DFC

"The BIS promotes a curiously botanical CBDC imaginary, from 'money flowers’ to ‘tree trunks’ and a ‘strong canopy’. This helps to naturalize CBDC without clarifying its sociopolitical implications or envisioned monetary future, such as geopolitical tensions and financial fragmentation, new modes of financial interaction or the strengthened role of central banks, while omitting the paradoxes and ambivalences of CBDC."

"The eNaira needs to get past certain challenges before it can be widely adopted domestically. These challenges include absence of technology infrastructure, lack of training for financial institution staff who have to manage the process, data privacy concerns, the electricity crisis and fear of financial crimes."

The ECB updated its digital euro FAQ with particular focus on the rationale for issuing a central bank digital currency (CBDC). "A digital euro would be an electronic form of cash for the digitalized world [that] would give consumers the option to use central bank money in a digital format... [and] providing... a digital means of payment universally accepted throughout the euro area...  Moreover, a digital euro would strengthen Europe’s strategic autonomy and monetary sovereignty by boosting the efficiency of the European payments’ ecosystem as a whole."

The Digital Dollar Project completed a proof-of-concept (PoC) with Western Union, BDO Unibank and Accenture that evaluated the potential benefits of using central bank digital currency (CBDC) for cross-border remittances. The platform leveraged distributed ledger technology (DLT) to simulate the payments infrastructure necessary to transfer digital dollars to Philippine pesos. A decentralized exchange (DEX) provided a market for currency pair exchange to explore potential benefits associated with a decentralized marketplace to improve competition and price transparency. The PoC found that CBDCs may improve remittance processing by settling a peer-to- peer payment in less than ten seconds, a key driver being atomic settlement, which reduced counterparty risk and optimized liquidity via streamlined foreign exchange (FX) spot orders and multi-party settlement.

"Emtech, an African provider of central banking infrastructure, introduced its Central Bank Digital Currency (CBDC) Innovation kit last month. The kit caters to fintechs and financial service providers interested in experimenting with solutions and business models based on digital currencies pioneered by central banks."

An IU International University of Applied Sciences paper presented the results of a survey of 207 Germans regarding their attitudes towards a digital euro. The results suggest that a digital euro should be designed as a digital version of physical cash, and it should be well and seamlessly integrated into the existing landscape of banking applications. However, the potential benefits are not yet clear, especially regarding transparency and trustworthiness, and some respondents perceived little added value compared to bank accounts or cash.

The German Federal Office for Information Security (BSI) published a technical guideline (TR) describing requirements that ensure a high level of IT security for the backend systems that support the operation of a central bank digital currency (CBDC) ecosystem. The CBDC ecosystem consists of the backend systems operated by the central bank, the frontend functionality made available to end users by wallet providers, exchange points, which may be operated by third parties other than the central bank, and, potentially, additional service providers. If implemented, the CBDC ecosystem constitutes a critical infrastructure, and the TR aims to ensure that it is made resilient to a wide range of attacks. In addition to implementing the goal of security-by-design, this TR also considers some privacy aspects.

"We use agent-based modelling to build a digital twin of the retail payment system, where heterogeneous consumers and merchants interact, learn, and adapt as they meet and use different monies and payment instruments. As we introduce an rCBDC, the model simulates its adoption. We calibrate this digital twin to Spain’s retail payment ecosystem. We run hypothetical scenarios that correspond to publicly available discussions about the digital euro. Results show that introducing an rCBDC without attractive design options and stimulus for consumers and merchants results in low and slow adoption. Results suggest that the reverse waterfall functionality and a positive remuneration spread are effective to foster adoption, whereas balance limits and top-up limits are effective to restrain adoption. Results also suggest that combining design options and stimulus with limits to holding rCBDCs could aid to achieve a sweet spot of adoption."

For many decades, cash has been the only form of money on which no interest rate is paid, disadvantaging those who hold it. With the advent of CBDCs, we could remunerate cash and level the monetary playing field to the benefit of all citizens. Designers of CBDCs have foreclosed on this option, opting to continue levying a large, stealthy, regressive tax on their citizens. They have done so to protect banks and their own finance, both of whom have long benefited from this privilege. [Andy Haldane]

"Open and harmonised APIs have allowed network-neutral and cross-technology platforms to carry out financial data exchange while tackling system sustainability issues by providing them a single, standardised set of APIs rather than customised APIs. Through open and harmonised APIs, improved and expanded financial services can be offered to the public. These financial services could enable a higher level of financial inclusion globally, thus reducing the digital access gap within and between countries."

"The ability to hold cash and spend it without authorisation is an important source of personal privacy, so it’s entirely natural for people to be wary of new technologies digitising this type of money. Open collaboration between central banks, regulators and technology providers across both the public and private sectors will be key in fostering the necessary consumer trust to make this transition credible."

SODA's Chris Ostrowski published an article that makes the case for some sort of public digital money that will not be at the mercy of organizations that use our payment dependency for their own ends. If we don’t create some form of public digital money, in which a democratically elected government sets the framework (as they do with cash) on how it is used, then we will inevitably see more and more cases where people are made ‘non-persons’ like Nigel Farage recently was by Natwest. A central bank digital currency (CBDC) is the best guarantee for our (cash like) rights, but it's so hard to get this side of the story out there, thanks to the 'CBDC = government control' narrative.

A global survey of Chartered Financial Analysts (CFA) Institute members found limited understanding of and support for central bank digital currency (CBDC). 42% of respondents believe that central banks should launch CBDCs, 34% disagreed, while only 13% said they had a strong understanding of CBDCs. The top reason cited to support launching a CBDC was to accelerate payments and transfers, with the chief concerns being focused on cybersecurity and fraud, data privacy, and lack of use cases. Respondents in emerging markets were more receptive to CBDC and they CBDC would enhance financial inclusion. Respondents in advanced economies were generally more satisfied with the current financial infrastructure and more skeptical of the need for a CBDC.

State Bank of Pakistan (SBP) Governor Jameel Ahmad reportedly informed the Senate’s Standing Committee on Finance and Revenue that the central bank is working on CBDC. The governor said that the SBP is proceeding cautiously, and is currently reviewing work done by other central banks.

The Bank of Japan (BoJ) launched a CBDC Forum comprised of 60 companies around various themes relating to the potential issuance of a digital yen. Companies were drawn from a range of industries including banking, payment services, retail, information technology, and fintech. Initial working groups will cover fundamental external systems CBDC connectivity, and CBDC system overlay services. Future groups will cover user onboarding, user device interfaces/ experience, and horizontal coexistence with other payment instruments.

The Banque de France (BdF) published an updated set of conclusions and lessons learned from its twelve distributed ledger technology (DLT) based wholesale central bank digital currency (CBDC) experiments. They show the operational feasibility and practical implementation of the three models it has conceptualized for issuing DLT-based wholesale CBDC; the interoperability, distribution and integration models. They all address key aspects of wholesale CBDC implementation and each model offers different capabilities and functionalities compared to the conventional systems, so they can be complementary rather than exclusive.

Transactions using China's digital yuan hit 1.8 trillion yuan ($250 billion) at end-June, according to People's Bank of China (PBOC) Governor Yi Gang, marking a jump from over 100 billion yuan as of August last year. However, e-CNY in circulation accounted for only 0.16% of China's M0 money supply, or cash in circulation, Yi pointed out that, although the balance is small, its transaction velocity is higher and more efficient than cash.