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The Blockchain will transform cross-border business

Colin Stevens

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Cryptocurrencies are, slowly yet steadily, changing the way people do business. The idea of having currency free from the whims of national governments in a crypto coin society and the possibility of making local or international transactions without any banks’ meddling is certainly an attractive one. But there are even more great things that blockchains bring to the table, writes Colin Stevens.

A few years ago, the word “Blockchain” was known only to a very select few. Nowadays, most people have heard of blockchains, even though they might just know it as ‘that thing that makes bitcoin work.’ While cryptocurrencies are the first widespread application of blockchain technology, this is far from the only use for it. Being secure, decentralized ledgers, blockchains can be applied in many fields

One area looking to new innovation using the blockchain is the cross-border money movement in multi-commodity trading business, which is very complex. There are a number of stakeholders, intermediaries and banks operating together to make deals happen. The supply chain deals are massive in value and happen very frequently.

Blockchain technology has been attracting attention from financial institutes, and the topics about “distributed ledger blockchain” have been widely discussed by banks. Many of them have setup innovation labs to conduct proof of concepts to be able to harness the power of blockchain and distributed ledger. Blockchain technology can help facilitating the process of cross-border money transfer and the advantages when compare to the traditional procedure.

The benefits of using blockchain for cross-border money transfer

It leads to the exclusion of any middlemen, central agencies, or correspondents from the payment processing. Transaction is amidst the parties who have entered into a bilateral agreement, thus ensuring trust is in place.

Reduced cost with minimal charges along the payment chain. In addition, SWIFT charges for the processing of the messages if the messages are routed through it. As a result of such charges, the correspondent banks/central agencies add to the cost of processing the payment, for activities like receiving, collating, and netting payment messages before retransmitting confirmations/denials to the respective banks.

Reduced turnaround time for settlement as there is no need for central agencies and movement of messages.

The intraday liquidity need not be ensured with the central banks. Since it is a distributed ledger and the nodes of the networks have a copy of the balances as they are maintained in the settlement accounts with the other banks, the balances are properly maintained.

Since the details of the transaction are encrypted and hashed, there is hardly any possibility to modify the data.

Subject to no messages being transmitted, the challenges around the standardization are minimized too.

Increased payment transparency with distributed ledger as sender and receiver are the nodes of the network/chain.

Blockchain is the future of cross-border payments. Companies that realize its potential and begin exploring ways to incorporate it will have a distinct advantage over competitors who stick with the status quo.

Ali Amirliravi, CEO of the Trade Finance Fintech company LGR Global

Ali Amirliravi, CEO of the Trade Finance Fintech company LGR Global

Ali Amirliravi, CEO of the Trade Finance Fintech company LGR Global, and founder of the new Silk Road Coin is a member of the Silk Road Chamber of International Commerce - an international association with the aim of increasing trade amongst members and states.

He predicts massive benefits to international business by the use of blockchain enabled cross border digital payments.

He told eureporter “inefficiencies within the digital payments and money movement industries are hurting businesses and consumers. By adopting new technologies and optimizing processes, we can not only improve speed and security, but really help to maintain the bottom line - a must in an industry with such slim margins. The time is now for stakeholders and banks to look to disruptive new technologies such as blockchain to solve existing problems and build out a new paradigm for international finance. Those that don’t act now will simply be left behind”

The universal use of the blockchain will make business much more straightforward for the companies themselves, this increased transparency and optimization will also make the companies much more attractive to outside investors.

It’s a win-win for everyone involved.

European Central Bank (ECB)

Lagarde reiterates need for timely ratification of own resources decision

Catherine Feore

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European Central Bank (ECB) President Christine Lagarde confirmed that the ECB would maintain its very accommodative monetary policy stance. The Governing Council will continue to conduct net asset purchases under the pandemic emergency purchase programme (PEPP) and expects purchases to be conducted at a significantly higher pace than during the first months of the year.

Lagarde said that the eurozone still had a long way to go before phasing out of monetary easing. She compared the situation to an economy on crutches, that has to cross the bridge of the pandemic, and in the meantime it needs two crutches, one fiscal and one monetary.

On national fiscal policies, Lagarde said an “ambitious and co-ordinated” approach remained crucial as a premature withdrawal of support would delay recovery and amplify long term scarring effects. She said firms and households would need ongoing support. 

At a European level, she said the ECB Governing Council reiterated the need for a timely ratification of the own resources decision, to finalize recovery and resilience plans promptly and the need for the NextGenerationEU programme to become operational without delay. She said that this could contribute a faster, stronger and more uniform recovery and thereby add to the effectiveness of monetary policy in the eurozone.

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Corporate tax rules

Tax policy: EU solutions to prevent tax fraud and avoidance

EU Reporter Correspondent

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Fair taxation is a priority for the European Parliament. Find out how it wants to tackle issues such as tax avoidance, tax fraud and more, Economy.

Infographic showing total tax revenue
Total tax revenue by EU country  

Tax policy, including the fight against tax fraud, has become a hot topic over the past decade due to journalistic investigations such as LuxLeaks, the Panama Papers, Football Leaks, Bahamas Leaks and the Paradise Papers, which revealed tax leaks and tax havens. They led to increasing unhappiness about damaging tax practices, particularly after the recession and the resulting budget constraints. Unpaid taxes result in smaller budgets both nationally and at EU level.

Tax policy has remained EU countries' own responsibility since the EU’s beginning, but the fight against tax fraud is shared by EU countries and the EU.

Taxation a priority for the European Parliament

Since September 2020, the Parliament has had a permanent sub-committee on tax matters. The committee was established to assist the economic and monetary affairs committee with taxation issues and deals with the fight against tax fraud, tax evasion and tax avoidance, as well as financial transparency in taxation.

During the 2014-19 parliamentary term, Parliament set up temporary special committees, including a special committee on financial crimes, tax evasion and tax avoidance and an inquiry committee Inquiry to investigate alleged contraventions and maladministration in the application of EU law in relation to money laundering, tax avoidance and tax evasion. These committees identified a number of flaws in tax provisions.

EU tax measures

Some of the main legislative proposals in recent years regarding tax relate to the exchange of information through the Directive on Administrative Cooperation, which has been amended many times to provide:

Other proposals relate to corporate taxation and tax avoidance for example:

  • The common consolidated corporate tax base (CCCTB), which addresses the tax obstacles that arise from different national tax systems for companies that operate in the internal market in order to avoid the risks of double taxation or aggressive tax planning
  • Corporate taxation of a significant digital presence to allow members states to tax profits made in their territory, even if a company is not physically present there
  • A common system for a digital services tax, a tax on revenues stemming from for example the transmission of data collected about users on digital interfaces
Infographic about gross domestic product for each EU country as well as direct and indirect taxes
Infographic showing for each EU country the gross domestic product as well as direct and indirect taxes  

In addition, there have been many proposals to update the VAT framework. The tax matters subcommittee is currently working on a report on how to create a new basis for taxing the profits of digital companies in countries where they operate, even when they do not have a physical presence.

The report will set out Parliament’s views ahead of the final global negotiations at the OECD, which are expected to be finalised by mid-2021. By June at the latest, the Commission is also expected to put forward a proposal on a digital levy as part of reforming the EU's system of own resources and financing the economic recovery after the Covid-19 pandemic.

About the infographics


Our infographic at the top shows the income from direct and indirect taxes for each EU country as well as total tax revenue as a percentage of the gross domestic product. The latter is divided between taxes on capital, consumption and labour. In addition, our map shows how wealthy countries are.

Infographic showing the VAT rates for EU countries
Standard VAT rate for different EU countries  

Find out more 

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European Parliament

European Parliament gives partial go-ahead to UK trade deal vote

EU Reporter Correspondent

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The European Parliament gave the go-ahead on Tuesday (13 April) for two key committees to vote this week on the EU-UK trade deal, but deferred a decision on whether the full parliament will give its assent later this month, writes Philip Blenkinsop.

The vote by parliament would be a final step in clearing the trade agreement struck between Britain and the European Union in December. Members of the parliament suspended the voting process in March in protest against British changes to arrangements on Northern Ireland.

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