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Crypto assets may displace local currencies in developing countries — IMF

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The International Monetary Fund has said some emerging markets and developing economies face immediate and serious risks of currency substitution by crypto assets.

The IMF disclosed this in a report titled, ‘Global Crypto Regulation Should be Comprehensive, Consistent, and Coordinated’ released on Thursday.

In the report, the IMF said its mandate is to safeguard the stability of the international monetary and financial system.

The Washington DC-based fund said, “Some emerging markets and developing economies face more immediate and acute risks of currency substitution through crypto assets, the so-called cryptoisation.

“Capital flow management measures will need to be fine-tuned in the face of cryptoisation. This is because applying established regulatory tools to manage capital flows may be more challenging when value is transmitted through new instruments, new channels and new service providers that are not regulated entities.”

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According to the IMF, crypto assets will soon pose systemic financial stability in some countries as policy makers struggle to the monitor risks.

It added that crypto assets were drastically changing the financial system it was trying to protect.

The IMF said, “Crypto assets and associated products and services have grown rapidly in recent years. Furthermore, inter linkages with the regulated financial system are rising.

“Policymakers struggle to monitor risks from this evolving sector, in which many activities are unregulated. In fact, we think these financial stability risks could soon become systemic in some countries.”

“While the nearly $2.5tn market capitalisation indicates significant economic value of the underlying technological innovations such as the blockchain, it might also reflect froth in an environment of stretched valuations.”

According to the international fund body, identifying, monitoring, and management of crypto-related risks continues to defy regulators and firms.

It added that in developing economies for instance, cryptoisation was threatening to replace domestic currency, and circumvent exchange restrictions and capital account management measures.

The IMF said, “Such risks underscore why we now need comprehensive international standards that more fully address risks to the financial system from crypto assets, their associated ecosystem, and their related transactions, while allowing for an enabling environment for useful crypto asset products and applications.”

The IMF added that crypto’s cross-sector and cross-border remit limits the effectiveness of national approaches. The body said, “Countries are taking very different strategies, and existing laws and regulations may not allow for national approaches that comprehensively cover all elements of these assets.

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“Importantly, many crypto service providers operate across borders, making the task for supervision and enforcement more difficult. Uncoordinated regulatory measures may facilitate potentially destabilising capital flows.”

According to the IMF, there is a need for a global regulatory framework that provides a level playing ground along the activity and risk spectrum.

It said crypto-asset service providers that deliver critical functions should be licensed or authorised.

The IMF said, “These would include storage, transfer, settlement, and custody of reserves and assets, among others, similar to existing rules for financial service providers.

 “Licensing and authorisation criteria should be clearly articulated, the responsible authorities clearly designated, and coordination mechanisms among them well defined. Requirements should be tailored to the main use cases of crypto assets and stablecoins.”

The IMF added there was an urgent need for cross-border collaboration and cooperation to address technological, legal, regulatory, and supervisory challenges.

“Crypto assets are potentially changing the international monetary and financial system in profound ways,” it added.

Punch

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Breaking: CBN jacks up interest rate to 15.5%

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The Central Bank of Nigeria (CBN) has raised the monetary policy rate (MPR), which measures interest rate, from 14 per cent to 15.5 per cent to tame rising inflation.

The interest rate was raised from 13 per cent to 14 per cent in July this year.

The monetary policy rate is the baseline interest rate in an economy, every other interest rate used within an economy is built on.

Governor of the CBN, Godwin Emefiele, addressing journalists on Tuesday after the committee’s meeting in Abuja, said 10 members of the committee voted for the rate hike.

In August, Nigeria’s inflation rate rose to a nearly two-decade high at 20.52 per cent.

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Lamborghini pushes out final Aventador, Ultimae, ends V12 supercar

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Supercar manufacturer, Lamborghini, has announced the production of the last Aventador. You can call it Avantador’s last dance. The final Lamborghini Aventador Ultimae was rolled off the production line in Sant’Agata, Italy, and kissing goodbye to V12-powered supercar that shaped an era. The Lamborghini V12 will be hybridised going forward.

This Ultimae Roadster marks the 11,465th Aventador to reach customers worldwide. First launched in 2011, the Aventador is not exactly modern, but when it debuted, it was described by CEO Stephan Winkelmann as “a jump of two generations in terms of design and technology,” with “performance that is simply overwhelming.”

A plug-in hybrid replacement is expected to be revealed later this year, having been spied testing.

Lamborghini made sure the final model was the most powerful, with the 6.5-litre unit producing 10bhp more than in the previous range-topping Aventador, the Lamborghini Aventador SVJ, sending 769bhp (780PS, hence the name) to both axles. The Aventador-based Essenza SCV12 produces 819bhp but is limited to track use.

The Ultimae’s 531lb ft torque peak matches the SVJ’s, with which it shares its power- to-weight ratio. But with a 0-62mph time of just 2.8sec and a top speed of 221mph, the Ultimae is the fastest road-going Aventador.

The 350 coupés and 250 roadsters – each sold with a numbered plaque – were offered in a range of unique colour schemes, including a new grey-on-grey option with contrasting red trim elements, while the roadster could be specified with an exposed carbonfibre roof panel. It was also subtly marked out from other Aventadors by way of a unique styling package that “took the best components” of the S and SVJ.

The Aventador’s plug-in hybrid replacement will serve as a bridge to pure-electric Lamborghini models in the future.

This electrified future will see the Hurácan and Lamborghini Urus also go down the same route, and an all-electric 2+2 introduced in the second half of the decade.

Importantly, however, while its replacement will use an electrified drivetrain, it will take the bulk of its power from a large-capacity V12, in line with company boss Stephan Winkelmann’s commitment to the emotional value of its supercars.

He told Autocar last year that there is “a lot of emotion attached” to the 12-cylinder engine, which he is particularly aware of, having been involved in the launch of the Aventador in his first stint as the boss of Lamborghini in 2011.

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How to use your pensions for mortgage

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The National Pension Commission recently approved the guidelines to access Retirement Savings Account balance for payment of equity contribution for residential mortgage by RSA holders.

The approval was in line with Section 89 (2) of the Pension Reform Act 2014, which allows RSA holders to use a portion of their RSA balance towards payment of equity for residential mortgage.

PenCom however specified conditions to access the funds. A major condition is that the applicant must be in active employment, either as a salaried employee or as a self-employed person.

It stated that application for equity contribution for residential mortgage must be in person and not by proxy.

How to apply

Anybody who is interested can approach his PFA to get explanation on the process. The PFA will print the statement of account and determine the 25 per cent.

Speaking with our correspondent, the Spokesperson, PenCom, Abdulqadir Dahiru, said, “Then when you have that, you can now go back to your mortgage lender, get a letter of offer of your property, go through their own due diligence to agree for them to finance because the pension is only giving you 25 per cent; 75 per cent will still be financed by somebody.

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“That person must give you an offer letter for a loan that he is ready to finance you, and this is the equity contribution you are required to bring. So if you have that equity contribution with that letter of offer, which has been validated by the mortgage lender, that is when you can approach your PFA to request for your 25 per cent.”

Maximum amount allowed

PenCom stated that the maximum amount to be withdrawn is 25 per cent of the total mandatory RSA balance as of the date of application, irrespective of the value of equity contribution required by the mortgage lender.

Where 25 per cent of a contributor’s RSA balance is not sufficient for payment as equity contribution, the RSA holders may utilise the contingency portion of their voluntary contributions (if any).

Consent form

If a person had accessed part of the funds before either for leaving paid employment before retirement age, he will still get lump sum at retirement. He can still get part of the funds for mortgage after meeting specific conditions stated in the guidelines, but he must sign a consent form to get it.

Aisha Dahir-Umar, DG National Pension Commission

Dahiru said, “If you have taken 25 per cent for temporary loss of job and then you get employment again, and you continue contributing and you come to collect for a mortgage, you will sign a consent to say that I’m fully aware that this money I want to withdraw to finance a house will affect the amount I may likely take when I retire, I understand and whatever.

“So, basically you are indemnifying the PFA that you understand so that at the point of retirement, if your benefit is lower compared to your colleagues you will not complain.”

Mortgage lender

To qualify as a mortgage lender for the purpose, the company must be licensed by the Central Bank of Nigeria, comply with the Contributory Pension Scheme and have valid Pension Clearance Certificate, according to PenCom’s guidelines.

Eligibility

According to PenCom, a worker must have an offer letter for the property duly signed by the property owner and verified by the mortgage lender. The RSA of the applicant must have both employer and employee’s mandatory contributions for a cumulative minimum period of 60 months (five years). A contributor under the Micro Pension Plan is also eligible, provided he/she has made contributions for at least 60 months (five years) prior to the date of his/her application.

Age limit

RSA holders that have less than three years to retirement are not eligible.

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Dahiru explained, “If I am an employee and working in an organisation where the retirement age is 55 years, if I am 50, or 51 years, I can access because I have five years or more than three years to retire. But once I get to 52 that, means I have three years which I cannot access.”

According to PenCom’s guidelines, married couples, who are RSA holders, are eligible to make a joint application, subject to individually satisfying the eligibility requirements.

Data recapturing

RSA holders, if registered before 1 July 2019, must have their records updated through the RSA data recapture exercise.

Dahiru said, “But it’s very important that RSA holders have done their recapture. When you have not done your data recapturing, we can’t process it.”

Insufficient 25 per cent contribution

The PenCom spokesperson said, “Where the 25 per cent the mortgage lender is asking for is equal to the 25 per cent of your RSA, definitely we will process. But if what mortgage lender is asking for is higher than what you can get from your PFA, you will have to look for the difference and pay and show evidence to your PFA.

“For instance, if your mortgage lender is looking for N2.5m and the mortgage is N10m, and the mortgage lender says bring 25 per cent as equity contribution, and your own 25 per cent in your RSA is only N1.5m, you will have to look for that difference of N1m and pay; then come with it with your offer letter for the property and the evidence that I have paid, then your PFA will give you the balance of N1.5m which is your 25 per cent.”

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