Following others in the financial services industry, Mastercard unveiled its own blockchain distributed ledger for cross-border payments.
Mastercard is launching its own blockchain network to enable partner banks and merchants to make cross-border payments faster and more securely.
The Mastercard blockchain service can be used to clear credit card transactions, eliminate administration tasks using smart contract rules and thus, speed transaction settlement.
"By combining Mastercard blockchain technology with our settlement network and associated network rules, we have created a solution that is safe, secure, auditable and easy to scale," Ken Moore, executive vice president for Mastercard Labs said in a statement.
On Saturday, Mastercard will also sponsor the Money20/20 Hackathon, where the company will make the Mastercard Blockchain API available for participating developers.
Blockchain is a public electronic ledger – similar to a relational database – that can be openly shared among disparate users and that creates an unchangeable record of their transactions, each one time-stamped and linked to the previous one.
Mastercard's blockchain is a private, permissions-based network, meaning only those authorized to participate in transactions can see them.
The credit card giant is another among several financial services organizations that have deployed blockchain-based cross-border payment networks.
Earlier this week, IBM announced it had partnered with a Polynesian payments system provider and an open-source FinTech payment network to implement a new international exchange based on a blockchain electronic ledger.
A new blockchain solution from IBM and Maersk will help manage and track the paper trail of tens of millions of shipping containers across the world by digitizing the supply chain process.
Jeffrey Neuburger, partner with Proskauer Rose LLP, an international law firm specializing in corporate finance, characterized IBM's blockchain deployment as "a major milestone for implementation of blockchain in major financial institutions."
IBM partnered with KlickEx Group, a United Nations-funded, Pacific-region financial services company, and Stellar.org, a nonprofit organization that supports an open-source blockchain network for financial services, to create the new cross-border payments service.
That partnership is likely to be a "watermark event in the growth of blockchain and digital currencies," Neuburger said.
"A lot is riding on the success or failure if this. Particularly interesting because the participants created their own digital currency for this implementation, and it will be interesting to see how regulators, among others, will receive this," Neuberger said.
Mastercard's blockchain is integrated into the company's payment network that includes 22,000 financial institutions to move funds that have been committed on the blockchain.
Mastercard's financial services and merchant customers will be able to connect into its blockchain network using an API, alleviating them from having to build out their own distributed ledger server nodes. Once a part of the blockchain network, banks and retailers can add their own internal nodes to scale capacity, Mastercard said.
"When it comes to payments, we want to provide choice and flexibility to our partners where they are able to seamlessly use both our existing and new payment rails based on the needs and requirements of their customers," Moore said.
The New Zealand Government has achieved its third fiscal surplus in a row with the Crown accounts for the year ended 30 June 2017 showing an OBEGAL surplus of $4.1 billion, $2.2 billion stronger than last year, Finance Minister Steven Joyce says.
“The 2016/17 Crown accounts are a direct demonstration of the hard work of New Zealanders since the Global Financial Crisis and the benefit of a strong economic plan that is delivering consistent growth,” Mr Joyce says.
Core Crown tax revenue was $75.6 billion for the 2016/17 year, up 7.4 per cent from the previous year with all major tax types increasing.
“The 12.3 per cent growth over last year in company tax, a 7.1 per cent growth in GST, and a 7.4 per cent growth in personal income tax, are a direct consequence of the confidence and growth of Kiwi companies and the growth in jobs.”
Core Crown tax revenue growth of $5.2 billion outpaced core Crown expenditure growth of $2.4 billion.
The final OBEGAL result for the year is $363 million better than predicted by Treasury at the time of the Pre-election Fiscal Update, largely due to core Crown expenditure being $502 million less than forecast.
“This better result should be seen as a one-off. Treasury advises that much of this expenditure reduction reflects timing differences and is likely to reverse out in the years ahead,” Mr Joyce says.
The country’s net debt has reduced in nominal terms by $2.4 billion from last year, to $59.5 billion. Net debt has dropped to 22.2 per cent of GDP.
“This is the first time net debt has reduced in actual dollar terms since the GFC and the Christchurch earthquakes,” Mr Joyce says. “It’s a significant milestone in the country’s economic recovery from those twin shocks.”
Mr Joyce says that the 2016/17 full year result should be interpreted with caution, and not seen as automatically flowing through into higher surpluses than forecast in the years ahead.
“Treasury has based its forecasts on current economic settings and some reasonably solid growth predictions for the years ahead. A number of commentators have noted a softening of growth indicators in recent days.
“The Government’s future surpluses will be needed to meet the cost of the significant investments we have committed to as part of the next four Budgets including the Government’s $32.5 billion infrastructure programme.
“We also need to keep reducing debt over time to prepare for the next rainy day event.”
New Zealand’s economy and financial system remain on a sound footing despite continuing challenges in the global environment, according to the Reserve Bank’s Annual Report 2016-17 released today. The 2016-17 financial year saw a pickup in economic activity in most major economies, although inflation and wage pressures remained subdued Supported by improving domestic economic conditions, the New Zealand banking system remains sound and well capitalised. “As a small, open economy, developments beyond our shores have a large influence on New Zealand’s economic outcomes,” former Governor Graeme Wheeler says in the Report. Mr Wheeler finished his term as Governor on 26 September. Acting Governor Grant Spencer said that in the last financial year the Bank undertook comprehensive research into the drivers of low inflation and in particular the formation of inflation expectations. “We have also focused a lot of policy work on strengthening the financial system against potential shocks. "Rapid house price inflation in recent years led to increased financial stability risks. In response, the Bank introduced loan-to-value restrictions on house lending, including tighter LVR restrictions on property investors from October 2016. These measures have improved the resilience of the banking system. "We have revised the outsourcing policy for larger banks, initiated improvements to banks’ quarterly disclosures, and undertaken stress testing.” During the year, the IMF undertook a comprehensive review of New Zealand’s financial sector regulatory regime through its Financial Sector Assessment Program (FSAP). “The IMF recognised a number of positive features of New Zealand’s institutional framework and the Bank’s policy approach, and we are assessing their recommendations aimed at strengthening the regulatory framework,” Mr Spencer said. In other highlights the Board conducted its annual overall assessment of the performance of the Bank, and this is included in the Bank’s Annual Report. The Board also noted that the Bank retained high audit ratings and achieved its operational objectives. A dividend of $145 million has been paid to the Government. The Annual Report is available as a downloadable PDF and the Bank has produced two videos for a general audience designed to communicate the Bank’s role in maintaining a sound and efficient financial system through the use of macro prudential policy. More information• The Reserve Bank’s Annual Report 2016-17 (pdf)• Video 1 - Global forces• Video 2 – Keeping banks healthy
Statement by Reserve Bank Acting Governor Grant Spencer: The Reserve Bank today left the Official Cash Rate (OCR) unchanged at 1.75 percent. Global economic growth has continued to improve in recent quarters. However, inflation and wage outcomes remain subdued across the advanced economies and challenges remain with on-going surplus capacity. Bond yields are low, credit spreads have narrowed and equity prices are near record levels. Monetary policy is expected to remain stimulatory in the advanced economies, but less so going forward. The trade-weighted exchange rate has eased slightly since the August Statement. A lower New Zealand dollar would help to increase tradables inflation and deliver more balanced growth. GDP in the June quarter grew in line with expectations, following relative weakness in the previous two quarters. While exports recovered, construction was weaker than expected. Growth is projected to maintain its current pace going forward, supported by accommodative monetary policy, population growth, elevated terms of trade, and fiscal stimulus. House price inflation continues to moderate due to loan-to-value ratio restrictions, affordability constraints, and a tightening in credit conditions. This moderation is expected to continue, although there remains a risk of resurgence in prices given population growth and resource constraints in the construction sector. Annual CPI inflation eased in the June quarter, but remains within the target range. Headline inflation is likely to decline in coming quarters, reflecting volatility in tradables inflation. Non-tradables inflation remains moderate but is expected to increase gradually as capacity pressure increases, bringing headline inflation to the midpoint of the target range over the medium term. Longer-term inflation expectations remain well anchored at around two percent. Monetary policy will remain accommodative for a considerable period. Numerous uncertainties remain and policy may need to adjust accordingly. Note: Following the departure of Graeme Wheeler, the Reserve Bank’s policy making Governing Committee now comprises: Acting Governor Grant Spencer, Deputy Governor Geoff Bascand, and Assistant Governor John McDermott.
From MSCNewsWire's European Correspondent |Wednesday 6 September 2017 | Beirut-based Meguerditch Bouldoukian is an emeritus figure in banking in the Middle East and the EU. Mr Bouldoukian (pictured with Paul Volcker) now answers our five questions on New Zealand’s Middle East positioning …..
There is evidence of a belief here in a short Middle East memory. We have the defaulting on the old Development Finance obligations. Then we have the U-turn on the undertaking on live sheep exports to Saudi Arabia. Followed by compensation in the form of a covert stock-handling depot there. Then the matter of the New Zealand delegation to the UN Security Council as a further entreaty backing the anti Israel censure?
There will always be mistakes and false starts. Especially with evolving markets. You can take comfort in your wider picture. According to recent OECD reports New Zealand’s one of the robust economies on the globe since 2012 due to tourism, inward migration, construction. It has a sound fiscal position and low public debt and balanced budget. GDP $185 billion, growth rate of 3.9 %, per capita income $39,400 and internet usage 86 %. I am though rather worried by the Development Finance Corporation experience which you cite and which once again demonstrates the danger of a longer term operational involvement by a government in commercial banking. If this intervention is a sustained one, and not just implemented to cope with an emergency then a Pandora’s Box is put in place and which is bound to be opened at some stage down the line.
There is a belief that only very large scale organisations, ideally with government involvement, are the only ones that can trade with the Middle East ---and then get paid...
My advice here is for commercial interests in your country to steer very clear of Middle East states ruled by sultans, emirs, kings, and other despots of that ilk. Elsewhere you will find strong legal statutes to ensure against the kind of default you seem to be describing
All the NZ trading banks are owned in Australia. Do you see this as an advantage/disadvantage?
The major banks must encourage the outside world in coordination with the government to pump in Foreign Direct Investments. Local banks ultimately can only finance SMEs or SMIs. I am pleased that you asked this question because it has given me an opportunity to clear up a misconception, rather touching in its way, to the effect that the Australian trading banks are owned in Australia. They are in fact and to a substantial extent owned by UK and US banks, notably HSBC, J.P Morgan, and Citigroup among others. Is this an advantage? Probably. The reason is that the smaller the bank, the greater will be its reluctance to take on risk.
It is said that the Australian banks along with the Canadian banks are the world's best regulated?
Industry figures tell us that world’s best regulated banks are domiciled in order in:
The significance of this is that you do not have to worry about banks operating in New Zealand soundly regulated as they are by the Reserve Bank.
Do you see any benefit in New Zealand seeking to re-establish its own joint stock/ trading bank?
You have had the problem in your recent and longer term history of your own bank in this category getting into trouble and having to be rescued by the taxpayer, the government in other words. This in turn opens our Pandora’s Box which takes the form of the state, and for a number of reasons, being viewed as being responsible for the bank and even long after the emergency that caused it to be involved in the first place.
The Reserve Bank’s monetary policy has been an important driver in the last five years behind above-trend growth in the economy and employment, Reserve Bank Governor Graeme Wheeler said today in a speech.
Speaking to the Northern Club in Auckland, Mr Wheeler said that the New Zealand economy has generally performed well in the last five years.
“It’s been a remarkable five years, especially with the challenges thrown up by the global economy and an over-heated domestic housing market. On the international front we’ve seen increasing use of unconventional monetary policies, sluggish international trade, sharp swings in commodity prices, a continued rapid build-up in global debt, and unexpected political developments in Europe, the UK and the US.
“Back home we’ve experienced the strongest migration surge since the 1800s, probably the longest period of negative tradables inflation since the Great Depression, a 75 percent decline in dairy prices before recovering, a major shift in resources to the non-tradables sector to support the Canterbury rebuild, and annual national house price inflation reached 21 percent.”
Despite these challenges, Mr Wheeler said, GDP growth has averaged 2.8 percent and employment growth 2.5 percent. Both exceed the trend rate of growth for the period of flexible inflation targeting up until 2012. Headline CPI inflation averaged 1 percent due to 4½ years of negative tradables inflation, while core inflation averaged 1.4 percent.
“Over the past five years, the Bank’s monetary policy has been an important driver behind the rate of output and employment growth, and the path of non-tradable inflation and inflation expectations. Long-term inflation expectations remain well anchored at the target mid-point of 2 percent.”
Mr Wheeler said that New Zealand has also had a stable financial system. “LVR restrictions have reduced financial stability risks as house prices became increasingly stretched. Requiring new borrowers to have a greater equity contribution in their house purchases reduced the overall riskiness of banks’ mortgage portfolios.
“Nationwide annual house price inflation has declined to 1 percent due to LVR restrictions, the tightening in bank lending, the rise in mortgage rates and increasing concerns about housing affordability.
“LVRs are not expected to be a permanent measure, but their removal would require a degree of confidence that financial stability risks won’t deteriorate again. However, debt-to-income ratios have risen in recent years, and with the underlying drivers of housing demand (population growth, low interest rates) remaining strong and demand outstripping supply, there’s a risk of a housing market resurgence (and a sharp lift in high LVR lending) if LVRs were removed at this time.”
Mr Wheeler said that, in the absence of major unanticipated shocks, prospects look promising for continued robust economic growth in New Zealand over the next two years.
“The greatest risk we face at this stage relates to the inflated global asset prices and the continuing build up in global debt.
“If growth in the global economy slows, we have some scope to buffer our economy. We’ve greater room for monetary policy manoeuvre than central banks in many advanced economies. Our official cash rate is 1.75 percent – above the zero and negative interest rates of several advanced country central banks – and the Bank has not grossed up its balance sheet by buying domestic assets. With a budget surplus and low net debt relative to GDP, there’s also flexibility on the fiscal policy side.”
The Reserve Bank has appointed Sean Mills as Assistant Governor and Head of Operations. Mr Mills will take up his appointment on 29 November 2017. He is currently Chief Information Officer at the Department of Corrections.
As Assistant Governor and Head of Operations, Mr Mills will replace Deputy Governor Geoff Bascand, who will take up the Head of Financial Stability role on 27 September, when Grant Spencer becomes Acting Governor for six months.
“Mr Mills is an experienced senior leader and business governance chair, has worked on a number of cross-government strategic initiatives, and has over 15 years’ prior experience in the finance sector,” Governor Graeme Wheeler said.
Mr Mills has previously been Head of IT Service Delivery at the Ministry of Social Development, where he contributed extensively to the operating performance of MSD’s technical services. From 1996 – 2006, he held several IT senior management roles at the ANZ Bank.
Departments that will report to Mr Mills are Communications, Currency Property and Security, Financial Services, Human Resources, Knowledge Services, and Risk Assessment and Assurance.
A slightly softer growth forecast is the main feature of largely unchanged Pre-election Fiscal Update compared to the Budget forecasts three months ago, Finance Minister Steven Joyce says.
“The softer growth New Zealand has experienced in the six months to March flows through to a lower starting point in the 2017/2018 year,” Mr Joyce says.
“The net effect is that growth is slightly lower through the forecast period – averaging 3.0 per cent over the next four years rather than the 3.1 per cent predicted in the Budget.
“The other notable change is that Treasury expects the labour market to be tighter over the next four years, with lower unemployment and stronger nominal and real wage growth.
“Treasury forecasts unemployment to drop to 4.3 per cent by June 2020 and for the average annual wage to increase from $58,900 at March 2017 to $65,700 by 2021, a $1300 per annum improvement on the Budget forecast.”
Other changes to the forecasts include:
A smaller balance of payments deficit across the forecast horizon
Lower CPI inflation, especially in the 2017/18 year
Net government debt falling below 20 per cent of GDP in the 2020/21 year. New Zealand Superannuation Fund contributions remain scheduled to resume in that year.
Most other elements of the forecast remain very similar to budget predictions, with nominal GDP, migration levels and budget surpluses largely unchanged, although the timing of budget surpluses has changed.
“The Budget surplus is expected to be $2.1 billion higher in the year just finished,” Mr Joyce says. “However Treasury expects the lower growth forecast to result in surpluses that are $1.8 billion lower over the next four years. The net effect is about even.
“The Government’s strong fiscal management means that New Zealand is one of the few OECD countries to be posting fiscal surpluses. This hard-won position is underpinning the Government’s strong economic plan which is delivering jobs and steady real wage growth for New Zealanders.”
The large infrastructure spend committed to in Budget 2017 means that residual cash remains broadly in balance until the 2019/20 financial year.
“There is limited room for any additional expenditure beyond what is already proposed in these forecasts until the 2020 financial year when there is expected to be a $1.7 billion cash surplus. Anything significant in the meantime would involve more borrowing or raising additional tax revenues,” Mr Joyce says.
The PREFU forecasts include the following budget spending commitments:
• $7 billion in additional operating expenditure over four years in Budget
2017 which commenced on 1 July 2017.
• $1.7 billion per annum ($6.8 billion over four years) operating
allowance to be allocated for Budget 2018, increasing by 2 per cent
each subsequent budget.
• $32.5 billion in total capital infrastructure investment between 1 July
2018 and 30 June 2021.
• $6.5 billion over four years ($2 billion per annum in out years) for the
Government’s Family Incomes package commencing on 1 April 2018.
“Government annual operating expenditure in these forecasts increases from $77 billion to $90 billion over the next four years, which is sufficient for significant ongoing improvement in the provision of public services,” Mr Joyce says.
Inflation targeting practises are similar across many central banks despite significant differences in their formal frameworks, says the Reserve Bank in its latest Bulletin article published today.
The Bulletin article titled “An international comparison of inflation targeting frameworks” looks at how New Zealand’s Policy Targets Agreement compares to nine other advanced economy central banks, and how the specifications in each framework compare to the actual practice of each central bank.
“In order to conduct the comparison we focused on five components of an inflation-targeting framework: the inflation target definition, communication of monetary policy, secondary considerations, assessment of inflation-targeting performance, and framework reviews and revisions,” says the article’s author, Senior Economic Analyst Amber Wadsworth.
“Overall we find that the formal inflation-targeting frameworks can differ greatly between the central bank, but, in practice, each bank operates in a similar manner.”
“The central banks we looked at have similar inflation targets and produce similar monetary policy reports and inflation targeting assessments. There is more variability in the financial stability considerations when setting monetary policy, and how the inflation-targeting frameworks are reviewed and revised,” says Wadsworth.
To support Money Week 2017, the Reserve Bank and the Commission for Financial Capability have collaborated in a series of videos to encourage people to better manage their debt and talk more freely about their finances.
The videos focus on this year’s Money Week theme of ‘debt’ and feature some of the families associated with our banknotes and connects with other pioneering New Zealanders, and the Queen, who appear on our Brighter Money banknotes.