WSJ : CVS Nearing $10.5 Billion Deal for Primary-Care Provider Oak Street Health

CVS Nearing $10.5 Billion Deal for Primary-Care Provider Oak Street Health
The deal would expand the health insurer and pharmacy chain’s role in medical care

CVS Health Corp. CVS -0.61% is close to an agreement to acquire Oak Street Health Inc. OSH -2.48% for about $10.5 billion including debt, a deal that would rapidly expand the big healthcare company’s footprint of primary-care doctors with a large network of senior-focused clinics, according to people with knowledge of the matter.

The companies are discussing a price of about $39 a share, the people said. The deal, if it goes through, could be announced as soon as this week, they said. CVS is scheduled to report earnings on Wednesday.

The agreement would come on the heels of CVS’s $8 billion agreement to acquire home-care provider Signify Health Inc. SGFY -0.95% Together, the two acquisitions would push CVS, the parent of its namesake pharmacies as well as the huge Aetna health-insurance operation and a pharmacy-benefit manager, far deeper into the direct provision of healthcare.

CVS Chief Executive Karen Lynch had signaled that primary care and home-based care are key growth areas for the company.

Oak Street, which has more than 160 centers across 21 states, focuses on the care of patients enrolled in Medicare.

Bloomberg reported last month that CVS was exploring a deal for Oak Street Health.

CVS’s deal would be the latest in a series of moves by a range of players, including health insurers, to acquire clinics and doctors focused on primary care. Of special interest to the buyers are clinics that manage and treat patients with chronic health conditions such as diabetes, whose care can be costly if not managed closely.

Among those pushing into the space with recent deals include Walgreens Boots Alliance Inc. and Amazon.com Inc.

Companies with health-insurance units, particularly those that offer Medicare Advantage plans, the private version of the federal program, have been especially interested in acquiring the clinics. The combinations would help the companies shave costs by managing patients more closely and in particular, helping them avoid costly hospital visits.

Health insurer Humana Inc. is rapidly expanding its care footprint, while UnitedHealth Group Inc.’s Optum health-services arm has over many years assembled a sprawling network of surgery centers, doctor groups and other assets.

UnitedHealth, the parent of the biggest health insurer in the U.S., aims to soon add home-health company LHC Group Inc.

For CVS, the Oak Street acquisition would further the company’s long-term shift to broaden into businesses beyond retail pharmacy by adding doctors who can more fully manage patients’ care.

CVS, of Woonsocket, R.I., has already been revamping pharmacies and adding more health offerings to create centers it calls HealthHUBs, in addition to the MinuteClinics it maintains in many stores.

CVS’s Aetna has a growing Medicare Advantage business, which would likely tie in closely with the Oak Street clinics. Oak Street, founded in 2012 and based in Chicago, specializes in caring for patients under financial arrangements that are supposed to link payment to value, rather than each medical service a clinic provides.

Instead, under so-called value-based arrangements, doctors and clinics are often paid a set amount per patient. That setup is supposed to encourage the clinics to provide upfront preventive services and support that can reduce costs of care by helping the patient avoid hospital visits. Clinics can generally pocket some or all of the savings they generate.

Oak Street said at a recent conference that it cares for about 159,000 patients under the arrangements.

FT : DCG sells shares in Grayscale crypto trusts in push to raise funds

DCG sells shares in Grayscale crypto trusts in push to raise funds
Digital assets conglomerate sells down holdings in prized investments at a discount to pay creditors

Crypto conglomerate Digital Currency Group has begun to sell shares in several of its most prized cryptocurrency funds at a steep discount, as it seeks to raise capital to pay back creditors of its bankrupt lending arm.

SoftBank-backed DCG has started to offload its holdings in several investment vehicles run by its subsidiary Grayscale, according to US securities filings seen by the Financial Times.

The move to sell down the assets underscores the financial difficulties at DCG as it tries to raise funds to support its collapsed lending units under crypto broker Genesis, while seeking to preserve its most cash-generative business.

Connecticut-based DCG, founded in 2015 by former banker Barry Silbert, is one of the largest and oldest investors in crypto coins and businesses. It is backed by investors including SoftBank, Singapore’s sovereign wealth fund GIC and Alphabet’s venture arm CapitalG.

Grayscale, DCG’s asset management business, is a key asset: it earns hundreds of millions of dollars per year in lucrative fees for managing large pools of bitcoin, ether and other cryptocurrencies in funds that investors can buy shares in from their brokerage accounts.

DCG is selling stakes in one of its largest trusts even though the shares over the past two years have fallen to substantial discounts to the underlying value of cryptocurrency they hold.


It is seeking to raise money after the lending units of Genesis, its crypto broker, collapsed into bankruptcy in January, becoming the latest large crypto company to fail after the downfall of Sam Bankman-Fried’s FTX exchange rocked the digital asset industry.

The US group has been attempting to repay more than $3bn to its creditors and has been embroiled in a public dispute with the Winklevoss twins over the debts. To raise further funds, the group last month hired Lazard bankers to help sell its trade news site CoinDesk. It is also seeking to offload some of its $500mn venture portfolio, the Financial Times previously reported.

DCG’s recent share sales have focused on the ethereum fund, where the group has moved to sell about a quarter of its stock to raise as much as $22mn in several trades since January 24, according to the filings. The company is selling at about $8 per share, despite each share’s claim to $16 of ether.

“This is simply part of our ongoing portfolio rebalancing,” DCG said.

Grayscale earns a 2.5 per cent management fee on the 3mn of ether in the trust, equating to $209mn in the year to end September. DCG last sold shares in the Ethereum Trust in 2021, when the vehicle traded nearly at par with its net asset value, according to the filings provided by The Washington Service. Today the shares trade at half the value of the ethereum coin they represent.


Its flagship Bitcoin trust holds about 3 per cent of all Bitcoin, worth $14.7bn, from which Grayscale earns a 2 per cent fee. It earned $303mn from fees on the bitcoin trust in the first nine months of 2022, according to securities filings.

DCG has also moved to sell down smaller blocks of shares in its Litecoin Trust, Bitcoin Cash Trust, Ethereum Classic Trust and Digital Large Cap Fund, according to the filings.

The group does not allow investors to redeem their shares for the coins held in the trusts, which would help close the significant net asset value gaps.

“DCG faces a trade-off: they could allow redemptions and enable liquidity at par value, including for their own holdings, but they’re better off not doing it because they make so much money from the management fees,” said Ram Ahluwalia, chief executive of Lumida Wealth. “Closing the discount would mean giving up this cash cow.”

Before cryptocurrency was easily tradable through reputable exchanges, the shares in Grayscale’s trusts traded at a large premium to the value of the coins they held, incentivising holders of bitcoin and ethereum to hand over their coins for shares in the Grayscale vehicles.

FT : Wireless charging offers hope for mass electric vehicle use

Wireless charging offers hope for mass electric vehicle use
Trials in Germany and the US could reduce the size of batteries needed and end drivers’ ‘range anxiety’

An hour’s drive south of Stuttgart lies a modest stretch of road that may represent the future of electric vehicle charging.

This kilometre-long strip in the German town of Balingen will, later this year, host the world’s first public trial of “wireless charging”. Its aim will be to show that a technology long regarded as ambitious and futuristic can now work in the real world.

Several carmakers, including BMW, already offer vehicles with pads that allow them to recharge when parked. But the potential for refuelling batteries while driving — known as dynamic charging — has widespread implications for the industry.

Chief among these is reducing the size of the batteries needed in vehicles to avoid dreaded “range anxiety” — which remains one of the greatest barriers to widespread electric vehicle adoption.

Carmakers and industry lobby groups have been warning that far too few charging points are being put in to serve the expected number of electric vehicles on the roads. They have also expressed concern about a potential shortage of battery materials by, or shortly after, the middle of the decade.

However, analysts believe that dynamic charging — which allows vehicles to carry much smaller batteries — would enable limited resources to be used across more vehicles.

“The aim of this project is not only to open up wireless charging to the public in Germany,” says Andreas Wendt, chief executive of the German arm of Electreon, an Israeli group that provides the charging system. “Other significant aspects include the development and use of a tool that will assist public transportation planners in where to install the inductive infrastructure for a specific town or region.”

Early trials show “how effective, safe, and easy to deploy wireless dynamic charging is,” Wendt adds. “We hope this is the start of many more projects on public and private roads in Germany.”

As vehicle manufacturers ramp up their production of battery models to meet tightening emissions regulations, dynamic charging — if proven to work at scale and cost effectively — therefore offers a solution to the lack of static charging points.

“A wireless in-road charging system will be revolutionary for EVs by potentially extending an EV’s battery charge without having to stop and plug in,” argues Michele Mueller, from Michigan’s Department of Transportation, which is also trialling the technology this year.

These first road trials largely feature buses — which run on fixed routes, making them easier to control — as well as some taxis, which can charge from pads placed under ranks at airports or train stations.

“The adoption of this technology will be in a fleet, or captive fleet, first, because it’s exponentially harder when you go to private cars,” explains Michael Hurwitz, future mobility specialist at professional services firm PA Consulting. Hurwitz was previously head of innovation at Transport for London, the local government body responsible for most of the transport network in the UK capital.

“If you have operational charging, rather than at the end of a route, then the battery size you need and the very significant cost of the vehicle goes down.”

But there are still significant hurdles for the technology to clear before it is proven.

Parts have to be interoperable, allowing rival vehicle models to charge on the same system to avoid duplicating the technology. Installing underfloor charging pads, meanwhile, can be prohibitively expensive.

Then there is the wider challenge of getting highway operators to co-ordinate with energy grids, and the wider automotive industry.

Hurwitz suggests the best chance for the technology is to have it “wrapped into the way we build and maintain roads, both commercially and operationally — if any highways are going to make it work, it’s intensively used freight corridors.”

However, the need for a high-speed electricity connection can make achieving widespread on-the-road charging too difficult.

When FirstBus, the UK’s second largest regional bus operator, which is in the process of electrifying its fleet, looked at wireless charging it concluded the project was too expensive, because of the need to feed power to its many rural bus stops.

“It’s all about the power supply,” says Garry Birmingham, FirstBus director of decarbonisation. “Some bus stops don’t even have a light in them.” The company was quoted £70,000 for each ground-based charging pad.

Even so, the technology is expected to make some inroads this decade. Technology research group IDTechEx predicts there will be around 700,000 wirelessly charged vehicles owned by premium car drivers in 2032, “because of the added convenience of not having to plug in”.

It expects about 180,000 of these to be electric delivery vans, as “limited space in depots will need non-intrusive wireless solutions so that vans can be charged and loaded with cargo at the same time.” IDTechEx also says: “Transit buses are also good candidates for adoption but are much smaller in unit volume.” 

Carmakers are already dipping their toes into the technology. Fiat owner Stellantis has been testing dynamic charging on a private track since 2021, while Volvo Cars last year announced it will trial wireless charging on its XC40 electric models.

Mats Moberg, who was head of research and development at Volvo at the time of the announcement, said: “Testing new charging technologies together with selected partners is a good way to evaluate alternative charging options for our future cars.”

FT : In charts: are governments doing enough to back green energy research?

In charts: are governments doing enough to back green energy research?
Spending levels may need to rise if the world is to achieve its climate goals

Can the world reconcile its hunger for energy with the need to fight climate change? The answer depends on whether it can find greener, cheaper, more efficient ways to produce and deliver that energy. But that in turn depends on the level of research and development spending, and overall investment, in this area — and the figures do not look promising.

Take the Mission Innovation initiative announced by then US president Barack Obama at the 2015 Paris climate summit — the gathering at which world leaders agreed to limit global warming to well below 2°C above pre-industrial levels.

MI’s 20 participant governments pledged to double their clean energy R&D investment in the five years to 2020. But that didn’t happen. Instead, there was a cumulative shortfall over the five-year period of more than $50bn, based on estimates from the Information Technology and Innovation Foundation, a US public policy think-tank.

According to the ITIF, of the 34 countries it covers, only Norway spent more than 0.1 per cent of its GDP on low-carbon energy R&D in 2021. But, if all 34 countries had invested at the 0.1 per cent level, it would have equated to an additional $71bn.


The latest World Investment Report from the Paris-based International Energy Agency estimates that, in 2021, total public spending on energy R&D was $38bn, of which almost 90 per cent was allocated to clean-energy technologies.

Much of the emphasis on clean energy is a response to the climate emergency. However, elevated fossil fuel prices and concerns over energy security — both factors that have come to the fore since Russia’s invasion of Ukraine — also play a part.

Public spending on non-fossil fuel energy R&D doubled in IEA member countries between 1974 and 1980, after oil price shocks, and doubled again between 1998 and 2011 — another period when oil prices were elevated.


Economic recovery packages have also helped to boost investment — as happened after the global financial crisis of 2008-09, again during the Covid-19 pandemic, and, most recently, after the return of high inflation in 2022. Funding from the US Inflation Reduction Act (IRA), passed last year, is expected to accelerate investment into clean technologies.

Although pressure on government budgets may work against this, levels of R&D spending today account for a smaller share of GDP than in previous crisis periods — suggesting that increases should be affordable.


As well as arguably being too low, current levels of R&D investment may be unbalanced. Data from the IEA shows that research into renewables, such as wind and solar, actually trended down slightly in the decade to 2021. Energy efficiency R&D has risen, mostly in the transportation sector rather than in buildings or industrial processes — both a significant source of emissions. The nascent technologies of carbon capture and storage (CCS) and hydrogen and fuel cells have very low shares of R&D (though some experts say that attention is in any case better focused on more proven areas).

A rising trend in government investment is likely to stimulate private investment. Incentives such as tax breaks could also help lure private investors away from fossil fuel projects and towards cleaner alternatives.

While the share of non-carbon sources in the energy mix is increasing, global fossil fuel consumption has almost certainly not yet peaked. In fact, it looks likely to keep rising in some developing economies for decades to come. The pressure to develop greener alternatives will only grow.

FT : Iran’s ‘ghost fleet’ switches into Russian oil

Iran’s ‘ghost fleet’ switches into Russian oil
Sanctions-busting vessels make sudden shift after introduction of oil price cap and other restrictions

Tankers in Iran’s “ghost fleet” have switched to carrying Russian oil since western curbs on Moscow intensified in December, as the Kremlin turned to sanctions-busting techniques pioneered by Tehran.

At least 16 vessels that formed part of the “ghost” network that allowed Iran to breach UN sanctions have begun to ship Russian crude oil over the past two months, according to Financial Times research.

Before the surge, just nine vessels had switched on to the Russian route during the nine months since the start of the war in February 2022.

Ship brokers and analysts said that Russia was enticing tanker owners and operators with premium rates, as it seeks to shield its main source of export revenues from western measures such as the G7/EU oil price cap. Estimated Russian oil export revenue is markedly down on its prewar levels.

“We’ve seen a number of vessels involved in Russian trade that previously did Iranian barrels,” said Svetlana Lobaciova, a tanker analyst at shipbrokers EA Gibson in London.

“The premium for Russian trade is at least 50 per cent above the normal market rates and could be even more than 100 per cent in some instances, making the economics even more attractive than shipping Iranian oil.”

Iran has been able to maintain or even increase its crude exports in recent months. Tehran, which co-operates on oil policy with Moscow through the Opec+ group, has emerged as a key backer for Russian President Vladimir Putin’s invasion of Ukraine.

Competition for vessels is a possible source of tension in the relationship. However, Matthew Wright, an analyst at Kpler, a data and analytics company, said: “an increase in the number of ships in the ghost fleets owned through secretive offshore entities, which enables sanctions evasion, appears to have helped avoid much of a problem with sourcing vessels.” 


The FT identified vessels involved in the Iranian ghost fleet using a list of 288 ships subject to sanctions-breaching complaints to marine registries and insurance companies by United Against Nuclear Iran, a US-based group that campaigns for tough enforcement of sanctions.

The FT checked the methods used by UANI for identifying ghost fleet members by reviewing a sample of its analyses, which are based on ship movement data and satellite photography. The FT also checked the findings on specific ships were consistent with those of other organisations. Data from Kpler was then used to monitor these vessels’ recent cargoes.

Strains in tanker markets are expected to be exacerbated in the coming weeks. EU sanctions and the G7 price cap were both extended to Russia’s exports of refined fuels like diesel and petrol on Sunday.

Russia has already had to reroute a lot of its crude to Asia after a ban on seaborne imports of Russian crude to the EU took effect on December 5. It will probably need to ship diesel and other fuels longer distances now a similar ban is in place.

Western sanctions targeting Russia are less onerous than US sanctions targeting Iran. The G7 price cap is also partly designed to limit revenues to the Kremlin while keeping enough Russian barrels in the market to avoid shortages.

Shipbrokers said terms made the Russian trade more attractive than dealing with Iran or other heavily sanctioned countries such as Venezuela. Ship owners and operators are less likely to fall foul of the measures if they can show they were told the Russian fuel was sold under the cap.

FT analysis suggests that the volumes of Russian crude being shipped on vessels identified as being part of the “ghost fleet” have surged from less than 3mn barrels in November to more than 9mn barrels in January.

One shipbroker said that while a handful of large tanker operators were still shunning Russian oil trade, such as western oil majors and US ship operators, many others were willing to take part given the rates on offer and leeway in the rules.

“Everyone is a sinner now,” the shipbroker said. “The line between the grey market and the conventional tanker market has definitely gotten blurrier in the past year.”

Some of the ships now serving the Russian route are vessels previously identified as likely to be part of Moscow’s own shadow fleet, a covertly controlled operation assembled over the past year. Shipbrokers have estimated that it consists of around 100 vessels.

Claire Jungman, chief of staff at UANI, said: “The ownership behind [ghost fleet] . . . vessels is often very opaque and disguised through numerous front companies that are constantly changing to avoid sanctions”.

Russian oil is still travelling in tankers operating with western insurance. Such insurance is only available on the condition the oil was bought for less than the price cap. The price for Russia’s main export-grade Urals has fallen to a discount of $30-$40 a barrel below benchmark international crudes such as Brent.

Russian barrels from the Baltic and Black Sea have fallen to a large discount partly to cover the cost of shipping and as refiners in India and Turkey negotiate lower prices for crude that once flowed to the EU.

Lobaciova at EA Gibson said Russian oil deliveries have proved more lucrative because they do not face significant delays, unlike Iranian cargoes that often spend more time at sea to mask their origin. Refiners in countries such as China, which has remained a big buyer of Iranian oil, have also left tankers of Iranian oil waiting to unload.

“We have at times seen Iranian tankers waiting for months — as best as we can tell that hasn’t happened to Russian tankers, which is better for operators especially when rates for Russian routes are so high,” she said.

FT : Ammo supply chain crisis: Ukraine war tests Europe in race to re-arm

Ammo supply chain crisis: Ukraine war tests Europe in race to re-arm
Manufacturers struggle to replenish national weapons stockpiles and meet demand from Kyiv

Ukraine’s battle against Russia is consuming ammunition at unprecedented rates, with the country firing more than 5,000 artillery rounds every day — equal to a smaller European country’s orders in an entire year in peacetime.

The dramatic shift to a war footing is creating a supply chain crisis in Europe as defence manufacturers struggle to ramp up production to replenish national stockpiles as well as maintain supplies to Ukraine.

Nearly a year since Russia’s invasion, the pace of demand for ammunition and explosives is turning into a test of Europe’s industrial production capacity in a race to re-arm.

“It is a war about industrial capacity,” said Morten Brandtzæg, chief executive of Norway’s Nammo, which makes ammunition and shoulder-fired weapons.

He estimates Ukraine has been firing an estimated 5,000-6,000 artillery rounds a day, which he said is similar to the annual orders of a smaller European state before the war.

The pressure on producers has not been helped by lingering supply chain bottlenecks following the coronavirus pandemic, a lack of production capacity and a shortage of critical raw materials for some explosives, which is holding back efforts to increase output.

Some components are in such high demand, Brandtzæg said, that their delivery time has increased from months to years.

It has led to a scramble to source materials, from chemicals for explosives to metals and plastics for fuses and artillery shell casings. Most companies have increased production shifts ahead of expected orders from national governments, and are hiring more people, another challenge since the start of the pandemic.

Yves Traissac, deputy chief executive at military explosives producer Eurenco, said the company is looking to increase production capacity to meet the higher demand from customers that include Germany’s Rheinmetall and Britain’s BAE Systems.

“We are currently managing a ramp-up to meet our customer demand. It is a challenge but we are working on that,” he said.

One particular challenge is sourcing nitric acid, which the company uses in small quantities to make explosives but which is also a key ingredient in the manufacture of fertiliser. With parts of Europe’s fertiliser production reduced due to the high cost of energy, the supply of nitric acid “has to be secured with our suppliers”, said Traissac. Eurenco, he added, is working to “have additional sources of critical raw materials”.

Rheinmetall, Germany’s largest defence contractor, announced last month it would build a new explosives factory in Hungary in a joint venture with the government to address the shortage.

The explosives produced in the new plant will be used for artillery, tank, and mortar ammunition, among other things. The company has also restarted decommissioned ammunition production facilities, it told the Financial Times, and has “bought in large stocks of important materials”. 

Mick Ord, chief executive of Britain’s Chemring, which supplies a range of explosives and propellants to defence contractors, said some customers have asked if it is possible to “increase output [of certain materials] by 100-200 per cent”. 

According to Ord, a “lot of the post-pandemic supply chain challenges are starting to abate”.

The “bigger challenge is that our capacity has been sized to what our customer demand was and the industry has been run very broadly on that basis, where capacity meets demand”.

To increase output significantly takes time and investment in new plants, he said. “These are pretty capital intensive projects which take a few years to build, commission and bring online. It’s not the kind of supply chain where you can just flick a switch.”

UK-based Denroy, which makes shell casings and other components for a range of defence companies, has benefited from pre-ordering certain materials such as polymers and composites.

The challenge, said chief executive Kevin McNamee, is “not so much our capacity but the lead times of some of the materials are very long — it can be a six-month lead time on some specialised materials”.

“Companies might do a batch once or twice a year, so if you miss that batch, you have to wait.”

The crisis has prompted companies to work more closely with their suppliers and also with those further down the chain. Several industry executives said they were spending more time making sure on a daily basis that individual suppliers were able to deliver.

The huge demand for investment is also prompting calls for a change in the way procurement is handled by governments, with executives saying they need longer-term contracts.

Nammo, which is co-owned by the governments of Norway and Finland, usually receives annual contracts from state customers. The company started to invest in its facilities early last year and has been able to meet the demand from its customers. Nevertheless, Brandtzæg said the scale of the investments are such that they are a “huge strain on the financials of an otherwise healthy defence company”. 

The investments for the company were “more than three times higher in 2022 than in the year before”. The defence industry needs longer, multiyear contracts, he added, “so that they can carry those massive investments”. 

In the UK, BAE Systems has been in talks with the Ministry of Defence about ramping up production of a number of munitions for months. The company is the main supplier for the British Armed Forces and in January began a new 15-year supply contract but it is still waiting for a formal agreement to cover the additional output required by Ukraine.

Lee Smurthwaite, programme director for munitions at BAE, said the company had already increased the number of shifts at its plants, in addition to hiring temporary workers, both to meet the demands of the new contract as well as in anticipation of more work. The company’s three main munition plants typically run two to three shifts over 24 hours a day, five days a week.

The rush to re-arm and the prospect of the war lasting for some time has prompted debate about the need to pool purchasing across the EU, despite its separate industrial bases.

Countries are also looking at collaboration further afield, with France late last month announcing it would work with Australia to jointly produce and send several thousand 155mm artillery shells to Ukraine. The production of the shells will be led by France’s Nexter.

“You will never end up with just one propellant plant in Europe but if ever there was a time to say, we should be co-operating on munitions, it is now,” said Francis Tusa, editor of Defence Analysis, pointing to a recent speech by French president Emmanuel Macron where he revealed that the number of shells manufactured in France each year corresponded to a week of shelling sent by Russia into Ukraine.

There could be merit in an agreement on common purchasing of weapons such as ammunition or explosives, he added.

Work on this is under way. The European Defence Agency, set up in 2004, is part of an EU effort launched late last year to explore with industry how member states can co-ordinate the procurement of some critical equipment, including ammunition.

“It was clear that for a number of capacities there was an urgent need,” said Pieter Taal, head of the EDA’s industry, strategy and European policies unit.

Progress, however, will take time, he admitted, adding that “between member states it always takes a lot of talking back and forth”.

Trevor Taylor, of the Royal United Services Institute, said: “Scale matters in defence production and the functional case for Europeans (including the British) working together is very clear.”

But he warned: “The political hurdles to such co-operation are significant: settling who would pay for what would be challenging.”

FT : UK to design ‘digital pound’ that could fend off future private tech rival

UK to design ‘digital pound’ that could fend off future private tech rival
Case in favour of central bank virtual currency said to be growing though concerns remain

The UK Treasury and Bank of England are designing a “digital pound” that could supplant banknotes by the end of this decade and fend off a Big Tech competitor.

With the decline of cash, ministers and officials think there is likely to be a need for a publicly-backed digital currency that would sit in wallets on smartphones and could be used for shopping much like notes and coins.

Consumers already accustomed to fast digital payments would see few obvious differences, but the core infrastructure would be part of the central bank and could be guaranteed to be available for everyone to use.

Officials believe a digital pound would ensure the BoE maintains control of the heart of the UK financial system and prevent any private company from keeping payments within a closed network.

A final decision on whether to go ahead will be taken around 2025, the Treasury said, when it would decide whether the potential benefits of implementing a new payments infrastructure outweighs the costs and risks.

One potential danger, flagged previously by the House of Lords and the BoE, is that a new central bank digital currency could increase financial instability if households and companies all withdrew money from commercial banks at once to put in a government-backed digital pound.

To guard against this, the Treasury said it would initially place a limit on the amounts that could be held in the new wallets, even though such constraints would reduce the digital currency’s usefulness as a payment system.

In starting the detailed design, officials are seeking to ensure that a digital pound could play a similar role to cash — allowing seamless payments, not receiving any interest and forming the backbone of currency in the UK.

This, they think, would help knit together different private sector payments systems, ranging from debit and credit cards, to fintech companies such as Monzo and Revolut and new stablecoins from cryptocurrency providers.

Andrew Bailey, BoE governor, said the case in favour of a central bank digital currency “continues to grow”, but highlighted there were concerns that needed addressing before taking “a profound decision for the country on the way we use money”.

With the private sector already providing effective payments infrastructure, a House of Lords’ report last year said that central bank digital currencies were “a solution in search of a problem”.

Official digital currencies are nonetheless becoming fashionable in the central banking circles. As of December 2022, 114 countries are exploring CBDCs, according to the Atlantic Council. Close to 30 governments including China, the Bahamas and Jamaica have either fully launched CBDCs or are currently running pilot schemes.

The rationale varies. Analysts see China’s “digital renminbi” as supporting greater surveillance and as an alternative to homegrown and international payment systems. The central bank of the Bahamas lists financial inclusion and stronger anti-money laundering systems as its rationale for launching the “sand dollar”.

An investigation into a digital euro launched by the EU is due to conclude in October, after which the bloc will decide whether to begin development. In the US, the Federal Reserve Banks of Boston and New York have been investigating retail and wholesale uses for CBDCs, respectively.

>>> US After Hours Summary: VLD +8.1% on Q4 guidance, SKY +4.9%, KMT +4.6%, SWKS

After Hours Summary: VLD +8.1% on Q4 guidance, SKY +4.9%, KMT +4.6%, SWKS +3.4%, SAVE +3.3% up on earnings; CHGG -20.8% after downbeat guidance, AOSL -13.3%, LEG -6.9%, PINS -3.4% on earnings, BBBY -28.7% after proposing public offering

After Hours Gainers:

Companies trading higher in after hours in reaction to earnings/guidance: VLD +8.1% (guidance), SKY +4.9%, KMT +4.6%, SWKS +3.4% (also authorized $2 bln for share repurchases; CFO leaving), SAVE +3.3%, BRBR +2%, BRBR +2%, KFRC +1.1%, NOV +1%, NOV +1%, VRNS +0.9%, ATVI +0.7%, UDR +0.7%, POWI +0.1%, SSD +0.1%, ARWR +0.1%

Companies trading higher in after hours in reaction to news: GNW +2.8% (separating CFO and CIO roles), ROG +1.8% (Starboard Value discloses 6.5% stake), NYT +1.2% (expanding agreement with Google, according to NYT), IDCC +1% (repurchasing $200 mln of its stock), MSGE +0.2% (exploring sale of Tao Group Hospitality), NOG +0.1% (increases quarterly dividend)

After Hours Losers:

Companies trading lower in after hours in reaction to earnings/guidance: CHGG -20.8%, AOSL -13.3%, COLL -9.9% (Q4 product revs guidance; $175 mln convertible senior notes offering), HLLY -9.5% (guidance; CEO stepping down), LEG -6.9%, ZI -6.9%, PINS -3.4% (also authorized $500 mln for share repurchases), RMBS -2.7%, ACM -2.6%, FN -1.5%, TTWO -0.6%, SPG -0.3%

Companies trading lower in after hours in reaction to news: BBBY -28.7% (proposes public offering), BLNK -6.3% (proposes $75 mln public offering), CVAC -5.5% (to offer $200 mln of shares in public offering), ME -0.4% (files $500 mln mixed shelf), META -0.1% (FTC not appealing court rejecting its attempt to block META's Within acqusition, according to Gizmodo)