DFC

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Examining CBDC and Wholesale Payments
Examining CBDC and Wholesale Payments
The U.S. Federal Reserve (Fed) published a paper that explores whether distributed ledger technology (DLT) based wholesale central bank digital currency (CBDC) is essential for new platforms that process wholesale payment transactions. Central bank money currently exists for wholesale transactions in the form of depository institution balances at the Fed used for Fedwire Funds Service. Examining the key technological characteristics and potential arrangements of tokenized distributed platforms and comparing them with existing settlement assets, transfer mechanisms, and balance sheet entries, the paper argues that DLT-based wholesale CBDC is not essential for a tokenized wholesale payment system.
#Fintech#CBDC#PaymentSystems#UnitedStates#wCBDC#DFC
·federalreserve.gov·
Examining CBDC and Wholesale Payments
Kazakhstan digital tenge phase one implementation plan
Kazakhstan digital tenge phase one implementation plan
The National Bank of Kazakhstan announced the next steps in its digital tenge (DT) central bank digital currency (CBDC) project. Initially it has focused on developing a retail CBDC, but has now sprouted several sub-projects and initiatives covering wholesale applications and usage, including securities settlement, stablecoin-related initiatives, and cross-border and social payments. In this regard, two separate environments of the DT platform, industrial and experimental (R&D), are planned for 2023. The industrial environment will implement the DT's main functionality of the DT and its subsequent operation, and the R&D environment will test several use-case scenarios.
#Fintech#CBDC#Kazakhstan#DFC
·nationalbank.kz·
Kazakhstan digital tenge phase one implementation plan
CBDC design choices and capital flow management measures
CBDC design choices and capital flow management measures
The IMF published a paper that looks at how capital flow measures (CFMs) could be implemented with CBDC, and what benefits, risks and complexities could arise. There are several implications of the analysis. First, CBDC ecosystems should generally be designed such that they can accommodate the introduction of CFMs. Second, thanks to the programmability of the payment infrastructure given by the new digital technologies, certain CFMs could likely be implemented more efficiently and effectively with CBDC compared to the traditional system. Third, implementing CFMs requires central banks to collaborate on practices and standards. Finally, CFMs on CBDC need to operate alongside traditional CFMs.
#Fintech#CBDC#IMF#DFC
·imf.org·
CBDC design choices and capital flow management measures
Implications of Central Bank Digital Currencies for Monetary Policy Transmission
Implications of Central Bank Digital Currencies for Monetary Policy Transmission
The IMF published a paper that analyzes the impact of retail central bank digital currency (CBDC) on financial conditions and monetary policy transmission. In general, it finds that the impacts are expected to be relatively small in normal times but can be more significant in a low interest rates environment and when there is financial market stress. CBDC could lead to increased financial inclusion which could loosen financial conditions and strengthen monetary policy transmission. On the other hand, increased competition for bank deposit funding, increased wholesale funding, and lower bank profits would tighten financial conditions. Of course, in jurisdictions with currencies that are pegged to another jurisdiction's, there is little to no ability to conduct independent monetary policy, so the impact of retail CBDC issuance is expected to be minimal.
#Fintech#CBDC#IMF#DFC
·imf.org·
Implications of Central Bank Digital Currencies for Monetary Policy Transmission
Kazakhstan establishes regulatory agency to implement CBDC
Kazakhstan establishes regulatory agency to implement CBDC
The National Bank of Kazakhstan (NBK) has established a separate entity to lead the development and implementation of the country’s central bank digital currency (CBDC), the digital tenge. The National Payment Corporation (NPC) is a reorganization of the Kazakhstan Center for Interbank Settlements. The new body will oversee the national payment system, including interbank clearing services, money transfers and digital identification. The NPC will also be responsible for the development of “digital financial infrastructure,” including the implementation of the digital tenge. https://www.nationalbank.kz/ru/news/informacionnye-soobshcheniya/15923
#Fintech#CBDC#Kazakhstan#DFC
·cointelegraph.com·
Kazakhstan establishes regulatory agency to implement CBDC
HSBC and HKUST to conduct one week hypothetical e-HKD trial
HSBC and HKUST to conduct one week hypothetical e-HKD trial
HSBC and the School of Business and Management of The Hong Kong University of Science and Technology (HKUST Business School) will run a one-week hypothetical e-HKD proof of concept. The bank will use distributed ledger technology (DLT) to simulate programmable money and instant settlement for retail payments. Around 200 HKUST Business School staff will receive hypothetical eHKD to spend at five campus merchants, such as cafes. They can also receive rewards as a digital token. I'm not certain about this, but it may be running as part of the Hong Kong Monetary Authority (HKMA) e-HKD Pilot Programme announced in May 2023.
#Fintech#CBDC#HongKong#DFC
·about.hsbc.com.hk·
HSBC and HKUST to conduct one week hypothetical e-HKD trial
RBI plans new features to boost e-rupee transactions
RBI plans new features to boost e-rupee transactions
The Reserve Bank of India (RBI) is reportedly planning to introduce new features to popularize the e-rupee retail central bank digital currency (CBDC), with transaction volumes running  way short of the RBI's end-2023 target (18,000/day versus a one million/day. The features include allowing digital rupee transactions when a customer is offline and linking the e-rupee to India's Unified Payments Interface (UPI). In fact, many banks have already gone live with QR code-based e-rupee UPI interoperability, so at least this doesn't seem to be new news. Also, HDFC Bank is reportedly working with IDEMIA to build an offline e-rupee platform for feature phones.
#Fintech#CBDC#India#Offline#QR#Interoperability#UPI#DFC
·reuters.com·
RBI plans new features to boost e-rupee transactions
Minutes of the Bank of England's July 2023 CBDC Technology Forum Meeting
Minutes of the Bank of England's July 2023 CBDC Technology Forum Meeting
At the July 26, 2023 meeting of the Bank of England's (BoE's) CBDC Technology Forum Tom Mutton (Chair) explained that they were now at the start of the design phase of the digital pound roadmap, during which they would conduct experiments and proofs of concept, and develop a detailed blueprint. He noted that the design phase was expected to last for 2-3 years, after which a decision would be made on whether or not to proceed to the build phase, during which the Technology Forum is expected to provide ideas and expert analysis that could inform and challenge the Bank of England’s experiments and the eventual digital pound blueprint.
#Fintech#CBDC#UnitedKingdom#DFC
·bankofengland.co.uk·
Minutes of the Bank of England's July 2023 CBDC Technology Forum Meeting
CBDC and the Cashless Economy: The African Experience
CBDC and the Cashless Economy: The African Experience
Nigeria's CBDC experience shows that the widespread adoption of digital currencies and the transition to 100% cashless economies, will be difficult. The benefits of adopting CBDC may be outweighed by negative aspects, especially the lack of trust and acceptance by citizens. Politicians focus on highlighting the advantages of digital currencies. However, the example of Nigeria proves that people are well aware of the dangers of depriving them of cash, and thus freedom and privacy. An attempt to impose top-down control over the monetary sphere could trigger unrest and violent social protests with political and economic, and even systemic, consequences that are difficult to predict.
#Fintech#CBDC#Nigeria#Africa#Privacy#DFC
·ersj.eu·
CBDC and the Cashless Economy: The African Experience
ENaira CBDC Benefits, Risks, and Lessons
ENaira CBDC Benefits, Risks, and Lessons
This paper identifies the benefits and risks of issuing CBDC drawing on Nigeria's eNaira experience. It notes that issuing a CBDC in Nigeria offers many benefits, including expanding financial inclusion, cash management cost-reduction, improving tax collection, boosting cross-border trade and remittances, and engendering economic growth. It also discusses some potential risks that policymakers must consider while highlighting some insightful lessons from the issuance and adoption of the eNaira in Nigeria.
#Fintech#CBDC#Nigeria#DFC
·papers.ssrn.com·
ENaira CBDC Benefits, Risks, and Lessons
Swift begins beta tests of CBDC connector
Swift begins beta tests of CBDC connector
SWIFT is working with three central banks, including the Hong Kong Monetary Authority (HKMA) and the National Bank of Kazakhstan, and 30 financial institutions on beta tests of an experimental method for interlinking central bank digital currencies (CBDCs) with existing fiat infrastructures. In addition, SWIFT has started a second phase of sandbox testing, with commercial banks, central banks and financial market infrastructures exploring uses such as trigger-based payments for digital trade platforms, foreign exchange models, delivery vs. payment and liquidity saving mechanisms. three central banks and monetary authorities. https://www.swift.com/news-events/press-releases/swift-advances-cbdc-innovation-interlinking-solution-begins-beta-testing
#Fintech#CBDC#SWIFT#Interoperability#Kazakhstan#HongKong#DFC#wCBDC
·finextra.com·
Swift begins beta tests of CBDC connector
NIST Stablecoin Report Highlights Security and Stability Concerns
NIST Stablecoin Report Highlights Security and Stability Concerns
The US National Institute of Standards and Technology (NIST) published a report on stablecoin security considerations. These include unauthorized or arbitrary minting; vulnerability in smart contract codes leading to the theft of the stablecoin’s on-blockchain reserves, the malicious hacking or updating of smart contract codes, denial-of-service attacks on the data oracles that provide the smart contracts with off-blockchain information, and attacks on the underlying blockchain. The stability and trust issues the report identifies vary based upon the stablecoin use case, as well as the kind of marketplace that the stablecoins are traded upon. https://nvlpubs.nist.gov/nistpubs/ir/2023/NIST.IR.8408.pdf
#Fintech#CryptoAssets#Stablecoins#CyberSecurity#NIST#DFC
·jdsupra.com·
NIST Stablecoin Report Highlights Security and Stability Concerns
There are now two types of PayPal dollars, and one is better than the other
There are now two types of PayPal dollars, and one is better than the other
Interestingly, JP Koning shows that of the two types of U.S. dollar digital currencies now offered by Pay Pal, its PayPal USD (PYUSD) stablecoins are actually safer than its the traditional account offering. Better quality assets back PYUSD, they are ranked more senior to other creditors if PayPal goes kaput in most states, and they are disclosed more transparently. Notably, PayPal's regular accounts are regulated piecemeal under each U.S. states' own peculiar version of a money transmitter license, that can almost always be legally backed by riskier assets, and typically do not require that they be held in trust solely for the benefit of customers. [See also Don Awrey's "Bad Money": https://www.cornelllawreview.org/2020/12/01/bad-money/]
#Fintech#CryptoAssets#Stablecoins#PayPal#UnitedStates#Regulation#DFC
·jpkoning.blogspot.com·
There are now two types of PayPal dollars, and one is better than the other
Project Sela demonstrates that retail CBDC can support access, cyber security and competition, while retaining cash features
Project Sela demonstrates that retail CBDC can support access, cyber security and competition, while retaining cash features
Project Sela, a joint experiment conducted by the Bank for International Settlements (BIS) and the Israeli and Hong Kong central banks, showed that a retail central bank digital currency (CBDC) ecosystem can combine accessibility, competition and preventative cyber security, while retaining key advantages of physical cash. In Sela, the retail CBDC ledger is operated by the central bank without compromising end user privacy as personal identifiers are obfuscated. Retail payments are therefore settled directly on the central bank's balance sheet in a privacy-preserving manner, meaning instant finality for transactions.
#Fintech#CBDC#Privacy#BIS#HongKong#Israel#rCBDC#DFC
·bis.org·
Project Sela demonstrates that retail CBDC can support access, cyber security and competition, while retaining cash features
Hungary for fintech: an interview with the Central Bank of Hungary’s Anikó Szombati
Hungary for fintech: an interview with the Central Bank of Hungary’s Anikó Szombati
Global Government Fintech published an interview with Magyar Nemzeti Bank's (MNB's)  Anikó Szombati on the central bank's financial innovation agenda. She made particular mention of the MNB's private blockchain-based non-fungible token (NFT) issuance and the associated mobile application platform.  The first series of NFTs were based on six collector versions of a five forint coin. Users obtain the NFTs by solving quizzes. By collecting NFTs containing all six letters of the word ‘forint’, users were able to participate in a prize game in which they could win special physical coin sets. The MNB is now working with SODA (Sovereign Official Digital Association) on a bridging operation between the current private blockchain and a public blockchain.
#Fintech#CBDC#NFT#Hungary#DFC
·globalgovernmentfintech.com·
Hungary for fintech: an interview with the Central Bank of Hungary’s Anikó Szombati
EU's ECB Faces Opposition to Digital Euro Plans That Threaten to Slow CBDC Project
EU's ECB Faces Opposition to Digital Euro Plans That Threaten to Slow CBDC Project
"Proponents of a digital euro are facing political opposition to their plans for a central bank digital currency (CBDC) – and technocratic central bankers aren’t sure how to respond... That opposition can start with legitimate concerns over privacy and the limits of government power – but can also venture into conspiracy theories that paint CBDCs as part of a much wider, orchestrated program of state control. 'We can assure people you are not traced and we can prove it with audits and whatever, but if outside of the system people start talking about this and convincing each other on social media … then that is a big blow.”'"
#Fintech#CBDC#Dystopia#DFC
·coindesk.com·
EU's ECB Faces Opposition to Digital Euro Plans That Threaten to Slow CBDC Project
India's CBDC Has 1.5M Users, 300K Merchants, Says RBI Chief
India's CBDC Has 1.5M Users, 300K Merchants, Says RBI Chief
The Reserve Bank of India (RBI) reportedly provided an update on its central bank digital currency (CBDC) pilot that started in the wholesale segment in November 2022, followed by a pilot in the retail segment in December. The trial has been rolled out to approximately 1.5 million users, and is is being operated through 13 banks in 26 cities, and over 300,000 merchants as of end-August 2023. The RBI has enabled full interoperability with Unified Payments Interface (UPI) QR codes. Moreover, the RBI is likely to launch a CBDC pilot for transactions for interbank borrowing or call money market by October 2023.
#Fintech#CBDC#India#rCBDC#wCBDC#DFC
·news.bitcoin.com·
India's CBDC Has 1.5M Users, 300K Merchants, Says RBI Chief
Idemia partners with Airtel Payments Bank and HMD Global
Idemia partners with Airtel Payments Bank and HMD Global
IDEMIA has partnered with Airtel Payments Bank and HMD Global to expand the reach of offline CBDC payments in India. The firms will focus on working together in order to launch an offline payment system in the next couple of months. The new product is set to facilitate the use of the digital INR on featured phones and devices, with the objective of driving financial inclusion. IDEMIA will provide its technology and services in order to provide an offline layer to ensure that the transactions of customers are instant and secure without the need for any kind of online validation.
#Fintech#CBDC#Payments#Offline#IDEMIA#India#DFC
·thepaypers.com·
Idemia partners with Airtel Payments Bank and HMD Global
Circle wanted to create a financial revolution. Instead, it’s losing the stablecoin wars to Tether
Circle wanted to create a financial revolution. Instead, it’s losing the stablecoin wars to Tether
Fortune magazine published a behind-the-scenes account of Circle's Silicon Valley Bank (SVB) trials and tribultations. Circle's management "devised a plan A, B, and C. The first failed when Circle’s attempted wire to get out its deposits didn’t go through. [They] remained optimistic that the government would guarantee its deposits—plan B. In case that didn’t work out, the executives spent the weekend negotiating deals with companies who would buy Circle’s SVB holdings for $0.85 on the dollar, which, along with Circle’s own balance sheet, would be enough to restore USDC’s reserves."
#Fintech#CryptoAssets#Stablecoins#Circle#USDC#SiliconValleyBank#DFC
·fortune.com·
Circle wanted to create a financial revolution. Instead, it’s losing the stablecoin wars to Tether
Circle says its USDC stablecoin was as diversified as possible. Is that accurate?
Circle says its USDC stablecoin was as diversified as possible. Is that accurate?
Circle has "no remorse" over its decision to hold $3.3B at SVB. It was "as diversified as possible" and blames banking for its woes, which is "extremely difficult" for crypto firms. However, Circle's stablecoin competitor, Paxos, didn't have single-bank exposure. As the screenshot below shows, $185.5 million worth of deposits held to back Paxos's USDP stablecoin were spread over thousands of banks using deposit placement networks like IntraFi, and were thus insured by the government. For the remainder, Paxos obtained $72 million worth private insurance. Only $10.9 million in deposits were effectively unprotected, a small 1.3% sliver of USDP's total assets. Rather than keeping 8% of its assets lodged at a second tier bank without insurance, why didn't Circle follow Paxos's risk reduction strategy?
#Fintech#CryptoAssets#Stablecoins#Circle#Paxos#USDC#USDP#SiliconValleyBank#DFC
·jpkoning.blogspot.com·
Circle says its USDC stablecoin was as diversified as possible. Is that accurate?
Hong Kong expands trial of China's digital yuan to more banks
Hong Kong expands trial of China's digital yuan to more banks
Hong Kong is reportedly actively testing China’s digital yuan and has entered the second phase of technical testing to incorporate a predominant local payment system. The Hong Kong Monetary Authority (HKMA) and the People’s Bank of China (PBOC) have completed the initial technical tests for cross-border payments using the digital yuan in Hong Kong. Currently, they are conducting the second phase of the technical trial, involving more Hong Kong banks and testing the digital yuan wallet’s top-up function through the Faster Payment System.
#Fintech#CBDC#China#HongKong#CrossBorder#Payments#DFC
·theblock.co·
Hong Kong expands trial of China's digital yuan to more banks
Palau to freeze USD-backed stablecoin after PoC launch in July
Palau to freeze USD-backed stablecoin after PoC launch in July
Palau is wrapping up its US dollar stablecoin (PSC) proof-of-concept (PoC) on September 8, 2023, just over a month after launch in July that was slated to run for three months. Following the distribution halt, PSC will also be frozen after September 15, becoming unavailable for spending by users. The government will send a survey to PoC participants, the results of which will be critical to developing the final report for the Palau Congress and the president, and ultimately deciding whether to move forward with the next phase of the stablecoin program. https://twitter.com/JHX_1138/status/1699650336581882041
#Fintech#CryptoAssets#Stablecoins#GovCoins#CBDC#Palau#Ripple#DFC
·cointelegraph.com·
Palau to freeze USD-backed stablecoin after PoC launch in July
Bangko Sentral ng Pilipinas selects technology for CBDC project
Bangko Sentral ng Pilipinas selects technology for CBDC project
[September 7, 2023] The Bangko Sentral ng Pilipinas (BSP) has selected Hyperledger Fabric as the distributed ledger technology (DLT) for its Project Agila (formerly known as Project CBDCPh) wholesale central bank digital currency (CBDC) sandbox tests. Project Agila aims to orient the BSP and participating financial institutions on CBDC technology solutions that have the potential to enhance the country's large-value payment system. By the end of Project Agila, the participants are expected to have a clearer understanding of CBDC technology and assess the capability of wholesale CBDCs to foster advancements in the large-value payment system. [February 12, 2024 update: The BSP dropped the blockchain solution and will use the technology that underpins the Philippine Payment and Settlement System (PhilPaSSplus), the country's real time gross settlement payment system. https://www.ledgerinsights.com/philippines-wholesale-cbdc-two-years-no-blockchain/]
#Fintech#CBDC#wCBDC#Philippines#DFC
·bsp.gov.ph·
Bangko Sentral ng Pilipinas selects technology for CBDC project
IMF reports on Saudi Arabia's CBDC exploration
IMF reports on Saudi Arabia's CBDC exploration
The IMF in its Saudi Arabia 2023 Article IV staff report reported on the Saudi Central Bank (SAMA) central bank digital currency (CBDC) explorations. Through Project Aber, SAMA was one of the first central banks to experiment with domestic and cross-border wholesale CBDC. Leveraging the lessons of the experiment, SAMA is continuing to explore wholesale CBDC use cases. SAMA is undertaking a three-phased approach (evaluation, testing, implementation), allowing for ongoing assessment at each stage, against which the future roadmap will continue to evolve.
#Fintech#CBDC#SaudiArabia#wCBDC#DFC
·imf.org·
IMF reports on Saudi Arabia's CBDC exploration
Bank of Canada explores impact of quantum computing on CBDCs
Bank of Canada explores impact of quantum computing on CBDCs
The Bank of Canada has called in evolutionQ for a research project involving quantum-safe cybersecurity technologies for greenfield digital currencies. The Bank of Canada is exploring technologies and technical ecosystems that may inform decisions relating to the development of a potential digital loonie. The evolutionQ research will explore the impact of integrating quantum-safe encryption methods and crypto-agility as design goals for digital currencies. The code developed during the research will be released as open source to give developers and researchers the opportunity to explore the new cryptographic methods.
#Fintech#CBDC#Canada#QuantumComputing#CyberSecurity#DFC
·newswire.ca·
Bank of Canada explores impact of quantum computing on CBDCs
Macau establishes digital currency as legal tender
Macau establishes digital currency as legal tender
A new law regulating Macau’s currency issuance has come into effect, giving digital currency the same legal status as traditional money in the Chinese special administrative region. The new legal framework, proposed by the Macau government, became effective on September 1, 2013 after being approved by the SAR’s legislative assembly in June. However, there is no timeline for the launch of a digital pataca central bank digital currency (CBDC).
#Fintech#CBDC#Macau#DFC
·centralbanking.com·
Macau establishes digital currency as legal tender
UK RLN to experiment with digital pound as tokenized deposits
UK RLN to experiment with digital pound as tokenized deposits
The UK Regulated Liability Network (RLN) will experiment with a retail digital pound backed by tokenized bank deposits. Earlier in 2023, the RLN performed similar trials in the US involving several banks, Mastercard and the NY Fed. The RLN has separate partitions for the central bank and each bank, with interbank payments being settled on the central bank partition. The experiments will explore how the tokenized deposits could sit alongside a retail CBDC, how RLN could accommodate both forms of money on a single platform, how the functional equivalence of all retail digital money could be ensured, and if the RLN can provide a more effective platform for innovation. https://www.ukfinance.org.uk/policy-and-guidance/reports-and-publications/regulated-liability-network-uk-discovery-phase
#Fintech#CBDC#RegulatedLiabilityNetwork#Tokenization#DFC
·ledgerinsights.com·
UK RLN to experiment with digital pound as tokenized deposits
BIS and Reserve Bank of India announce winners of G20 TechSprint 2023
BIS and Reserve Bank of India announce winners of G20 TechSprint 2023

The Bank for International Settlements (BIS) and the Reserve Bank of India (RBI) announced the winners of the G20 TechSprint 2023 challenge. From the short list of 21 teams three winners for three problem statements were chosen: -Team Secretarium Ltd. from the UK won the category fon fighting money laundering, combating financing of terrorism, tax and sanctions evasion, with their solution on transaction monitoring and protecting anonymity and privacy using secure privacy technology. -Team Millicent Labs from the UK won the category for problem of improving liquidity in cross-border payments between emerging and developing countries' currencies, with their hybrid decentralised exchange for CBDCs, which features automated market makers and traditional order books, to optimise liquidity and reduce volatility risk. -Team Knox Networks from the US won the category for problem of developing multilateral cross-border CBDC platforms, with their multilateral CBDC solution based on File-Based Digital Assets (FBDAs).

#Fintech#BIS#TechSprint#CBDC#India#FinancialIntegrity#CrossBorder#DFC
·bis.org·
BIS and Reserve Bank of India announce winners of G20 TechSprint 2023
Customers of Indian banks can scan UPI QR code and pay via digital rupee
Customers of Indian banks can scan UPI QR code and pay via digital rupee
Growing numbers of Indian commercial banks have gone live with Unified Payments Interface (UPI) interoperability on the Reserve Bank of India (RBI) digital rupee central bank digital currency (CBDC) rupee app. With this move, the bank's customers will be able to scan any UPI QR code through the banks' digital rupee apps and pay for transactions. The UPI is the national payment portal operated by the National Payments Corporation of India (NPCI), a division of the RBI. The NPCI provides the infrastructure for both the UPI and the digital rupee.
#Fintech#CBDC#India#QR#Interoperability#DFC
·cnbctv18.com·
Customers of Indian banks can scan UPI QR code and pay via digital rupee
China insists digital yuan be usable everywhere
China insists digital yuan be usable everywhere
Mu Changchun, the head of the People's Bank of China (PBOC) Digital Currency Research Institute, said that the digital yuan must be available for all retail scenarios, with standard QR codes being one of the first steps. He also wants to see wholesale payment systems becoming interoperable with the central bank digital currency (CBDC), and he envisions the digital yuan and smart contracts being used for securities transactions, enabling settlement on a delivery versus payment (DvP) or payment versus payment (PvP) basis. https://finance.eastmoney.com/a/202309032835731424.html
#Fintech#CBDC#China#QR#wCBDC#DFC
·ledgerinsights.com·
China insists digital yuan be usable everywhere