IBM and Finastra are two of the names in a new UK cross-industry consortium that wants to reimagine and test new payment rails for the financial system.
The Digital FMI Consortium has been unveiled today (17 August) and the new group – standing for ‘Digital Financial Market Infrastructure (DFMI)’ – is the body behind Project New Era, the UK’s “first privately-led” Digital Sterling (dSterling) pilot, set to launch in the autumn.
The group says it will focus on real-world testing to evaluate a future digital currency ecosystem, environment and economy that includes the coexistence of current forms of money, regulated digital assets (including cryptocurrencies and stablecoins) and central bank digital currencies (CBDCs).
Kunal Jhanji, Managing Director and Partner at Boston Consulting Group, states: “The world is undergoing a financial revolution from which there is no turning back. With the advent of DLT and blockchain technology, digital assets are ushering in a new era for money, with potentially transformative benefits for consumers, businesses, financial institutions and states. The industry needs to now come together to help the lawmakers and central banks shape the design and regulatory aspects of the biggest change we will see in the payments ecosystem in our lifetimes.”
Brunello Rosa, CEO and Head of Research at Rosa & Roubini Associates, explains: “Currently, 105 countries (representing over 95% of global GDP) are exploring paths towards a CBDC, while ten countries have now fully launched a digital currency. The market continues to develop at a tremendous pace, with the British government having announced plans to make the UK a global crypto hub, the ECB declaring recently that CBDCs could be the ‘Holy Grail’ of cross-border payments, and the Fed exploring a digital dollar with increasing urgency.”
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Not everyone is enthusiastic about CBDCs and crypto. For instance, earlier this year, the House of Lords Economic Affairs Committee decided that CBDCs were really not worth all the trouble.
The crypto sector has also been a bit wild of late. Not many are putting the ‘stable’ into stablecoin.
Blockchain.com said it is cutting 25% of its workforce. US cryptocurrency broker Voyager Digital has filed for bankruptcy protection, blaming the move on “volatility and contagion” in the markets. Crypto lending platform Celsius has also filed for bankruptcy in the US. While Coinbase faces an SEC probe over its crypto listings.
The price of Bitcoin currently stands at £19,667 – a fall of 34% over the last six months.
That said, notable names like BlackRock and abrdn have shown an interest in working with crypto companies, so maybe the doom and gloom is not needed.
Along with IBM and Finastra, the consortium is made up of financial institutions, including commercial banks, payment providers, telecommunications providers, fintech firms, NFT ecosytems and digital currency exchanges. To date members include FinClusive, Ibanera, paywith.glass, Mattereum, Trust Payments and Accomplish Financial, with further members set to be announced upon the launch of the UK pilot.
Boston Consulting Group is its consulting partner, and is supported by The Payments Association in the UK. Official global advisors to the project include Rosa & Roubini Associates as macroeconomic advisors, Simmons & Simmons as legal counsel and Farrant Group providing communications.
The Digital FMI Consortium says it intends to use the blueprint set out by Project New Era to launch private-sector pilots in unnamed jurisdictions across the world.
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