Five digital currency questions for central banks - Central Banking
"Central bankers need to take a view on the ongoing disruption to monetary systems, rather than simply expecting the issue will go away, argues Adam Csabay"
Texas Says Stablecoins Are Money — Here Is Why They Are Right
The document states that “cryptocurrency is not money under the Money Services Act, […] However, when a cryptocurrency transaction does include sovereign currency, it may be money transmission depending on how the sovereign currency is handled. A licensing analysis will be based on the handling of the sovereign currency.”
US sanctions on Venezuela could be death knell for petro - Central Banking
"The US sanctions on the Venezuelan oil industry are preventing the country from accessing foreign currency, and may very well be the final nail in the petro’s coffin, analysts tell Central Banking."
Central Bank Digital Currencies: Preliminary Legal Observations by Hossein Nabilou :: SSRN
An Overview of MakerDAO – Hacker Noon
MakerDAO, also known as Maker, is a crypto-collateralized stablecoin that uses a two-token system comprised of Dai, which targets a value of $1 per unit, and Maker (MKR), which is used to pay fees on Dai loans and grants governance input via voting on Maker’s policies, like the collateral ratio required on loans and the amount of fees charged on loans. Maker has a fixed maximum supply and when it is used to repay Dai loan fees it is burned, thereby reducing the circulating supply. To keep the price of a unit of Dai at $1, Maker employs incentive mechanisms that will be detailed later in this piece.
The libertarian fantasies of cryptocurrencies | FT
Analysis at the IMF and the Bank of England demonstrates that we need to be clear about what central bank digital money is to achieve, how it relates to cash or bank deposits, and whether it could be a substitute for central bank reserves, which at present can only be owned by commercial banks.
Reading the fine print: Basis pre-sale burns non-USD investors - The Block
"Basis, the highly anticipated algorithmic stable coin project, shut down and announced it would return 90% of capital raised to its investors. It didn’t mention that it was actually contractually obligated to do so. Both USD and ETH/BTC investors received 90% of returned capital, USD investors at a notional value of 1:1, whereas Ether investors saw as much as an 85% discount to par. Some of these investors have reached out to The Block under anonymity to share how the marketing of the sale differed from the underlying fine print in the pre-sale SAFT agreement"
Satoshi Capital Research: Stablecoins Becoming the New Bank Account
According to a new Satoshi Capital research, stablecoins are dominating bitcoin, quickly developing into a major competitor to the traditional bank accounts. According to Satoshi Capital research, the functional differences between traditional bank accounts and stablecoins lie in speed, costs, and accessibility. Whereas traditional bank accounts – both business and individual accounts – can only be accessed by customers of each respective institution and transfers come with high costs and processing times, stablecoins can be used across the board considering that it has open system architecture.
CBDC is mixed bag for financial stability – Bank of Korea - Central Banking
"A paper published by the Bank of Korea is “among the first” to analyse the impact a central bank digital currency would have on financial stability, the authors say. The conclusions of the paper, written by Young Sik Kim and Ohik Kwon, are somewhat mixed. "
What is Dai, and how does it work? – MyCrypto – Medium
"This is a brief overview of how MakerDAO and Dai works. There are many intricacies to the system, but I believe these are the main mechanisms in place if one wants a brief overview of how Maker gives Dai its stablecoin properties."
The potential of crypto credit markets and how to use them » Brave New Coin
"Infrastructure is fast growing for crypto credit markets. With the introduction of collateralized debt positions (CDPs) Maker's stablecoin DAI has been a game-changer and the driving force behind the nascent crypto lending markets by allowing users to lock up their ETH in CDPs and being issued with the USD stablecoin DAI. To get DAI, users most post collateral at least 1.5x the value of their debt."
Decentral Bank – The world's first decentralized central bank
Mojaloop
The Bill and Melinda Gates Foundation have formed the Mojaloop Foundation to develop and promote a free, open-source real-time payments platform for nations and central banks. The Mojaloop software includes a directory for identifying account holders, a transfer system for routing payments, and a clearing and settlement layer that transfers funds among users’ financial institutions. The routing system relies partly on Interledger technology originally developed by Ripple. Mojaloop-based systems are hosted by each country’s authorities, but because they use a shared standard, they could eventually become interoperable across borders.
Bill & Melinda Gates Foundation Releases Open-Source Software to Support Efforts that Expand Access to Financial Services in Developing Countries - Bill & Melinda Gates Foundation
"The Bill & Melinda Gates Foundation today released a new open-source software for creating payment platforms that will help unbanked people around the world access digital financial services. The software is designed to provide a reference model for payment interoperability between banks and other providers across a country’s economy. It is available now, free-of-cost, for software developers to adapt and banks, financial service providers and companies to implement. Information on the code can be found at mojaloop.io."
Crypto ‘Money’: Perspective of a Couple of Canadian Central Bankers - Bank of Canada
"In this paper we examine what is new about cryptoassets and their technology and how they may affect core central bank functions. We do this by outlining what we think are the three most important research and policy questions for central bankers around cryptoassets and cryptocurrencies specifically. First, what is fundamentally new about the technology that underpins cryptocurrencies and other cryptoassets? Second, how do cryptocurrencies affect a central bank’s role in the economy? Third, given the two challenges of a rise of cryptoassets and a decline in the use of cash, should digital payments be left entirely to the private sector or should central banks issue their own digital currencies? We discuss these three policy questions and highlight what aspects of them are most important to central bankers. Finally, we raise several new questions to help guide researchers in studying cryptoassets and their underlying technology."
ECB chief says instant payments could break Visa/Mastercard duopoly
The European Central Bank is floating the idea of using instant payment rails to link up national card schemes as a means to break the duopoly enjoyed by Visa and Mastercard, who between them account for over 80% of all EU card transactions.
Stablecoins: The New Bank Account :: TabbFORUM
While still a nascent class of digital assets, stablecoins have quickly developed into a meaningful competitor to traditional bank accounts at banks. Stablecoins are digital tokens that represent national currencies and are issued using a variety of bitcoin-based technologies, representing an $18 trillion market opportunity.
Over 5.5 Billion USDC has Been Transferred оn-Chain
The Centre consortium was founded by crypto finance firm Circle and United States-based crypto exchange Coinbase. USDC s a U.S. dollar-backed stablecoin released by Coinbase and Circle in October of last year.
Facebook’s Crypto Shopping Spree Isn’t Over Yet. Here’s Who Else They Might Acquire.
Citing unnamed sources, the publication said Facebook has been eyeing several blockchain startups with a view of making acquisitions. Some of these firms include Algorand, Basis and Keybase.
Cryptocurrency and Central Bank E-Money - Federal Reserve Bank of Atlanta
"The Atlanta Fed recently hosted a workshop, "Financial Stability Implications of New Technology," which was cosponsored by the Center for the Economic Analysis of Risk at Georgia State University. This macroblog post discusses the workshop's panel on cryptocurrency and central bank e-money. A companion Notes from the Vault post provides some highlights from the rest of the workshop."
Central Bank Digital Currency and Financial Stability | Bank of Korea
The introduction of deposits in CBDC account essentially decreases supply of private credit by commercial banks, which raises the nominal interest rate and hence lowers a commercial bank's reserve-deposit ratio. This has negative effects on financial stability by increasing the likelihood of bank panic in which commercial banks are short of cash reserves to pay out to depositors. However, once the central bank can lend all the deposits in CBDC account to commercial banks, an increase in the quantity of CBDC which does not require reserve holdings can enhance financial stability by essentially increasing supply of private credit and hence lowering nominal interest rate.
Korean Central Bank Study: Issuing Digital Currency Poses Financial Risk - CoinDesk
Researchers from South Korea’s central bank say issuing a central bank digital currency (CBDC) could have negative effects on the economy. The Bank of Korea (BoK) published a study on Thursday, which modeled the effects of a CBDC on liquidity at commercial banks. It found that if the public could access the theoretical digital currency directly, commercial banks’ demand deposits, or reserves, could be reduced – leaving them with a cash shortfall. That could eventually force them to compensate by raising interest rates on loans, the central bank explained.
NJ Legislators Pass Bill To Ban Cashless Stores | PYMNTS.com
“Many people do not have access to consumer credit, and any effort by retail establishments to ban the use of cash would be discriminatory towards those people,” said Rep. Paul D. Moriarty, D-Camden/Gloucester and one of the bill’s main sponsors, according to Chain Store Age. “The U.S. dollar is legal tender and should be accepted at any retail establishment in New Jersey.”
A dual-currency system would make negative rates work – IMF research - Central Banking
"The creation of a dual-currency system would allow negative rates to become more effective in dealing with future recessions, says research published by the International Monetary Fund. The proposal would allow central banks to transmit monetary policy faster, and shorten recessions, overcoming the limitations imposed by the zero lower bound, say authors Katrin Assenmacher and Signe Krogstrup."
IMF Staff Floats Dual Money to Allow Much Deeper Negative Rates - Bloomberg
"IMF economists Ruchir Agarwal and Signe Krogstrup said that dividing the monetary base into two separate currencies -- cash and electronic money -- could allow rates to be cut even deeper below zero. E-money would pay whatever the policy rate is and cash would have an exchange rate against the e-cash, they wrote."
Cashing In: How to Make Negative Interest Rates Work – IMF Blog
"While a dual currency system challenges our preconceptions about money, countries could implement the idea with relatively small changes to central bank operating frameworks. In comparison to alternative proposals, it would have the advantage of completely freeing monetary policy from the zero lower bound. Its introduction would reconfirm the central bank’s commitment to the inflation target, rather than raise doubts about it."
Winklevoss Exchange Gemini Shuts Down Accounts Over Stablecoin Redemptions - CoinDesk
Two over-the-counter trading desks say their accounts at Gemini, the crypto exchange founded by U.S. investors Cameron and Tyler Winklevoss, were abruptly closed without explanation over attempts to redeem GUSD, the company’s stablecoin first introduced in September.
Ex-Tether Exec Joins Venture Launching Stablecoin Clearinghouse - CoinDesk
"Still in development, the platform – called Stablehouse.io – is aimed to addresses patchy liquidity, stability and accessibility that currently “prevent the stablecoin market from reaching critical mass,” according to an announcement."
Iran launches gold-backed cryptocurrency 'PayMon'
"The Islamic Republic of Iran has reportedly launched a gold-backed cryptocurrency called “PayMon” – the Persian word for covenant – in cooperation with four local banks and the Ghoghnoos Company, in a move made following international sanctions."
A Bitcoin-Backed Stablecoin Has Launched on the Ethereum Blockchain - CoinDesk
"A new token backed one-to-one with bitcoin is now live on the ethereum blockchain. “Wrapped BTC” (WBTC) officially launched its ERC-20 token Wednesday evening. The project was first unveiled in October as a joint initiative between decentralized exchange startups Kyber Network and Republic Protocol, as well as cryptocurrency custody company BitGo. As stated on the project’s website, the aim of WBTC is to bring “greater liquidity to the ethereum ecosystem including decentralized exchanges and financial applications.”"