The company promised to pay debts with local bonds, and its shares subsequently rose after several months. Evergrande is near a default that could hit all the markets on a global scale.

This Thursday, September 23, the Central Bank of China decided to inject 18.6 billion dollars into banks in that country to avoid a worrying financial crisis due to the default of the real estate company Evergrande Group.

After the real estate company confirmed that it had difficulties paying millionaire debts, the amount disbursed by the entity amounts to more than USD 50,000 million in seven days.

According to a report made by Bloomberg, this introduction of money from the Chinese government to solve Evergrande crisis is equivalent to 120,000 million yuan. This injection would be happening through reverse buyback agreements.

This procedure includes securities at a certain price to sell in the future at a higher price. Due to the features of the methodology and its costs, the net cash addition would be 90,000 million yuan (USD 13,945 million).

The Central Bank of China injected USD 14,000 million last Friday, September 17, but the country had also added a slightly higher amount on Saturday 18.

In the same vein as its bank debts, Evergrande’s stock is also crumbling down. This fall generates consequences in the international stock markets since many investors that the firm owns are banks from nations such as Canada, the United States of America, and Australia.

However, amid the disturbance experienced in recent weeks, the financial market received a breath of fresh air after Evergrande announced that it would pay its debt maturities this week with local bonds for at least 232 million yuan (USD 35 million). 

These decisions get reflected in Evergrande’s shares on the Hong Kong Stock Exchange, which rose 17% in the last 24 hours, after various months of almost uninterrupted decline.

Evergrande Might Become the New Lehman Brothers

Evergrande Group is the second-largest real estate company in China and had been struggling with liquidity problems for some time.

Due to these problems, the company would now have difficulties with a debt that might surpass USD 300,000 million to its creditors. Some creditors are banks in China and other entities around the world.

As a consequence of this failure in one of the most important firms in the Asian country, the fear of a new global financial crisis, such as Lehman Brothers in 2008, has been growing in recent weeks.

China has already disbursed just over USD 50,000 million, approximately 12% of what the United States of America had available as a financial injection in 2008.

How the Crisis in China Affects Cryptocurrencies

The cryptocurrency market is not exempt from such a crisis that could occur in stock markets worldwide. On September 20, this media reported that the decline in the market capitalization of cryptocurrencies would have reached USD 225,000 million, representing a drop of 11% in 24 hours.

The funds that got invested in cryptocurrencies got moved elsewhere. This migration came in parallel with a fall in the price of cryptocurrencies such as bitcoin (BTC), which could not detach from the red figures of the stock market, and whose value decayed more than 9% in just a few hours.

By: Jenson Nuñez

Chile is evaluating a digital currency that would meet its issuance in a similar way to the banknotes. The white paper for this digital currency would get published in early 2022.

The Central Bank of Chile is now advancing to achieve the development and release of its digital currency. The institution reported this news on Wednesday, September 22, after its president, Mario Marcel, confirmed his participation in a digital event organized by the Inter-American Development Bank (IDB) and the Chilean Ministry of Finance.

During the digital meeting “Innovation in the financial industry: a boost to financial reactivation and inclusion,” Marcel revealed the creation of a working team committed to generating a digitalization strategy to encourage the Chilean economy.

Through a press release, the institution highlighted that this team would have among its tasks to evaluate the goal, requirements, and regulations for the development of a digital currency issued by the Central Bank.

This currency would meet a creation similar to bills and coins, according to the text. Likewise, it states that this digital currency would be a tool for citizens to pay in shops and among themselves so that financial institutions can settle payments between peers.

The working group, which will be under the counselor Alberto Naudon’s supervision, must create a medium-term plan regarding digital means of payment in the South American nation. They would consider retail, wholesale, cross-border, and even private digital payments.

The publication added that the working group would also consider crypto assets, the central bank’s digital currency, and the infrastructures that support the various means of payment, internal and external.

According to the Central Bank of Chile, There are New Challenges for CBDCs

The Chilean Central Bank argues, in its publication, that central bank digital currencies, commonly known as CBDCs are receiving a lot of global attention and research as they have the potential to make different public policy objectives easier.

According to data from research firm Bison Trails, CBDCs are under the magnifying glass of at least 80 of the central banks worldwide. And some of these banks have already made significant progress, such as China, Brazil, or the Bahamas.

Regarding Chile, the Central Bank considers that cryptocurrency can offer various improvements in the security of payments. This digital currency would also bring a lot of financial opportunities for citizens. It would make sending money across Chilean borders easier, as well as encourage more financial inclusion.

The working team also warned about a series of challenges that they could face when taking the step of creating their CBDC. These challenges might be greater than those of the issuance of physical or fiduciary money in matters such as the provision of credit in the economy, financial stability, and privacy during a transaction.

The advance in the Chilean bank’s CBDC happens in parallel with the intentions of the  Chilean government to create a regulation for financial technology companies (Fintech) that could balance cryptocurrencies.

The discussion of that bill, introduced by the government of Sebastián Piñera before Congress, received its approval this Thursday, September 23.

By: Jenson Nuñez

Some businesses in Buenos Aires and the interior of Argentina accept payments with this method. Retailers are satisfied with the speed and simplicity of transactions with cryptocurrencies.

A jewelry store in La Pampa, Argentina, recently made a sale with cryptocurrencies, thus adding that sector to the adoption of Bitcoin. The item traded was a watch worth ARS 30,000, equivalent to USD 164. The buyer used Tether (USDT) for the operation, but the establishment also accepts payments with Bitcoin.

The owner of the store, Hugo Iglesias, said that he decided to accept cryptocurrencies as payment for all his services. When he put the sign on the window, he received many inquiries while the providers started accepting cryptocurrencies.

Regarding the billing, Iglesias explained that he treated it as an ordinary transaction. He stated that everything was easy and fast, unlike what happens with credit or debit cards. He said that they made him wait to collect the sale proceeds while the accreditation of funds with cryptocurrencies was instantaneous.

That jewelry store is not the only one accepting payments with Bitcoin and other cryptocurrencies as adoption is growing in other firms in the area. That is also the case of Buenos Aires jewelry Libertad 74, where buyers can use any cryptocurrency or stablecoin.

Trading and Investments with Cryptocurrencies Grow in Argentina

The prices of jewelry in Argentina are highly dependent on the US dollar. For that reason, cryptocurrencies can contribute to conducting high-value operations amid the difficulty of accessing the US fiat currency in Argentina.

Argentines are looking for alternatives to protect themselves from devaluation and inflation, but the government continues to impose restrictions. That makes the dollarization process even more difficult in the South American country, which is why many people have opted for the digital dollar. That is a set of assets known as stablecoins that represent an option that allows safeguarding value.

In that sense, the adoption of cryptocurrencies in the commercial sphere in Argentina is something increasingly frequent. A real estate agency in Buenos Aires recently pre-sold an office still under construction.

Oslo Properties co-founder Patricio Rozenblum said that the buyer of the property paid the total value in Bitcoin. Cryptocurrency exchange SatoshiTango assisted the real estate agency in settling the operation.

Regarding the transaction, Rozenblum stated that it was simple and there were no fees to pay in the future. He said that the deal would have been complex if the payment had been in installments due to the volatility of Bitcoin.

In the capital of Argentina, citizens can also buy other things with cryptocurrencies, including brand new vehicles, tires, spare parts, and accessories. Concerning cars, the buyer takes advantage of a plan to pay for the reservation in crypto assets.

Buyers of tires can use Bitcoin and other cryptocurrencies as part of a campaign called Pay as You Like. They can also purchase spare parts and accessories and receive services like wheel alignment and balancing with crypto assets.

By Alexander Salazar