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20 I Companies & Markets bne May 2017
Bitcoin and blockchain– the underlying technology that powers cryptocurrencies – is thriving in a region with so many different currencies flowing through such poor traditional payment platforms. Africa already boasts several established bitcoin exchange services, such as ICE3X and BitX in South Africa and BitPesa in its six markets of East and West Africa, where users can trade between bitcoin and traditional currencies.
“With currency restrictions and an over-dependence on the US dollar, it has become very difficult, expensive and risky to operate a business across African currencies,” says Rossiello. “By using bitcoin as a middle currency, many businesses can safely make bank-to-bank transfers from one African currency (or global currency) to another, with bitcoin safely helping the settlement behind the scenes.”
“We are really excited with the uptake of our customers, many of them from the traditional financial sector, in using our bitcoin-powered international payments and settlement products – it is the perfect time to use decentralised technolo- gies like bitcoin to jump ahead of the slower incumbents and create safer, cheaper and more scalable systems,” she adds.
As well as the huge and growing payments area, fintech is also looking at ways to help the financing of micro,
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small and medium-sized enterprises in Africa, of which the World Bank estimates up to 70% lack any access to funding. The World Bank sees fintech helping to bridge a $2tn funding gap for millions of SMEs in emerging mar- kets that are seeking credit to grow their businesses.
For example, in March BitPesa announced it has part- nered with BitBond, which is based in Berlin and offers loans to businesses around the world, including those
in Central and Eastern Europe like Bulgaria, to connect fixed-income investors with small business owners in Africa who need loans. To make global cross-border lend- ing possible, the platform uses the bitcoin blockchain for payment processing. “When companies use bitcoin tech- nology, working together is nearly a seamless process as we have the same systems and goals,” says Rossiello.
Nii Quaynor, a scientist and engineer who is often described as the “father of the internet in Africa", holds out great hope for the potential of blockchain technol- ogy, with its attributes of transparency and non-corrupt- ibility, to transform great swathes of Africa, with non- financial applications such as land registries and voting. Banks in Africa, so often the targets of corruption, are also looking into the potential uses of blockchain.
Czech National Bank scraps koruna cap
Tim Gosling in Prague
The Czech National Bank surprised the markets on April 6 when it announced it had scrapped the cap on the koruna it had maintained since late 2013.
The announcement came just days after the end of the cen- tral bank’s “hard commitment” to keep the currency pegged at CZK27 to the euro through the first quarter of the year.
Investors had poured billions into koruna-denominated assets in recent months as they bet on a jump in the value of the koruna when the regime is lifted. However, the CNB surprised many by ending the regime almost immediately.
The koruna rose on the back of the news but by less than many analysts had predicted. In fact by mid-April, the currency had weakened again and was approaching the level of the cap.
Speculators in the crown seem to be taking their time to realise their gains because of a big overhang of crown positions that some suggests totals more than €65bn.
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Jiri Rusnok, governor of the Czech National Bank, said in com- ments published on April 11 that it may be close to the middle of the year before the koruna stabilises. "We do not know [how long it will be before the koruna is stable],” he admitted. “I estimate it can take several weeks but also a month, [or] two.”
At the same time, he said the bank stands ready to intervene on an ad hoc basis should volatility appear on the market. How- ever, he denied the CNB has intervened since removing the cap.
The move, which was decided at a non-monetary policy meeting, appears to have been pushed by the continued ‘CZKexit’ frenzy, the rising level of forex reserves due to spiralling intervention demands, and a surge in inflation around the turn of the year.
In particular, it may have been pressured by the need to make record high levels of intervention in March to maintain the regime, data released by the central bank suggested on April 7. The central bank looks to have been forced to buy as much as €17bn in March, according to the latest international reserves