As regular visitors to our News section will be aware, central bank digital currencies (CBDCs) are a coming thing. Cynics would say CBDCs are merely a way of distracting consumers from investing in true cryptocurrencies. CBDCs are digital, but not crypto – since they are controlled by central banks. However, they are soon to be launched on the international markets as an asset class to compete with cryptos.
A blockchain-based digital euro could in theory support almost unlimited numbers of payments being processed at the same time with a very large money supply and with a smaller carbon footprint than the card payment system, concludes Estonia’s central bank following an experiment with the ECB.
Eesti Pank worked with the ECB and the central banks of Spain, Germany, Italy, Greece, Ireland, Latvia and the Netherlands on a research experiment to assess one possible technical solution for the digital euro.
The project looked at how a digital euro built on the blockchain technology that already serves as the basis for the Estonian e-state could perform in terms of the number of payments and money-holders and its energy costs, and how digital identities could be linked and privacy ensured.
Payments were made between people with digital identities from Estonia, Latvia, Lithuania and Spain.
Historical Performance And IFISA Process Guide
That figure is the result of over £24 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.
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:
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.