Fredrich Neitzsche contends, “The snake which cannot cast its skin has to die. As well the minds which are prevented from changing their opinions; they cease to be mind.” To him, change is critical to human existence and progress. Failing to change will be the death of humanity as we know it. It is easy to discern from his thinking that we all owe humankind a duty to change. One facet of our lives where this philosophy has held is in the financial world.
As life evolves, so do our means of payment. The COVID-19 pandemic currently ravaging the world, for instance, has necessitated radical shifts in how we interact. As a way of mitigating spread, significant volumes of transactions have gone digital and virtual. With no end to the situation in sight, conversations around Central Bank Digital Currencies(CBDCs) and National Payments Platforms(NPP) have gained ground. But what are they, and importantly, what is their value? Come with me to explore CBDCs and NPPs and their place in finance.
The Relationship Between CBDC and Apollo NPP
CBDC (also known as digital sovereign currencies) is money issued by a country in digital form for transaction purposes. Many nations are mulling their introduction for more extensive public use. China, with its digital yuan and the Marshall Islands with Marshallese Sovereign, blazes the trail that many other countries are following in adopting CBDCs.
CBDCs will use National Payment Platforms to complete transactions. The National Payment System is a blockchain-based framework allowing exchanges by CBDCs. Apollo Fintech has pioneered this space with its revolutionary National Payment Platform. While announcing its launch and opportunities to collaborate, Apollo Fintech’s CEO, Mr. Stephen McCullah, stated, “The National Payment Platform is the only blockchain-powered system that enables users to make digital payments through sovereign currency.”
What Is the Value Proposition of Apollo’s NPP?
Is the Apollo NPP worth its publicity? Where exactly is its application in the payment systems? The following is but a snippet of the value it offers. In reality, though, the platform has immense capabilities.
Achievement of an Entirely Cashless Economy
Apollo’s NPP allows countries to go cashless. Physical bills are expensive to develop and maintain. A shift to entirely cashless payments releases funds used in their printing, diverting such savings to other sectors builds the economy.
Giving Central Banks Control Over Money Issuance
The increase in popularity of privately issued payment solutions is a concern to many Central Banks. Privately issued digital currencies, including crypto, offer advantages that fiat currencies don’t. For example, they are cheaper, faster, safer, and convenient means of transacting. Regaining Central Bank’s foothold in currency issuance requires them to develop currencies that compete favorably against available alternatives. CBDC running on Apollo’s NPP are that required avenue.
Arresting the Illicit Transfer of Money
The proliferation of illegal payments is a headache for many nations across the globe. These payments destabilize the economy and support nefarious activities like fraud, human trafficking, drug trade, and funding of terror activities. In its January 2020 Report on The State of Crypto Crime, Chainalysis shows a worrying increase in these crimes buttressed by crypto.
Flagging them is made the more difficult by advancements in the payments industry. Some of these enable anonymity in transactions making them the tool of choice for those with ill motives. Neil Walsh, Chief of Cybercrime and Anti-Money Laundering arm of the UN’s Office on drugs and crimes avers that crypto offers “a new layer of secrecy that favors criminals.”
Using the transparency the Apollo NPP provides, Central Banks will be able to capture these transactions and prevent termination. In this way, the banks will be vital in abetting global crime.
Enhancing Tax Efficiency
Nations grapple with attaining efficiencies in the taxation system. The difficulty lies in capturing all tax eligible transactions accurately and on time. The NPP’s transparency feature will enable full tracking of these curtailing tax evasion.
Catering for the Unbanked
Another selling point of the Apollo National Payments Platform is its ability to rope in the unbanked population. Banking facilities are inaccessible to many in developing countries. Interestingly, they own mobile phones, which they may use to expand their reach of financial services. Through the use of complementary features such as payments apps, QR scanners, and SMS’s for payments; The NPP will enable those unbanked to enjoy hassle-free transactions with their peers.
Protecting Monetary Sovereignty
The American dollar dominates interactions on the global market. It is the primary currency upon which nations peg the values of theirs. The NPP offers governments an opportunity to wean themselves off of this dollar-dependence. Its blockchain-powered system allows governments to issue sovereign-digital currencies hence taking back their monetary autonomy.
Expediting Payments
Apollo’s National Payment Platform is blockchain-based. As such, it enables the elimination of intermediaries in transactions. Near-instant payments are the result. There’s no gainsaying the value of such transactions in economic growth.
Additionally, banks can settle transactions between them without going through the central bank. Central banks are clearinghouses for interbank transactions. The blockchain eliminates this function allowing for direct trading across banks.
Creation of a Stable Currency
Government-issued digital currencies guarantee more stability compared to privately issued ones. Central banks determine the stability of their currency by employing the monetary policy according to the prevailing conditions. Additionally, NPP gives countries more significant say in determining the values of their money by disengaging them from the need to peg them on others. The net effect is the attainment of a firmer means of transaction.
Reduction of Transaction Costs
As stated elsewhere in this document, The NPP removes intermediaries from transactions. In essence, transaction fees are low.
Enhancing Possibilities for Cross-border Trade
Used together with CBDCs and Apollo’s NPP, governments will be allowed to migrate from the existing cross-border payment solutions. While the current payment methods have proven outdated, sluggish, and costly to use, CBDCs are cost-efficient and fast.
Endnote
The one constant in life changes. No single aspect of human life is exempt from it. It is essential, therefore, that we are prepared to handle it when it presents. The finance world has shown high adaptability to change. It is this that has seen an increased acceptance of revolutionary inventions in the payment space.
CBDCs and NNPs are examples of these innovations brought on by the need to change. Although still in their infancy, they, without doubt, will be essential tools in finance as we advance. The Apollo National Payment Platform borrowing from its immutable ledger provides the solution that Central Banks require as they roll out sovereign digital currencies.
