DFC

"We’ve spent months cataloguing and investigating every single USDT ever sent to and from Tether, across the eight blockchain and layers on which it currently exists: Omni (Bitcoin), Liquid (Bitcoin), Ethereum, Tron, Simple Ledger Protocol (Bitcoin Cash), EOS, Solana, and Algorand. Here’s what we found."

The Swiss National Bank (SNB) will technically be ready to launch a wholesale central bank digital currency (CBDC) in January 2022, using Switzerland’s Six Digital Exchange (SDX). However, a policy decision has yet to be taken, and there is the question of whether the SNB can legally issue wholesale CBDC. Also, Thomas Moser, a member of the SNB’s governing board, says there are no plans for going live at this point in time.

The Monetary Authority of Singapore (MAS) announced the results of the Global CBDC Challenge. The Challenge was aimed at identifying and developing retail central bank digital currency (CBDC) solutions that increase payment efficiencies, improve financial inclusion and support the broader digitalization drive in the economy.

A digital euro will probably be deemed legal tender, according to European Central Bank Executive Board member Fabio Panetta. “It would be quite awkward not to have legal-tender status for an additional instrument issued by a central bank” though he cautioned that achieving the status “should not be taken for granted.”

Here’s a book excerpt a year after its publication — because I keep referring people to this chapter. This chapter has stood up quite well through 2021. Sand Dollar, D-Cash and DC/EP are still in ever-growing pilot programmes. Nigeria has just launched its e-Naira CBDC as an alternate payment system. Consumer use cases for CBDCs are still thin on the ground."

In 2022, the Bank of England and the UK Treasury will launch a consultation which will set out their assessment of the case for a UK central bank digital currency (CBDC), including the merits of further work to develop an operational and technology model for a UK CBDC. It will evaluate the main issues at hand, consider the high level design features, possible benefits and implications for users and businesses, and considerations for further work. The 2022 consultation will inform a decision on whether the authorities are content to move into a ‘development’ phase which will span several years. If the results of this ‘development’ phase conclude that the case for CBDC is made, and that it is operationally and technologically robust, then the earliest date for launch of a UK CBDC would be in the second half of the decade.

The Bank of China has reportedly shown a machine that converts foreign currencies into digital yuan. The machine is likely in preparation for the 2022 Beijing Winter Olympics, when the CBDC is set to be introduced to the rest of the world. Users need to link their passports to the transaction, but don’t need a bank account, and it supports 17 foreign currencies.

The Monetary Authority of Singapore (MAS) published a paper that sets out its initial assessment of the economic case for a retail CBDC in Singapore and its potential implications for financial stability and monetary policy.

The Monetary Authority of Singapore (MAS) is embarking on Project Orchid – to build the technology infrastructure and technical competencies necessary to issue a digital Singapore dollar should Singapore decide to do so in future. Managing Director Ravi Menon, said that while retail central bank digital currency (CBDC) has its upside, the case for it in Singapore is not urgent. However, he sees much promise in wholesale CBDC.

Russia will reportedly have reportedly a prototype of the digital rouble platform in early 2022 and pilot-test it next year before making a final decision on the launch of the country's digital currency. Also, Russian lawmakers will reportedly begin working on the legal adjustments needed to implement the digital ruble plan. At least eight federal laws and five codes must be changed for the digital ruble to take effect. The new rules will address several themes, such as the central bank's authority to establish circulation for the new currency, and its acceptance as a means of payment.

The Banque de France published a report on its series of experiments with a wholesale central bank digital currency (#CBDC) but says its work has also thrown up new questions. The tests focused on ways of integrating CBDC into innovative procedures for the exchange and settlement of financial assets, based on new technologies such as distributed ledger technology (DLT), and in multi-currency and cross-border settings. The report covers nine experiments which were conducted as of September 2020 in conjunction with domestic and international private sector players, as well as other central banks and public authorities. Numerous technological partners were also involved, enabling the experiments to explore a broad range of technologies.

"Sovereign Wallet Network (SWN) seeks to address the un-federated nature of digital currencies while also solving the scalability trilemma of the blockchain industry. MetaMUI is the 1st Identity-based blockchain to truly enable regulated, identity-based Peer-to-Peer (P2P) transactions, it can be used as the cornerstone for most financial offerings, with its high versatility and support for custom-developed use cases that enable Central Bank Digital Currencies (CBDC) implementation and issuance easily on the MetaMUI CBDC platform."

"Sovereign Wallet Network (SWN) Global is working to revolutionalize the global financial space and create an ecosystem of products that foster the future of finance through our MetaMUI self-sovereign-identity-based blockchain."

Banco Central do Brasil (BCB) is reportedly partnering with Seattle-based KaJ Labs, to launch the trail of its central bank digital currency (CBDC). However, there's no mention of it on the BCB website, and the Kaj Labs press release makes it sound more like the firm has merely initiated discussions with the BCB. Also, it's unclear whether they're discussing retail of wholesale CBDC. It sounds more like the latter, with a focus on using DLT to tokenize and settle bonds.

This paper by Satoshi Capital Advisor's Josiah Hernandez explores the financial and technical feasibility of a New York City coin (NYC Coin) to be issued by the New York City government. New York City mayor elect Eric Adams introduced the NYC Coin concept during a radio interview on November 3. He said he wanted to turn New York into a crypto-friendly city and wagered a “friendly competition” with Miami and its Miami Coin cryptocurrency.

Banca d’Italia and Deutsche Bundesbank have been ramping up their efforts to utilize distributed ledger technology (DLT) in central bank money settlements. The initiatives aim to complement current central bank money settlement practices with programmable trigger mechanisms that connect DLT-based assets, like tokenized securities, and cash to be settled via conventional payments systems. This could be seen as complementary to the Digital Euro, which is currently under consideration.

"When talking about the programmability of central bank digital currency, one delineation needs to be made clear – the difference between programmable money and programmable payments. The two terms are often used interchangeably, but they actually refer to two very different things."

The BIS Innovation Hub published a brochure for its mBridge project with a comprehensive list of use cases contributed by 22 commercial banks across four different jurisdictions (China, Hong Kong, Thailand and the United Arab Emirates). The mBridge trial platform has shown that CBDCs can substantially increase the speed of cross-border payments from multiple days to near real-time, while also reducing cost. The project is using an agile and iterative development approach, plus a modular bricks design.

The Bank for International Settlements (BIS) published a paper that gives a guided tour of the growing literature on central bank digital currency (CBDC) on the microeconomic considerations related to operational architectures, technologies and privacy, and the macroeconomic implications for the financial system, financial stability and monetary policy. A set of questions, particularly on the cross-border dimensions of CBDCs, remains unresolved, and calls for further work to expand the research frontier.

The People's Bank of China (PBOC) shared the latest statistics on their digital yuan (eCNY) pilot. The number of wallets opened has increased almost sevenfold since June to 140 million, and the number of merchants capable of accepting the digital renminbi is 1.55 million (see table). However, before launch, more work is needed on capacity expansion, security and risk management, and the legal/regulatory framework. For example, the digital forms of the renminbi have to be added to the People's Bank of China Law, and regulatory measures for eCNY need to be tailormade. [Read more]

Oliver Wyman and JP Morgan published a joint report exploring how a multiple central bank digital currency (mCBDC) network could save corporates money. They estimate that corporate wholesale payments amount to $24 trillion a year and cost $120 billion, which could fall by $100 billion using an mCBDC network. The savings will come at the expense of banks, via the loss of correspondent banking fees and the reduction of corporate overnight balances by up to $10 billion. Plus, banks will have to pay to operate two sets of cross-border payment systems in parallel during this transition.

The Bank of Jamaica estimates that in excess of 20,000 individuals are currently utilizing Sand Dollars, with “north of $300,000” of the central bank digital currency (CBDC) currently in circulation. The central bank is nearing the end of ensuring there is interoperability with the automated clearing house (ACH) so there can be a pass-through link between Sand Dollar wallets and deposit accounts. Once that exercise is completed, the central bank along with the financial institutions, is going to be focusing on making an aggressive push to get more businesses enrolled in the infrastructure.

"Stellar is an open-source, decentralized blockchain network that was designed with asset issuance in mind. It offers the interoperability and flexibility of a permissionless ledger while possessing built-in capabilities to ensure security, certainty, and control – as with a centralized or permissioned ledger. That combination makes it particularly well-suited for issuance of CBDCs. "

"The really important question that needs to be addressed, and we plan to do so in a follow up post, is what does Nigeria get out of the eNaira system? Africa’s largest economy is frequently been ravaged by fuel and consumer goods shortages. It is used to double-digit inflation levels. Will eNaira help tackle these issues? In that context what problem does the eNaira really solve? And what are the potential unappreciated blind spots in its design? Are emerging markets particularly likely to benefit from these new structures or the opposite?"

AgAu says it will store physical gold and silver in Switzerland and sell customers its tokens – each one a digital contract that grants the bearer direct ownership rights to a gram of either precious metal. The tokens would be freely traded with transactions validated and recorded on the Ethereum blockchain.

DFW's founding team developed the world's first retail CBDC in production (when the firm was called NZIA). It pioneered numerous groundbreaking innovations that have shaped the evolution of CBDC design; inclusive access, interoperability with legacy systems, policy and regulatory reform, KYC/AML compliance, and systems to guarantee privacy, integrity, governance and trust.

The US President’s Working Group on Financial Markets (PWG) released a report on stablecoins. It concluded that “the absence of appropriate [stablecoin] oversight presents risks to users and the broader system... and current oversight is inconsistent and fragmented, with some stablecoins effectively falling outside the regulatory perimeter. It called on Congress to create legislation to “require stablecoin issuers to be insured depository institutions, which are subject to appropriate supervision and regulation, at the depository institution and the holding company level.”

In August, Circle announced it would shift the assets backing its USDC stablecoin out of commercial paper and only invest in "cash and short US Treasuries." However, although its latest attestation shows this transition is complete, it is not classifying anything that matures in 90 days or less as CP (see below). Tether is already reporting at this level of granularity, disaggregating "cash and cash equivalents" into its component parts, so why can't Circle do the same?

"Other companies that might seek to go cashless are now on notice that NYC is serious about enforcing its cashless ban."

"As well as the settlement with the CFTC and a $41 million fine this month (covered here two days ago), everyone’s favourite stablecoin issuer, Tether Inc., had a front-cover story in Bloomberg Businessweek — confirming quite a few things that people like me have been saying over the past few years."