David Fuller and Eoin Treacy's Comment of the Day
Category - General

    Bank Collaboration Approved By Banque De France To Test CBDC For Interbank Settlements

    This article from Tokencrunch may be of interest to subscribers. Here is a section:

    A collaboration of the SEBA Bank AG and the Tezos Foundation to test the integration of a CBDC for interbank settlements was one of 8 successful projects chosen by the Banque De France announced on the 20th of July. Many people had speculated whether Tezos was involved with at least one of the eight projects.

    One link involved NeoFacto, partners with Tezos core development team Nomadic Labs and also partners to successful CBDC project applicants Société Générale Forge.

    However, it seems that the Tezos Foundation has collaborated with SEBA Bank AG based in the Crypto Valley in the same cryptocurrency-friendly region where the Tezos Foundation is based.

    A post on LinkedIn from CV Labs a Swiss incubator also based in the Crypto Valley who have relationships with both the Tezos Foundation and SEBA Bank AG appeared to congratulate both Société Générale and SEBA Bank on the project whilst also tagging several prominent Tezos Foundation figures and also displaying the Tezos logo in the visual image.

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    The Baupost Group Letter

    Thanks to a subscriber for this letter by Seth Klarman and team. Here is a section focusing on appetite for risk:

    Fed policy has been magnificently successful in achieving its objectives not only of lifting securities prices but also of altering investor behavior. The Fed wanted to influence buyers of securities to be bolder in their pursuit of return. The head of a major pension fund recently authored a piece describing how the fund had responded to lofty markets and low yields on safe debt instruments. Their reaction was not to lower the fund’s currently aggressive 7% risk-adjusted return objective to a more realistic threshold, but instead to direct more assets into “lower volatility” private investments while leveraging the portfolio. Private investments, of course, have the same underlying risk and inherent volatility as public investments – though because they are not publicly traded, their intermittent and privately determined appraisals may make them appear to be less volatile. And as for the choice to leverage up, we can only note that leverage is a double-edged sword that enhances returns in good times while sinking them in down markets. If markets falter, this fund will have not solved its problems but rather have multiplied them.  

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    NZ to trial world-first commercial long range, wireless power transmission

    This article by Loz Blain for newatlas.com may be of interest to subscribers. Here is a section:

    Emrod currently has a working prototype of its device, but will build another for Powerco, with plans to deliver by October, then spend several months in lab testing before moving to a field trial. The prototype device will be capable of delivering "only a few kilowatts" of power, but can easily be scaled up. "We can use the exact same technology to transmit 100 times more power over much longer distances," said Emrod founder and serial entrepreneur Greg Kushnir. "Wireless systems using Emrod technology can transmit any amount of power current wired solutions transmit."

    The system uses a transmitting antenna, a series of relays and a receiving rectenna (a rectifying antenna capable of converting microwave energy into electricity). Each of these components appear in these images to simply look like big ol' squares on poles. Its beams use the non-ionizing Industrial, Scientific and Medical band of the radio spectrum, including frequencies commonly used in Wi-Fi and Bluetooth.

    Unlike Tesla's globally-accessible free power dream, the power here is beamed directly between specific points, with no radiation around the beam, and a "low power laser safety curtain" immediately shuts down power transmission before any object, like a bird, drone, power thief or helicopter, can touch the main beam. There will be no difficulties this time working out where to place the meter.

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    Gold Views: In search of a new reserve currency

    Thanks to a subscriber for this report from Goldman Sachs which may be of interest. Here is a section:

    As a result of growing debasement risk, DM investment demand strength has continued with ETF additions in both Europe and US running high (see Exhibit 6). We see this trend persisting for some time as investment allocations into gold increase in line with allocations to inflation protected assets, similar to what happened after the financial crisis. Following the GFC, inflation fears peaked only at the end of 2011 as the bounce back in inflation ran out of steam, bringing the gold bull market to a halt. Similarly, we see inflationary concerns continuing to rise well into the economic recovery, sustaining hedging inflows into gold ETFs alongside the structural weakening of the dollar, we see gold being used as a dollar hedge by fund managers. Indeed, decomposing our gold forecast, with returns of 18% over the next 12 months, we estimate 9% of the growth is driven by 5yr real rates going to -2% over the next 12 month, (an est. elasticity of 0.1), while the second 9% comes from the 15% increase in the EM dollar GDP (an est. elasticity of 0.5) (see Exhibit 7). On top of these known flows, a large share of physical investment demand in gold is non-visible, in particular vaulted bar purchases by high net worth individuals. Looking at net Swiss imports one can see that gold stocks in Switzerland, where most of these private vaults are located, have been building at close to a record pace (see Exhibit 8). In addition, the stretched valuations in equities, low real rates and high level of economic and political uncertainty all point toward continued inflows by high net worth individuals, in our view.

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    'An absolute necessity' Why this expert says China desperately needs a digital currency

    This article by Veta Chan for Fortune.com may be of interest to subscribers. Here is a section:

    How will data be used by central banks and how will the central bank reassure people about the privacy of their data?

    The data you are going to collect, there are two sides to it. On one side, the data that they're going to collect, given they are going to be able to engage the complete economic activity of a country in realtime, that data will be recorded on a blockchain-type network, distributed ledger, we don't know exactly. So the government will have access to all of that. On the [other] hand, it will enable the central bank to do their job more effectively. Because rather than having a lag in economic data, they're monitoring all the spending, the transactions, money supply, inflation implications, all in realtime... Tracking where people go in the world, because CBDC will be available to Chinese as they do business in other countries. It's almost a sort of a way to track an individual. So there are big alarming questions that need to be properly considered when it comes to privacy and anonymity.

    The technology is there to enforce anonymity, but it's a question of are they going to implement it? Is that something that they're going to build into their currency? Time will only tell if different central banks come up with their versions of digital currency, as they say there is no one-size-fits-all, they're all going to be different and likely to reflect the values and culture of their citizens. Are we just going to accept that all governments get to have this data like we've kind of accepted with tech giants like Facebook? No one has really done anything about it.

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    Email of the day - on hedging exposure to market crashes

    Robusta Coffee Heads for Biggest Monthly Gain in a Decade

    This article by Manisha Jha for Bloomberg may be of interest to subscribers. Here is a section:

    Robusta coffee futures have surged about 16% in London this month, the biggest gain for a most-active contract since June 2010 amid a shift toward home coffee consumption. Worldwide lockdowns that shuttered cafes, restaurants and offices have supported demand for robusta beans, typically favored to brew instant coffee at homes.

    “Nestle results provide confirmation at-home sales is doing very well,” said Carlos Mera, an analyst at Rabobank in London. “It was priced in to some extent, based on IRI data from the U.S., but this is more global.”

    Robusta spreads have firmed up and its certified stockpiles have fallen to the lowest since the start of last year. Speculators covering their negative positions has also helped prices rally in recent weeks. Smaller robusta crops expected in Brazil and Vietnam in the 2020-21 season are also bullish for prices, Rabobank said.

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