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Home » Daily Briefing » Daily briefing - 16 February 2017

Daily briefing - 16 February 2017

Japan has an accommodating approach to bitcoin and three of the biggest Japanese banks have now invested in bitFlyer, the Tokyo-based bitcoin exchange. Yesterday, bitFlyer announced new fundraising from Sumitomo Mitsui, Mizuho Financial Group and Dai-ichi Life Insurance. (Mitsubishi UFJ Capital invested in bitFlyer in 2015.) After China, Japan is the second-biggest trader of bitcoin, with some five thousand merchants accepting the cryptocurrency as payment, and Tokyo is building a strong regulatory environment around the cryptocurrency. As the esteemed Bernard Lunn notes: "Compare Coincheck which has the lion's share of bitcoin merchant processing in Japan to Coinbase which has that position in America. While Coincheck operates in a relatively benign regulatory environment, Coinbase is in legal battles with the IRS." With the Tokyo Olympics coming up in 2020, there are high hopes in the sector that visiting spectators will be using bitcoin — free of sales tax — instead of converting to yen.

Speaking of which: Is South Africa looking at the adoption of a digital currency? Tim Masela, head of national payments at the central bank (SARB) told Moneyweb earlier this month that it would make sense to look at issuing a digital version of the rand because it is easy to use, is far-reaching, and can guarantee settlements in real-time at reduced cost. SARB is open to the issuing of a national digital currency, which would probably be based on blockchain or distributed ledger technology. "If we go the route of issuing a digital currency, the objective would be to take advantage of emerging technologies so that we reap the benefits," said Mr Masela.

One rarely hears Madrid mentioned as an alternative to London as Brexit comes rumbling over the horizon. Dublin has apparently rehabilitated itself sufficiently from its c2005 'Wild West' reputation and is now regularly mentioned as a City alternative, even though Ireland remains in colossal debt. Spain however has been supplying news stories that have left reporters agog: take the Cuidad Real airport, which 'opened' nine years ago, having cost over a billion euro to build. At a distance of 146 miles south of Madrid, it was conceived as an alternative to the capital's airport, though even Ryanair would be embarrassed to land that far from its nominal destination. The facility went bankrupt in 2012 and was purchased in 2015 by investors for €10,000, or a 100,000th of its original cost. Now the country is trying to clean up its property and banking mess, with the banks forced to book €270 billion in losses and Bankia executives under investigation following Bankia's ill-fated IPO in 2011. Investment bankers turned up their noses and the focus switched to selling shares to retail investors, with disastrous consequences. "Former Bank of Spain Governor Miguel Angel Fernandez Ordonez was placed under investigation for his role in allowing the Bankia group to raise three billion euros in capital with a 2011 share sale a year before its near-collapse, the National Court in Madrid said Monday. Others named as suspects include the former Deputy Governor Fernando Restoy and Julio Segura, the former head of the securities regulator CNMV. Three current central bank officials resigned their posts after they were also named."

Singapore's DBS Bank has been winning praise for its swift and innovative approach to digital finance, but it appears that Singaporean banks are facing into more old-fashioned problems as provisions grow for bad loans. The Strait Times reports: "DBS, Southeast Asia's largest lender, was expected to show a 6.6 percent profit decline to S$936 million, according to analysts polled by Reuters, or S$1.014 billion according to those polled by Bloomberg." However, the reported drop was closer to nine percent as the bank doubled its provisions for soured loans. Charges for energy loans are a major part of the problem. "Reduced demand for oil and gas services has led at least four companies into default, the highest profile of which was Swiber Holdings, which sought court protection in July. In the latest sign of the industry's struggles, Ezra Holdings, on 3 February, flagged that it faces a $170 million writedown on a joint venture."

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