against their transaction limits, XRP remains the fastest, most efficient and most scalable digital asset in the world – making it the best digital asset for payments. It’s no surprise that institutions are looking to XRP to provide much-needed on-demand liquidity for cross-border payments.

Game changer for $XRP! 55 billion XRP now in escrow Tweet This

Here’s how the escrow works:

The Escrow feature in the XRP Ledger allows parties to secure XRP for an allotted amount of time or until specific conditions are met. For example, Escrow allows a sender of XRP to put conditions on exactly when a payment can be completed, so the payment remains cryptographically locked until the due date.

We use Escrow to establish 55 contracts of 1 billion XRP each that will expire on the first day of every month from months 0 to 54. As each contract expires, the XRP will become available for Ripple’s use. You can expect us to continue to use XRP for incentives to market makers who offer tighter spreads for payments and selling XRP to institutional investors.

We’ll then return whatever is unused at the end of each month to the back of the escrow rotation. For example, if 500M XRP remain unspent at the end of the first month, those 500M XRP will be placed into a new escrow account set to expire in month 55. For comparison, Ripple has sold on average 300M XRP per month for the past 18 months.

Ripple’s vision remains the same – to enable the Internet of Value in which money moves like information moves today – and XRP is at the heart.

To learn more, please visit ripple.com/xrp.

| A Ripple release  ||  December 7, 2017   |||

Dec 13, 2017  - The appointment of Adrian Orr to be the new Governor of the Reserve Bank of New Zealand (RBNZ) appears to be a good move by the Minister of Finance. To be really effective, however, Mr Orr will need to take seriously the issue of our sustained overvalued exchange rate over the last decade which has played a role in holding back export growth.

“We are hopeful the appointment of someone from has worked inside the RBNZ, but also had a very successful career outside since, signals a willingness for reform within the bank, given the review and the new Government’s pre-election promises of changes to targets and the decision-making model, says Dr Dieter Adam, CE, The Manufacturers’ Network.

“Under the previous Governor’s leadership we saw consistent comments around the role of the currency in holding back growth in exports. We did not, however, see much credible action to change the situation. We understand that under current settings, the RBNZ has limitations as to what it can do to address the exchange rate level and volatility. With a new Governor more willing to act within existing means and the potential for wider reform, there is an opportunity to make strides to address the challenge.

“Our currency remains significantly higher than long term averages, both on the Trade Weighted Index and critically, against the Australian Dollar, where much of our manufacturer's export revenue comes from.

“The RBNZ’s recent work to introduce macro-prudential tools, such as the loan-to-value ratios have been a positive move to address concerns on financial stability while giving the Bank more freedom to act on interest rates. We would encourage the incoming Governor to continue down this path, particularly in continuing investigation of debt-to-income rations.

“Addressing the currency challenges our tradable sector has faced over the last decade are key to helping to improve our export success and the transition to a more productive and high value economy. Let us not forget, however, that the use of updated targets and additional tools by the RBNZ alone won’t suffice to meet the challenge. The Government needs to make decisive policy changes to address the economic fundamentals behind – first and foremost - the misallocation of capital into property speculation, high levels of household debt, and the absence of any significant productivity growth in the real economy of New Zealand." says Dr Adam.

| A Manufacturers Network release  ||  December 13, 2017  |||

Dec 8, 2017  -  Over its long history, Canada’s banking industry has absorbed a range of adjacent players in the sprawling world of financial services: trust companies, investment dealers, property and casualty insurers, and wealth advisors. Many of these structural mergers involved both extensive regulatory reform as well as significant cultural shifts within the industry. Yet as Canada’s banks consolidated and expanded into these other verticals, they tended to impose their cautious ways rather than adopt the more free-wheeling ethic of the smaller players they had raced to acquire.

The fintech revolution, however, will demand a complete reboot of this well-established dynamic. As these ambitious startups evolve from giant-killing disrupters into innovation-minded partners for the banking sector, both sides are struggling to figure out how to live with one another.

Fintech firms offer entrepreneurial energy, innovative technologies and highly flexible consumer engagement techniques. But they also bring a healthy dose of impatience to a famously staid industry that was widely congratulated, almost a decade ago, for the corporate caution and regulatory prudence that allowed Canada’s banks to ride out the 2008 credit crisis.

Banks, for their part, are awakening to the realization that younger consumers want to do most of their banking on their mobile devices, which is also how they shop and consume news. The American Banking Association even published a tip sheet for its members on how to “make friends” with fintech.

It’s a tall order. The sluggish pace of in-branch or web-based banking and lending, hard-wired into the banking industry’s culture, is anathema to the fintech industry’s sense of urgency and opportunity, and reveals, to many of these startups, a reluctance to take chances on new mobile and data technologies.

Fintech firms offer entrepreneurial energy, innovative technologies and highly flexible consumer engagement techniques. But they also bring a healthy dose of impatience to a famously staid industry

As a former banking consultant who now helps raise capital for fintech startups, I can see both sides.

If it hopes to survive, the banking industry needs to find new ways of partnering with these nimble newcomers. Yet the learning has to happen in the other direction as well: if they want to succeed and grow, impatient fintech entrepreneurs must find ways to work with these large, closely regulated institutions.

Let’s start with the source of the chafing. Various fintech players with serious ambitions have told me they often feel worn down by bank clients’ insistence on historical performance data for innovations with no past, the dearth of seasoned innovation champions within these huge organizations, the lasting effects of legacy technologies, and frustratingly diffuse decision-making processes.

Risk aversion runs deep in the banking sector, and, in many cases, it seems to be a point of pride. As some fintech founders report, they’re often told by bank partners that every feature of a new service must work perfectly, while potential downsides are scrutinized to the point of exhaustion. And though fintech founders are acutely aware of the fast pace of their own industry, many come away from these encounters sensing that their banking partners have little sense of urgency.

Today, some banks are starting to see that there may be risks associated with their institutional inertia. Most have established innovation labs or are backing proof-of-concept projects with fintech partners. While some fintech startups express skepticism about these ventures, others offer up useful advice for their bank partners on how to make such forays succeed:

— resist the analysis-paralysis instinct and give your innovation teams sufficient scope to dive into proof-of-concept partnerships, knowing that some will fail

— ensure that there’s a business sponsor behind such pilot projects, as well as a path that leads to a possible deal, and

— be prepared to pay fintech partners for the value they create through successful initiatives that generate new service offerings and improved customer engagement.

But it’s a two-way street. Fintechs need the support of banks to help overcome one of their main challenges: getting to scale and ultimately putting products in front of customers. This can entail something of a Catch-22, however, because banks often seem to be more receptive to partnerships with fintech firms that have already created a compelling brand promise, have a consumer track record and bring their own investors or sponsors to the table.

Fintech options ease the pain points of financing for entrepreneurs ‘There’s no silver bullet here’: Global financial firms still grappling with fintech challenge, report finds

So, what does a successful partnership look like? These pairings, fintech firms say, will increase addressable market segments; demonstrate how an improved user experience leads to increased adoption; expand the lifetime value of a customer relationship; and focus on service offerings that minimize competitive tensions.

To work with fintech firms, banks also need to reconcile themselves to some unfamiliar practices, such as associating their brands with products and services they don’t necessarily own. And both parties have to find common ground on technical issues such as customer data sharing, anti-money-laundering/know-your-client compliance and which key performance indicators will be employed to measure success, given that at least initially, the new fintech partnerships are unlikely to make a dent in the top line.

As this difficult pairing game proceeds, it may be useful to look beyond the banking industry for learnings. My own suggestion: IBM in the early 1990s, when then-CEO Lou Gerstner, a former consumer packaged goods executive, radically shook up the sleepy culture of a massive tech manufacturer. Recognizing the mortal threats facing his company from both the hardware and software sides of the computer industry, Gerstner forced IBM’s tens of thousands of employees to begin thinking about creating business solutions that actually responded to its customers’ needs. The end result? During Gerstner’s tenure, among many other changes, he shut down unprofitable businesses and added valuable service offerings to the commoditized hardware business, increasing the market cap of IBM to US$168 billion from US$29 billion.

Simply put, fintechs are to the banking sector as Gerstner was to IBM: crucial change agents, pushing these giants to confront the uncertain future taking shape outside the walls of a fortified industry that’s far more exposed than Canada’s bankers may realize.

Change, as we know, is hard. Not changing, however, would be worse.

Roy Kao is senior advisor, Finance & Commerce, MaRS Discovery District. This article first appeared in the Ivey Business Journal.

| A Financial Post release  ||  December 8,  2017   |||

Dec 7,  2017  - An article published today in the Reserve Bank Bulletin reviewed the policy responses by overseas central banks to house-price collapses. It was originally written by a contracted researcher, Maitland MacFarlan, as part of the Bank’s general consideration of risks around housing markets. The article considers several episodes of house price collapses around the globe over the last 30 years, a period that encompasses the Nordic financial crises that began in the late 1980s, the Asian financial crisis of the late 1990s, and the more recent global financial crisis (GFC). The paper focuses on the policy responses to these problems and lessons that current policy makers can derive from these experiences. The article observes a strong association between housing busts and banking crises, while noting that not all housing busts lead to a more generalised financial crisis, and not all financial crises are accompanied by house price collapses. Housing market crashes have highlighted the need for borrowers and lenders to take more forward-looking, longer-term perspectives on their exposure to market developments. Read the article: House price collapses: policy responses and lessons learned

| A RBNZ release  ||  December 7,  2017   |||