BoE stress tests: all you need to know

The Bank of England has released the results of its latest round of its annual banking stress tests and its semi-annual financial stability report this morning. Used to measure the resilience of a bank’s balance sheet in adverse scenarios, the stress tests measured the impact of a severe slowdown in Chinese growth, a global recession […]

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Draghi: Eurozone will decline without vital productivity growth

It’s productivity, stupid. European Central Bank president Mario Draghi has become the latest major policymaker to warn of the long-term economic damage posed by chronically low productivity growth, as he urged eurozone governments to take action to lift growth and stoke innovation. Speaking in Madrid on Wednesday, Mr Draghi noted that productivity rises in the […]

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Asia markets tentative ahead of Opec meeting

Wednesday 2.30am GMT Overview Markets across Asia were treading cautiously on Wednesday, following mild overnight gains for Wall Street, a weakening of the US dollar and as investors turned their attention to a meeting between Opec members later today. What to watch Oil prices are in focus ahead of Wednesday’s Opec meeting in Vienna. The […]

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Banks, Financial

RBS emerges as biggest failure in tough UK bank stress tests

Royal Bank of Scotland has emerged as the biggest failure in the UK’s annual stress tests, forcing the state-controlled lender to present regulators with a new plan to bolster its capital position by at least £2bn. Barclays and Standard Chartered also failed to meet some of their minimum hurdles in the toughest stress scenario ever […]

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Barclays: life in the old dog yet

Barclays, a former basket case of British banking, is beginning to look inspiringly mediocre. The bank has failed Bank of England stress tests less resoundingly than Royal Bank of Scotland. Investors believe its assets are worth only 10 per cent less than their book value, judging from the share price. Although Barclays’s legal team have […]

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Categorized | Financial

IBM to join blockchain rush

Posted on September 23, 2016


Another day, another blockchain project unveiled by a bank, technology company, or consultancy. IBM will join the fray this week by announcing a partnership with China UnionPay to let bank customers exchange bonus points in different loyalty schemes.

Arguing that such a project would be prohibitively complex and costly using conventional technology, IBM and China UnionPay say that it is only possible because of the blockchain system that underpins bitcoin, the cryptocurrency.

    The US technology group and the Chinese state-owned payment settlement network aim to eventually include all kinds of loyalty schemes in the exchange, including air miles and supermarket reward cards.

    Blockchain technology is a complex set of algorithms and cryptography created to allow bitcoins to be traded and verified electronically over a widely distributed network of computers without a central ledger.

    Having initially been sceptical about it because of worries over fraud, big banks are now exploring how they can exploit the technology to speed up back-office settlement systems and free billions in capital tied up supporting trades on global markets.

    IBM and China UnionPay say bank customers are often restricted in how they can spend their bonus points in loyalty schemes, so would benefit from a speedy way to exchange them for points in other banks’ schemes.

    He Shuo, director of China UnionPay’s Electronic Payment Research Institute, said: “Blockchain embeds trust into transactions. This along with similar innovations under way using blockchain will positively change the future of the finance industry.”

    IBM has developed its own blockchain solution and is working with a number of financial institutions on other projects in this area, including Bank of America and Bank of Tokyo-Mitsubishi UFJ.

    However, there remains significant scepticism about the potential for the largely unproven technology to transform large swaths of financial services.

    “Blockchain is a technology in search of a problem,” said Alexander Ross, investment executive at Illuminate Finance, a venture capital group focused on financial technology. “We are seeing a very large number of new blockchain companies but only seriously look at backing solutions that solve real world business problems.”

    This week has brought a flurry of announcements about blockchain projects ahead of next week’s Sibos financial conference in Geneva.

    Technology consultants GFT will on Friday announce a project with Royal Bank of Scotland to test the UK state-controlled bank’s blockchain initiative using a cloud platform from Google.

    Earlier this week, seven financial institutions, including HSBC, Citigroup and Credit Suisse, announced the launch of a blockchain system developed by Axoni to store and maintain their records of trading data.

    Meanwhile, Switzerland’s stock exchange announced that it was teaming up with Digital Asset Holdings, the blockchain specialist run by former JPMorgan banker Blythe Masters, to develop a prototype for post-trade securities processing.

    Separately, Accenture courted controversy in the blockchain community by patenting a technique for editing information stored using the nascent technology in a move designed to make it more commercially viable.