Disintermediation

• Yet failure to serve the unique needs of over-stretched small businesses leaves banks exposed to disintermediation from an evolving landscape of tech-led solutions.
• According to Aite Group2 less than 10% of financial institutions deliver digital services tailored to small business needs including invoicing, receivables, accounting and cash flow management.
• Autobooks makes it simple for a small business to enroll, send invoices, and quickly accept online payments - directly from the financial institution\xe2\x80\x99s existing digital banking channels.
• The collaboration between Bottomline and Autobooks is a great example of fintechs coming together to better serve small businesses.\xe2\x80\x9d\nBottomline (NASDAQ: EPAY) makes complex business payments simple, smart, and secure.

• The global blockchain technology market is poised to grow by $8,071.49 million during 2020-2024, progressing at a CAGR of 29% during the forecast period.
• This report on the blockchain technology market provides a holistic analysis, market size and forecast, trends, growth drivers, and challenges, as well as vendor analysis covering around 25 vendors.
• The market is driven by the increase in FinTech spending, and the disintermediation of banking services.
• This study identifies the easier access to technology as one of the prime reasons driving the blockchain technology market growth during the next few years.

SPEECH

An ECB digital currency – a flight of fancy?

Speech by Yves Mersch, Member of the Executive Board of the ECB and Vice-Chair of the Supervisory Board of the ECB, at the Consensus 2020 virtual conference, 11 May 2020

• [1] The European Central Bank is one of them.
• Not because we want to keep up with fashionable trends, but because we have to be ready.
• Ready to embrace financial technological innovation which has the potential to transform payments and money faster, and in more disruptive ways, than ever before.
• We currently see no indication that the public at large is willing to abandon the valued and trusted advantages of cash.

Part of ECB mandate to be ready for change

• Reliable access to money would then hinge on the stability and efficiency of private retail infrastructures.
• And trust in money itself would rely on trust in the intermediaries that issue private money.
• [2] This is one reason why central banks keep fully up to speed on financial technological developments.
• After all, providing safe money and a reliable means of payment have been an integral part of the mandate and core business of central banks since their very inception.
• Whether and when it becomes more of a policy debate will largely depend on the preferences of households.
• Let me give you a preview of our deliberations, starting with different design options.

Legally solid despite fancy design?

• This is true for the bulk of the money issued through our wholesale credit operations with our counterparties.
• At present, access to the central bank balance sheet offers the possibility to access digital central bank money.
• What could change in the future is the scope of the parties eligible to access our central bank balance sheets.
• A wholesale CBDC, restricted to a limited group of financial counterparties, would be largely business as usual.
• Setting up a CBDC would require a solid legal basis, in line with the principle of conferral under EU law.
• One key consideration here is whether a retail CBDC could and should have the same legal tender status as banknotes and coins.
• These are just two of the many ways to design a CBDC.

Disintermediation – economically inefficient and legally untenable

• The main reason is that introducing a retail CBDC could have major consequences for the financial system.
• During a systemic banking crisis, this could trigger digital bank runs of unprecedented speed and scale, magnifying the effects of such a crisis.
• Banks might manage to render their deposits more attractive than central bank ones.
• They could, for instance, provide additional services to those offered by central banks.
• Otherwise even in the absence of a crisis a readily convertible CBDC could crowd out bank deposits, leading to the disintermediation of the banking sector.
• If the central bank were to take retail deposits, it might also have to provide loans, with all the ensuing consequences.
• [5] But disintermediation would be economically inefficient and legally untenable.
• I am nearing the end of my speech but look forward to exchanging views with you during our virtual Q&A session.

Conclusion

• The report evaluates current and anticipated use cases for blockchain and assesses the market potential globally, regionally, and segmented by deployment type and industry vertical for the period 2020 to 2025.
• The report includes detailed forecasts by use case, application, and industry verticals from 2020 to 2025.
• There will also be a substantial impact in terms of business model disintermediation across a wide variety of industry verticals.
• We see Blockchain as a Service (BaaS) representing a key service offering for many market segments as a mean of solution introduction and scalability via a cloud services model.