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Are There Compelling Reasons to Consider a Central Bank Digital Currency for the U.S.?
Are There Compelling Reasons to Consider a Central Bank Digital Currency for the U.S.?
A U.S. Richmond Fed article examines alternative arguments for considering a CBDC for the U.S. It points out that introducing a CBDC is unlikely to substantially improve the current U.S. money and payments system. A more compelling reason to consider a CBDC is to prepare the U.S. system against future threats, especially those associated with the rise of private and foreign digital currencies. Therefore, there appears no immediate need for the U.S. to issue a CBDC, but the U.S. needs to explore the CBDC technology now for potential future use.
#Fintech#CBDC#UnitedStates#DFC
·richmondfed.org·
Are There Compelling Reasons to Consider a Central Bank Digital Currency for the U.S.?
How to Build Trust – USDC Audits and Attestations
How to Build Trust – USDC Audits and Attestations
Circle's Chief Financial Officer explains the difference between stablecoin audits and attestations. An audit is an assurance engagement that verifies the accuracy of financial statements and is typically performed annually by a public accounting firm. The audit verifies the accuracy, completeness and composition of the reserve and tests the internal controls over financial reporting that ensure financial statement accuracy. In an attestation – the accounting firm “attests” to the accuracy of a set of statements. It is different from an audit (it makes little sense to test financial controls monthly, for example), but it provides the same standards of assurance over the statements.
#Fintech#CryptoAssets#Stablecoins#Circle#USDC#DFC
·circle.com·
How to Build Trust – USDC Audits and Attestations
How to Build Trust – USDC Audits and Attestations
How to Build Trust – USDC Audits and Attestations
Circle's Chief Financial Officer explains the difference between stablecoin audits and attestations. An audit is an assurance engagement that verifies the accuracy of financial statements and is typically performed annually by a public accounting firm. The audit verifies the accuracy, completeness and composition of the reserve and tests the internal controls over financial reporting that ensure financial statement accuracy. In an attestation – the accounting firm “attests” to the accuracy of a set of statements. It is different from an audit (it makes little sense to test financial controls monthly, for example), but it provides the same standards of assurance over the statements.
#Fintech#CryptoAssets#Stablecoins#Circle#USDC#DFC
·circle.com·
How to Build Trust – USDC Audits and Attestations
Initial steps towards a central bank digital currency by the Central Bank of Brazil
Initial steps towards a central bank digital currency by the Central Bank of Brazil
This Central Bank of Brazil (BCB) note discusses the development of its central bank digital currency (CBDC). The main objective is to provide entrepreneurs with a safe and reliable environment to innovate through the use of programmability technologies, such as programable money and smart contracts. In the context of a modern payment system, already available to the Brazilian population, a full-fledged CBDC must enable new functionalities, beyond those brought by an instant payment arrangement. Therefore, the innovation tool for which the BCB envisions the greatest potential is the development of a platform for smart payments. [It will be a wholesale central bank digital currency (CBDC), transacted exclusively between the BCB and commercial banks banks to support the provision of retail financial services settled through tokenized bank deposits.]
#Fintech#CBDC#LATAM#Brazil#DFC
·bis.org·
Initial steps towards a central bank digital currency by the Central Bank of Brazil
Assessing the Case for Retail CBDCs: Central Banks’ Considerations
Assessing the Case for Retail CBDCs: Central Banks’ Considerations
"Many central banks around the world have been researching, experimenting, or developing central bank digital currencies (CBDCs). Although central banks in several emerging markets and developing economies have implemented or plan to implement a general-purpose, or retail, CBDC to promote financial inclusion and improve their payment systems, central banks in many advanced economies have not yet found a compelling case for a retail CBDC."
#Fintech#CBDC#DFC
·kansascityfed.org·
Assessing the Case for Retail CBDCs: Central Banks’ Considerations
Runs on Algorithmic Stablecoins: Evidence from Iron, Titan, and Steel
Runs on Algorithmic Stablecoins: Evidence from Iron, Titan, and Steel
"In conclusion, design flaws in the no-arbitrage mechanism contributed to the failure of the IRON stablecoin. That said, the design flaws we uncover in this paper are not easily fixed. For instance, using the spot price as opposed to the ten-minute weighted-average price of TITAN in the creation of IRON is susceptible to manipulation of the spot price. It remains to be seen whether future generations of algorithmic stablecoins can improve these issues. For now, our results serve as useful reminder that some stablecoins are not stable at all, particularly for the users of smaller accounts who bought into the falling knife when IRON was tumbling."
#Fintech#CryptoAssets#Stablecoins#DFC
·federalreserve.gov·
Runs on Algorithmic Stablecoins: Evidence from Iron, Titan, and Steel
Japan Passes Crypto Stablecoin Bill That Enshrines Investor Protection
Japan Passes Crypto Stablecoin Bill That Enshrines Investor Protection
Japan’s parliament passed a bill that classifies stablecoins as digital money that must be linked to a currency that is legal tender and guarantee holders the right to redeem them at face value. The legal definition means stablecoins can only be issued by licensed banks, registered money transfer agents and trust companies. The new legal framework will take effect in a year, and Japan’s Financial Services Agency will introduce regulations governing stablecoin issuers in coming months.
#Fintech#CryptoAssets#Stablecoins#Japan#Regulation#DFC
·bloomberg.com·
Japan Passes Crypto Stablecoin Bill That Enshrines Investor Protection
‘This Is the Usual’: Thai Central Bank Governor on CBDC Pilot Delay
‘This Is the Usual’: Thai Central Bank Governor on CBDC Pilot Delay
The Bank of Thailand (BoT) has been working on a retail central bank digital currency (CBDC), with an initial six month pilot planned for the second quarter of 2022, but it has been postponed to the fourth quarter of this year, to make sure the central bank gets it right. In terms of rationale, the BoT sees CBDCs offering more potential for the private sector to get involved and innovate, compared to the existing fast payments system. For example, programmability can't be built on a fast payment system.
#Fintech#CBDC#Asia#Thailand#DFC
·coindesk.com·
‘This Is the Usual’: Thai Central Bank Governor on CBDC Pilot Delay
Central Bank Digital Currency and Financial Fragility
Central Bank Digital Currency and Financial Fragility
A recent European Central Bank (ECB) paper analyzes how the introduction of a remunerated CBDC might affect financial stability. It validates the commonly held view that higher CBDC remuneration increases depositor withdrawal incentives and thus bank fragility. Second, it identifies a contrarian force when banks raise deposit rates in response to higher CBDC remuneration to retain deposits that, in turn, reduces fragility. These opposing effects can lead to a U-shaped relation between CBDC remuneration and bank fragility.
#Fintech#CBDC#DFC
·econ.queensu.ca·
Central Bank Digital Currency and Financial Fragility
Old dogs, new tricks: adapting central bank balance sheets to a world of digital currencies
Old dogs, new tricks: adapting central bank balance sheets to a world of digital currencies
The Bank of England's Andrew Hauser argues that a central bank digital currency (CBDC) could have a big impact on the the size, composition and risk profile of the central bank's balance sheets; for the monetary policy transmission mechanism, and for monetary control. He argues for the need to understand these impacts, and build them into the design of CBDCs and central bank operational toolkits.
#Fintech#CryptoAssets#Stablecoins#CBDC#UnitedKingdom#DFC
·bankofengland.co.uk·
Old dogs, new tricks: adapting central bank balance sheets to a world of digital currencies
Managing the failure of systemic Digital Settlement Asset (including stablecoin) firms
Managing the failure of systemic Digital Settlement Asset (including stablecoin) firms
The U.K. government proposes to amend its Financial Market Infrastructure Special Administration Regime to bring crypto-assets within the jurisdiction of the Bank of England while giving the institution the reins in the event of a collapsing stablecoin. One proposed amendment includes broadening the legal definition of a “payment system” to include crypto-assets, providing the central bank with regulatory powers under Part 5 of the 2009 Banking Act. The government clarified that the central bank will only step in during “systemic” collapses, which it defines as any “deficiencies in [a system’s] design or disruption to its operation may threaten the stability of the U.K. financial system or have significant consequences for businesses or other interests.”
#Fintech#CryptoAssets#Stablecoins#UnitedKingdom#DFC
·gov.uk·
Managing the failure of systemic Digital Settlement Asset (including stablecoin) firms
Bank of Ghana tests CBDC integration with mobile money providers
Bank of Ghana tests CBDC integration with mobile money providers

The Central Bank of Ghana (BoG) has reportedly granted Vodafone Cash and CalBank customers the opportunity to test its online version of its central bank digital currency (CBDC), the eCedi. BoG has created online and offline wallets for eCedi but has only deployed the online pilot in the city’s capital, Accra. Meanwhile, the BoG's Governor reported that usage and uptake of the offline version of the eCedi is still being piloted in a small town called Sefwi Asafo in the Western North region.

#Fintech#CBDC#Africa#G+D#DFC
·thepaypers.com·
Bank of Ghana tests CBDC integration with mobile money providers
Retail CBDC and U.S. Monetary Policy Implementation: A Stylized Balance Sheet Analysis
Retail CBDC and U.S. Monetary Policy Implementation: A Stylized Balance Sheet Analysis
"This paper discusses how a Federal Reserve issued retail central bank digital currency (CBDC) could affect U.S. monetary policy implementation. Using a stylized balance sheet analysis, we analyze the effect a retail CBDC could have on the balance sheets of the Federal Reserve, commercial banks, and U.S. households. Then we consider how these balance sheet changes could affect monetary policy implementation for the Federal Reserve. We illustrate that the potential effects on monetary policy implementation from a retail CBDC are highly dependent on the initial conditions of the Federal Reserve’s balance sheet. Moreover, the analysis demonstrates how the Federal Reserve may use its existing tools to manage the effects of a retail CBDC on monetary policy implementation."
#Fintech#CBDC#UnitedStates#DFC
·federalreserve.gov·
Retail CBDC and U.S. Monetary Policy Implementation: A Stylized Balance Sheet Analysis
There's no such thing as a safe stablecoin
There's no such thing as a safe stablecoin
"Stablecoins aren't stable. So-called algorithmic stablecoins crash and burn when people behave in ways the algorithm didn't expect. And reserved stablecoins fall off their pegs - in either direction. A stablecoin that does not stay on its peg is unstable. Not one of the stablecoins currently in circulation lives up to its name. "
#Fintech#CryptoAssets#Stablecoins#DFC
·coppolacomment.com·
There's no such thing as a safe stablecoin
Crunchfish finalist in Reserve Bank of India’s Global Hackathon for Digital Cash on non mobile devices – Crunchfish
Crunchfish finalist in Reserve Bank of India’s Global Hackathon for Digital Cash on non mobile devices – Crunchfish
"Crunchfish was a finalist for its innovation Digital Cash on non-mobile devices, in the global hackathon “HARBINGER 2021 – Innovation for Transformation”, organized by RBI, the Reserve Bank of India. The overall objective of the hackathon was to identify and enable innovations with the potential to transform the digital payments landscape. Crunchfish participated for the problem statement – Non Mobile Digital Payment Solutions."
#Fintech#CBDC#Offline#Crunchfish#DFC
·crunchfish.com·
Crunchfish finalist in Reserve Bank of India’s Global Hackathon for Digital Cash on non mobile devices – Crunchfish
No, the UK Is Not Going to Make USDC and USDT Legal Tender
No, the UK Is Not Going to Make USDC and USDT Legal Tender
"Money doesn’t have to be legal tender to be used for mainstream payments. It just needs to be widely accepted. Making stablecoins legal tender may help to instill confidence in them, but far more important is regulating them so they are perceived as safe. The U.K. has a comprehensive system of regulation to ensure that electronic payments are safe. Bringing stablecoins into this system of regulation would encourage their widespread use."
#Fintech#CBDC#CryptoAssets#Stablecoins#LegalTender#DFC
·coindesk.com·
No, the UK Is Not Going to Make USDC and USDT Legal Tender
India's Central Bank Digital Currency to be Introduced in Phased Manner
India's Central Bank Digital Currency to be Introduced in Phased Manner
The Reserve Bank of India (RBI) is continuing its work on central bank digital currency (CBDC).  According to its latest annual report "the design of CBDC needs to be in conformity with the stated objectives of monetary policy, financial stability and efficient operations of currency and payment systems... The RBI proposes to adopt a graded approach to introduction of CBDC, going step by step through stages of a proof of concept (PoC), pilots and the launch.
#Fintech#CBDC#Asia#DFC
·rbidocs.rbi.org.in·
India's Central Bank Digital Currency to be Introduced in Phased Manner
Terra to burn leftover UST (USTC) stablecoins in community pool
Terra to burn leftover UST (USTC) stablecoins in community pool
There is a total of about 11.2 billion circulated supply of TerraClassicUSD (USTC), currently trading below $0.04. About 1 billion USTC remaining in Terra’s community pool will be sent to the burn module and immediately discarded from supply. Terra will then bridge 371 million cross-chain USTC from Ethereum to Terra which will then be burned by Terraform Labs. “Eliminating a significant chunk of the excess UST supply at once will alleviate much of the peg pressure on UST,” the proposal said. The Terra governance has voted to create a new chain, which will ditch the algorithmic stablecoin USTC (formerly UST) in the old blockchain which has been renamed Terra Classic.
#Fintech#CryptoAssets#Stablecoins#Terra#DFC
·forkast.news·
Terra to burn leftover UST (USTC) stablecoins in community pool
Barclays Warns that "Fully Collateralized" Tether May Be Prone to Downwards Spiral
Barclays Warns that "Fully Collateralized" Tether May Be Prone to Downwards Spiral
"“...Even this arbitrage might not bring the value of the stablecoin back to par, for two reasons. First, investors may begin to have doubts about the underlying collateral backing the token or, more likely, its liquidity and Tether's ability to sell it all without taking a haircut. Second is the practical cost of the arbitrage. The arbitrageur needs to buy the token at a discount in the secondary market and redeem it directly from Tether for its face value. As we note above, Tether does not make this easy or cheap, by charging redemption fees and imposing minimum fiat withdrawal amounts. Related to this, arbitrageurs may lack the balance sheet/capital to absorb all of the desired selling by liquidity seekers, as this sort of arbitrage activity requires deep pockets and a tolerance for potential mark-to-market losses, given the delay between purchase and redemption.”"
#Fintech#CryptoAssets#Stablecoins#Tether#DFC
·bloomberg.com·
Barclays Warns that "Fully Collateralized" Tether May Be Prone to Downwards Spiral
Testimony by Vice Chair Brainard on digital assets and the future of finance
Testimony by Vice Chair Brainard on digital assets and the future of finance
In testimony before the U.S. House Financial Services Committee, Fed Vice Chair Lael Brainard said that no decision has been made about whether the Fed will issue central bank digital currency (CBDC). However, she said that it is important to undertake the necessary work to inform any such decision and to be ready to move forward should the need arise. For example, a digital dollar could help ensure financial system stability if crypto-assets and CBDCs issued by other countries become increasingly popular. https://financialservices.house.gov/events/eventsingle.aspx?EventID=409382
#Fintech#CryptoAssets#CBDC#Stablecoins#DFC
·federalreserve.gov·
Testimony by Vice Chair Brainard on digital assets and the future of finance
Tether Launches MXN₮ Tether Tokens Pegged to the Mexican Pesontugrik-tether-tokens-pegged-to-the-mexican-peso/
Tether Launches MXN₮ Tether Tokens Pegged to the Mexican Pesontugrik-tether-tokens-pegged-to-the-mexican-peso/
Tether is launching a stablecoin pegged to the Mexican Peso (MXN₮) with initial blockchain support to include Ethereum, Tron, and Polygon. MXN₮ will join three other fiat-currency pegged tokens Tether has in the market: the U.S. dollar-pegged USD₮, the Euro-pegged EUR₮, and the offshore Chinese Yuan-pegged CNH₮. This marks Tether’s entrance into Latin America that will provide a testing ground for onboarding new users in the Latin American market and will pave the way for future fiat-pegged currencies in the region to be launched.
#Fintech#CryptoAssets#Stablecoins#Tether#LATAM#DFC
·tether.to·
Tether Launches MXN₮ Tether Tokens Pegged to the Mexican Pesontugrik-tether-tokens-pegged-to-the-mexican-peso/
Taxonomy of digital community currency platforms
Taxonomy of digital community currency platforms
"Community currencies are used to pay for products or services within specific groups defined by geographical boundaries or specific common interests. Financial crises, social emergence in developing countries, and increased access to digital devices have stimulated a growing number of communities worldwide to develop digital currency projects. These projects use technologies ranging from traditional plastic cards to mobile phones and blockchain technologies. Following the design science research approach, this paper analyzes digital community currencies (DCCs) by developing a taxonomy based on platform architecture, governance, transactionality and virtuality. By investigating 22 DCC platforms around the world, 4 groups were distinguished: local, proprietary, commons and cyber. The identification of these four different groups of digital community currencies allows us to better discuss the potentials and limitations of each one of them. The presented taxonomy can be useful to researchers and practitioners both to explain and to design DCC platforms. Discussing each of the emerging categories from the proposed taxonomy helps us to provide insights into DCCs, offering a new theoretical frame for investigating the particular case of digital payment platforms."
#Fintech#CBDC#GovCoins#DFC
·researchgate.net·
Taxonomy of digital community currency platforms
A Reference Ontology of Money and Virtual Currencies
A Reference Ontology of Money and Virtual Currencies
"In recent years, there has been a growing interest, within the financial sector, in the adoption of ontology-based conceptual models to make the nature of conceptualizations explicit, as well as to safely establish the correct relations between them, thereby supporting semantic interoperability. Despite the wide number of efforts to create a unified view of the reality related to economic and financial domains, no comprehensive enough formal model has been developed to, on one hand, accurately describe the semantics regarding the world of money and currencies and, on the other hand, differentiate them from virtual currencies - of which cryptocurrencies are the most significant representative. This research aims at tackling these questions by conducting an ontological analysis of money and related concepts, grounded in the Unified Foundational Ontology, based on a literature review of the most relevant economic theories, and considering recent innovations in the financial industry."
#Fintech#CryptoAssets#CBDC#Ontology#DFC
·researchgate.net·
A Reference Ontology of Money and Virtual Currencies
Towards Ontological Foundations for CBDC
Towards Ontological Foundations for CBDC
"The digitalization of the economy and technological innovations are pushing central banks to investigate new forms of digital money. The concept and design of digital currencies have been investigated by central banks for some time. Although much progress has been made towards a convergence on definitions , the term Central Bank Digital Currency (CBDC) is still used to refer to a number of concepts. In this paper we address this issue by extending and refining our previous work, the Reference Ontology of Money and Virtual Currencies, to provide a semantic foundation for the concept of CBDC."
#Fintech#CBDC#Ontology#DFC
·researchgate.net·
Towards Ontological Foundations for CBDC
Towards a Reference Ontology of Money
Towards a Reference Ontology of Money
"Having a clear understanding of the concepts on the finance domain is fundamental to figure out the evolution of the economy before innovations in the Finance Industry. This research aims at addressing these issues by investigating the conceptual foundations of money, grounded in the Unified Foundational Ontology and based on the literature review of the most relevant economic theories."
#Fintech#CBDC#CryptoAssets#Ontology#DFC
·researchgate.net·
Towards a Reference Ontology of Money
An Ontological Exploration of CBDC Governance Design
An Ontological Exploration of CBDC Governance Design
"Financial ecosystems and their related transactions are increasingly relying on big tech payment service providers, such as ApplePay and WeChat. By offering these services, transacting in unregulated cryptocurrencies becomes easier. Consequently, big tech companies take a powerful position in the ecosystem, such dominance may be avoided by a decentralized ecosystem, in which decision making power is distributed over several actors. Emergence of several highly unregulated cryptocurrencies and increased reliance on big tech, motivates central banks to investigate alternatives, called Central Bank Digital Currency (CBDC) that can be subject to governance and rules. CBDC is specifically aimed to decrease dependency on largely uncontrolled big tech payment service providers and to limit the growth of unregulated cryptocurrencies. In this paper, we explore the key question of how to design a governance structure, we do that by applying the DECENT ontology and conceptual models to the real world use-case of CBDC."
#Fintech#CBDC#CryptoAssets#Ontology#DFC
·researchgate.net·
An Ontological Exploration of CBDC Governance Design
Personal loss recovery for offline digital cash
Personal loss recovery for offline digital cash
"Our analysis shows that automated loss recovery for digital cash through an expiry date could provide substantial benefits to consumers. A potentially important aspect that we consider in the paper is privacy in payments (Garratt and Van Oordt 2021, Borgonovo 2021). While our model does not explicitly account for privacy preferences, results in our paper do suggest that a digital cash that provides more privacy may achieve a higher level of social welfare despite weaker loss recovery. Finally, some consumers may feel uncomfortable with expiring digital cash for reasons that are outside of our economic model. It might therefore be beneficial to consider providing an option to allow users to opt out from automated loss recovery at their own financial risk."
#Fintech#CBDC#Offline#Payments#DFC
·voxeu.org·
Personal loss recovery for offline digital cash
Terra Is Back From Bankruptcy
Terra Is Back From Bankruptcy

One model of Terra goes like this: (1) Terra is a company. Not really — it’s a decentralized finance ecosystem, a blockchain, a bunch of independent developers working on diverse projects — but let’s just pretend for a minute. (In fact there is a company-ish thing called Terraform Labs which helps run Terra, and another company-ish thing called Luna Foundation Guard that keeps some of Terra’s money, but here I want to conceive of Terra as a whole as sort of a distributed company.) (2) The Luna token, which powers the Terra blockchain and is the currency of its ecosystem, is the equity of Terra, the stock in the Terra company. (3) The TerraUSD stablecoin (or UST), which was supposed to always be worth a dollar, and which maintained that peg by being exchangeable for $1 worth of Luna at market prices, is the debt of Terra. Like bonds of the company, or like deposits of a bank.

#Fintech#CryptoAssets#Stablecoins#Terra#DFC
·bloomberg.com·
Terra Is Back From Bankruptcy