DFC

The Bank for International Settlements (BIS) published a paper on Brazil's recent experience with the Pix retail instant payment system. Since launching in November 2020, Pix has signed up 67% of adults in Brazil, with free payments between individuals and low charges for merchants. The two key ingredients in the success of Pix are, first, the mandatory participation of large banks to kick-start network effects for users, and second, the central bank's dual role as infrastructure provider and rule setter. Pix has also shown how central bank infrastructures can support interoperability and competition, promoting lower costs and greater financial inclusion. These features also have relevance for the possible adoption of retail CBDC.

Stellar CEO Denelle Dixon has said that her company is still working with Bitt on Tascombank's digital hryvnia  project despite the armed conflict between Russia and Ukraine. The last significant update on the project was published in December 2021, when it was stated that they would utilize Stellar to pilot a digital version of the Ukrainian hryvnia. To be clear, this is not a central bank digital currency (CBDC) project. The only connection with the National Bank of Ukraine is that is being conducted under the supervision of the central bank.

Euroclear has invested in Fnality, the blockchain payments consortium formerly known as the Utility Settlement Coin (USC) and owned by 16 major financial institutions. Euroclear operates Central Securities Depositories (CSDs) across Europe, including Belgium, Finland, France, Ireland, the Netherlands, Sweden, and the United Kingdom. In October, Fnality plans to launch its first payment currency with pounds sterling deposited at the Bank of England. That makes it a so-called wholesale synthetic CBDC where the purpose is for institutions to use it for settlement, especially for blockchain-based transactions.

The Singapore branch of the Bank for International Settlements (BIS) Innovation Hub, the Reserve Bank of Australia, Bank Negara Malaysia, the Monetary Authority of Singapore, and the South African Reserve Bank have completed prototypes for a common cross-border payments platform using multiple central bank digital currencies (mCBDCs). Project Dunbar proved that financial institutions could use CBDCs issued by participating central banks to transact directly with each other on a shared platform. This has the potential to reduce reliance on intermediaries and, correspondingly, the costs and time taken to process cross-border transactions.

The Head of the FinTech Section at the Qatar Central Bank (QCB) reportedly confirmed that the central bank is considering CBDC issuance. More generally, Alanood Abdullah Al Muftah said the central bank will soon set a direction on its overall fintech focus, particularly on different fintech verticals, including digital banking.

The National Bank of Kazakhstan (NBK) announced that the next step in its "Digital Tenge" central bank digital currency (CBDC) project will be to involve stakeholders and international partners in discussions about design and pilot scenarios. In that regard, the NBK has launched a Digital Tenge Hub dialogue platform to provide training and certification of market participants, conduct design sessions to discuss methodological aspects, as well as connect new participants to test scripts on the Digital Tenge platform. It will be open to all market participants. The overall plan is, by July 2022, to develop a model to inform a decision to launch a digital tenge (or not) by the end of 2022.

The UK Financial Ombudsman has ruled in favor of customers who registered complaints about the lender after it made changes to account access in 2019 to comply with new regulations on banking fraud. This entailed sending customers a text code via SMS or clicking a link in the bank's mobile app. Unlike other banks, Santander offered no alternative means of access, except to visit a branch or contact the call center to access services. The bank has been forced to pay out hundreds of pounds in compensation to customers who complained under age discrimination laws.

The Bank of Canada and the Massachusetts Institute of Technology (MIT) will collaborate on a twelve-month research CBDC project. The Bank will work with the MIT Media Lab’s Digital Currency Initiative (DCI) team to explore how advanced technologies could affect the potential design of a CBDC. The DCI is also working with the Boston Fed on its Project Hamilton CBDC project.

The Bank of Ghana outlined the key design aspects of its retail CBDC plans. With inclusiveness being a major motivation, it will attempt to bring the eCedi to citizens without a bank account, or even internet access. In that regard, the Bank proposed the use of hardware wallets and other devices.

Back in December 2021, Ukraine's Ministry of Digital Transformation launched its ePidtrymka digital payment system to distribute COVID-related stimulus funds to fully-vaccinated Ukraine citizens who are over 18. The card is issued free of charge both online and offline at participating bank branches. The money can be spent on books, gyms, tickets to the cinema, theater, museums, concerts or transportation in the Ukraine, but money had to be used within four months, after which the account is closed. [Hence this is a form of Gessell money as described by Celo's Zeke Copic in a recent paper.] The cards are not reloadable, so they're more like gift cards. However, a few weeks ago the usage restrictions were dropped, and card-to-card transfers were allowed.

Back in December 2021, Ukraine's Ministry of Digital Transformation launched its ePidtrymka digital payment system to distribute COVID-related stimulus funds to fully-vaccinated Ukraine citizens who are over 18. The card is issued free of charge both online and offline at participating bank branches. The money can be spent on books, gyms, tickets to the cinema, theater, museums, concerts or transportation in the Ukraine, but money had to be used within four months, after which the account is closed.

On December 19, 2021, Ukraine launched "ePidtrymka" which translates to eSupport. It was launched on Diia which is a smartphone app and web portal that was launched in February 2020 to function as a means of storing and sharing digital versions of documents, and also making government services available digitally instead of requiring in-person interactions only. The program paid UAH 1,000 to people who have received COVID-19 vaccinations With these funds one can buy a season ticket to a gym or fitness club, visit a cinema, theater, museum, buy tickets for rail and air transport in Ukraine, buy books. The money is provided for 4 months from the date of receipt. If they are not spent during this time, the account will be closed. Funds can be spent both online and offline, but only on the aforesaid categories of Ukrainian business services. The spending restrictions were lifted on March 2,2022 and I think it was closed down shortly after.

"[White Paper] Mind the gap between the ledger and the offline wallet"

"According to a pilot study by Mercy Corps Ventures on a group of Kenyans providing micro-task services to Appen, a data company for the development of machine learning and artificial intelligence products, Stable coins were identified as the optimum solution that delivers the highest value to the micro-task worker as the transaction fees and speeds are lowest. The workers delivered services to Appen through a micro-working app named Corsali. They were then paid through the same app."

This Deloitte paper advocates for combining the best attributes of crypto-asset technology with the features of an established fiat currency under the sponsorship of a central bank? However, to me it sounds like they're describing a central bank-issued fiat-pegged stablecoin running on a private permissioned distributed ledger technology-based network. Am I missing something, because this just sounds like a fairly generic central bank digital currency?

If you want to have a central bank digital currency that is a form of electronic cash, that is value that can be transferred from person to person (or, more accurately, from device to device) without online access to some central database or blockchain or whatever else, then you have the obvious problem that if the device containing the electronic cash is lost or destroyed then the value is lost or destroyed with it. But is this actually a problem? I mean, should we try to design a digital currency so that it can be recovered? Maybe it is better if it can be lost.

Fir Tree Capital Management, a $4 billion hedge fund, is making a substantial 12-month short wager on Tether. Its thesis against Tether centers around the coin’s roughly $24 billion in high-yield commercial paper, much of it the firm believes is tied to Chinese real estate developers.

"What emerges is a picture of Silicon Valley executives who thought they could charge into finance and make billions, if only they could surmount technical and regulatory barriers. What they failed to realise was that the very fact Facebook had conceived the idea, doomed it. As one government official involved in the process puts it: “Diem spent years trying to reverse engineer their project to fix all of its faults. But they could never fix being linked to Facebook. It was their original sin.”"

The first 100,000 Jamaicans establishing Jam-Dex Central Bank Digital Currency (CBDC) wallets (accounts) after April 1, will receive a $2,500 deposit from the Government. Minister of Finance and the Public Service Nigel Clarke advised that four more wallet providers are expected to be onboarded by the Bank of Jamaica by June, to bring the overall number to five. The national CBDC rollout is scheduled sometime between the beginning of the April to and the end of June.

European Central Bank (ECB) President Christine Lagarde reportedly says she supports accelerating work on a digital euro. She is confident it will become a reality, but the decision is ultimately up to the ECB's General Council. Lagarde told Bloomberg last year that the digital euro could be rolled out by 2025, although In September ECB adviser Jürgen Schaaf said the ECB's experiments and research into a digital euro are no guarantee that one will be launched.

"Amerant Bank, ConnectOne Bank and Primis Bank have joined founding members New York Community Bank, Synovus Bank, NBH Bank, First Bank and Webster Bank in the USDF Consortium, the group said in a statement Wednesday. Investment bank Piper Sandler will offer guidance through the process as the consortium grows."

Ripple's VP of Central Bank Engagement, James Wallis, recently hosted a roundtable-style webinar with expert panelists and guest speakers to explore the current state of CBDCs, particularly within the Americas. Beyond just implications for central banks, the conversation touched on what CBDCs could mean for consumers and commercial banks, the biggest opportunities in front of the technology and current roadblocks to its meaningful adoption. John Kiff, former Senior Financial Sector Expert at the International Monetary Fund, said China’s pilot is one of six underway in the world — four of which are in the Americas. In total, more than 100 countries are currently exploring CBDCs.

"This post will discuss the two cases that the SEC relied on as the basis for issuing its Wells Notice to the Crypto Exchange, as well as the future for these types of programs."

Amazon Web Services (AWS) published Retail Central Bank Digital Currency: From Vision to Design, which outlines a framework that can help support policymakers in evaluating the interdependencies between central bank digital currency (CBDC) policy and technology choices. In a blog post, they summarized the key principles outlined in paper (see below). "The CBDC strategy framework starts with a central bank’s policy goals and aligns those to design principles to create awareness of potential policy trade-offs. Then, the solution exploration phase aligns technology considerations to those principles, and competitive dynamics from the design are considered. Results from experimentation then feed back into design principles to make sure the technical solution aligns to policy goals."

The Eastern Caribbean Central Bank (ECCB) announced that full functionality of the DCash CBDC platform has been restored effective March 9. It had been down since January 14, 2022As part of the restoration, the platform now benefits from several upgrades including an enhanced certificate management process and an updated version of the software which provides the foundation for the DCash system. Extensive testing and assurance exercises were conducted prior to restoration of the platform to ensure full functionality of the service in accordance with quality assurance specifications.

U.S. President Joe Biden signed an Executive Order outlining a whole-of-government approach to addressing the risks and harnessing the potential benefits of digital assets and their underlying technology. The Order lays out a national policy for digital assets across six key priorities: consumer and investor protection; financial stability; illicit finance; U.S. leadership in the global financial system and economic competitiveness; financial inclusion; and responsible innovation. It directs federal agencies to coordinate efforts at drafting cryptocurrency regulations. It also directs the U.S. Treasury Department to draft a report on “the future of money and payment systems," and asks agencies to evaluate how the U.S. could issue a central bank digital currency (CBDC) “should issuance be deemed in the national interest.” "The Order also encourages the Federal Reserve Board to continue its research, development, and assessment efforts for a U.S. CBDC, including development of a plan for broader U.S. Government action in support of their work. This effort prioritizes U.S. participation in multi-country experimentation, and ensures U.S. leadership internationally to promote CBDC development that is consistent with U.S. priorities and democratic values.

"The Oesterreichische Nationalbank (OeNB) joined forces with the OeKB CSD GmbH, the Österreichische Bundesfinanzierungsagentur (OeBFA), Raiffeisen Bank International AG and Erste Group Bank AG to launch a joint research project dubbed DELPHI (Delivery vs. Payment Hybrid Initiative). In this project, the involved parties aim to simulate both the issuance and settlement of Austrian government bonds as security tokens on a blockchain platform."

Franklin Noll, who is a big fan of "smart banknotes" is not so keen on stored-value devices ("E-Purses") that hold and transfer digital currency via NFC and do not require internet or outside electricity. He trots out various problems with E-Purses, all with little to no substantiation.  He claims that E-purses are expensive, costing at least $1 each if produced in the millions of units. He questions the durability of the devices and the likelihood of high replacement rates. The cards required periodic charging, which is a problem in areas with spotty electricity, and they require chips that can be hacked and need to be sourced from anywhere but China. Franklin also doubts that E-Purses will be widely adopted, based on the adoption failures of similar devices in the past (the UK Mondex Finnish Avant Avant cards in the 1990s. He claims that part of the problem was that they required a lot of user maintenance. [Read more]

"In a chat with Business Standard's Vikram Gopal, author and fintech expert Richard Turrin tells about how China is moving ahead with its digital currency. He also clears some air on its Indian version"

"The TLDR of it is that he believes Putin isn’t mad, but focused on strategically cutting himself off from the global economy for a different purpose. He wants an excuse to onboard the entire nation onto a digital currency plaform that’s 100 per cent controlled by the state so as to better control the domestic economy which is facing unparalleld pressure."