Bahamas strikes first with Sand Dollar amid US–China CBDC faceoff
Bahamas strikes first with Sand Dollar amid US–China CBDC faceoff
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Fed Chairman Powell sees no urgency to develop a CBDC, but eventually, the world’s top central bank must act, say experts.
The Bahamas, an island nation in the West Indies, made digital currency history on Oct. 20 with the official launch of a new central bank digital currency, the so-called Sand Dollar. It became the first country to roll out a CBDC available to all residents, and while the Bahamas is a small nation — with only 393,000 people — it appears to be an event of some global financial significance.
Or is it? “It could be if it succeeds,” Ross Buckley, KPMG-KWM professor of disruptive innovation at University of New South Wales, Sydney, told Cointelegraph. “Other small island nations — as in my backyard in the Pacific — are watching it carefully and could well follow suit.”
James Barth, a finance professor at Auburn University, placed the event in the context of a series of CBDC milestones, beginning with the launch of Bitcoin (BTC) in 2009 and including Facebook’s Libra announcement in 2019, China’s CBDC trials in April, and the European Central Bank’s statement about the possible issuance of a digital euro in October. “These developments and the COVID-19 pandemic made it virtually certain that a country — most likely a small country — would go live with a central bank digital currency,” he said.
Some, however, said it was too early to tell. Hans Gersbach, an economics professor at ETH Zurich in Switzerland, told Cointelegraph: “First, we have to see whether it will function well in practice.” Jay Joe, CEO of Nzia Limited — the technology solutions provider for the Bahamas rollout — told Cointelegraph that the Sand Dollar was introduced in the Bahamas to help facilitate financial inclusion across the nation:
“The Bahamas as a vast archipelago spreading across over 100,000 square miles of ocean, has many remote islands and communities where residents do not have access to formal financial services.”
Because of population sparsity, it often isn’t economically viable for banks to build branches and sustain infrastructure. The new CBDC “enables the people of The Bahamas universal access to digital payments and extends the reach of financial services to all corners of the nation,” Joe told Cointelegraph. Among the key questions the nation’s central bank and others were looking to answer with the rollout, Joe said, were “how existing regulations and policies will be shaped, and, eventually, how the CBDC will be embraced by the people to some day become as ubiquitous as cash.”
A sense of urgency?
The global demand for online services has accelerated dramatically with the COVID-19 pandemic, and this is arguably driving the development of CBDCs around the world. As the deputy governor of the Central Bank of Canada, Timothy Lane, said recently. “If we want to be ready to develop any kind of digital central bank product, we need to move faster than we thought was going to be necessary.” Barth further explained:
“The virus has shifted behavior in favor of more social distancing and therefore greater use of online communication and transactions, both domestically and globally. This certainly makes digital currencies more relevant as money and for payments.”
But this sense of urgency isn’t universal, as Jerome Powell, chairman of the United States Federal Reserve, said on Oct. 19 at an International Monetary Fund event. He believes that CBDCs face many critical challenges, such as preventing fraud and cyber attacks, ensuring financial stability, and protecting privacy, saying: “There’s a great deal of work yet to be done. [...] In fact, I actually do think that CBDC is one of those issues where it’s more important for the United States to get it right than it is to be first.”
The U.S. needn’t worry about losing the "first-mover" advantage with regard to a digital currency, Powell implied. Was he right? “Probably in the immediate sense, yes,” according to Buckley, who added: “Longer term though if China or another nation allows its CBDC to be used in international trade, the U.S. will have to respond and quickly.”
The U.S. draws extraordinary benefits from minting the world’s reserve currency, and the loss of exclusivity in that regard could cost the U.S. economy dearly. It would also have political consequences — for instance, placing many countries outside the scope of U.S. financial sanctions. Buckley believes that China’s “long game” is, arguably, to upend the U.S. dollar as the world’s reserve currency. “It [China] hates that the global economic system is built upon the U.S. dollar, and it aims to build a parallel system that it controls,” he said, further adding: “This was the impetus behind the denomination of trade contracts of other country’s exporters and importers with China in renminbi.”
It was also a motivation behind the New Development Bank established by the BRICS states — Brazil, Russia, India, China and South Africa — and also for the Asian Infrastructure Investment Bank, continued Buckley, referencing another multilateral development bank whose creation was proposed by China in 2009 to make better use of Chinese foreign currency reserves amid a global financial crisis. “A [Chinese] CBDC will interact really well with dematerialized digital trade documentation so if China allows DC/EP offshore it will be a total game changer. In time I think they will.”
Barth, for his part, agreed that the U.S. didn’t have to hurry to bring a CBDC to market, as the U.S is the world’s largest economy, accounting for 20% of global gross domestic product, and the U.S. dollar remains the world’s dominant currency. “Chairman Powell is right that the U.S. does not have to worry about losing any ‘first mover’ advantage by rushing to issue a central bank digital currency.”
On the other hand, Sidharth Sogani, founder and CEO of analytics firm Crebaco Global, told Cointelegraph that being first to market among large economies does matter. "China is already testing its CBDC. They have integrated POS machines, mobile apps and many other source codes to develop apps on their CBDC.”
He further opined: “First mover advantage is crucial in this case — especially when you are competing with China.” Financially, the U.S. is still dominant, but with regard to CBDC technology, it trails — “And here China is going to lead for sure as they are ready with their CBDC and are the second biggest economy globally.”
Sogani explained this from the point of view of a bank customer: “If you are already having a great experience with Bank A,” which uses a Chinese CBDC, “will you open an account or download an app with Bank B — which does business with a U.S. dollar CBDC?” If/when China launches its CBDC, it will attract large numbers of global customers very quickly. “It will be difficult to catch them.”
The U.S. should have a CBDC ready to go — just in case — suggested Gersbach. “Preparation should be stepped up in order to follow fast if successful models of CBCDs are introduced.” But according to Barth, the big question is how the “CBDCs will affect money and payments, particularly the role of the government.” Gersbach also outlined several other factors: “Preventing cyber attacks, privacy issues, and financial stability. Security of all kinds and financial stability are the two most important issues to be resolved.”
Sogani, assuming that CBDCs would be built on a blockchain platform, questioned how CBDCs would relate to Bitcoin and other cryptocurrencies. “It’s [a CBDC] a completely different thing, with different fundamentals and uses. Understanding the nitty gritty is the biggest challenge.”
How close is the first mass CBDC?
It seems that the development of CBDCs around the world has picked up in 2020, and if this is the case, when might one see the first massive-scale CBDC? According to Barth: “Most of the major countries have been studying CBDCs for some time now.” He added:
“China, of course, has been engaged in trials but with no information provided about a nationwide adoption date. Nevertheless, it is likely to be the first major country to issue a CBDC, and if so, it is likely to trigger other major countries to follow suit.”
Regarding China, Sogani said: “Their legal framework seems to be in the making. It will launch it for the masses in a few months. I don’t see any other country as close to China’s development stage." Meanwhile, according to Buckley: “China intends clearly its digital currency/electronic payment project to dominate payments and money within China domestically, and they’ve been working on it for five to seven years.”
As long as the project remains domestic, there is no real challenge to the United States. But if China takes it global, “It will take the U.S. years of work to respond with a CBDC of its own, the so-called digital dollar,” said Buckley.
Meanwhile, Sogani sees big benefits, even for small countries — like the Bahamas — that take the digital path. "A CBDC enables a country’s currency to go global which the current financial ecosystem doesn’t offer.” To make an international transfer, ample paperwork needs to be signed and fees paid. “This is expensive. It takes up to two days and is complicated,” commented Sogani, adding:
“But if it is a CBDC, it can go directly to the mobile apps, and it can be tracked. Yes, there will be compliance but the SWIFT method, which involves nostro and vostro accounts, will be eliminated — making life simpler.”
Joe called the Bahamas’ rollout “the world’s first production-grade live implementation of a retail CBDC.” Asked if there were lessons here for other nations, the NZIA CEO told Cointelegraph that there were many, “including the importance of grassroots engagement and understanding of CBDC and its effects on the intermediated financial system,” further adding:
“A CBDC is more than elaborate software and mobile wallet systems. It needs to be designed from the ground up and built as part of a national payments infrastructure that addresses the needs of everyday people.”
In sum, there appears to be a certain global logic to recent events. Because the U.S. dollar, the incumbent global currency reserve, has much to lose by coming to market with a flawed CBDC, it appears to be moving cautiously, content to let smaller players such as the Bahamas do its beta testing. Meanwhile, China, the challenger, is moving fast, but its DC/EP project is focused on the nation’s mass market for now. A truly global digital yuan may still be some years away.
“A CBDC is a total game changer that raises a host of tough issues,” concluded Buckley. “This is why no one country has yet done it. Central banks never like stepping into the unknown — it’s not in their DNA for good reasons. But I think China will force other nations’ hands.”
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Key shipping company files for Chapter 11 bankruptcy
The Illinois-based general freight trucking company filed for Chapter 11 bankruptcy to reorganize.
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The U.S. trucking industry has had a difficult beginning of the year for 2024 with several logistics companies filing for bankruptcy to seek either a Chapter 7 liquidation or Chapter 11 reorganization.
The Covid-19 pandemic caused a lot of supply chain issues for logistics companies and also created a shortage of truck drivers as many left the business for other occupations. Shipping companies, in the meantime, have had extreme difficulty recruiting new drivers for thousands of unfilled jobs.
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Freight forwarder company Boateng Logistics joined a growing list of shipping companies that permanently shuttered their businesses as the firm on Feb. 22 filed for Chapter 7 bankruptcy with plans to liquidate.
The Carlsbad, Calif., logistics company filed its petition in the U.S. Bankruptcy Court for the Southern District of California listing assets up to $50,000 and and $1 million to $10 million in liabilities. Court papers said it owed millions of dollars in liabilities to trucking, logistics and factoring companies. The company filed bankruptcy before any creditors could take legal action.
Lawsuits force companies to liquidate in bankruptcy
Lawsuits, however, can force companies to file bankruptcy, which was the case for J.J. & Sons Logistics of Clint, Texas, which on Jan. 22 filed for Chapter 7 liquidation in the U.S. Bankruptcy Court for the Western District of Texas. The company filed bankruptcy four days before the scheduled start of a trial for a wrongful death lawsuit filed by the family of a former company truck driver who had died from drowning in 2016.
California-based logistics company Wise Choice Trans Corp. shut down operations and filed for Chapter 7 liquidation on Jan. 4 in the U.S. Bankruptcy Court for the Northern District of California, listing $1 million to $10 million in assets and liabilities.
The Hayward, Calif., third-party logistics company, founded in 2009, provided final mile, less-than-truckload and full truckload services, as well as warehouse and fulfillment services in the San Francisco Bay Area.
The Chapter 7 filing also implemented an automatic stay against all legal proceedings, as the company listed its involvement in four legal actions that were ongoing or concluded. Court papers reportedly did not list amounts for damages.
In some cases, debtors don't have to take a drastic action, such as a liquidation, and can instead file a Chapter 11 reorganization.
Shutterstock
Nationwide Cargo seeks to reorganize its business
Nationwide Cargo Inc., a general freight trucking company that also hauls fresh produce and meat, filed for Chapter 11 bankruptcy protection in the U.S. Bankruptcy Court for the Northern District of Illinois with plans to reorganize its business.
The East Dundee, Ill., shipping company listed $1 million to $10 million in assets and $10 million to $50 million in liabilities in its petition and said funds will not be available to pay unsecured creditors. The company operates with 183 trucks and 171 drivers, FreightWaves reported.
Nationwide Cargo's three largest secured creditors in the petition were Equify Financial LLC (owed about $3.5 million,) Commercial Credit Group (owed about $1.8 million) and Continental Bank NA (owed about $676,000.)
The shipping company reported gross revenue of about $34 million in 2022 and about $40 million in 2023. From Jan. 1 until its petition date, the company generated $9.3 million in gross revenue.
Related: Veteran fund manager picks favorite stocks for 2024
bankruptcy pandemic covid-19 stocksUncategorized
Key shipping company files Chapter 11 bankruptcy
The Illinois-based general freight trucking company filed for Chapter 11 bankruptcy to reorganize.
Share this:
The U.S. trucking industry has had a difficult beginning of the year for 2024 with several logistics companies filing for bankruptcy to seek either a Chapter 7 liquidation or Chapter 11 reorganization.
The Covid-19 pandemic caused a lot of supply chain issues for logistics companies and also created a shortage of truck drivers as many left the business for other occupations. Shipping companies, in the meantime, have had extreme difficulty recruiting new drivers for thousands of unfilled jobs.
Related: Tesla rival’s filing reveals Chapter 11 bankruptcy is possible
Freight forwarder company Boateng Logistics joined a growing list of shipping companies that permanently shuttered their businesses as the firm on Feb. 22 filed for Chapter 7 bankruptcy with plans to liquidate.
The Carlsbad, Calif., logistics company filed its petition in the U.S. Bankruptcy Court for the Southern District of California listing assets up to $50,000 and and $1 million to $10 million in liabilities. Court papers said it owed millions of dollars in liabilities to trucking, logistics and factoring companies. The company filed bankruptcy before any creditors could take legal action.
Lawsuits force companies to liquidate in bankruptcy
Lawsuits, however, can force companies to file bankruptcy, which was the case for J.J. & Sons Logistics of Clint, Texas, which on Jan. 22 filed for Chapter 7 liquidation in the U.S. Bankruptcy Court for the Western District of Texas. The company filed bankruptcy four days before the scheduled start of a trial for a wrongful death lawsuit filed by the family of a former company truck driver who had died from drowning in 2016.
California-based logistics company Wise Choice Trans Corp. shut down operations and filed for Chapter 7 liquidation on Jan. 4 in the U.S. Bankruptcy Court for the Northern District of California, listing $1 million to $10 million in assets and liabilities.
The Hayward, Calif., third-party logistics company, founded in 2009, provided final mile, less-than-truckload and full truckload services, as well as warehouse and fulfillment services in the San Francisco Bay Area.
The Chapter 7 filing also implemented an automatic stay against all legal proceedings, as the company listed its involvement in four legal actions that were ongoing or concluded. Court papers reportedly did not list amounts for damages.
In some cases, debtors don't have to take a drastic action, such as a liquidation, and can instead file a Chapter 11 reorganization.
Shutterstock
Nationwide Cargo seeks to reorganize its business
Nationwide Cargo Inc., a general freight trucking company that also hauls fresh produce and meat, filed for Chapter 11 bankruptcy protection in the U.S. Bankruptcy Court for the Northern District of Illinois with plans to reorganize its business.
The East Dundee, Ill., shipping company listed $1 million to $10 million in assets and $10 million to $50 million in liabilities in its petition and said funds will not be available to pay unsecured creditors. The company operates with 183 trucks and 171 drivers, FreightWaves reported.
Nationwide Cargo's three largest secured creditors in the petition were Equify Financial LLC (owed about $3.5 million,) Commercial Credit Group (owed about $1.8 million) and Continental Bank NA (owed about $676,000.)
The shipping company reported gross revenue of about $34 million in 2022 and about $40 million in 2023. From Jan. 1 until its petition date, the company generated $9.3 million in gross revenue.
Related: Veteran fund manager picks favorite stocks for 2024
bankruptcy pandemic covid-19 stocksUncategorized
Tight inventory and frustrated buyers challenge agents in Virginia
With inventory a little more than half of what it was pre-pandemic, agents are struggling to find homes for clients in Virginia.
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No matter where you are in the state, real estate agents in Virginia are facing low inventory conditions that are creating frustrating scenarios for their buyers.
“I think people are getting used to the interest rates where they are now, but there is just a huge lack of inventory,” said Chelsea Newcomb, a RE/MAX Realty Specialists agent based in Charlottesville. “I have buyers that are looking, but to find a house that you love enough to pay a high price for — and to be at over a 6.5% interest rate — it’s just a little bit harder to find something.”
Newcomb said that interest rates and higher prices, which have risen by more than $100,000 since March 2020, according to data from Altos Research, have caused her clients to be pickier when selecting a home.
“When rates and prices were lower, people were more willing to compromise,” Newcomb said.
Out in Wise, Virginia, near the westernmost tip of the state, RE/MAX Cavaliers agent Brett Tiller and his clients are also struggling to find suitable properties.
“The thing that really stands out, especially compared to two years ago, is the lack of quality listings,” Tiller said. “The slightly more upscale single-family listings for move-up buyers with children looking for their forever home just aren’t coming on the market right now, and demand is still very high.”
Statewide, Virginia had a 90-day average of 8,068 active single-family listings as of March 8, 2024, down from 14,471 single-family listings in early March 2020 at the onset of the COVID-19 pandemic, according to Altos Research. That represents a decrease of 44%.
In Newcomb’s base metro area of Charlottesville, there were an average of only 277 active single-family listings during the same recent 90-day period, compared to 892 at the onset of the pandemic. In Wise County, there were only 56 listings.
Due to the demand from move-up buyers in Tiller’s area, the average days on market for homes with a median price of roughly $190,000 was just 17 days as of early March 2024.
“For the right home, which is rare to find right now, we are still seeing multiple offers,” Tiller said. “The demand is the same right now as it was during the heart of the pandemic.”
According to Tiller, the tight inventory has caused homebuyers to spend up to six months searching for their new property, roughly double the time it took prior to the pandemic.
For Matt Salway in the Virginia Beach metro area, the tight inventory conditions are creating a rather hot market.
“Depending on where you are in the area, your listing could have 15 offers in two days,” the agent for Iron Valley Real Estate Hampton Roads | Virginia Beach said. “It has been crazy competition for most of Virginia Beach, and Norfolk is pretty hot too, especially for anything under $400,000.”
According to Altos Research, the Virginia Beach-Norfolk-Newport News housing market had a seven-day average Market Action Index score of 52.44 as of March 14, making it the seventh hottest housing market in the country. Altos considers any Market Action Index score above 30 to be indicative of a seller’s market.
Further up the coastline on the vacation destination of Chincoteague Island, Long & Foster agent Meghan O. Clarkson is also seeing a decent amount of competition despite higher prices and interest rates.
“People are taking their time to actually come see things now instead of buying site unseen, and occasionally we see some seller concessions, but the traffic and the demand is still there; you might just work a little longer with people because we don’t have anything for sale,” Clarkson said.
“I’m busy and constantly have appointments, but the underlying frenzy from the height of the pandemic has gone away, but I think it is because we have just gotten used to it.”
While much of the demand that Clarkson’s market faces is for vacation homes and from retirees looking for a scenic spot to retire, a large portion of the demand in Salway’s market comes from military personnel and civilians working under government contracts.
“We have over a dozen military bases here, plus a bunch of shipyards, so the closer you get to all of those bases, the easier it is to sell a home and the faster the sale happens,” Salway said.
Due to this, Salway said that existing-home inventory typically does not come on the market unless an employment contract ends or the owner is reassigned to a different base, which is currently contributing to the tight inventory situation in his market.
Things are a bit different for Tiller and Newcomb, who are seeing a decent number of buyers from other, more expensive parts of the state.
“One of the crazy things about Louisa and Goochland, which are kind of like suburbs on the western side of Richmond, is that they are growing like crazy,” Newcomb said. “A lot of people are coming in from Northern Virginia because they can work remotely now.”
With a Market Action Index score of 50, it is easy to see why people are leaving the Washington-Arlington-Alexandria market for the Charlottesville market, which has an index score of 41.
In addition, the 90-day average median list price in Charlottesville is $585,000 compared to $729,900 in the D.C. area, which Newcomb said is also luring many Virginia homebuyers to move further south.
“They are very accustomed to higher prices, so they are super impressed with the prices we offer here in the central Virginia area,” Newcomb said.
For local buyers, Newcomb said this means they are frequently being outbid or outpriced.
“A couple who is local to the area and has been here their whole life, they are just now starting to get their mind wrapped around the fact that you can’t get a house for $200,000 anymore,” Newcomb said.
As the year heads closer to spring, triggering the start of the prime homebuying season, agents in Virginia feel optimistic about the market.
“We are seeing seasonal trends like we did up through 2019,” Clarkson said. “The market kind of soft launched around President’s Day and it is still building, but I expect it to pick right back up and be in full swing by Easter like it always used to.”
But while they are confident in demand, questions still remain about whether there will be enough inventory to support even more homebuyers entering the market.
“I have a lot of buyers starting to come off the sidelines, but in my office, I also have a lot of people who are going to list their house in the next two to three weeks now that the weather is starting to break,” Newcomb said. “I think we are going to have a good spring and summer.”
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