Category Finance News

Paul Brody is global blockchain leader at professional services firm EY and co-author of a 2023 book, Ethereum for Business: A Plain-English Guide to the Use Cases that Generate Returns from Asset Management to Payments to Supply Chains. He speaks with Global Finance about blockchain technology’s impact on everything from routine payments to cross-border remittances to the future of banking and the CFO and treasurer roles.

Global Finance: If we look at what people are transacting on blockchains today, it’s not primarily bitcoin but stablecoin, a type of cryptocurrency designed to maintain a stable value over time. Does this surprise you?

Paul Brody: The ability of people to pay each other in dollars is hugely valuable. And to give you a sense of how big stable- coin dollars have become, last month the ethereum blockchain ecosystem did $2 trillion in stablecoin payments, over 99% of which were in US dollars.

GF: Who is actually using them?

Brody: By far the most popular initial use case for stablecoin is in emerging markets. Countries without independent central banks often experience high inflation or even hyperinflation, and so demand for US dollars is really high among the local population.

GF: And they’re being used for cross-border remittances too?

Brody: A lot of traditional cross-border systems take days to execute, and they cost a fair amount of money. If both participants have smartphones and cryptocurrency accounts, you can send dollars across borders in a matter of seconds for almost nothing.

GF: Lately, the US Treasury Department seems to be saying that the US doesn’t need a central bank digital currency [CBDC], i.e., a digital dollar. It can use stablecoin. Is that your read too?

Brody: What we need is well-regulated stablecoin. We need some regulatory safeguards to make sure that if you say there’s a dollar on-chain, there’s also a dollar in the bank account to back that up, or its equivalent in assets.

CBDCs have been flopping, mostly because central banks don’t really know why they’re doing them. I’ve talked to many central bankers, and they generally have no idea why they’re doing this other than Facebook wanted one.

GF: How will blockchain technology change things for corporate CFOs and treasurers?

Brody: CFOs and treasurers have some questions to ask themselves: Am I plugged into the crypto and blockchain system? Can I make stablecoin payments? Should I include bitcoin in my corporate treasury alongside US dollar-denominated bonds? Going further, can I automate my business contracts? My procurement? How can I run my business operations more efficiently? And if a customer wants to pay me in stablecoin, can they do so? The answer for most companies today is, no, they can’t.

GF: If you’re a stablecoin issuer, how do you make a profit on that business?

Brody: You make money with transaction fees and, potentially, your float on the interest rate. But that depends on interest rates. If rates go down really low, it’s going to be a painful business. Fees are pretty small because it’s such a competitive environment.

GF: What does all this mean for banks generally going forward? Is it going to lessen their importance?

Brody: It’s going to change banks’ role, and may diminish it. It depends on how a bank makes its money.

Banks that make their money processing credit card transac- tions are the most at risk because blockchains represent a new, more efficient way to process transactions. You swipe your credit card in a store, and you don’t see the cost of the payment, but it’s real and it’s substantial, like 3% to 4%. International wire trans- fers are usually a fixed fee, as much as $50. Stablecoin transfers cost almost nothing by comparison.

But if you’re a regional bank that does a lot of corporate finance, blockchain probably doesn’t change your business that much.

GF: What about major custody banks, such as BNY Mellon, JPMorgan, etc.? Is their business at risk?

Brody: Major custody banks are in an interesting place. They have a ton of assets, and if you’ve got assets and you control and custody those assets, you’re then in a position to help people tokenize them.

So, this new technology is certainly a threat, but it’s also potentially a substantial opportunity. At the end of the day, if you’re custodying assets and you’re now helping people tokenize them or manage them in different ecosystems, that represents the additive potential to your business.

GF: In your book Ethereum for Business, you highlight the importance of blockchain-based smart contracts. With these, one can define not only dollars but all sorts of things, even coffee mugs. Why aren’t more corporations using smart contracts?

Brody: The answer is that blockchains don’t yet have privacy built into them, and this is a huge problem. But it’s being fixed. It’s like the early days of the internet, when we didn’t have encryption. Most companies don’t feel comfortable doing business without privacy.

It’s why private blockchains have never worked. If companies had a private blockchain, they thought it ensured privacy. What they didn’t realize is that inside that walled garden there’s still no privacy. If you’re a big company and you have all your suppliers in your private blockchain, you still can’t run your procurement process there, because supplier A can see how much you’re paying supplier B, and also how much you’re ordering from them.

GF: How deep are banks going to go in providing blockchain services?

Brody: Every single bank is going to offer some kind of DLT [distributed ledger technology] service. You have stocks, you have bonds [to offer clients], and now you may add crypto. Other institutions may send cash to an ethereum address for you, instead of setting up a wire transfer to a bank address. There will be new versions of money transfer and payments, and some of them are going to be quite sophisticated.

GF: Skeptics are asking when they will see blockchain’s “killer app”: meaning an application that’s universally used, along the lines of what email did for the internet?

Brody: Stablecoins are the killer app, the one that gets everybody on-chain. The stablecoin market is about to get crazy competitive, and yield-bearing stablecoins will be widely available soon.

Canada last month named its first-ever AI minister, joining a list of countries that already includes the United Arab Emirates, France, and Taiwan.

For the role, newly elected Prime Minister Mark Carney tapped Evan Solomon, a former TV host who has worked for the publicly owned Canadian Broadcasting Corporation and the private network CTV. Previously, the AI domain fell largely under the industry portfolio. Canada is a leader in the field. In 2017, it became the first country to release a national AI strategy. By 2020, it ranked fourth out of 54 countries in the Global AI Index based on level of AI implementation, innovation, and investment—although it has since dropped to eighth place.

Despite its strength in AI research, however, Canada has been slow to scale the technology commercially.

“This is a positive and important first step,” says Adegboyega Ojo, Canada research chair in Governance and Artificial Intelligence at Carleton University’s School of Public Policy and Administration. “The creation of the Ministry of AI and Digital Innovation signals the new government’s intention to prioritize AI development as part of its broader ambition to build an economy of the future.”

Recent announcements by Canadian telecom giants Telus and Bell of investments in AI infrastructure are also encouraging, Ojo adds, as they should attract private sector investment and strengthen the country’s AI ecosystem.

Still, the challenge ahead could exceed the scope of the current blueprint, Ojo cautions: “The new minister may need to take on a broader coordination role beyond the government’s plans to expand AI infrastructure, invest in training, promote adoption and commercialization, and streamline AI procurement through the AI procurement through the [proposed] Office of Digital Transformation.” That, Ojo argues, will include working closely with counterparts in other ministries and departments as well as across provincial and territorial governments to ensure that AI is deployed strategically in areas where it can generate the greatest economic value, promote social inclusion, and support environmental sustainability. “To address the need for coordination effectively, the government will need to set bold and measurable goals that align AI deployment with national priorities,” he says. “This is what AI-driven transformation is really about.”

Hong Kong’s Mandatory Provident Fund Schemes Authority (MPFA) instructed the city’s fund managers last month to prepare for possible fallout from Moody’s
recent reduction of its US Treasury debt rating from Aaa to Aa1.

The territory’s mandatory provident funds (MPFs)—Hong Kong’s compulsory retirement savings schemes—are val- ued at approximately $167 billion, of which about 37% were invested in bonds and balanced funds as of the close of last year. Participating fund managers may be compelled to sell some of their US government bonds due to Washington’s

loss of its triple-A rating. Specifically, the MPFA told managers and MPF trustees to prepare for the possibility that the remaining credit agencies may slash US government debt ratings. The regulator asked trustees to devise adequate strategies and risk mitigation methods should US bond ratings fall further, as the MPFA has no plans to alter existing investment requirements.

The responsibility lies with MPF investment managers to create sound compliance plans, the regulator emphasized—and to make prompt, coherent changes to their asset allocation when respond- ing to market events, while at all times acting in the best interests of MPF scheme members

Moody’s mid-May decision to downgrade US sovereign debt stemmed from the growing cost of rolling over existing debt amid high interest rates alongside the steep rise in the federal government’s budget deficit. The one-notch downgrade reflected a decade’s growth in interest payment ratios and government debt to levels markedly greater than similarly rated sovereigns, Moody’s said in a statement.

Also, as of late May, Moody’s and S&P Global maintained their respective Aa3 and AA+ credit ratings for Hong Kong. Both agencies said the special administrative region’s position was largely secure on the back of its sizable foreign exchange reserves and fiscal buffers, coupled with high per capita income levels and the territory’s robust external balance sheet.

Paul Brody is global blockchain leader at professional services firm EY and co-author of a 2023 book, Ethereum for Business: A Plain-English Guide to the Use Cases that Generate Returns from Asset Management to Payments to Supply Chains. He speaks with Global Finance about blockchain technology’s impact on everything from routine payments to cross-border remittances to the future of banking and the CFO and treasurer roles.

Global Finance: If we look at what people are transacting on blockchains today, it’s not primarily bitcoin but stablecoin, a type of cryptocurrency designed to maintain a stable value over time. Does this surprise you?

Paul Brody: The ability of people to pay each other in dollars is hugely valuable. And to give you a sense of how big stable- coin dollars have become, last month the ethereum blockchain ecosystem did $2 trillion in stablecoin payments, over 99% of which were in US dollars.

GF: Who is actually using them?

Brody: By far the most popular initial use case for stablecoin is in emerging markets. Countries without independent central banks often experience high inflation or even hyperinflation, and so demand for US dollars is really high among the local population.

GF: And they’re being used for cross-border remittances too?

Brody: A lot of traditional cross-border systems take days to execute, and they cost a fair amount of money. If both participants have smartphones and cryptocurrency accounts, you can send dollars across borders in a matter of seconds for almost nothing.

GF: Lately, the US Treasury Department seems to be saying that the US doesn’t need a central bank digital currency [CBDC], i.e., a digital dollar. It can use stablecoin. Is that your read too?

Brody: What we need is well-regulated stablecoin. We need some regulatory safeguards to make sure that if you say there’s a dollar on-chain, there’s also a dollar in the bank account to back that up, or its equivalent in assets.

CBDCs have been flopping, mostly because central banks don’t really know why they’re doing them. I’ve talked to many central bankers, and they generally have no idea why they’re doing this other than Facebook wanted one.

GF: How will blockchain technology change things for corporate CFOs and treasurers?

Brody: CFOs and treasurers have some questions to ask themselves: Am I plugged into the crypto and blockchain system? Can I make stablecoin payments? Should I include bitcoin in my corporate treasury alongside US dollar-denominated bonds? Going further, can I automate my business contracts? My procurement? How can I run my business operations more efficiently? And if a customer wants to pay me in stablecoin, can they do so? The answer for most companies today is, no, they can’t.

GF: If you’re a stablecoin issuer, how do you make a profit on that business?

Brody: You make money with transaction fees and, potentially, your float on the interest rate. But that depends on interest rates. If rates go down really low, it’s going to be a painful business. Fees are pretty small because it’s such a competitive environment.

GF: What does all this mean for banks generally going forward? Is it going to lessen their importance?

Brody: It’s going to change banks’ role, and may diminish it. It depends on how a bank makes its money.

Banks that make their money processing credit card transac- tions are the most at risk because blockchains represent a new, more efficient way to process transactions. You swipe your credit card in a store, and you don’t see the cost of the payment, but it’s real and it’s substantial, like 3% to 4%. International wire trans- fers are usually a fixed fee, as much as $50. Stablecoin transfers cost almost nothing by comparison.

But if you’re a regional bank that does a lot of corporate finance, blockchain probably doesn’t change your business that much.

GF: What about major custody banks, such as BNY Mellon, JPMorgan, etc.? Is their business at risk?

Brody: Major custody banks are in an interesting place. They have a ton of assets, and if you’ve got assets and you control and custody those assets, you’re then in a position to help people tokenize them.

So, this new technology is certainly a threat, but it’s also potentially a substantial opportunity. At the end of the day, if you’re custodying assets and you’re now helping people tokenize them or manage them in different ecosystems, that represents the additive potential to your business.

GF: In your book Ethereum for Business, you highlight the importance of blockchain-based smart contracts. With these, one can define not only dollars but all sorts of things, even coffee mugs. Why aren’t more corporations using smart contracts?

Brody: The answer is that blockchains don’t yet have privacy built into them, and this is a huge problem. But it’s being fixed. It’s like the early days of the internet, when we didn’t have encryption. Most companies don’t feel comfortable doing business without privacy.

It’s why private blockchains have never worked. If companies had a private blockchain, they thought it ensured privacy. What they didn’t realize is that inside that walled garden there’s still no privacy. If you’re a big company and you have all your suppliers in your private blockchain, you still can’t run your procurement process there, because supplier A can see how much you’re paying supplier B, and also how much you’re ordering from them.

GF: How deep are banks going to go in providing blockchain services?

Brody: Every single bank is going to offer some kind of DLT [distributed ledger technology] service. You have stocks, you have bonds [to offer clients], and now you may add crypto. Other institutions may send cash to an ethereum address for you, instead of setting up a wire transfer to a bank address. There will be new versions of money transfer and payments, and some of them are going to be quite sophisticated.

GF: Skeptics are asking when they will see blockchain’s “killer app”: meaning an application that’s universally used, along the lines of what email did for the internet?

Brody: Stablecoins are the killer app, the one that gets everybody on-chain. The stablecoin market is about to get crazy competitive, and yield-bearing stablecoins will be widely available soon.

A collective sigh of relief rippled through EU capitals on May 18 when former Bucharest Mayor Nicuşor Dan secured an unexpectedly strong mandate in round two
of Romania’s presidential elections, besting far-right opponent George Simion with 53.6% of the vote against 46.4%.

Dan, a 55-year-old mathematician with a sober, low-key demeanor and a reputation for competence, had underper- formed in round one; but his commitment to the EU, NATO, and supporting Ukraine convinced doubters. Voters were also put off by Simion’s pro-Russian views—Romania has a history of antagonism with Russia—and his endorsement by Hungarian Prime Minister Viktor Orbán, who argues that Transylvania, incorporated into Romania by the 1920 Treaty of Trianon, should revert to Budapest.

Dan will have little time to relish his victory. Strong support for the nationalist right will remain a concern as the new government tackles major economic problems including the EU’s highest bud- get deficit at around 9% of GDP and falling living standards.

Political instability in recent months has damaged Romania’s profile in international capital markets—Fitch Ratings assigns it a BBB- with a negative outlook—and fiscal reform will be tougher given Dan’s commitment to eventually raise defense spending to 3.5% of GDP.

In his inauguration speech on May 26, Dan spoke of the need for change, arguing that the state was spending too much, and that inequalities within Romania—Southeast Europe’s largest economy with some 19 million people—needed to be tackled and institutions reformed. The new president said he wants to look to the future rather than the past and restore faith in democracy.

“It is in the national interest to send a message of stability to financial markets,” he emphasized. “It is in the national interest to send a signal of openness and predictability to the investment environment.”

Dan’s first priority will be to assemble a government out of Romania’s deeply fractured political scene. “The most likely outcome is a moderate coalition … with the potential addition of the Save Romania Union,” says Orsolya Ráczová, associate fellow for the Center for Global Europe at GLOBSEC. “This would provide fresh impetus to implement reforms agreed with the EU.”

The Central Bank of Kenya (CBK) plans to lift its 10-year ban on issuing new banking licenses on July 1.

This change will open the market to fintechs and digital banks, which is expected to increase market competition and, possibly, bank consolidations as small banks are forced to merge or exit the industry.

“Fintechs will drive innovation in the sector, prompting traditional banks to adopt new technologies to stay competitive,” says Anne Kibisu, a banking analyst at Deloitte Kenya.

New and existing banks will face new capital requirements enacted in December 2024 under the Business Laws (Amendment) Act 2024. By 2026, banks will be required to maintain KES10 billion ($77 million) in capital.

This development follows a similar capital increase in 2009, when the requirement was raised from KES250 million to KES1 billion. That change prompted mergers, including KCB’s acquisition of National Bank in 2019. Analysts predict a similar wave of consolidation as smaller banks struggle to meet the new capital targets.

The central bank reports that 12 banks face a combined capital shortfall of KES11.8 billion. To comply with the new requirements, these banks needed to raise KES3 billion by December 2024, KES6 billion this year, and eventually KES10 billion by 2026.

“These increased capital thresholds are designed to help banks absorb economic shocks and continue supporting sustainable growth,” said CBK Governor Kamau Thugge.

Since December 2023, 27 of Kenya’s 39 licensed banks have met the new capital requirement. The remaining 12, primarily smaller banks with limited branch networks, now face significant pressure to recapitalize or merge with larger institutions.

“We are actively exploring strategic partnerships to meet the new capital requirements,” said an executive from an affected bank. “Mergers are also being considered.”

The CBK is expected to guide the consolidation process, as it did during the 2015-2016 banking crisis, which saw the collapse of Imperial Bank and Chase Bank. By 2027, Kenya’s banking sector is expected to be more robust and consolidated.

Morocco has surpassed South Africa as the leading host of data centers in Africa, with 23 facilities.

The North African kingdom has adapted quickly to the digital age. In 2020, the Agency for Digital Development published a roadmap listing digital infrastructure as a priority. Since then, incentives have been put in place for the sector, including tax cuts and exemptions in the National Charter of Investment. The desire for data sovereignty has also contributed to the boom in data centers. A 2021 law ordered all sensitive data to be hosted within Morocco’s borders, which led to data repatriation.

Currently, most data centers are owned by telecom companies like Maroc Telecom and Inwi or by data center operators like Medasys and N+One. Most large banks also have one, while smaller banks lease data storage space.

Regional governments compete by offering different incentives. Casablanca-Settat and Rabat-Salé-Kénitra boast the most data centers. The full internet penetration rates of these urban centers and energy availability are key for these sites. Other regions are catching up, too. Last year, American firm Iozera signed a $500 million deal to build a data center in Tetouan.

“Datacenter location decisions are driven by a complex interplay of factors, including proximity to business hubs, regional infrastructure capabilities, and long-term operational sustainability. The industry naturally gravitates toward areas that optimize these variables,” says Doha Ammour, vice president of International Business Development at N+ONE Datacenters.

The digital wave in Morocco doesn’t stop at data centers. Developments in fintech, AI, and even e-government initiatives, like Digital Morocco 2030, were recently showcased at April’s 2025 Gitex Africa tech expo in Marrakech. The event drew over 1,400 exhibitors and received over 45,000 visitors and delegates from over 130 countries.

The saying goes, “Data is the new oil.” Data must also be refined and properly stored. However, unlike oil, data is infinite and even self-replicating, so the demand for data services will continue to increase.

By concentrating on financial inclusion, Latin America shows other parts of the world how to navigate testing times.

The IMF estimates that Central America will grow by 3.9% this year, the Caribbean is predicted to see a tourism bounce, and the region is setting global standards, according to Boston Consulting Group’s managing director, Saurabh Tripathi.

“Like many emerging markets, Latin America is a hotbed of financial innovation,” said Tripathi to Costa Rican newspaper La República. “In fact, some of the most cutting-edge developments in global banking originate [in Latin America]. These aren’t just regional success stories, but global benchmarks. Latin America is leading by example, and the world is paying attention.”

Tripathi cited two examples: Nubank, which started in Brazil and has spread to Colombia and Mexico. Nubank passed 100 million customers in May 2024 and has a market capitalization of $56.6 billion. Meanwhile, the Central Bank of Brazil’s Pix payment platform has transformed the nation’s instant payments system with more than 155 million users, 15 million companies, and over 6 billion transactions monthly. In 2024, Pix had a 53% year-on-year growth and surpassed credit card transactions.

However, Tripathi warned that more than 50% of the total capital invested in the world banking sector is trading below its value. This suggests that banks are not generating enough returns to cover capital costs, which in turn means they cannot enact societal transformation.

“We are on the verge of a banking revolution that will redefine how banks operate, how they serve society, and how they build trust,” he added.

In March, Brazilian bank Itaú unveiled instant global payments, and the latest unicorn in the region is Mexican digital bank Plata, which raised $160 million in Series A funding led by New York-based Kora that valued the two-year-old company at $1.5 billion.

Bolivia, Chile, and Ecuador have fielded projects ranging from financial inclusion to client experience, which won awards during the Fintech Americas Miami conference in March.

Other regional entities that received multiple awards include Grupo AutoFácil, BAC, Banco Atlántida, BBVA, BCP, Citi, Davivienda, and Santander.