Tom Emmer, a member of the US House of Representatives, has introduced a new bill to prohibit the Federal Reserve from issuing a retail CBDC. “My bill, which prohibits the Fed from issuing a CBDC directly to individual Americans, is a statutory prohibition on a surveillance tool that could be used to kill private sector innovation and deflate the dollar’s dominance.”

High-level summaries of sessions on digital euro cross-currency and conditional payments, scheme access, form factor and interface, on-boarding, end-user services and dispute management, compensation model, rollout approach, and rulebook development.

The IMF published a technical report that analyzes the retail payments markets of Jordan to identify pain points that retail central bank digital currency (CBDC) could address. It found that retail payment systems in Jordan are highly integrated, enabling customers to make interoperable transactions between banks and non-bank payment service providers. The country’s cross-border remittance market was competitive, but could benefit from the reduced transactions cost associated with retail CBDC. Despite generally accessible and appropriate product offerings and an enabling environment, various barriers prevent customers from extensively using digital means of payment. Hence, retail CBDC might create an opportunity to overcome these barriers, thus making a cross-border retail CBDC worth consideration. However, it recommended that the Central Bank of Jordan (CBJ) rigorously evaluate benefits against risks and costs before forging ahead. Meanwhile, the CBJ should develop capacity to address technology, cybersecurity, financial integrity, and legal issues. [IMF]

Bank for International Settlements (BIS) General Manager Agustín Carstens called for  the development of a  “unified ledger” that would allow different parts of the digital financial ecosystem to work together seamlessly. More specifically, such a ledger could bundled together central bank digital currencies (CBDCs) and tokenized deposits, linked with smart contracts, to create a "money Lego" ecosystem. And Mr. Carstens claimed that all of a unified ledger's potential benefits  could be achieved on permissioned platforms with various degrees of centralization.

Coinbase will support for Euro Coin (EUROC) on the Ethereum network (ERC-20 token) and trading will commence as soon liquidity conditions are met, in regions where trading it is supported. The EUROC token will launch with the "experimental" label, designated for new or low volume tokens on the exchange.

The Central Bank of Nigeria (CBN) is in talks with potential technology partners to develop a new system to run and manage its eNaira central bank digital currency (CBDC). The CBN wants to develop its own CBDC software so that it can keep full control of the underlying technology. The CBN, in collaboration with Bermuda-based Bitt inc., launched the eNaira in October 2021 which, like other CBDC pilots and launches, has struggled to win wide adoption, although not necessarily because of the technology platform.

"Papers in this BIS volume were prepared for a meeting of emerging market Deputy Governors organised by the Bank for International Settlements on 9–10 February 2022. "

"There’s an excellent chance governments worldwide will soon force their citizens to use central bank digital currencies (CBDCs). CBDCs enable all sorts of horrible, totalitarian things."

FinDev Gateway published a paper that draws on the growing number of central bank digital currency (CBDC) launches, pilots and experiments since 2013, as well as findings from the latest Alliance for Financial Inclusion (AFI) report on the role of CBDCs for financial inclusion in the developing world, to consolidate key learnings to empower decision-makers on their CBDC journeys.

"It's good to see people getting more critical about cashless society, but often their main concern is about governments doing surveillance of our digital payments. In reality, there are at least 9 other reasons to fight cashless society, all of which are just as important" [Brett Scott]

"In part one, we looked at the Bank of England’s difficulties establishing the “need” for a digital pound (“Britcoin”). Here we’re moving on from the cheap thrills of theorisation to the fibrous goodness of pragmatics."

"If you build it, maybe they will come, maybe not. Or maybe you don’t care, and you just want to build it anyway. That seems to be the attitude being taken by the Bank of England, which launched its consultation on a ‘digital pound’ — which, painfully, appears to have assumed the moniker Britcoin — to mild fanfare last week."

To advance in the design of Real Digital, on 11/30/21, BC launched a special edition of the Real Digital Challenge Laboratory of Financial and Technological Innovations, the LIFT Challenge Real Digital, which aims to evaluate its use cases and technological viability . Based on the results obtained in the challenge, BC will advance in a pilot phase, which should start in the second half of 2023 and extend throughout 2024.

"Proof of reserves is all the rage on crypto platforms. The idea is that if the platform can prove to its customers' satisfaction that their deposits are fully matched by equivalent assets on the platform, their deposits are safe. And if the mechanism they use to prove this uses crypto technology, that's even better. Crypto tech solutions have surely got to be much more reliable than traditional financial accounts and audits - after all, FTX passed a U.S. GAAP audit. No, they aren't. Proof of reserves as done by exchanges like Binance does not prove that customer deposits are safe. It is smoke and mirrors to fool prospective punters into relinquishing their money, just like claims that exchanges and platforms are "audited" or have "insurance". There are no audits in the crypto world, there is no insurance, and as I shall explain, proof of reserves proves absolutely nothing." [Frances Coppola]

"For stablecoins to flourish as widely used payment vehicles they require a proper regulatory framework. A good starting point is to adhere to the principle of “same risk, same activity, same regulation.” Another worthwhile principle is to not recreate the wheel. With this in mind, this Commentary offers some suggestions as to how stablecoins and their issuers could be regulated using the existing regulatory frameworks that are applied to retail payments-system providers and deposit-taking institutions. These existing frameworks include the Bank Act, its provincial statutory counterparts, and the relatively recent Retail Payments Activities Act. We paraphrase the Financial Stability Board’s high-level recommendations for global stablecoins – many of which apply in a domestic setting as well – and assign the legislation/recommendations/authority based on the Canadian context." [Jeremy Kronick & Mark Zelmer, CD Howe]

SUERF published an abbreviated version of the 2022 BIS paper on African CBDC developments.  Like their peers, a key motivation for African central banks is achieving greater payment system efficiency, but they place more emphasis on financial inclusion and potential benefits for monetary policy. But Africans are more worried than other regions about cyber risks and cross-border spillovers and are also concerned about high operational costs.

"Let’s take a look at one of the biggest stablecoins in crypto, the USDC token. Using a few specific examples, we will show: (1) stablecoins are regularly used by dubious actors to move massive sums of money internationally with minimal oversight, (2) stablecoins are regularly used in fraudulent transactions, and (3) stablecoin issuers provide shadow banking services for other crypto entities that are unable to access traditional banking services. "

Ukraine’s Ministry of Digital Transformation and Deputy Prime Minister Mykhailo Fedorov has reportedly instructed the National Bank of Ukraine (NBU) to launch its e-hryvnia central bank digital currency (CBDC) pilot this year, instead of the originally planned 2024. The NBU published an e-hryvnia concept note in November 2022, and in January 2023 Tascombank carried out CBDC tests on the Stellar network.

The Banque de France (BdF) published a paper on the impact of stablecoins on the financing of the real economy. The largest stablecoins manage their peg with the US dollar by holding safe short-term assets such as US dollar-denominated commercial paper (CP). The paper suggests that US CP isssuers react to the increasing demand for stablecoins by issuing more CP. The authors exploit the fact that reserve asset policies vary across stablecoins and over time to confirm that the relationship between stablecoins and CP market is effectively due to the purchase of CP by stablecoin issuers.

"Digital currencies put central banks on a slippery slope towards unjustifiable infringement of civil liberties and encroachment into the marketplace. For once, both big commercial banks and startups have aligned interest here to resist the regulatory overreach. The disruption to the banking system is potentially vast, if retail money suddenly flooded into a central bank depository, when the next unseen crisis surely comes. Regardless, be afraid of the consequences of choking off competition in the financial system, let alone stifling fintech entrants. "

It’s clear regulators prefer interacting with banks because banks are centralized and easy to control. Reading between the lines, the real risk stablecoins pose is creating a system less amenable to government efforts of control. But technological progress is not going to stop. Economic activity is simply going to move elsewhere in the world if we continue down this path. United States regulators believe they face a choice between allowing or banning stablecoins, but in reality they face a choice between allowing stablecoins onshore or having them be primarily offshore. Already, the biggest winner of the current U.S. attack on crypto is likely Tether, the largest stablecoin issuer with a less-than-reputable past. Stablecoin tether (USDT) is growing again while Circle’s USDC and the Paxos-issued BUSD, both of which are more transparent, more regulated and safer for consumers, are shrinking.

"Recent news reports have shone a light on Binance-Peg BUSD (“PBUSD”) and how it doesn’t always appear to have been completely backed by BUSD issued by Paxos. PBUSD is minted on several blockchain networks including BNB Chain, Avalanche, Polygon, and TRON. PBUSD has always been, and continues to be, 100% collateralized. However, the collateral has not always been stored in a single, dedicated wallet in real time so that the 1:1 backing was not always immediately visible to users. Binance undertook a project to centralize the collateral in a single, dedicated wallet; this was completed on 04 January 2023 so that users have visibility into the 1:1 backing of PBUSD. Minting of PBUSD now only takes place after collateral is added to the dedicated wallet. Centralization of collateral for all Binance-backed tokens into dedicated collateral wallets will be completed by 09 February. This will be visible in the Proof of Reserves system that we are continuing to develop."

"BUSD is natively issued on Ethereum, thus limiting its usage outside of the Ethereum ecosystem. In order to extend BUSD’s utility to other blockchains, Binance offers a wrapped version of the stablecoin, Binance-Peg BUSD, which is designed to track the value of the original, ERC-20 BUSD at a 1:1 ratio. “Wrapping” tokens is blockchain lingo for creating versions of the original asset that are transportable to other chains for the sake of increasing interoperability and the interconnectedness of the digital asset space. Normally, the value of wrapped tokens is secured by locking the collateral of the original asset, which is the case with Binance-Peg BUSD."