DFC

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Logical architecture for a digital shekel system
Logical architecture for a digital shekel system
The Bank of Israel (BoI) published a paper that examines architecture alternatives for implementing the two-tiered central bank digital currency (CBDC) business model. The paper focuses on the types of participants in the system, the functional distribution between the participants in providing an end-to-end solution, the distribution model to end users; and back-end layer—or system “engine”—managed by the central bank. It concludes that the optimal model is an indirect distribution model, in which the central bank distributes CBDC to the institutions that manage end user's accounts, and those will support distribution to the end users.
#Fintech#CBDC#Israel#DFC
·boi.org.il·
Logical architecture for a digital shekel system
Powell says Fed not "remotely close" to a central bank digital currency
Powell says Fed not "remotely close" to a central bank digital currency
Chairman Jerome Powell, testifying before the Senate Banking Committee on March 7, 2024, said the U.S. Federal Reserve was "nowhere near" issuing a CBDC. He added that it has no interest in establishing accounts for individuals that would compete with the banking system, and it would not support any Fed monitoring of personal financial transactions.
#Fintech#CBDC#Privacy#UnitedStates#DFC
·reuters.com·
Powell says Fed not "remotely close" to a central bank digital currency
Project Aurum 2.0: Improving privacy for retail CBDC payment
Project Aurum 2.0: Improving privacy for retail CBDC payment
The BIS Innovation Hub and the Hong Kong Monetary Authority have launched the second phase of Project Aurum. Phase 1.0 tested the feasibility of a technological stack that integrates a wholesale interbank system and a retail e-wallet. Phase 2.0 will now focus on how to enhance privacy for retail central bank digital currencies (CBDC). It will explore several privacy-enhancing technologies, including pseudonymization and zero knowledge proofs, and test how increasing privacy affects the performance and compliance of a system.
#Fintech#BIS#HongKong#CBDC#Privacy#ZeroKnowledgeProofs#Anonymity#DFC
·bis.org·
Project Aurum 2.0: Improving privacy for retail CBDC payment
HKMA launches wholesale CBDC project to support tokenization, tokenized deposits
HKMA launches wholesale CBDC project to support tokenization, tokenized deposits
The Hong Kong Monetary Authority (HKMA) launched Project Ensemble to test using wholesale central bank digital currency (CBDC) to settle tokenized assets with tokenized bank deposits. Use cases will include settling tokenized green bonds, carbon credits, aircraft instruments, electric vehicle charging stations, and electronic bills of lading. To help set industry standards, the HKMA will form a "wCBDC Architecture Community" consisting of local and multinational banks, key digital asset industry players, and technology companies. https://www.hkma.gov.hk/eng/news-and-media/press-releases/2024/03/20240307-5/
#Fintech#CBDC#wCBDC#Tokenization#DepositTokens#HongKong#DFC
·ledgerinsights.com·
HKMA launches wholesale CBDC project to support tokenization, tokenized deposits
BSP wholesale CBDC pilot to be completed by end 2024
BSP wholesale CBDC pilot to be completed by end 2024
Bangko Sentral ng Pilipinas (BSP) will reportedly complete its wholesale central bank digital currency (CBDC) pilot that launched in September 2023, by the end of 2024. The BSP is testing out basic funds transfers between six participating banks, with plans to later test are higher value-adding services like securities settlement.
#Fintech#CBDC#wCBDC#Philippines#DFC
·gmanetwork.com·
BSP wholesale CBDC pilot to be completed by end 2024
RBI in no hurry to launch central bank digital currency
RBI in no hurry to launch central bank digital currency
The Reserve Bank of India (RBI) has reportedly set no specific timeline for the 'full-fledged' launch of its e-rupee central bank digital currency (CBDC). The RBI started its wholesale CBDC pilot on November 1, 2022 and the retail CBDC pilot on December 1, 2022. There are currently about 4.3 million retail users of CBDC, new challenges and issues keep cropping up about the e-rupee's technology, as well as questions around the safety features and speed of transactions.
#CBDC#Fintech#India#DFC
·etnownews.com·
RBI in no hurry to launch central bank digital currency
Russian CBDC status update: 25,000 transactions so far
Russian CBDC status update: 25,000 transactions so far
The Bank of Russia provided an update on the digital ruble pilot that started in August 2023 with a dozen banks, 600 end users and 30 merchants across 11 cities. So far there have been 19,000 for person-to-person and 6,000 person-to-business payments, and 3,500 involved smart contracts. The central bank plans to further expand the circle of users and add 19 more banks, add dynamic QR codes, and expand the use of smart contracts. https://www.cbr.ru/press/event/?id=18474 https://iz.ru/1658510/2024-03-01/tcb-rf-provel-25-tys-operatcii-v-ramkakh-testirovaniia-tcifrovogo-rublia
#Fintech#CBDC#Russia#DFC
·ledgerinsights.com·
Russian CBDC status update: 25,000 transactions so far
Kyrgyzstan central bank announces CBDC vendor short list
Kyrgyzstan central bank announces CBDC vendor short list
The National Bank of the Kyrgyz Republic (NBKR) has received proposals from twelve firms to develop and test a demo version of a digital som central bank digital currency (CBDC). The NBKR will select from Axellect, DCM, EMTECH, FIS, G+D Filia GmbH, Knox Networks, MONTRAN,Nahmii, Ltd, R3 Corda, SICPA/Nabatech, TCS Quartz, and Xiamen Strait Chain Technology. The selection criteria will focus on blockchain platform technology.
#Fintech#CBDC#Kyrgyzstan#DFC
·nbkr.kg·
Kyrgyzstan central bank announces CBDC vendor short list
Bank of Jamaica set on riding out CBDC challenges
Bank of Jamaica set on riding out CBDC challenges
Governor of the Bank of Jamaica (BOJ) Richard Byles reportedly says the central bank is "determined" to make its Jam-Dex central bank digital currency (CBDC) work despite the slow take-up. The main reason is merchant adoption, with most of the larger merchants preferring that Jam-Dex payments go through a single point-of-sale machine, so BOJ is testing a solution that uses a dynamic quick response (QR) code. Also, only one bank is able to facilitate Jam-Dex transactions, although three more are expected to step up to the plate soon.
#Fintech#CBDC#Jamaica#DFC
·jamaicaobserver.com·
Bank of Jamaica set on riding out CBDC challenges
US Republican Senators file bill to ban Fed from issuing a digital dollar
US Republican Senators file bill to ban Fed from issuing a digital dollar
U.S. Republican Party Senators Ted Cruz, Bill Hagerty, Rick Scott, Ted Budd, and Mike Braun, re-introduced the CBDC Anti-Surveillance State Act, that would prohibit the Federal Reserve from issuing a retail central bank digital currency (CBDC). The original version was filed by Republican House Representative Tom Emmer in September 2023. Former President Donald Trump, the front-runner in the Republican leadership race, has also promised to ban the creation of a CBDC if elected President. https://www.hagerty.senate.gov/wp-content/uploads/2024/02/cbdc_anti-surveil-_lance_state_act.pdf
#Fintech#CBDC#Dystopia#UnitedStates#DFC
·coindesk.com·
US Republican Senators file bill to ban Fed from issuing a digital dollar
Primary and Secondary Markets for Stablecoins
Primary and Secondary Markets for Stablecoins
The U.S. Federal Reserve (Fed) published a paper that explored the March 2023 USDC stablecoin depeg as a means to learn more about the complexities of stablecoin markets, with an emphasis on distinguishing between primary and secondary market dynamics during a stablecoin crisis. In the end, the analysis, which compared the market dynamics of the four largest stablecoins by market capitalization (USDT, USDC, BUSD and DAI), found more questions than answers, and called for additional theoretical and empirical investigation.
#Fintech#CryptoAssets#Stablecoins#USDC#USDT#BUSD#DAI#DFC
·federalreserve.gov·
Primary and Secondary Markets for Stablecoins
Russia advances law to use tokenized digital assets for payments
Russia advances law to use tokenized digital assets for payments
The Russian State Duma will consider a draft law on February 27, 2024, that will legalize the use of tokenized assets for cross border payments. Russia already has a legal framework for tokenized financial assets, which it refers to as digital financial assets (DFA). These regulated assets include tokenized commodities, trade finance and other structured products. However, DFAs were explicitly not allowed to be used for payments. However, Russia is now looking for alternative ways to settle cross border transactions, in light of sanctions imposed following Russia's invasion of Ukraine.
#Fintech#CryptoAssets#Stablecoins#Tokenization#CrossBorder#Payments#Russia#DFC
·ledgerinsights.com·
Russia advances law to use tokenized digital assets for payments
Rise of Digital Money: Implications for Pacific Island Countries
Rise of Digital Money: Implications for Pacific Island Countries
The IMF published an overview of the development of digital money and payment systems in twelve Pacific island countries (PICs), assessing potential benefits and risks, with a focus on how they can harness digital technology to enhance financial inclusion and payment efficiency while minimizing risks. The paper also examines the prerequisites for successfully adopting various forms of digital money and proposes a strategic framework for policy decisions (see Figure 10). It advocates a gradual, well-informed approach, tailored to PICs' unique monetary and financial circumstances, including the presence of national currencies and the maturity of payment systems. Moreover, the paper suggests that a regional approach could help address capacity and scalability challenges in introducing new digital money forms and payment methods in PICs.
#Fintech#CBDC#Asia-Pacific#Palau#Marshall_Islands#IMF#DFC
·imf.org·
Rise of Digital Money: Implications for Pacific Island Countries
Managing the transition to central bank digital currency
Managing the transition to central bank digital currency
De Nederlandsche Bank (DNB) published a paper that studies the transition from a steady-state without central bank digital currency (CBDC) to one in which the home country issues a CBDC using a two-country dynamic stochastic general equilibrium (DSGE) model with financial frictions. In the new steady state, the availability of CBDC, which is liquid and storage-cost-free, improves welfare. During the transition, however, demand for CBDC and money overshoot, thus crowding out bank deposits and leading to initial declines in investment, consumption, and output. However, these negative effects can be reduced with binding caps, with an optimal level of around 40% of the CBDC demand in the steady state. A two-tiered remuneration scheme is also effective in smoothing the transition if the penalty interest rate is extremely high (e.g., a negative 300% interest rate on holdings above 50% steady-state demand).
#Fintech#CBDC#Netherlands#FinancialStability#DFC
·dnb.nl·
Managing the transition to central bank digital currency
City of St Gallen to issue CHF 100 million digital bond on SDX
City of St Gallen to issue CHF 100 million digital bond on SDX
The Swiss City of Saint Gallen will use the SIX Digital Exchange (SDX) to issue a CHF 100 million, three year digital bond. This is the fourth municipality to issue a digital bond on SDX in the last three months. It coincides with wholesale central bank digital currency (CBDC) trials conducted by SDX, where the wholesale CBDC issued by the Swiss National Bank is used to settle the bond issuances.
#Fintech#CBDC#wCBDC#Tokenization#Settlement#Switzerland#DFC
·ledgerinsights.com·
City of St Gallen to issue CHF 100 million digital bond on SDX
Bank of England and HM Treasury RFI on digital pound privacy
Bank of England and HM Treasury RFI on digital pound privacy
The Bank of England (BOE) and HM Treasury published a digital pound request for information on privacy, meaning the protection of users’ personal and transaction data, and ensuring they have control and visibility over who can process their data and for what purposes. However, the digital pound would not be anonymous because the ability to identify and verify users is needed to prevent financial crime, but the BOE and government will not access users’ personal data in a digital pound ecosystem. In that regard, the BOE is exploring technological solutions to prevent it from being able to access personal data via the core ledger. The deadline for responding is March 12, 2024. https://www.bankofengland.co.uk/the-digital-pound/digital-pound-working-groups
#Fintech#CBDC#UnitedKingdom#DFC
·app.keysurvey.co.uk·
Bank of England and HM Treasury RFI on digital pound privacy
Digital euro: Debunking banks’ fears about losing deposits
Digital euro: Debunking banks’ fears about losing deposits
In parallel to yesterday's VoxEU article, the European Central Bank (ECB) posted an article by the same three senior officials that debunked fears that a commercial bank customers might withdraw deposits to hold digital euro. "Banks are barking up the wrong tree when they rely on studies that overlook the outlined design features of a digital euro. In doing so, they ignore the many other challenges they need to address to ensure stable funding through deposits. Banks need to offer attractive products and services that incentivize customers to hold their deposits with them instead of migrating to new and powerful private competitors."
#Fintech#CBDC#Eurozone#ECB#DFC
·ecb.europa.eu·
Digital euro: Debunking banks’ fears about losing deposits
Nigeria's eNaira Soars to N10.26 Billion in Circulation
Nigeria's eNaira Soars to N10.26 Billion in Circulation
"Nigeria's digital currency, eNaira outstandings have reportedly reached N10.26 billion as of September 30th, 2023. This 302% growth in just nine months indicates a rising acceptance of Africa's first Central Bank Digital Currency (CBDC), launched by the Central Bank of Nigeria (CBN) in October 2021." Unfortunately, I can only find 2022 data on the CBN website. https://www.cbn.gov.ng/documents/Statbulletin.asp
#Fintech#CBDC#Nigeria#DFC
·bnnbreaking.com·
Nigeria's eNaira Soars to N10.26 Billion in Circulation
EU Parliamentary Committee votes in favor of 'digital euro' CBDC
EU Parliamentary Committee votes in favor of 'digital euro' CBDC
"The European Parliament's Committee on Civil Liberties and Justice (LIBE) reportedly has overwhelmingly voted to endorse the latest digital euro report backing the European Central Bank's (ECB) proposed digital euro, taking the bloc one step closer to a central bank digital currency (CBDC). The draft legislation would make a proposed CBDC legal tender and was passed by a resounding 48 in favor of with only six against (and with seven abstentions)."
#Fintech#CBDC#Eurozone#DFC
·coingeek.com·
EU Parliamentary Committee votes in favor of 'digital euro' CBDC
ECB argues digital euro won't disintermediate banks
ECB argues digital euro won't disintermediate banks
The Centre for Economic Policy Research's VoxEU published an article by Ulrich Bindseil and two other senior European Central Bank (ECB) executives, argued that that commercial bank deposits are unlikely to impacted much by the launch of a digital euro due to its design. This combines a holding limit with the reverse waterfall, which allows instant top-up of a central bank digital currency (CBDC) wallet from the users' bank accounts. Also, merchants and other businesses cannot hold digital euro balances. According to the article, stablecoins and other innovative private sector financial products are bigger threats to bank business models. https://cepr.org/voxeu/columns/digital-euro-after-investigation-phase-demystifying-fears-about-bank
#Fintech#CBDC#Stablecoins#Eurozone#ECB#DFC
·ledgerinsights.com·
ECB argues digital euro won't disintermediate banks
Digital Euro: The Case Against Legal Tender
Digital Euro: The Case Against Legal Tender
SUERF published an article by Christian Pfister that the notion of legal tender is a “barbarous relic” that is unfit in a digital environment where there is a wide choice of payment instruments. Furthermore, making the digital euro legal tender could even undo some the expected benefits of its launch and entail risks. That is not to say that making a retail central bank digital currency (CBDC) legal tender may be more justified in a context where the wide majority of payments are made in cash and the public authorities wish to encourage the modernization of payments, i.e. in some developing and emerging economies.
#Fintech#CBDC#Eurozone#LegalTender#DFC
·suerf.org·
Digital Euro: The Case Against Legal Tender
Draft digital euro legislation supports permissionless blockchains
Draft digital euro legislation supports permissionless blockchains
The most recent draft of the digital euro legislation being discussed by the European parliamentary Committee on Economic and Monetary Affairs includes support for permissionless blockchains. “Conditional payments in Digital Euros may also be carried out on permissionless distributed ledgers where until now only privately issued assets like crypto-assets or stable coins are available as a means of payment. With the approval and under conditions set by the European Central Bank (ECB), the Digital Euro would be made available as a token to be referenced on these chains.” The ECB and European Council previously stated they don’t want programmable money at the base layer, so the legislation now specifies conditional payments will happen in the “layer above”. https://www.europarl.europa.eu/doceo/document/ECON-PR-758954_EN.pdf
#Fintech#CBDC#Eurozone#DFC
·ledgerinsights.com·
Draft digital euro legislation supports permissionless blockchains
Why NZ central bank quip about people trusting printed money is dangerous
Why NZ central bank quip about people trusting printed money is dangerous
"During a parliamentary committee hearing, Adrian Orr, Governor of the Reserve Bank of New Zealand made a joke. 'It’s a great business to be in central banking. You print money and people believe it. Touch wood,' said Orr. The Committee laughed." https://vimeo.com/showcase/10758103/video/912104765
#Fintech#CBDC#NewZealand#CryptoAssets#DFC
·ledgerinsights.com·
Why NZ central bank quip about people trusting printed money is dangerous
Philippines to have digital currency in 2 years
Philippines to have digital currency in 2 years
The Governor of Bangko Sentral ng Pilipinas (BSP) reportedly expects to put in place within the next two years a wholesale central bank digital currency (CBDC). However, blockchain or distributed ledger technology (DLT) won’t be used, which brings into question whether it is a "wholesale CBDC". Market convention defines a retail CBDC as being technology agnostic (it can be DLT-based or not), but it defines wholesale CBDC as being DLT-based. Otherwise, every non-DLT central bank-run digital payment system (e.g., real-time gross settlement systems) would be on the list of wholesale CBDC projects.
#Fintech#CBDC#WCBDC#Philippines#DFC
·business.inquirer.net·
Philippines to have digital currency in 2 years
Canadian CBDC study asserts bank deposit switching will be just 12% without limits
Canadian CBDC study asserts bank deposit switching will be just 12% without limits
"Economists at the Bank of Canada ran a model to assess the impact of introducing a retail central bank digital currency (CBDC) on bank deposits. It’s widely expected that a proportion of bank deposits will switch to a CBDC. The economists believe that most assessments neglect the fact that banks provide products that complement deposits, such as mortgages and credit cards. If you assume consumers don’t care about the other products their bank offers, then 39% of deposits could be crowded out by CBDC. "
#Fintech#CBDC#Canada#FinancialStability#DFC
·ledgerinsights.com·
Canadian CBDC study asserts bank deposit switching will be just 12% without limits
Central Bank Digital Currency and Banking Choices
Central Bank Digital Currency and Banking Choices
The Bank of Canada (BOC) published a paper that uses a structural model where each household chooses which financial institution to deposit their digital money with, to estimate the extent to which a central bank digital currency (CBDC) competes with bank deposits. It uses a unique Canadian dataset which contains information on households’ bank choices for a rich set of financial products. The paper finds that non-interest-bearing CBDC that does not provide complementary financial products can substantially crowd out bank deposits only if it provides an extensive service network. Also, a Canadian CBDC that uses post offices as service locations would benefit rural households more than a CBDC that uses bank branches as service locations.
#Fintech#CBDC#Canada#FinancialStability#DFC
·bankofcanada.ca·
Central Bank Digital Currency and Banking Choices
Indian CBDC pilot progresses to programmable, offline usage
Indian CBDC pilot progresses to programmable, offline usage
The Reserve Bank of India (RBI) plans to add programmability and offline payments to its central bank digital currency (CBDC) pilot. "Programmability will facilitate transactions for specific/targeted purposes, while offline functionality will enable these transactions in areas with poor or limited internet connectivity." It sounds like programmability will take the form of "purpose-bound money" that embeds ("bounds") programming logic denoting its use based on programmed conditions that becomes "unbounded" once those conditions are met. https://www.rbi.org.in/Scripts/BS_PressReleaseDisplay.aspx?prid=57277
#Fintech#CBDC#India#Programmability#Offline#PBM#DFC
·ledgerinsights.com·
Indian CBDC pilot progresses to programmable, offline usage
CBDC and monetary sovereignty
CBDC and monetary sovereignty
A chapter published in a legal conference volume published by the European Central Bank (ECB) investigated the potential rationale for the introduction of a central bank digital currency (CBDC) to preserve monetary sovereignty. It concluded that the introduction of a CBDC as a protective measure when the currency substitution is caused by unfavorable economic conditions is neither effective nor appropriate for such purposes. And it identified only a very limited set of circumstances when the issuance of a CBDC might be appropriate to push back on the use of technologically superior foreign money. And more bluntly, it concluded that "a digital euro might help defend the monetary sovereignty of the euro area Member States by facilitating cross-border payments as a conduit, mitigating dependence on foreign infrastructure for pan-European payments, serving as a catalyst for the promotion of technologically new payment functionalities and offering a digital complement to cash. In its planned form, however, the digital euro is not (yet) fit for purpose. Its statutory privilege compared to cash and its holding limits will prevent it from fulfilling its anchoring function. Its issuance would thus weaken rather than strengthen the euro area’s monetary sovereignty in the long run." [starts on page 165]
#Fintech#CBDC#MonetaryPolicy#Eurozone#ECB#DFC
·ecb.europa.eu·
CBDC and monetary sovereignty