Haycen interviewed in Treasury Management International

“Digital money increases the chances of pound sterling becoming a more compelling trading currency globally.” Excerpts from an interview with Treasury Management International below.

 “I think at a strategic level, while the UK has a very mature payments system, absolutely it should be developing new formats for sterling, and building the new systems that can support that,” he states. “It’s important that the UK occupies the same strategic space as its global trading competitors and allies, because they are all building these systems with the intent to move liquidity in new ways, including cross-border.”

“Payments can be inefficient, slow, and expensive. Digital money enables businesses to connect directly to a counterparty in any part of the world, with instant transmission and settlement, also allowing finance to be recycled faster, potentially reducing cost of capital.”

Digital money increases the chances of pound sterling becoming a more compelling trading currency globally. “Achieving this relies on new digital formats of pound sterling being available for global commerce and trade partners to interact, and in creating a distribution network for pounds sterling that moves faster than it ordinarily would.”

However, a major stumbling block for acceptance of digital monies is their mistaken bundling together as one with the rather more unstable world of cryptocurrencies. The perception of a global payment system that is connected to a risk-heavy crypto-trading system dissuades many businesses from engaging.

Indeed, buying stablecoins or moving fiat balances into crypto-exchanges where risks are heightened, makes no sense at all in a trade context, agrees Sully. One issue with stablecoin values is that some are exposed to secondary trading markets. Arbitrage traders can then de-peg a stablecoin’s price from its fiat currency. This remains a huge and unnecessary risk for professional participants, such as treasurers, who may wish to use digital money for the benefit of real-world use cases.

The solution Sully recommends is the “verticalisation of digital monies and stablecoins solely focused around on- and off-ramping business users”. For this to occur, in the corporate treasury space, new digital monies need to be created that are fully disassociated with crypto-trading. CBDCs already have legitimacy because they are central bank creations. Stablecoin legitimacy is initially derived from the trust and transparency afforded its creating company or financial institution being regulated (by the UK’s Financial Conduct Authority, for example).

https://treasury-management.com/articles/digital-money