China Moves Further Ahead in CBDC Race – Plus Loans Latest

The central banks are coming. Further to yesterday’s announcement of more preparatory moves for the Bank of England’s Britcoin, a central bank digital currency (CBDC), there’s more from China. The Chinese are far ahead in the CBDC area, and are actively trialling digital payment systems.

China is reportedly expanding its virtual yuan experiments to more local cities, however, there’s no exact timetable for its official launch, central bank Vice Governor Li Bo stated during an annual meeting on Sunday (April 18, 2021) of both Chinese and foreign policymakers, senior executives and prominent academics.

As first reported by Reuters, China has taken the lead when it comes to developing a central bank digital currency or CBDC in order to streamline the existing financial system, while potentially attempting to address the threat from permissionless, decentralized cryptocurrencies such as Bitcoin from dominating the global financial ecosystem. CBDCs may also help speed up local and international payments.

In 2020, China had introduced its CBDC testing in Suzhou, Shenzhen, Chengdu and Xiong’an.

Li further noted that testing had revealed that the issuance process and distribution mechanism of the virtual renminbi or e-CNY is actually compatible with the traditional financial system. It may also help with minimizing the overall impact on the existing banking sector.

China is committed to enhancing the e-CNY’s ecosystem, by improving its security and reliability, while also providing a proper set of legal and regulatory guidelines, Li added while attending the Boao Forum in the nation’s southern island province of Hainan.

The State-backed virtual currency will be used by local residents and foreign visitors to the Beijing Winter Olympics which is scheduled to take place in 2020, Li confirmed.

Li also stated that the focus of creating the digital yuan will mostly be for local use while working cooperatively with other nations to identify a solution for conducting international payments in the long term. The potential internationalization of the digital yuan will be somewhat of a natural process, and the country’s aim is to not actually replace the US dollar or other world currencies, but allow the markets to decide what’s best, Li claims.

Loan Offers Latest

  • The loan offer from Mar-Key Group has an A+ rating and an annual rate of interest of 7 per cent.  The term of the loan is 24 months. The offer is currently 84 per cent filled.
  • The loan from We Buy Ant Home  has an A+ rating and an annual rate of interest of 7 per cent.  The term of the loan is 36 months. The offer is currently 16 per cent filled.

Historical Performance And IFISA Process Guide

  • Money&Co. lenders have achieved an average return of more than 8 per cent gross (before we deduct our one per cent fee). 

That figure is the result of over £20 million of loans facilitated on the site, as we bring individuals looking for a good return on capital together with carefully vetted small companies seeking funds for growth. Bear in mind that lenders’ capital is at risk. Read warnings on site before committing capital.

  • Money&Co. has been lending for over 5 years and has only had two bad debts so far, representing a bad debt rate of 0.03 per cent per annum.

All loans on site are eligible to be held in a Money&Co. Innovative Finance Individual Savings Account (IFISA), up to the annual ISA limit of £20,000. Such loans offer lenders tax-free income. Our offering is an Innovative Finance ISA (IFISA) that can hold the peer-to-peer (P2P) business loans that Money&Co. facilitates. For the purposes of this article, the terms ISA and IFISA are interchangeable.

So here’s our guide to the process:

  • Step 1: Register as a lender. Go to the login page, and go through the process that the law requires us to effect. This means we have to do basic checks on you to comply with money-laundering and other security requirements.
  • Step 2: Put money into your account. This is best done by electronic transfer. We can also process paper cheques drawn in favour of Denmark Square Limited, the parent company of Money&Co.
  • Step 3: Buy loans in the loan market. Once you’ve put cash in your account it will sit there – and it won’t earn interest until you’ve bought a piece of a loan. It’s this final step that requires lenders and IFISA investors to be pro-active. Just choose some loans – all loans on the Money&Co. site can be held in an IFISA – and your money will start earning tax-free interest.

The ISA allowance for 2020/21 is unchanged from last tax year at £20,000, allowing a married couple to put £40,000 into a tax-free environment. Over three years, an investment of this scale in two Money&Co. Innovative Finance ISAs would generate £8,400 of income completely free of tax. We’re assuming a 7 per cent return, net of charges and free of tax here.

Once you have made your initial commitment, you might then consider diversifying – buying a spread of loans. To do this, you can go into the “loans for sale” market. All loans bought in this market also qualify for IFISA tax benefits.

Risk: Security, Access, Yield

Do consider not just the return, but the security and the ease of access to your investment. We write regularly about these three key factors. Here’s one of several earlier articles on security, access and yield.



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Disclaimer: Money&Co.™ is the trading name of Denmark Square Limited, Company Number 08561817, registered in England & Wales, authorised and regulated by the Financial Conduct Authority (FCA). The company is identified on the Financial Services Register under Reference Number 727325. The registered office is 58 Glentham Road, Barnes, London, SW13 9JJ where the register of Directors may be inspected. Denmark Square Limited (ISA manager reference number Z1932) manages the Money&Co. Innovative Finance ISA.