Western Central Banks Set 2% Limit on Crypto Reserves for Banks

PayBox, a Ghanaian payments startup, believes that DeFi provides Africa the opportunity to leapfrog cross-border challenges.

“Africa has the ability to leapfrog into decentralized finance (DeFi) and smooth over the difficulties of cross-border finance through blockchain and Web3,” said Co-Founder, David Boye-Doku, during the Africa Money & DeFi Summit in Accra, Ghana.

PayBox is described as a fast-growing African fintech start-up cross-border mobile growth engine enabling easy access to offline and online digital payment and business solutions.

“Decentralizing finance in Africa will give everyone access and the choice of alternative currencies; it offers financial and digital inclusion,” Boye-Doku said.

Paybox is one of several startups sponsored by the International Trade Center (ITC), through its NTF V Tech project in Ghana, to exhibit at the West Africa Money and DeFi event. Fintech leaders like MFS Africa and Paystack and Web3-focused businesses, Revio and Mazzuma, also attended the summit, sharing their industry knowledge.

PayBox began its business journey by offering mobile payment solutions to small and medium sized enterprises.

“The next phase is infusing Web3 rails on mobile payments so that a local wallet can become an international wallet for small businesses and millennials in Africa. Your phone number can become a crypto wallet to send funds easily across Africa,” said Boye-Doku.

Web3 wallets can be web-based, mobile-based, or even hardware based. Their relatively simple user interaction provides the user access to decentralized blockchain-based apps that serve as gateways to crypto assets. This allows users to instantly send and receive those assets via mobile phone number, email, or crypto address.

Boye-Doku believes central bank digital currency (CBDC) is the key to the rapid development and growth of African economies.

“It would allow capital to move freely at lightning speed with near zero transaction fees and convert crypto into currencies. This means we can spend in our domains as well as transact with people not in our domains,” he said.

“We chatted with a representative from the Bank of Ghana, and they are looking for a token that will sit on top of the Ghanaian CBDC. We are already building an exchange token so they can ride on that,” he said.

__________________________________

Follow us on Twitter for latest posts and updates

Join and interact with our Telegram community

__________________________________

__________________________________

The Basel Committee on Banking Supervision is recommending banks to limit cryptocurrency exposure to 2% of their reserves, part of its newly unveiled guidelines for crypto exposure in the banking sector.

The guidelines that are now endorsed by a group of Central Bank Governors from western global powers, generally target ‘unbacked crypto assets and stablecoins with in-effective stabilization mechanisms.’

Dubbed Prudential Treatment of Crypto Asset Exposures, they introduce the final standard structure for banks regarding exposure to digital assets, including tokenized traditional assets, stablecoins, and unbacked cryptocurrencies.

The guidelines were endorsed at a meeting held on December 16 2022 by the committee’s supervisory organ, The Group of Central Bank Governors and Heads of Supervision (GHOS).

GHOS is the oversight body of the Basel Committee on Banking Supervision and is the primary global standard setter for the prudential regulation of banks and provides a forum for cooperation on banking supervisory matters.

Currently chaired by the Governor of Canada’s central bank, the Committee itself was established by the central bank governors of the Group of ten (G10) countries in 1974:

• Belgium
• Canada
• France
• Germany
• Italy
• Japan
• Netherlands
• Sweden
• Switzerland
• United Kingdom
• Unites States

“Today’s endorsement by the GHOS marks an important milestone in developing a global regulatory baseline for mitigating risks to banks from cryptoassets. It is important to continue to monitor bank-related developments in cryptoasset markets. We remain ready to act further if necessary.” – Tiff Macklem, Chair of the GHOS and Governor of the Bank of Canada.

GHOS members agreed to implement the standard by January 1 2025, and tasked the Committee with monitoring the implementation and effects of the standard.

The Central Bank Governors also tasked the Committee with continuing to assess bank-related developments in crypto asset markets, including the role of banks as stablecoin issuers, custodians of cryptoassets, and broader potential channels of interconnections.

You can find the guidelines in this report.

_____________________________________

Follow us on Twitter for the latest posts and updates

Join and interact with our Telegram community

_____________________________________

_____________________________________