DFC

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Central Bank Digital Loonie: Canadian Cash for a New Global Economy
Central Bank Digital Loonie: Canadian Cash for a New Global Economy
"Being a finalist in this competition, this manuscript presents a design proposal for a Central Bank Digital Loonie (CBDL) based on careful academic research of the possible technological, legal, and economic components of such an unprecedented and historic expedition. We propose a two-phased approach. In the first phase, the BoC introduces a centralized platform as a public-good infrastructure that establishes digital cash and ensures global/domestic interoperability. In this phase, e-KYC-based authentication leverages existing private/public sector solutions but also safeguards users' privacy/data against third-party commercial interests while complying with AML/CFT. In the second phase, the BoC will expand the platform to an enterprise-level permissioned blockchain. This shared resource will transform CBDLs into "programmable e-money" within a “social operating system” that will enable Canadians to operate, innovate, compete, and thrive in this new global digital economy."
#Fintech#CBDC#Canada#DFC
·papers.ssrn.com·
Central Bank Digital Loonie: Canadian Cash for a New Global Economy
Why Stablecoin Interest Rates Are So Damn High
Why Stablecoin Interest Rates Are So Damn High
"Why are interest rates on dollar-pegged stablecoins so much higher than interest rates on actual dollars? You’d think that a stablecoin worth a dollar would command the same interest rate as a dollar, namely zero. But a quick search of lending rates on stablecoins reveals rates of anything from 9% to 13%, or even more."
#Fintech#CryptoAssets#Stablecoins#DFC
·coindesk.com·
Why Stablecoin Interest Rates Are So Damn High
PBOC branch chief seeks clarity on digital yuan as legal tender
PBOC branch chief seeks clarity on digital yuan as legal tender
"People’s Bank of China (PBOC) Nanjing branch president Guo Xinming proposed amendments to the administrative law to clarify the digital yuan’s status as legal tender at China’s annual plenary session on March 5, 2022. Meanwhile, He Hengyang, a deputy to the NPC and chief procurator of the Chongqing Municipal Procuratorate, also proposed amendments to the criminal law for guidelines on charges and sentencing of digital yuan-related crimes. He said digital yuan-related crimes could violate existing law and citizens’ information protection, data security, and economic and national security."
#Fintech#CBDC#China#DFC
·forkast.news·
PBOC branch chief seeks clarity on digital yuan as legal tender
Towards a common understanding of digital currency
Towards a common understanding of digital currency
A working group formed through the Digital Currency Global Initiative has set out to establish a common classification framework for all kinds of digital currency. Members of the architecture-focused working group introduced a new tool designed to overcome terminology problems during January 2022's DC3 conference hosted by the International Telecommunication Union (ITU). The working group is building an ontology – an explanatory framework of terms and characteristics – that can describe exactly what constitutes different kinds of digital currency. The goal is to marry basic taxonomy concepts with deeper ontology concepts, or so-called “notions.”
#Fintech#CBDC#CryptoAssets#DFC
·itu.int·
Towards a common understanding of digital currency
Reviving the SDR for the next century
Reviving the SDR for the next century
"USD650bn of the International Monetary Fund’s synthetic currency, the Special Drawing Rights (SDRs), today hits the balance sheets of IMF members as a response to the pandemic. The scramble to leverage this allocation for development and climate change underlines how far from the SDR’s original purpose—as the elastic provision of global liquidity—we have traveled. Yet the emergence of cryptocurrency technology suggests ways the SDR could be revamped for the global challenges ahead. With imagination and ambition, such a revamp would allow developing economy savings to be channeled into productive investments rather than financing the US current account. This would be a genuine watershed in the fight against climate change."
#Fintech#CBDC#SDR#IMF#DFC
·moneyinsideout.exantedata.com·
Reviving the SDR for the next century
Philippines central bank to launch CBDC research effort
Philippines central bank to launch CBDC research effort
The Bangko Sentral ng Pilipinas (BSP) is moving ahead with a research project focused on central bank digital currency (CBDC). The BSP's  exploratory work started in 2021, focusing implications of CBDC for the whole financial system. A national payment system assessment was later conducted which resulted in the identification of relevant use cases of wholesale CBDC aimed at enhancing the payment system’s safety, resiliency, and efficiency. As a next step, the BSP targets to roll-out Project CBDCPh aimed at building organizational capacity and hands-on knowledge of key aspects of CBDC that are relevant for a use case around addressing frictions in the national payment system.
#Fintech#CBDC#Asia-Pacific#DFC
·bsp.gov.ph·
Philippines central bank to launch CBDC research effort
Central Bank completes Sand Dollar’s link to automated clearing house
Central Bank completes Sand Dollar’s link to automated clearing house
The Central Bank of The Bahamas (CBOB) has now completed its integration of the Sand Dollar with the Bahamas Automated Clearing House (BACH) system, opening the door for Sand Dollar to now be transferred from a digital wallet to any deposit account at a local commercial bank. Sand Dollar users simply pair their mobile wallets to a deposit account and carry out transfers.
#Fintech#CBDC#Caribbean#DFC
·thenassauguardian.com·
Central Bank completes Sand Dollar’s link to automated clearing house
Swiss DLT trading facilities can have central bank accounts, use SIC for payments
Swiss DLT trading facilities can have central bank accounts, use SIC for payments
The Swiss National Bank clarified the criteria for allowing distributed ledger technology (DLT) trading facilities to access to the Swiss Interbank Clearing (SIC) payment system, to enable atomic securities settlement. This simultaneous exchange of a tokenized asset for cash ideally requires access to the payment system and an account at the central bank. Last year new legislation came into force that created a "DLT trading facility"  license in the Financial Market Infrastructure Act (FinMIA), without which separate licenses would be needed for trading versus custody and settlement. DLT trading facilities that use SIC are expected to have a central bank account or "sight deposit".
#Fintech#CBDC#wCBDC#Switzerland#Settlement#Regulation#DFC
·snb.ch·
Swiss DLT trading facilities can have central bank accounts, use SIC for payments
CBDC and the security–financial inclusion dilemma
CBDC and the security–financial inclusion dilemma
"If a CBDC can be stored in a wallet, it may be necessary that the wallet safely stores value and can be easily set up and accessed like any other traditional mobile app. All in all, central banks should try to find the optimum CBDC design which combines an acceptable level of security with a seamless and enjoyable user experience if they want to achieve widespread adoption."
#Fintech#CBDC#Offline#DFC
·blog.digital-euro-association.de·
CBDC and the security–financial inclusion dilemma
ECCB DCash Service to Resume Next Week
ECCB DCash Service to Resume Next Week
The Eastern Caribbean Central Bank (ECCB) is completing the final testing and assurance exercises following several system upgrades and will make the DCash platform available for public use during the week of March 7. The DCash system has been down since January 14. The interruption was due to an expiring certificate on the version of the Hyperledger Fabric that hosts the DCash ledger, and not to any external intervention. It has taken longer than expected to fix the problem because the ECCB took the opportunity to undertake several upgrades platform including enhancing the system’s certificate management processes, and updating the version of Hyperledger Fabric. Other upgrades will allow the platform to process government disbursements to individuals and permit commercial websites to accept DCash. The ECCB says that the security and integrity of all DCash data, applications and architecture, including all central bank, financial institutions, merchant and wallet apps remain secure and intact.
#Fintech#CBDC#Caribbean#DFC
·eccb-centralbank.org·
ECCB DCash Service to Resume Next Week
Project Hamilton by the Boston Fed: A Summary
Project Hamilton by the Boston Fed: A Summary
"Project Hamilton is a joint venture between the Federal Reserve Bank of Boston and the Massachusetts Institute of Technology’s Digital Currency Initiative.  It is a multi-year research project aimed at gaining a hands-on understanding of CBDC design.  Hamilton is in phase one, researching a transaction processing system flexible enough to support experimentation with multiple CBDC models. In a white paper, “A High Performance Payment Processing System Designed for Central Bank Digital Currencies,” the Project Hamilton developers describe their efforts and results.  Here is my summary of the Hamilton Project whitepaper."
#Fintech#CBDC#UnitedStates#DFC
·blog.digital-euro-association.de·
Project Hamilton by the Boston Fed: A Summary
Crunchfish prevents fraudulent cloning and Digital Cash double spending
Crunchfish prevents fraudulent cloning and Digital Cash double spending
"Crunchfish has applied for a patent for a logical lock that protects against fraudulent use by cloning of Trusted Applications, which significantly enhances the security of any Trusted Applications running in hardware based as well as software based secure execution environments. For instance, double spending may occur if a clone of the Digital Cash offline Trusted Application is generated and continues to operate offline. This patent pending innovation prevents such double spending with Digital Cash offline."
#Fintech#CBDC#Offline#Crunchfish#DFC
·crunchfish.com·
Crunchfish prevents fraudulent cloning and Digital Cash double spending
Central Bank of Brazil Lift Challenge Real Digital selects nine vendors
Central Bank of Brazil Lift Challenge Real Digital selects nine vendors
The Banco Central do Brasil's Lift Challenge Real Digital has chosen nine partners to help develop a digital real, Brazil's central bank digital currency (CBDC). They received 47 project proposals from Brazil, Germany, the U.S., Israel, Mexico, Portugal, the U.K. and Sweden. An implementation phase for the selected projects will begin on March 28 and last until July 27, with an eye towards launching a pilot in 2022 and introducing a final version in 2024.
#Fintech#CBDC#SouthAmerica#DFC
·bcb.gov.br·
Central Bank of Brazil Lift Challenge Real Digital selects nine vendors
Central Bank of Brazil Lift Challenge
Central Bank of Brazil Lift Challenge
"LIFT Challenge is a special edition of the LIFT Lab with a specific objective, carried out by Fenasbac in partnership with the Banco Central do Brasil (BCB). These challenges – focused on a mature audience of banks, payment institutions and fintechs – bring together market participants interested in developing a minimally viable product (MVP) that meets the objective of the edition and proposes innovative solutions that benefit the SFN (National Financial System) and the Brazilian population."
#Fintech#CBDC#SouthAmerica#DFC
·bcb.gov.br·
Central Bank of Brazil Lift Challenge
Reply to COS Cut on Digital Sing Dollar
Reply to COS Cut on Digital Sing Dollar
The Monetary Authority of Singapore (MAS) has assessed that the case for a retail CBDC in Singapore is not compelling. It has found that reasons typically offered for issuing retail CBDCs are not very relevant to MAS and Singapore at this juncture. "Some of the reasons usually offered are that CBDCs can ensure financial inclusion or enable cheaper and faster payments. Financial inclusion is not a significant problem in Singapore. Electronic payments in Singapore have also become pervasive, seamless, and efficient...  In short, [the MAS is] using improvements in payment technology and competition to achieve [its] objectives of cheap and fast payments for all, using existing forms of central bank-backed money... [However] the case for a CBDC could strengthen if foreign digital currencies become more widely used locally... [so the MAS] continues to build up its technological and institutional capabilities in the CBDC space...
#Fintech#CBDC#Asia#DFC#Singapore
·mas.gov.sg·
Reply to COS Cut on Digital Sing Dollar
Central bank to pronounce itself on digital currency by December
Central bank to pronounce itself on digital currency by December
The National Bank of Rwanda will reportedly complete its CBDC research by the end of December 2022, according to central bank Deputy Governor, Soraya Hakuziyaremye, after which  it will have a clear policy on whether it will issue the CBDC or not. Financial inclusion will be the primary goal.
#Fintech#CBDC#Africa#DFC
·newtimes.co.rw·
Central bank to pronounce itself on digital currency by December
Is the Bank of Mexico Ready to Launch its CBDC?
Is the Bank of Mexico Ready to Launch its CBDC?
The Bank of Mexico reportedly plans to launch a two-tier ("intermediated") CBDC by 2024. As part of the roll-out, commercial banks expect interoperability capacity to increase through the Interbank Electronic Payment System (SPEI), and that a CBDC should in principle seek greater inclusion and lower transaction costs.
#Fintech#CBDC#LATAM#DFC
·investing.com·
Is the Bank of Mexico Ready to Launch its CBDC?
Taiwan to Debut Retail CBDC by September
Taiwan to Debut Retail CBDC by September
Taiwan is reportedly looking to complete trials of its prototype central bank digital currency (CBDC) by the third quarter of 2022. Its most recent design is a two-tier system that allows consumers to exchange bank deposits with digital currency. In addition, the CBDC can also be linked to credit and debit cards and will be legal tender.
#Fintech#CBDC#Asia#DFC
·pymnts.com·
Taiwan to Debut Retail CBDC by September
Emtech supports central banks across Africa, Caribbean to deploy regulatory sandboxes
Emtech supports central banks across Africa, Caribbean to deploy regulatory sandboxes
"Emtech’s digital regulatory platform includes the innovator’s center, which helps fintechs to prepare and test the requirements for multiple regulators and/or countries and test regulatory reporting APIs for pre-market technical integration, as well as the regulatory sandbox, a fintech launchpad based on regulator limits and the live reporting of data. The sandbox helps the regulatory authorities base their response to innovations on the outcomes of live experiments."
#Fintech#Regulation#CBDC#Sandboxes#DFC
·techcrunch.com·
Emtech supports central banks across Africa, Caribbean to deploy regulatory sandboxes
The potential effects on the Israeli banking system of issuing a digital shekel
The potential effects on the Israeli banking system of issuing a digital shekel
The Bank of Israel published a paper on the potential impact of issuing a central bank digital currency (CBDC) on the stability of the banking system and its ability to continue fulfilling its financial intermediation function. It concludes that, under common assumptions regarding the substitution volume between the public’s deposits and the digital shekel, the negative impact to profitability is not expected to lead to a significant erosion in the banking system's profitability, its stability, or its ability to provide credit and fulfill its classic functions in a modern economy.
#Fintech#CBDC#MiddleEast#DFC
·boi.org.il·
The potential effects on the Israeli banking system of issuing a digital shekel
CBDCs: What Happens When the Lights Go Out?
CBDCs: What Happens When the Lights Go Out?
“While offline capabilities improve resilience to power or connectivity outages, they may also increase vulnerability to fraud in transactions, as fewer security features and centralized controls can mitigate fraudulent behavior,” the WEF said. It added that these “include locking stolen funds, querying suspicious transactions or freezing breached accounts,” as well as “potential vulnerabilities of physical devices providing access to CBDC, such as stored-value cards.”
#Fintech#CBDC#Offline#DFC
·pymnts.com·
CBDCs: What Happens When the Lights Go Out?
Central Bank of Trinidad and Tobago to make decision on CBDC pilot by mid-year
Central Bank of Trinidad and Tobago to make decision on CBDC pilot by mid-year
The Central Bank of Trinidad and Tobago reportedly hopes to make a decision on a possible CBDC pilot by mid-year. The central bank's focus is on improving the payments system by promoting more widespread, safe and efficient electronic financial transactions. It is receiving IMF technical assistance, including on technical aspects and country experiences.
#Fintech#CBDC#Caribbean#DFC
·trinidadexpress.com·
Central Bank of Trinidad and Tobago to make decision on CBDC pilot by mid-year
Comments on Fed CBDC Paper
Comments on Fed CBDC Paper

Steve Cecchetti and Kermit Schoenholtz respond to the 22 questions posed in the Fed's central bank digital currency (CBDC) discussion paper. In general, they doubt that the benefits of a U.S. CBDC will exceed the risks, and that other, less risky, means are available to achieve all the key benefits that CBDC advocates anticipate. But if the Fed were to go ahead, they suggest that there should be no cap on individual holdings, to avoid a premium on CBDC (compared to other central bank liabilities) that would just redirect runs into close substitutes (such as Treasury bills).

Also, the Fed should expect to pay interest on CBDC because it would be politically unsustainable for the Fed to pay interest on wholesale digital liabilities without paying interest on retail digital liabilities. Also, not paying interest on CBDC would diminish its attractiveness relative to other safe, liquid instruments. Plus, that interest will be in part a mechanism to compensate the private intermediaries for performing the necessary services of creating and maintaining accounts, verifying identities, tracking assets, implementing transactions, and monitoring for suspicious activity.

They acknowledge that these would increase run risk in the private financial system, but in their view all of the benefits expected from issuing CBDCs can be achieved less disruptively, and they provide alternative mechanisms for five widely claimed benefits. They see two potential developments that could make a U.S. CBDC worthwhile; (i) if regulation of stablecoins prove politically infeasible (see their earlier post), or (ii) if other highly trustworthy financial jurisdictions (with convertible currencies, credible property rights protections, and free cross-border flow of capital) offer their own CBDC.

If the Fed does go ahead an issue CBDC, offline capability would add to its attractiveness. When the internet is not available, mobile telephony could provide a backup, and to facilitate everyday payments, small transactions also should be feasible offline, via Bluetooth or NFC links.

#Fintech#CBDC#UnitedStates#DFC
·moneyandbanking.com·
Comments on Fed CBDC Paper
The emerging autonomy-stability choice for stablecoins
The emerging autonomy-stability choice for stablecoins
This paper by Maarten van Oordt illustrates how fiat-backed/pegged stablecoin peg deviations may occur when the issuer doesn't have reliable access to the traditional payment system of the jurisdiction that issues the relevant fiat currency. It suggests that national authorities could make stablecoin issuer access to payment systems conditional on submitting to regulatory controls. Stablecoin users would then face a choice between regulated stablecoins with a stable value but little autonomy, and alternative stablecoin arrangements with more autonomy but a less stable value.
#Fintech#CryptoAssets#Stablecoins#DFC
·research.vu.nl·
The emerging autonomy-stability choice for stablecoins
Tracing the footprint of cryptoisation in emerging market economies
Tracing the footprint of cryptoisation in emerging market economies
A new Bank for International Settlements (BIS) note provides estimates of the extent of "cryptoization" in emerging market economies (EMEs). In countries with volatile and/or depreciating exchange rates, holders of domestic fiat currencies have incentives to shift into reserve currency-pegged stablecoins, which conveniently help avoid capital controls and financial integrity requirements. The BIS note found that trading of US dollar-linked stablecoins vis-à-vis some EME currencies has soared since 2020, particularly against the Turkish lira and the Brazilian real. In addition, trading of risky crypto-assets, such as Bitcoin, also spiked in some EMEs facing depreciation pressure.
#Fintech#CryptoAssets#Stablecoins#CrossBorder#DFC
·bis.org·
Tracing the footprint of cryptoisation in emerging market economies
Moneyness: What's the marketing strategy for the Fed's CBDC?
Moneyness: What's the marketing strategy for the Fed's CBDC?
JP Koning wonders whether the U.S. Fed has a central bank digital currency (CBDC) marketing pitch beyond that it is safer than other forms of money ("free from credit risk and liquidity risk"). He argues that "safe" is something that Americans already have with commercial bank money thanks to deposit insurance. And because the Fed is going with an "intermediated" model, users will still have to deal with (and probably pay fees to) the same old banks and other payment service providers.
#Fintech#CBDC#UnitedStates#DFC
·jpkoning.blogspot.com·
Moneyness: What's the marketing strategy for the Fed's CBDC?
BOJ on track for digital currency roll-out
BOJ on track for digital currency roll-out
The Bank of Jamaica (BOJ) is reportedly still on track for the roll-out of its JAM-DEX central bank digital currency (CBDC) during the first quarter of 2022. The remaining steps include the passage of amendments to the Bank of Jamaica Act to make CBDC legal tender and the BOJ the sole issuer, and increasing the number of deposit-taking institutions onboarding clients. Also, launch awaits an independent third-party quality assurance assessment of the system, the results of which will be made public.
#Fintech#CBDC#Caribbean#DFC
·jamaicaobserver.com·
BOJ on track for digital currency roll-out
It’s Time to Abandon the “Token vs. Account” Discussion
It’s Time to Abandon the “Token vs. Account” Discussion
Celo's Ezechiel Copic tears down bogus distinction between “account-based” and “token-based” digital currency (DC), where ownership of the former is tied to identity, and the latter requires verifying the validity of the object used to pay. The distinction makes great sense in the physical currency world, but breaks down in the DC world, where blockchain-based DCs muddy the waters.
#Fintech#CryptoAssets#CBDC#DFC
·linkedin.com·
It’s Time to Abandon the “Token vs. Account” Discussion