Charities favored by cryptophilanthropists are weighing the fallout from a scandal that heightens skepticism about the marriage of alt-currency and charitable donations.

FTX — a high-profile cryptocurrency exchange, thanks to marketing and ads with celebrities like model Gisele Bündchen — filed for bankruptcy on Friday amid fraud allegations against Sam Bankman-Fried, its philanthropist founder. Bankman-Fried, a champion of the philanthropic strategy known as “effective altruism,” had signed the Giving Pledge months earlier, promising to give away most of what was then his $21 billion fortune. Yet his wealth and the value of the business disappeared virtually overnight, according to Bloomberg and other business news media.

The FTX turmoil undermines the relatively new effective altruism movement, which advocates using data analytics to direct philanthropy to the greatest possible impact. It seems that the foundation of the company will not be able to do millions in grants pledged to nonprofitsand Bankman-Fried’s philanthropic advisers are publicly concerned that the goodwill generated by his donations may have helped launder fraud.

More broadly, the scandal casts a black eye on cryptophilanthropy and presents a public relations challenge for the thousands of nonprofits raising funds from those who own the alternative money. “It’s not positive for anyone in the crypto space,” said Robbie Heeger, CEO of Commitment, a donor-driven nonprofit fund for crypto donors. “It really hurts the broader image of cryptophilanthropy because Sam was such a dedicated philanthropist.”

FTX’s collapse and fraud allegations confirm a disreputable cryptocurrency narrative for skeptics, said Rhodri Davies, a philanthropy expert who wrote on the scandal of Alliance magazine, saying, “Is the writing on the wall for cryptophilanthropy?”

Critics of the cryptocurrency describe it as a Ponzi scheme, with early investors promoting the cash alternative to drive up the prices of their asset. “There’s always been this nagging feeling with crypto that some of these things might be a little sketchy,” Davies, founder of the Why philanthropy matters website, said in an interview. “It’s the kind of story that might make board members or administrators say, ‘I don’t understand this stuff, but I know enough to know that I don’t want to have anything to do with it. with that. “”

Worse perhaps, the fallout from the FTX collapse has rattled cryptocurrency markets and compounded the drop in value for most coins. A bear market known as “crypto winter” set in earlier this year and is now expected to last for some time.

“The future of cryptocurrencies of all kinds looks quite bleak,” declared the Verge, a tech news outlet, describing “existential threats”.

Crypto enthusiasts are denouncing the alleged fraud and the savings investors lost in the collapse. But they argue that FTX is just a capricious part of a big, promising industry that, thanks to blockchain technology, will prove to be more transparent than traditional monetary systems.

“He’s a bad actor,” said Alex Wilson, co-founder of the give a block, a company that helps nonprofits create crypto fundraising programs and convert digital cash donations into standard currency. “This is a failure of an entity and not of the crypto itself.”

Endaoment’s Heeger said the alleged Bankman-Fried fraud could not have happened if FTX had embraced the transparency and decentralization typical of most crypto companies, including its charity. “I want to emphasize that this is exactly the type of consumer manipulation and fraud that crypto was designed to combat,” he added.

Some 2,000 nonprofits accept crypto donations through the Giving Block platform, including the American Heart Association, Institute for Justice, San Diego Institute of Contemporary Art, March of Dimes, and Save the Children. Some organizations do little more than include the digital money option on their donation page. Others woo crypto donors through Twitter — the social media channel where enthusiasts gravitate — and dedicated programs.

Several charities have said that the FTX imbroglio and collateral damage does not affect them directly and will not derail their crypto fundraising programs. Many of these efforts are relatively new and do not produce significant revenue. Groups also generally do not hold crypto to avoid exposure to the sometimes violent swings in value. Giving Block, for example, converts crypto gifts into cash, which it then passes on to the charity.

“We believe cryptocurrency is here to stay,” said Rebecca Milner, Director of Advancement for International Medical Corps, which has run a small crypto fundraising program for about three years. “We want to be in the loop if donors want to donate cryptocurrency.”

Kaboomwhich aims to bring fairness to children’s playspaces, began accepting crypto donations about a year ago, in part to connect with young parents most likely to care about its mission. Market research suggests that up to 94% of crypto buyers are millennials or members of Gen Z. A Fidelity charity investigation found that a third of its millennial account holders are investing in digital cash.

Kaboom’s effort is small; the organization garners all but 1% of its support from institutional donors and major philanthropists, and crypto donors make up only a fraction of that share. But the organization sees it as a way to keep abreast of the opportunities and challenges of new technologies. “We’re taking a long-term view,” said James Siegal, former CEO of Kaboom and now Principal Investigator. “Technology has enormous potential to disrupt philanthropy and the way we strive to have an impact.”

The crypto market is still in its infancy – the the first bitcoin was sold a little over a decade ago – and Siegal believes that “rational and reasonable regulation” should soon make it easier to spot and weed out bad actors.

International Heifer did one of biggest bets on cryptophilanthropy. He recently acquired the assets of the BitGive Foundation, a nonprofit that connected Bitcoin holders with charities, and is in the process of redesigning the foundation. GiveFollow-upa bitcoin crowdfunding platform.

“We continue to move forward in building the strategy and roadmap for what GiveTrack looks like,” said Harper Grubbs, Senior Director of Digital Marketing at Heifer. “What all of this calls for is greater transparency.”

Grubbs notes that the stock market crashes every few years, but inevitably bounces back and up. “I don’t think this is the end of crypto, by any means. I hope people will learn from this what the industry can do to prevent this from happening again.

The FTX debacle comes almost exactly one year after the surge in cryptocurrencies and cryptophilanthropy reached new heights. The values ​​of many digital currencies set records in November 2021, and Fidelity Charitable account holders were closing out a year in which they donated $331 million in digital assets – an almost 12x increase from the $28 million donated in 2020.

The opening of the Ukrainian war in February 2022 also saw a cryptophilanthropy rush to support the defense and relief organizations of this country.

But the values ​​of digital coins have fallen in the face of inflation, rising interest rates and the implosion of some key players in the field. The value of a single Bitcoin, which peaked at nearly $68,000 in November 2021, eroded throughout 2022 and fell below $16,000 this week when news of the implosion from FTX broke.

This year has also seen Greenpeace – which once accepted Bitcoin – and other groups launch a campaign against the currency, blaming that the computer mining of the electricity-intensive coin is a threat to the environment.

Even before the FTX scandal, some nonprofit organizations concluded that the cryptocurrency was questionable. “Space has become, to a very large extent, an opportunity for personal enrichment at the expense of others and the environment”, wrote Molly White, software engineer and editor of Wikipedia, whose anti-crypto campaign within the Wikimedia Foundation community led the organization to stop accepting digital assets.

Many people in nonprofits feel the same way, said Davies of Why Philanthropy Matters. “I suspect there are more organizations that have kind of stopped caring about crypto and haven’t really made a big fuss about it.”

Giving Block, however, said it more than doubled its customer base in 2022 to more than 2,000. “What we saw last week at FTX with such massive scale fraud is disappointing,” the co-founder said. Wilson. “But at the end of the day, that doesn’t change our view of where cryptophilanthropy is headed.”

Central banks around the world realized they had to provide an alternative to the growing popularity of cryptocurrencies and stablecoins or let the future of money slip away.

Central bank digital currencies (CBDCs) are safer and less volatile versions of cash than crypto assets because they are issued and regulated by central banks. These are digital versions of a country’s physical currency, such as a digital dollar, euro, pound, yuan, or naira.

In response to emerging trends and developments in the global digital space, the Central Bank of Nigeria (CBN) launched eNaira over a year ago to, among other things, provide Nigerians with a cheap means of payment , safe and reliable within the country. and the global economy.

Nigeria was the second country after the Bahamas to deploy a CBDC. According to the Atlantic Council’s CBDC tracker, Nigeria is one of 11 countries to have fully deployed a central bank digital currency, the other 10 are in the Caribbean.

Several central banks in sub-Saharan Africa are exploring or are in the pilot phase of a digital currency following the introduction of e-Naira in Nigeria in October 2021

In one year, more than 3 billion naira worth of eNaira has been minted, while more than 700,000 transactions, worth 8 billion naira, have been recorded on the platform.

According to the apex bank governor, Godwin Emefiele, 33 banks have been fully integrated, more than 3,305 merchants registered and 919,000 customers onboarded.

To highlight the massive interest and encouraging response from Nigerians and other parties across the globe, he said the eNaira website is attracting an average of 2.5 million daily visits.

Financial inclusion, targeted social protection, fight against corruption

There are many reasons to explore digital currencies, and the motivation of different countries to issue CBDCs depends on their economic situation.

The first is the promotion of financial inclusion. CBDCs could bring financial services to people who did not have bank accounts before, especially if they are designed for offline use. In remote areas without internet access, digital transactions can be done at little or no cost using simple feature phones.

About 45% of adult Nigerians do not have a bank account while 35.9% are excluded from formal financial services. However, about 81% of Nigeria’s adult population owns a mobile phone; in addition, there are approximately 150 million mobile subscribers in Nigeria. Therefore, eNaira can leverage the huge opportunity presented by mobile telecommunications as a delivery channel for delivering digital financial services to the underserved and unbanked population.

It is no surprise that the CBN launched the eNaira USSD channel using *997# in August 2022. To facilitate interoperability, the NIBSS Instant Payment (NIP) solution, which allows eNaira users to make seamless transactions between eNaira and any bank of their choice. across the country, was also made available the same month. The feature has been widely used by users, registering more than 301 million naira in transactions in less than 90 days.

CBDCs can be used to distribute targeted social benefits, especially during sudden onset crises such as a pandemic or natural disaster. And experts believe this is where eNaira can help the government deliver most of its pro-poor interventions.

With the proper deployment of CBN-backed digital currency, funds for TraderMoni, FarmerMoni, MarketMoni, N-Power and others can be distributed directly to beneficiaries, eliminating misappropriation, exploitation by middlemen, as well as the danger of handling cash, to name a few.

With eNaira, the federal government can have a direct impact on the victims of the recent floods, which affected at least 32 states.

It is gratifying that the CBN is collaborating with the Department of Humanitarian Affairs through the creation of sector-specific tokens to support federal government social programs and the distribution of targeted social programs with the goal of lifting millions of people out of poverty. by 2025, according to Emefiele.

CBDCs can also facilitate cross-border transfers and payments. Over the years, the demand for transparent and inexpensive cross-border payments has grown alongside the growth of international e-commerce, remittances and tourism.

However, Sub-Saharan Africa is the most expensive region to send and receive money, with an average cost of just under 8% of the transfer amount.

CBDCs, like eNaira, could make sending money easier, faster, and cheaper by shortening payment chains and creating more competition between service providers. According to the International Monetary Fund (IMF), faster authorization of cross-border payments would help boost trade within the region and with the rest of the world.

A consultant, Dr. Aminu Bizi, believes that eNiara can increase the benefits Nigeria derives from the African Continental Free Trade Area (AfCFTA).

The Atlantic Council noted that CBDCs, such as eNaira, can improve the transparency of money flows. Cash is essentially untraceable, which helps facilitate crime. eNaira can help the government and its agencies easily track the flow of money in society. For example, with eNaira, it will be difficult for a retailer to collect money for fuel subsidies and divert it for luxury overseas.

“eNaira is account-based and transactions are in principle fully traceable, unlike token-based crypto asset transactions.

“Once eNaira becomes more widespread and integrated into the economy, it can bring greater transparency to informal payments and strengthen the tax base. Informal and formal businesses can also benefit if adoption of eNaira improves consumption through greater financial inclusion,” noted the IMF in one of its reports on CBDCs.

Global attention

The more than 13-month success of eNiara has made Nigeria an educational hub for knowledge acquisition on central CBDC, as CBN has organized and conducted several knowledge sharing sessions for international financial institutions, including the IMF, the World Bank Group, as well as Central Africa. banks, such as the Bank of Uganda and the Reserve Bank of Zimbabwe.

CBN Governor, Emefiele, during the first anniversary of eNaira noted that with many requests from various institutions to participate in the knowledge sharing session; and with the aim of institutionalizing the progress made in the implementation of the CBDC, as well as the trends, size and regulatory challenges of digital financial assets and innovations, a digital finance program had been developed to ensure the sharing knowledge that ensures a safe, efficient and reliable environment. financial system and inclusion, while creating the climate to project the bank’s success in digital currency development and implementation.

“The Digital Finance Program is poised to be a hub for knowledge generation on digital assets in Africa, skill building in Fintech, Blockchain technology, Decentralized Finance (DeFi), digital currencies of Central Bank (CBDC), Financial Innovation, Digital Financial Literacy, RegTech and Risk among others, limiting the vulnerability of the financial system to cyberattacks and fraud,” he proudly stated.

He added that apex bank’s research department produced a compendium of findings, comprising 38 papers bordering core digital currencies and FinTechs with respect to financial stability, monetary policy implementation and effectiveness. , cross-border payments and remittances, and regulation. and monitoring. He said the papers provided theoretical and empirical insight into the likely impact CBDCs and FinTechs would have on the Nigerian economy, and alleged risks could be mitigated.

Central banks in Africa and around the world are looking to learn from Nigeria’s eNaira.

Challenges

The introduction of eNaira was not without difficulties. However, the risks, which forced some countries to suspend the introduction of digital currency, have been successfully addressed in Nigeria.

However, to date, less than 1% of the Nigerian population uses eNaira despite the fact that crypto adoption is high in the country. The bank must critically examine why younger generations are not embracing it as a store of value.

The apex bank should leverage the robust collaborative environment of the payments and digital financial services ecosystem by engaging super agents, Fintechs, Association of Licensed Mobile Payment Operators (ALMPO), Association of Licensed Telecoms Operators of Nigeria (ALTON ), among others, to drive greater adoption, especially in underserved and unbanked segments of the population.

“The CBN recognizes the daunting task ahead. We therefore call on all relevant stakeholders including financial institutions, NIBSS, FinTech groups, telecom operators and merchants to collaborate, innovate, deepen and improve the value of eNaira for Nigerians and Nigeria.

“The bank hopes that eNaira will drive the digital economy agenda and foster a more prosperous Nigeria,” Emefiele said.

However, a positive sign is that those who have adopted eNaira are active users, according to a senior director of the Atlantic Council Center for Geoeconomics, Josh Lipsky, quoted by Bloomberg. This is the opposite of China, where millions of people opened wallets during a CBDC pilot phase, but with very little activity for the average user, he said.

Hotel distribution was a recurring theme in technology-focused sessions on WTM’s opening day London.

Startups, futurists, brands and tech providers presented their own perspectives on the current landscape for hotels and alternative accommodation, the demands placed on the sector by post-pandemic travellers, and how hotels can benefit from broader developments in e-commerce and technology.

A larger trend that many hotels are part of is payments, which in turn is part of “fintech” – the technological reinvention of financial services. Many travel companies, including hotels, are thinking more strategically about how customers can pay, as well as how money flows up and down the supply chain.

Many establishments have been forced to adapt their systems and business relationships to allow customers to pay in their own currency, using their own credit card. For example, allowing Chinese customers to pay with their Chinese bank.

However, fintech innovations have moved beyond accepting a wider range of currencies. Cryptocurrencies have the potential to achieve scale in hospitality, according to Rohit Talwar, a futurist whose keynote opened this year’s WTM London. Talwar suggested that hotels should treat cryptocurrencies exactly the same as traditional currencies. He told attendees that 350 million people worldwide hold crypto, 25% of US travelers would like to pay in crypto, and a growing number of people are being paid in crypto. He added that Visa, Mastercard and most major financial institutions are now on board with crypto.

However, Talwar suggested that the public should consider alternative payment methods beyond cryptocurrencies. He suggested that “everything we own is an asset”, from the parking space in front of our house to the clothes we carry on our backs. There are platforms, he said, that have the potential to convert these assets into “a means of payment that travel agencies and hotels can accept.”

A platform focused on innovation and likely to interest hoteliers emerged during a roundtable organized by the media brand Travolution. Pinktada is a marketplace where travelers can “sell” their reservation to another traveler, regardless of the original hotel or purchase channel. Co-founder Ronald Homsy explained that the platform is a Web3.0 game, built using blockchain. Its advantage for hotels is that they can increase volumes on non-refundable inventory sold, as travelers have the option of reselling the room themselves if they need to cancel.

Pinktada is a new player in hospitality, founded in 2020. But in addition to start-ups, some of the world’s biggest hotel brands have also shared their stories of innovation.

Media brand Phocusfil hosted a session in which attribute-based shopping (ABS) was revealed as one of its trends to watch. ABS allows hotels to set prices based on specific room attributes and on-site amenities, resulting in better revenue. However, to fully exploit the opportunities, hotels must be able to not only index a property’s features, but also integrate that indexing into the search, store and booking flow, while ensuring that operational systems are also aligned.

Technology milestone sponsor Saber Hospitality Solutions is committed to ABS and now has some hotel customers using it. Its vice-president Frank Trampert used the example of beach or pool cabanas as an attribute that hotels may price differently depending on duration or at different times of the day, week, or season. “This is just one example of how ABS can help hoteliers sell ‘beyond the room’ and think like a retailer.”

While many speakers were looking at medium to long-term horizons, some hoteliers are very focused on the role of technology today and how it will support the recovery of the industry. During a session at the end of the day, Markus Keller d’Accor told the audience that the work-from-home/work-from-anywhere trend that emerged in the wake of the COVID shutdowns was not only embedded in the industry, but also represented a opportunity for hotel chains, travel management companies and technology partners.

“Mixed-use travel is here to stay,” he said, “and we’re excited about the new opportunities that are emerging in response to how hotels are changing and how technology can be used to respond. to these new needs.

This Management's Discussion and Analysis of Financial Condition and Results of
Operations ("MD&A") is designed to provide a reader of our financial statements
with a narrative from the perspective of management and is intended to help the
reader understand the results and operations and financial condition of the
Company. Our MD&A should be read in conjunction with the MD&A and Consolidated
and Combined Financial Statements included in our Annual Report on Form 10-K for
the fiscal year ended December 31, 2021 (the "2021 Annual Report on Form 10-K").

INFORMATION RELATING TO FORWARD-LOOKING STATEMENTS

Certain statements included or incorporated by reference in this quarterly
report, in other documents we file with or furnish to the Securities and
Exchange Commission ("SEC"), in our press releases, webcasts, conference calls,
materials delivered to shareholders and other communications, are
"forward-looking statements" within the meaning of the United States federal
securities laws.

Forward-looking statements are not guarantees of future performance and actual
results may differ materially from the results, developments and business
decisions contemplated by our forward-looking statements. Accordingly, you
should not place undue reliance on any such forward-looking statements.
Forward-looking statements speak only as of the date of the Report, document,
press release, webcast, call, materials or other communication in which they are
made. Important factors that could cause actual results to differ materially
from those envisaged in the forward-looking statements include the following:

•The ongoing effects of the COVID-19 pandemic on our global operations and the
operations of our customers, suppliers, and vendors is having, and is expected
to continue to have, a significant impact on our business and results of
operations.
•Changes in, or status of implementation of, industry standards and governmental
regulations, including interpretation or enforcement thereof, may reduce demand
for our products or services, increase our expenses or otherwise adversely
impact our business model.
•Our growth depends in part on the timely development and commercialization, and
customer acceptance, of new and enhanced products and services based on
technological innovation.
•The indemnification provisions of acquisition agreements by which we have
acquired companies may not fully protect us and as a result we may face
unexpected liabilities.
•Our businesses are subject to extensive regulation; failure to comply with
those regulations could adversely affect our financial statements and our
business, including our reputation.
•International economic, political, war or hostility, legal, compliance, supply
chain, epidemic and business factors could negatively affect our financial
statements.
•We may be required to recognize impairment charges for our goodwill and other
intangible assets.
•We are party to asbestos-related product litigation that could adversely affect
our financial condition, results of operations and cash flows.
•Our restructuring actions could have long-term adverse effects on our business.
•As of the date of this quarterly report, we have outstanding indebtedness of
approximately $2.6 billion and the ability to incur an additional $736.0 million
of indebtedness under the Revolving Credit Facility, as defined above, and in
the future we may incur additional indebtedness. This indebtedness could
adversely affect our businesses and our ability to meet our obligations and pay
dividends.
•We may not be able to generate sufficient cash to service all of our
indebtedness and may be forced to take other actions to satisfy our obligations
under our indebtedness, which may not be successful.
•Any inability to consummate acquisitions at our historical rates and at
appropriate prices, and to make appropriate investments that support our
long-term strategy, could negatively impact our growth rate and stock price.
•Our acquisition of businesses, investments, joint ventures and other strategic
relationships could negatively impact our financial statements.
•Changes in our tax rates or exposure to additional income tax liabilities or
assessments could affect our profitability. In addition, audits by tax
authorities could result in additional tax payments for prior periods.
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•Adverse changes in our relationships with, or the financial condition,
performance, purchasing patterns or inventory levels of, key distributors and
other channel partners could adversely affect our financial statements.
•Our financial results are subject to fluctuations in the cost and availability
of commodities that we use in our operations.
•If we cannot adjust our manufacturing capacity or the purchases required for
our manufacturing activities to reflect changes in market conditions and
customer demand, our profitability may suffer. In addition, our reliance upon
sole or limited sources of supply for certain materials, components and services
could cause production interruptions, delays and inefficiencies.
•Potential indemnification liabilities to Fortive pursuant to the separation
agreement could materially and adversely affect our businesses, financial
condition, results of operations and cash flows. In addition, there can be no
assurance that Fortive's performance of its indemnity obligations to us under
the separation agreement regarding certain liabilities will be sufficient.
•If there is a determination that the distribution, together with certain
related transactions, is taxable for U.S. federal income tax purposes because
the facts, assumptions, representations or undertakings underlying Fortive's
private letter ruling from the IRS or tax opinion are incorrect or for any other
reason, then Fortive and its stockholders could incur significant U.S. federal
income tax liabilities, and we could also incur significant liabilities.
•We may be affected by significant restrictions, including on our ability to
engage in certain corporate transactions for a two-year period after the
distribution in order to avoid triggering significant tax-related liabilities.
•Fortive may compete with us.
•We may not achieve some or all of the expected benefits of the separation, and
the separation may adversely affect our businesses.

See "Item 1.A. Risk Factors" in our 2021 Annual Report on Form 10-K and Part II
- Item 1A. Risk Factors" in this Form 10-Q for a further discussion regarding
reasons that actual results may differ materially from the results, developments
and business decisions contemplated by our forward-looking statements.
Forward-looking statements speak only as of the date of the report, document,
press release, webcast, call, materials or other communication in which they are
made. We do not assume any obligation to update or revise any forward-looking
statement, whether as a result of new information, future events and
developments or otherwise.

OVERVIEW

General

Vontier Corporation ("Vontier," the "Company," "we," "us," or "our") is a global
industrial technology company that focuses on critical technical equipment,
components, and software and services for manufacturing, repair and servicing in
the mobility infrastructure industry worldwide. We supply a wide range of
solutions spanning advanced environmental sensors; fueling equipment; field
payment hardware; point-of-sale; workflow and monitoring software; vehicle
tracking and fleet management; software solutions for traffic light control; and
vehicle mechanics' and technicians' equipment. We market our products and
services to retail and commercial fueling operators, convenience store and
in-bay car wash operators, tunnel car wash businesses, commercial vehicle repair
businesses, municipal governments and public safety entities and fleet
owners/operators on a global basis.

Our research and development, manufacturing, sales, distribution, service and
administrative operations are located in more than 30 countries across North
America, Asia Pacific, Europe and Latin America. In addition, we sell our
products in these countries and multiple other markets in these regions. We
define high-growth markets as developing markets of the world experiencing
extended periods of accelerated growth in gross domestic product and
infrastructure, which include Eastern Europe, the Middle East, Africa, Latin
America, and Asia, with the exception of Japan and Australia.
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COMPANY PERFORMANCE AND OUTLOOK

Company performance

On an overall basis, sales of our hardware and software products and services
increased during the three and nine months ended September 30, 2022. As compared
to the comparable periods of 2021, aggregate year-over-year total sales
increased 2.5% and 5.1% for the three and nine months ended September 30, 2022,
respectively. Sales from existing businesses decreased 1.9% and 0.2% during the
three and nine months ended September 30, 2022, respectively, as compared to the
comparable periods in 2021.

The increase in total sales during the three months ended September 30, 2022 was
primarily driven by our acquisition of DRB Systems, LLC ("DRB"), which is part
of our mobility technologies platform, as well as our diagnostics and repair
portfolio, which experienced strong demand across most product categories. The
Company saw strong demand for our compressed natural gas technology within our
alternative energy solutions and aftermarket within our mobility technologies
platform, but was impacted by the lower rate of demand related to the enhanced
credit card security requirements for outdoor payment systems based on the
Europay, Mastercard and Visa ("EMV") global standards. Changes in foreign
currency exchange rates negatively impacted our sales growth by 3.3% during the
three months ended September 30, 2022 compared to the comparable period in 2021.

The increase in total sales during the nine months ended September 30, 2022 was
primarily driven by our acquisition of DRB. Our mobility technologies platform
had strong demand for alternative energy but was impacted by the lower rate of
demand related to the enhanced credit card security requirements for outdoor
payment systems based on the Europay, Mastercard and Visa ("EMV") global
standards as well as the end of Mexico fiscal regulation upgrades. Additionally,
total sales increased due to our diagnostics and repair technologies platform,
which experienced strong demand across most product categories, most notably
specialty tools and diagnostics as well as the impact of price increases by the
Company across its portfolio. Changes in foreign currency exchange rates
negatively impacted our sales growth by 2.5% during the nine months ended
September 30, 2022 compared to the comparable period in 2021.

In developed markets, year-over-year total sales increased at a rate in the mid
single digits and sales from existing businesses declined at rate in the low
single digits for the three months ended September 30, 2022. The increase in
total sales was primarily due to an increase in North America related to the
impact of our acquisition of DRB and strong demand for our compressed natural
gas technology within our alternative energy solutions which was partially
offset by declines in Western Europe. In high growth markets, total sales and
sales from existing businesses for the three months ended September 30, 2022
declined at a rate in the low double digits and low single digits, respectively.
The decline in total sales was primarily due to timing for dispenser and
environmental deliveries in India and the negative impact of foreign exchange
rates.

In developed markets, year-over-year total sales increased at a rate in the high
single digits for the nine months ended September 30, 2022. Sales from existing
businesses for the nine months ended September 30, 2022 were up slightly. The
increase in total sales was primarily due to an increase in North America
related to the impact of our acquisition of DRB and strong demand for our
compressed natural gas technology within our alternative energy solutions which
was partially offset by declines in Western Europe. In high growth markets total
sales and sales from existing businesses decreased at a rate in the low double
digits and mid single digits, respectively, driven by declines in Latin America
due to the end of Mexico fiscal regulation upgrades and the Middle East and
Africa.

Outlook

We expect overall sales and sales from existing businesses to grow on a
year-over-year basis in 2022. Additionally, this outlook is subject to various
assumptions and risks, including but not limited to the resilience and
durability of the economies of the United States and other critical regions,
ongoing challenges with global logistics and supply chain including the
availability of electronic components, the impact of the COVID-19 pandemic, the
impact of the Russia Ukraine Conflict, market conditions in key end product
segments, and the impact of energy disruption in Europe.

Our outlook is subject to the factors below and other uncertainties as identified in the “Information Regarding Forward-Looking Statements” section above.

We anticipate that supply chain and inflationary pressures will persist
throughout 2022 and that although our backlog may decline compared to 2021, it
may remain elevated compared to historical levels. At the end of August, one of
our key electronic suppliers for multiple boards that are part of every
dispenser shipped in the United States, suffered a cyberattack that brought down
all their manufacturing capability for approximately three weeks, which impacted
our Greensboro factory while we mitigated the issue. We will continue to deploy
the Vontier Business System to actively manage production challenges,
                                       34
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work with customers and suppliers to minimize disruptions and use price increases and other countermeasures to offset inflationary pressures.

We continue to monitor the macroeconomic and geopolitical conditions which may
impact our business, including the COVID-19 pandemic, monetary and fiscal
policies, international trade and relations between the U.S., China and other
nations, and investment and taxation policy initiatives being considered in the
United States and by the Organization for Economic Co-operation and Development.
We also continue to monitor the Russia Ukraine Conflict and the impact on our
business and operations. As of the filing date of this report, we do not believe
they are material.


RESULTS OF OPERATIONS

Comparison of operating results

                                                       Three Months Ended                                 Nine Months Ended
($ in millions)                            September 30, 2022         October 1, 2021         September 30, 2022         October 1, 2021
Total sales                               $           788.0          $        768.5          $         2,312.5          $      2,200.5
Total cost of sales                                  (428.1)                 (422.1)                  (1,269.2)               (1,223.8)
Gross profit                                          359.9                   346.4                    1,043.3                   976.7
Operating costs:
Selling, general and administrative
expenses ("SG&A")                                    (174.7)                 (147.8)                    (517.4)                 (458.1)
Research and development expenses ("R&D")             (35.0)                  (31.2)                    (104.4)                  (97.3)

Operating profit                          $           150.2          $        167.4          $           421.5          $        421.3

Gross profit as a % of sales                           45.7  %                 45.1  %                    45.1  %                 44.4  %
SG&A as a % of sales                                   22.2  %                 19.2  %                    22.4  %                 20.8  %
R&D as a % of sales                                     4.4  %                  4.1  %                     4.5  %                  4.4  %
Operating profit as a % of sales                       19.1  %                 21.8  %                    18.2  %                 19.1  %



Components of Sales Growth
                                                          % Change Three Months           % Change Nine Months
                                                        Ended September 30, 2022        Ended September 30, 2022
                                                           vs. Comparable 2021             vs. Comparable 2021
                                                                 Period                          Period
Total revenue growth (GAAP)                                                2.5  %                          5.1  %
Existing businesses (Non-GAAP)                                            (1.9) %                         (0.2) %
Acquisitions (Non-GAAP)                                                    7.7  %                          7.8  %
Currency exchange rates (Non-GAAP)                                        (3.3) %                         (2.5) %



Total sales within our mobility technologies platform increased low single
digits during the three months ended September 30, 2022 as compared to the
comparable period of 2021 which was primarily attributable to our acquisition of
DRB. Our sales from existing businesses in our mobility technologies platform
decreased low single digits primarily due to the lower rate of demand related to
the enhanced credit card security requirements for outdoor payment systems based
on the EMV global standards which were partially offset by strong demand for our
compressed natural gas technology within our alternative energy solutions.

Total sales within our mobility technologies platform increased mid single
digits during the nine months ended September 30, 2022 as compared to the
comparable period of 2021 which was primarily attributable to our acquisition of
DRB. Our sales from existing businesses in our mobility technologies platform
were down slightly primarily due to the lower rate of demand related to the
enhanced credit card security requirements for outdoor payment systems based on
the EMV global standards as well as
                                       35
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the end of Mexico tax regulatory upgrades which were partially offset by strong demand for our compressed natural gas technology in our alternative energy solutions.

Total sales and sales from existing businesses within our diagnostics and repair
technologies platform increased low single digits during the three months ended
September 30, 2022 as compared to the comparable period in 2021 driven primarily
by continued strong demand across most product categories, most notably hardline
and powered tools.

Total sales and sales from existing businesses within our diagnostics and repair
technologies platform increased low single digits during the nine months ended
September 30, 2022 as compared to the comparable period in 2021. The results of
our diagnostics and repair technologies platform were driven primarily by
continued strong demand across most product categories, most notably specialty
and hardline tools.

The impact on the Company of price increases are reflected as a component of the
change in sales from existing businesses, and year-over-year price increases
contributed 5.9% and 5.3% to sales growth during the three and nine months ended
September 30, 2022 versus the comparable periods in 2021.

The impact of currency translation decreased reported sales 3.3% and 2.5% on a
year-over-year basis during the three and nine month periods ended September 30,
2022, respectively, primarily due to the unfavorable impact of the strengthening
of the U.S. dollar against most other major currencies in 2022 compared to the
comparable periods of 2021.

Cost of Sales

Cost of sales increased $6.0 million for the three months ended September 30,
2022, as compared to the comparable period in 2021, which was due primarily to
the impact of acquisitions as well as increased costs due to inflationary
pressures.

The year-over-year increase of $45.4 million cost of sales for the nine months ended September 30, 2022 compared to the comparable period in 2021 was mainly due to the impact of the DRB as well as increased costs due to inflationary pressures.

Gross profit

Gross profit increased during the three months ended September 30, 2022, as
compared to the comparable period in 2021, which was primarily due to the impact
of the Company's price increases and the impact of the acquisition of DRB and
was partially offset by the increased costs due to inflationary pressures.

The year-over-year increase in gross profit for the nine months ended September
30, 2022 as compared to the comparable period in 2021 is primarily due to the
impact of the Company's price increases and the impact of the acquisition of DRB
and was partially offset by the increased costs due to inflationary pressures.

The 60 and 70 basis point increases in gross profit margin during the three and
nine months ended September 30, 2022, respectively, as compared to the
comparable periods in 2021 is primarily due to price increases and the impact of
the DRB acquisition which were partially offset by increased costs due to
inflationary pressures.

Operating costs and other expenses

SG&A expenses increased by $26.9 million, or 300 basis points as a percentage of
sales, during the three months ended September 30, 2022, as compared to the
comparable period in 2021, primarily due to the impact of the acquisition of
DRB.

SG&A expenses increased by $59.3 million, or 160 basis points as a percentage of
sales, during the nine months ended September 30, 2022, as compared to the
comparable period in 2021, primarily due to the impact of the acquisition of
DRB.

R&D expenses (consisting principally of internal and contract engineering
personnel costs) increased $3.8 million and $7.1 million during the three and
nine months ended September 30, 2022, respectively, as compared to the
comparable periods in 2021, primarily due to the impact of our acquisitions of
DRB and Driivz. R&D expense as a percentage of sales was relatively flat during
the three and nine months ended September 30, 2022.

                                       36
--------------------------------------------------------------------------------

Operating profit

Operating profit margin decreased by 270 basis points in the three months ended
September 30, 2022 compared to the comparable period in 2021.

Year-over-year operating profit margin comparisons were favorably impacted by:

•The year-over-year impacts of sales volumes, price, sales mix, other operating
impacts and changes in foreign currency exchange rates - favorable 20 basis
points
•The year-over-year operating effect of our acquisitions, excluding amortization
- favorable 50 basis points

Year-over-year operating profit margin comparisons were primarily impacted by the following adverse factors:

• Increase in costs due to inflationary pressures – 340 unfavorable basis points

Operating profit margin decreased by 90 basis points in the nine months ended
September 30, 2022 compared to the comparable period in 2021.

Year-over-year operating profit margin comparisons were favorably impacted by:

•The year-over-year impacts of sales volumes, price, sales mix, other operating
impacts and changes in foreign currency exchange rates - favorable 190 basis
points
•The year-over-year operating effect of our acquisitions, excluding amortization
- favorable 60 basis points

Year-over-year operating profit margin comparisons were primarily impacted by the following adverse factors:

• Increase in costs due to inflationary pressures – 340 unfavorable basis points

NON-GAAP FINANCIAL MEASURES

Sales of existing businesses

We define sales from existing businesses as total sales excluding (i) sales from
acquired and divested businesses; (ii) the impact of currency translation; and
(iii) certain other items.

•References to sales attributable to acquisitions or acquired businesses refer
to GAAP sales from acquired businesses recorded prior to the first anniversary
of the acquisition less the amount of sales attributable to certain divested
businesses or product lines not considered discontinued operations.
•The portion of sales attributable to the impact of currency translation is
calculated as the difference between (a) the period-to-period change in sales
(excluding sales from acquired businesses) and (b) the period-to-period change
in sales, including foreign operations, (excluding sales from acquired
businesses) after applying the current period foreign exchange rates to the
prior year period.
•The portion of sales attributable to other items is calculated as the impact of
those items which are not directly correlated to sales from existing businesses
which do not have an impact on the current or comparable period.

Sales by existing companies should be viewed as supplementing, not replacing or superior to, total sales, and may not be comparable to similarly titled measures reported by other companies.

Management believes that reporting the non-GAAP financial measure of sales from
existing businesses provides useful information to investors by helping identify
underlying growth trends in our business and facilitating easier comparisons of
our sales performance with our performance in prior and future periods and to
our peers. We exclude the effect of acquisitions and divestiture-related items
because the nature, size and number of such transactions can vary dramatically
from period to period and between us and our peers. We exclude the effect of
currency translation and certain other items from sales from existing businesses
because these items are either not under management's control or relate to items
not directly correlated to sales from existing businesses. Management believes
the exclusion of these items from sales from existing businesses may facilitate
assessment of underlying business trends and may assist in comparisons of
long-term performance. References to sales volume refer to the impact of both
price and unit sales.

                                       37
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INCOME TAXES

General

Income tax expense and deferred tax assets and liabilities reflect management's
assessment of future taxes expected to be paid on items reflected in our
financial statements. Our effective tax rate can be affected by, among other
items, changes in the mix of earnings in countries with differing statutory tax
rates (including as a result of business acquisitions and dispositions), changes
in the valuation of deferred tax assets and liabilities, the implementation of
tax planning strategies, tax rulings, court decisions, settlements with tax
authorities and changes in tax laws.

Comparison of the three and nine month periods ended September 30, 2022 and October 1, 2021

Our effective tax rate for the three and nine months ended September 30, 2022
was 26.2% and 21.8%, respectively, as compared to 19.6% and 22.2% for the three
and nine months ended October 1, 2021. The year-over-year increase in the
effective tax rate for the three months ended September 30, 2022 as compared to
the comparable period in the prior year was primarily due to the recording of
our investment in Tritium at fair value. The year-over-year decrease in the
effective tax rate for the nine months ended September 30, 2022 as compared to
the comparable period in the prior year was primarily due to an increase in
non-taxable income related to our previously held equity interest in Driivz and
a decrease in state taxes.

Our effective tax rate for both periods in 2022 and 2021 differs from the U.S.
federal statutory rate of 21% due primarily to the effect of state taxes and
foreign taxable earnings at a rate different from the U.S. federal statutory
rate, which for the nine months ended September 30, 2022, was offset by the
increase in non-taxable income related to our previously held equity interest in
Driivz.

COMPREHENSIVE INCOME

Comprehensive income decreased by $115.1 million during the three months ended
September 30, 2022 as compared to the comparable period in 2021 primarily due to
unfavorable changes in foreign currency adjustments of $37.7 million and net
earnings that were lower by $77.2 million.

Comprehensive income decreased by $65.3 million during the nine months ended
September 30, 2022 as compared to the comparable period in 2021 primarily due to
net earnings that were higher by $33.0 million and unfavorable changes in
foreign currency adjustments of $98.2 million.

CASH AND CAPITAL RESOURCES

We assess our liquidity in terms of our ability to generate cash to fund our
operating, investing and financing activities. We generate substantial cash from
operating activities and believe that our operating cash flow and other sources
of liquidity will be sufficient to allow us to continue to invest in existing
businesses, consummate strategic acquisitions, make interest payments on our
outstanding indebtedness, and manage our capital structure on a short and
long-term basis.

Financing and capital operations 2022

In the nine months ended September 30, 2022we carried out the following financing and capital transactions:

• Entry and settlement of a $250.0 million accelerated share buyback program under which we received 10.0 million shares which are Treasury Stock;

• Repurchased 1.6 million shares on the open market which are held as Treasury
Stock.

Our long-term debt requires, among others, that we maintain certain financial
covenants, and we were in compliance with all of these covenants as of September
30, 2022.

See also Note 5. Funding to the condensed consolidated financial statements for more information.

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© Edgar Online, source Previews

A the lack of available tonnage continued to hamper demolition activities throughout the Southeast Asian region. In its latest weekly report, ship broker Clarkson Platou Hellas said that “with Diwali celebrations in full swing this week, industry watchers are taking advantage of this time to spend time with their families without disruption to the movement of tonnage. It was a particularly poignant year with the UK announcing another prime minister (its 3rd this year alone), Rishi Sunak being the first Asian leader in the House of Commons, making it a particularly special coincidence. It is hoped that it will now bring much-needed stability to the domestic economy, which will help sustain what is an extremely chaotic state of global monetary affairs. Many industry players have gone home, after the aforementioned Tradewinds Ship Recycling Conference last week, which was initially deemed a success due to all of the stakeholders debating and discussing the market, after the covid pandemic. However, activity has not picked up since then due to firm freight markets across all sectors and the rest of the year looks just as quiet and close to what is likely to be the calmest on record. …Despite murmurs in the local market of lower steel prices, there should still be demand from steel mills, which will help establish a strong pillar for the market in India and Bangladesh, the former being the most stable of the three main recycling destinations. It is expected that steel plate prices for ships for the foreseeable future are unlikely to be able to drop significantly, with such an empty tonnage menu for buyers to choose from,” the shipbroker concluded.

In a separate note, Allied Shipbroking added that “the ship recycling market has been hovering in uninspiring territory for some time, which is quite evident when you consider the lack of momentum seen in terms of transactions. Additionally, as we see widening gaps between price ideas among end buyers, cash buyers, and homeowners, the market is likely to remain firmly in a state of disarray for the period ahead. Separate major demonstration destinations, in Bangladesh things have remained rather stagnant, with most local buyers seemingly unable to compete at relatively “achievable” levels.Current steel plate prices and exchange levels, coupled with still restrictive L/C levels being put on the market, have created poor conditions for a rapid recovery at this stage.In Pakistan, activity is also slow. relatively sluggish, with the actual distribution of scrap metal price levels leaving little room for a more sustainable flow of transactions. Finally, in India, in the middle of the Diwali holiday, things remained fairly calm once again.”

Meanwhile, GMS (www.gmsinc.net), added that “activity and action remain sparse across all recycling destinations, with very few (market) sales to speak of, including minimal firm interest or serious numbers from end buyers who can incentivize owners/spot buyers to engage in meaningful negotiations Fundamentals, which remain the main drivers of current volatility, remain in a precarious balance across all venues, with volatile steel prices /falling and currencies still struggling to find a stable footing.As a result, a sort of two-tier market has emerged, one where spot buyers, brokers and owners expect the market to be at one level, and another where local recyclers seem to be intentionally positioning prices well below requested levels, and both are around 50 USD/LDT apart right now. Privileged ones, such as tankers built in Russia or small specialized LDT units in good condition, are greeted with acceptable figures in the markets, especially from a picky Bangladesh. Standard Handy, Panamax Bulk Carriers and Capes are seeing their prices hover around 550 USD/LDT (if at all), as the number of end buyers with the ability to establish viable L/Cs across the sub- continent continues to decline. The Diwali holiday in India has given the market there a breather, but the lingering inertia evident in Pakistan and Bangladesh has turned into prolonged unease and gives cash buyers no confidence to bid on the small number of candidates available for retraining, instead preferring the much more bullish commercial sector as a viable alternative,” GMS concluded.

Nikos Roussanoglou, Hellenic Shipping News Worldwide

A joint study conducted by KPMG China and Aspen Digital estimated that 58% of family offices and high net worth individuals (HNWIs) in Hong Kong and Singapore have distributed some of their wealth in cryptocurrencies.

At the same time, 34% of non-investors intend to join the ecosystem in the near future.

Almost two-thirds are HODLers

The poll revealed that bitcoin and ether are the most popular digital currencies among family offices and HNWIs based in Hong Kong and Singapore.

These consumers have also shown significant interest in non-fungible tokens (NFTs) and decentralized finance (DeFi).

“NFTs have seen an explosion of interest since 2021, while interest in DeFi started in 2020 and remains interesting,” said Yang He – CEO of Aspen Digital.

Despite the negative macroeconomic events and the prevailing bear market, the executive expects cryptocurrencies to become even more intriguing financial instruments for investors in these two countries.

Paul McSheaffrey – Senior Banking Partner at KPMG China – agrees. In line with inflation and the currency crisis, an increased number of consumers might allocate a small portion of their money in digital currencies and wait for a possible price increase:

“For HNWIs and family offices, there’s a real possibility of a big upside, so they can think, why not spend 2 or 3% of my portfolio on it and see what happens.”

According Arthur Hayes, Hong Kong’s participation in the crypto world is a key factor that could trigger the next bull run. National authorities have recently revealed plans to legalize cryptocurrency retail and emerge as a digital asset hub.

Singapore officials, on the other hand, withdrew some of their support for the sector. Next Terra’s accidentthey applied strict rules to avoid similar cases.

Crypto adoption on the rise in Southeast Asia

Many countries in this part of the world have shown great interest in bitcoin and alternative coins over the past few months.

A Chainalysis survey discovered that Vietnam, with a score of 1,000, is the world leader in crypto adoption. One of the main reasons for his leadership could be the fact that locals find blockchain-based games quite intriguing.

The second position belongs to the Philippines, while Thailand and Indonesia are also among the top 20.

The deep political crisis in relations between Russia and the West after February 2022 has led to large-scale changes in the application of economic sanctions. There was a significant increase in the speed, focus and scope at which sanctions could be applied to a country.

At first glance, sanctions policy is a narrow and even technical issue. Financial, trade, transport and other restrictive measures are only one of the tools available to the great powers to achieve their political objectives. However, the transformation of sanctions, as a tool, gives an idea of ​​the much broader changes of the modern economy under the influence of political risk. This “tsunami of sanctions” against Russia is the sign of a bifurcation point. Its passage will either launch a reformatting of global power relations or, alternatively, preserve American hegemony in the global economy and in finance.

After the end of the Cold War, the United States was able to consolidate its role as the undisputed leader in world finance. The US dollar is still the most popular way to make international payments, and US financial institutions are hubs for global financial transactions. A side effect of this leadership has been the ability of US authorities to trace financial ties around the world. Since the early 2000s, against the backdrop of the fight against international terrorism, Washington has steadily increased its ability to control financial transactions, stopping them where the issue concerns national security. Thus, the blocking of financial sanctions and the freezing of foreigners’ assets have become widespread.

A similar tool had existed before; but American leadership in global finance has greatly enhanced its effectiveness. In addition to terrorists, other people are increasingly placed on blocked lists. Few doubted the advisability of blocking international criminals, drug traffickers or WMD manufacturers. But the list of blocked individuals began to replenish massively for more controversial reasons. Blocking sanctions were increasingly used to deter hostile states. Given the globalization of world finance and US leadership, Washington’s blocking sanctions have become tantamount to a suppression of customary international transactions. Targeted or “smart” sanctions against individuals or companies have proven extremely damaging. For example, blocking the backbone companies of a particular target country could lead to huge losses, as happened in the case of the sanctions against the oil and gold sectors in Venezuela or against the oil industry in Iran. . Financial blocking sanctions have also been combined with more familiar sanction instruments, including export or import bans.

It would seem that the rapid economic growth of China and the European Union should have interfered with American leadership and reduced the severity of the sanctions. However, it turned out that the size of a given economy is not commensurate with the possibilities of using it for political purposes. Neither the European Union nor China has yet managed to catch up with the United States in terms of the extent of the application of restrictive measures. To date, only the United States has been able to create a globally functioning sanctions machine, including the application of extraterritorial (secondary) sanctions and a broad interpretation of US jurisdiction. For example, US authorities apply financial sanctions and even criminal prosecution for dollar transactions with sanctioned persons, even against foreign individuals and organizations.

Over the past 12 years, EU financial institutions have paid over $5 billion in fines to the US regulator for violation of US sanctions. The EU itself is strengthening its sanctions capabilities by actively using blocking financial sanctions. The UK has also been very active since leaving the EU. Britain often imposes sanctions as part of a coalition. Other Western economies mirror the moves by the UK – Switzerland, Japan, Australia, etc.

Russia became a major target of sanctions in 2014. However, until 2022, their volume was relatively modest. The 2019 IMF report noted that the sanctions had slowed the growth of the Russian economy only 0.2% per year, and their role is incomparable with oil prices and the regulatory policy of the Russian authorities themselves. The situation changed dramatically after the start of the military operation in Ukraine. Over the past few months, the United States and its allies have used almost every possible sanction against Russia. Large banks and industrial companies have been hit with blocking sanctions. Russian financial reserves and assets of Russian citizens worth hundreds of billions of dollars have been frozen. It is prohibited to supply a wide range of goods and services to Russia, including electronic and industrial equipment. Bans have been introduced on the import of Russian oil and oil products, and restrictions have been imposed on their transportation to third countries. Sanctions affect Russian coal, gold, ferrous metallurgy products and more, including transportation restrictions.

A significant number of non-Western countries refused to apply the sanctions against the Russian Federation. However, companies in many of these countries are afraid to violate US sanctions for fear of administrative or criminal prosecution by US authorities. A recent example is the massive suspension by banks in friendly countries of cooperation with the Russian payment system Mir.

Despite the colossal damage from the sanctions, the Russian economy has shown a high threshold of stability. The authorities have succeeded in maintaining financial stability. Export deliveries are redirected to Asian markets. Critical imports are replaced by substitutes from friendly countries. Russian companies are actively exploring the niches of Western companies that have left the country. The process did not go smoothly everywhere, and it is far from always possible to replace the assets that are given away with adequate analogues. However, the very system of life under sanctions is being built in a coherent way and has a real chance of stability.

It will be of crucial importance for Russia to organize payments in alternative currencies to the dollar and the euro. The Chinese yuan has become the most sought after option. The main reason is the volume of the Chinese market and the high density of Russian-Chinese trade. Moreover, China itself is increasingly the target of US sanctions. In recent years, Beijing has vigorously sought technological independence from foreign countries. Sanctions against major Chinese telecommunications companies only fuel China’s efforts. The creation of channels of financial and trade relations with Russia independent of foreign actors will be the first major precedent for an alternative mechanism of economic relations involving two great powers. However, here too, quick and guaranteed breakthroughs are hardly to be expected. A large number of Chinese companies operate in Western markets and do not want to lose them to Russia. Moreover, the volume of the Russian market is much smaller. The same logic applies to Russian partners in India and many other friendly countries. Making new connections will take considerable time and effort.

The success of these efforts is not guaranteed, although Russia, under current conditions, has no choice but to radically restructure the mechanisms of its financial and trade relations with foreign countries. Strictly speaking, the ability of Russia and its partners to achieve such an outcome will reveal the flaws that exist in the current system of American leadership. A negative outcome of such a bifurcation point will be the marginalization of Russia in global finance and trade at the level of the DPRK or Iran, while other major non-Western players, even the closest allies Russia, will maintain tight integration into the US-centric system. . A positive outcome would be the restructuring of global finance, which would leave room for the formation of an alternative hub such as China or several similar hubs. Such a scenario would give Moscow a wider room for maneuver and would promote the diversification of its external economic relations.

From our partner RIAC

Related

Oct 25 (Reuters) – As a developed country, you know your currency is in trouble when investors start hedging with bitcoin.

After brief British Prime Minister Liz Truss unveiled her mini-budget on September 23, filling financial markets with dread, a portion of investors moved away from the pound and into cryptocurrency.

Trading volumes between bitcoin and the pound jumped 233% in September from the previous month, according to data from research firm CryptoCompare, while trading between the cryptocurrency and an equally battered euro also jumped 68%.

“This was the first time we’ve seen such a significant increase in (bitcoin) volumes for a developed country’s currency,” said Ed Hindi, chief investment officer at Tyr Capital.

On the Monday following Friday’s fiscal shock, when the pound fell to an all-time low against the dollar, trading volumes between the pound and bitcoin hit a daily high of 846 million pounds (955 million dollars), according to market data firm Kaiko. To research.

Meanwhile, bitcoin volatility is near an all-year low. In contrast, U.S. safe-haven bond volatility is near its highest since March 2020, as measured by the ICE BofAML U.S. Bond Market Option Volatility Estimate Index. (.MOVEMENT).

In fact, over the past month of market turmoil, US Treasuries have been just as or more volatile than bitcoin, according to data from Refinitiv. Bitcoin and the US 10-year note are now hovering around 21, according to a measure of realized volatility, while in early September, bitcoin’s volatility was more than double that of the bond, at 65. against 31.

“ESCAPE FROM THE CRISIS”

In bitcoin’s early days, a key selling point was its potential protection against currency depreciation and inflation. This narrative began to unravel as greater institutional adoption meant that cryptocurrencies traded more in parallel with traditional risky corners of financial markets.

So, are investors ready to bet on bitcoin as a hedge again?

Pound volumes echoed similar cases of investors jumping into bitcoin when fiat currency came under pressure, including in Russia and Ukraine this year.

Experts pointed to the relative ease for retail investors to buy bitcoin, rather than entering the gold or forex markets, as one of the factors driving the trend.

“Bitcoin has always been less of a ‘flight to safety’ and more of an ‘escape from crisis’ asset, even though the pound is nowhere near as weak as the rouble,” added Ben McMillan, chief investment officer. at IDX Digital Assets.

Some market participants said flows from the British pound were also driven by sophisticated traders taking advantage of arbitrage opportunities resulting from changes in bitcoin’s price.

One bitcoin bought nearly 19,000 pounds on September 27, its highest level in six weeks, from around 17,000 pounds on October 24.

BITCOIN PRICE

Bitcoin is not a safe bet. Clearly.

The world’s largest cryptocurrency has fallen more than 58% this year, while traditional safety plays gold and US bonds (.MERG0Q0) are down around 10% and 15% respectively, the pound lost 16% and the S&P 500 (.SPX) fell more than 21%.

However, bitcoin has stabilized somewhat in recent weeks, hovering roughly around the $19,000 mark.

Trading volumes between bitcoin and the pound are now back to levels they were before the mini-budget, analysts at CryptoCompare said, with the pound recovering ground after the UK government canceled its budget plans.

Some crypto watchers say the September surge was nevertheless a reflection of bitcoin’s enduring appeal as an asset outside of traditional finance.

“The large outflows from GBP to BTC imply that investors see value in having decentralized, incorruptible, capped money as an alternative to central bank and government-backed currencies,” CoinShares researchers said.

($1 = 0.8856 pounds)

Reporting by Lisa Pauline Mattackal in Bengaluru; Additional reporting by Alun John in London; Assembly Pravin Char

Our standards: The Thomson Reuters Trust Principles.

The opinions expressed are those of the author. They do not reflect the views of Reuters News, which is committed to integrity, independence and non-partisanship by principles of trust.