DFC

Banco de Reserva del Perú has apparently been studying central bank digital currency (CBDC) since 2019. "Central banks must continue with the analysis, both conceptual and technological, in order to be prepared for eventual changes in the conditions they face regarding the conduct of monetary policy in the future. It is essential to continue with the study and analysis of the potential effects of the issuance of a digital currency, as well as learning from the experiences of other countries on the subject."

"The inauguration of the DCash CBDC pilot, in March 2021, represented the first major step towards the practical achievement of a CSME. To truly understand the scale of this achievement, it is necessary to examine some of the fundamental problems that arise from inefficient payment systems. In doing so, light will be shed on the Herculean efforts required to get to this point and the pivotal justifications for why these efforts were well warranted."

This IMF paper reviews how central banks have been reacting to the challenges posed by fintech to the legal foundations of their governance. It finds that fintech calls for reconsidering the adequacy of the legal formulation of currency issuance and payment systems functions and powers. Fintech may impact the functional autonomy for some key central bank functions. For example, the role claimed by governments in designing CBDC will be an important issue to consider; the legal framework will need to carefully delineate the respective roles and responsibilities between the government and the central bank. The authors suggest that central bank law reform must be sufficiently broad to achieve appropriate levels of “agility” to provide a “future-proof ” legal framework. For instance, legislation (and by extension the legal framework to which the central bank is subject) should to the maximum extent possible be technology-neutral.

Banky Foiben’I Madagasikara (BFM) is exploring the introduction of a retail central bank digital currency (CBDC) based on a two-tier "intermediated" distribution model. The design thought process will be focused on domestic use, but keeping open the option of cross-border use later. The BFM has published a request for information and quotation (RFI/RFQ) for potential technical solutions, The deadline for submissions is September 6, 2021, with a heads up notification requested by August 25.

Paxos is rebranding its stablecoin from Paxos Standard (PAX) to Pax Dollar (USDP) so it is more easily identifiable as a US dollar-backed token. The updated USDP smart contract will go live on August 31, 2021. PAX has always maintained reserves that are 100% cash or cash equivalents, which for Paxos means short-term Treasury bills.

The Centre Consortium announced that USD Coin (USDC) stablecoins will only be backed by cash and U.S. Treasury Bills. Centre oversees which entities are allowed to issue the stablecoin and use its API. In July, its parent company Circle, which issues the USDC, revealed that USDC was only 61% backed by cash (including money market funds) and cash equivalents (high-quality short-term fixed income securities). The July attestation report showed that reserves included Yankee Certificate of Deposit (13%), commercial paper (9%), corporate bonds (5%) and municipal bonds and U.S. Agencies (0.2%).

"The key lesson from disasters past, present and future is not that we should keep cash but that what we should have in place is a means to person-to-person (or actually, device-to-device) payments in the absence of mobile networks, electricity and clearing systems. I don't want to labour the point about the unsuitability of blockchain-based payments for general purpose cash replacement, but this seems to me to reinforce a critical design characteristic for central bank digital currencies: they must be able to work offline."

Facebook's digital wallet, Novi, could abandon the Diem stablecoin in favor of fiat money if regulators do not change their tune, says David Marcus, head of Facebook Financial and Novi. The current iteration of the project involves the issue of a single stablecoin pegged to the US dollar, versus the original plan to issue a series of stablecoins backed by individual traditional currencies, as well as a token based on the currency-pegged stablecoins. Marcus claims that US authorities' "hostility" to Facebook's move into payments, is "profoundly un-American" and that the firm deserve a "fair shot" while also pointing out that it is already well embedded in the sector.

Ukraine's Ministry of Digital Transformation is reportedly planning to pay its employees with Ukraine’s e-hryvnia central bank digital currency (CBDC) as part of future pilot testing. Another e-hryvnia pilot idea being considered is to use it in the payment of social benefits and government subsidies, and to employ smart contracts that can potentially limit the use and misuse of such government grants.

The Bank of Jamaica (BOJ) reportedly said that, although wallet providers can monitor personal information and transactions of its central bank digital currency (CBDC) users, this information cannot shared with the BOJ and any other authority without a court order. The BoJ will only capture general data for economic analysis. A total of $230 million CBDC has been minted as part of a pilot exercise which ends in December 2021. If the pilot is successful, full roll-out is expected in 2022.

"CoinDesk presents a consolidated guide to what we know, and don’t know, about the collateral behind the largest stablecoins."

Research about central bank digital currency (CBDC) has been silent about consumers’ willingness to use CBDC and what triggers usage. This De Nederlandsche Bank paper reports on the results of a survey among a representative group of Dutch citizens to fill this gap. It found that about half of the Dutch population would be willing to open a current account for digital euros at the central bank. The not-for-profit nature of central banks was the most often mentioned rationale. The second was improved resilience of the electronic retail payment system, and third was its relative safety versus cash.

The Bank of Ghana plans to test a general purpose central bank digital currency (CBDC) in partnership with German banknote printer Giesecke+Devrient (G+D). G+D is providing the technology and will adapt their Filia CBDC solution adapted to Ghana’s requirements, which will be tested in a pilot with banks, payment service providers, merchants, consumers and other relevant stakeholders. Filia enables secure, consecutive offline payments in case no network connection is available.

The Coinbase website now states that USD Coin is “backed by fully reserved assets,” contrary to the now-removed claim of “backed by U.S. dollars in a bank account.” More specifically, “each USDC is backed by one dollar or asset with equivalent fair value, which is held in accounts with US regulated financial institutions.”

The Central Bank of Nigeria (CBN) will reportedly launch a pilot of its e-nairu that will be run on the "two-tier" model whereby the central bank designs and distributes the digital currency (CBDC) and regulated financial institutions provide it to individuals and businesses. The CBN hopes that this strategy will help it “address interoperability risks that might be associated with the implementation.” The CBN reckons the risk of financial disintermediation can be addressed via the imposition of limits on e-naira holdings.

The Bank of Jamaica (BOJ) minted Jamaica’s first batch of central bank digital currency (CBDC). A total of J$230 million in CBDC will be issued to deposit-taking institutions and authorized payment service providers during the CBDC pilot exercise which ends in December. Minister of Finance and the Public Service, Nigel Clarke, said that legislative amendments to accompany CBDC will be in place before March 31, 2022, the end of the current fiscal year.

Circle, the fintech company behind the USDC stablecoin, intends to become a US Federally-chartered national full-reserve commercial bank, according to its S-4 special-purpose acquisition company (SPAC) filing with the U.S. Securities and Exchange Commission. The firm said that a banking framework could reduce the risks around its business, including its reliance on third-party payment systems.

Tether has released an assurance report that provides a breakdown of the company's consolidated assets on June 30, that shows that its $62.7 billion outstanding USDT stablecoin were fully backed. The report was conducted by Moore Cayman, a Cayman Islands-based auditor. Tether's latest attestation report provides much more detail on the composition of its assets, including its commercial paper (most of it which is rated A-1 or A-2). Also, its allocation to Treasury Bills has grown to around 24% from the 3% three months ago. It's very well footnoted, too.

"The Central Bank of Venezuela announced the new redenomination plan for its fiat currency called “Digital Bolivar.” This new proposal seeks to simplify transactions by slashing six zeroes from the current value of the currency. While it is called digital, it has nothing to do with the proposal of a new central bank digital currency (CBDC), but it claims to have the development of a digital economy in the country as its objective."

The National bank of Cambodia's (NBC's) Chea Serey, who leads the central bank's Project Bakong blockchain-based retail interbank payment system, said Bakong’s electronic wallet reached 200,000 users in June, doubling from three months earlier. Project Bakong, launched in October 2020, allows Cambodians to pay at stores or send money through a mobile app in riel or U.S. dollars. Serey said that the mission of Bakong is to "increase the usage of the local currency," with the long-term goal to "solely use our local currency." NBC is also exploring cross-border transactions through Bakong. Currently it is working on this with Malaysia's Maybank as well as Thailand's central bank.

"A CBDC not only has domestic macroeconomic and financial implications for the issuing economy; it has also implications for the rest of the world.  Our simulations suggest that if a CBDC is available to non-residents, additional volatility in capital flows, exchange rates and interest rates resulting from its presence can be mitigated through holdings limits on transactions by foreigners or through flexibility in the CBDC’s remuneration rate.  Of the two policy tools, our simulations show the latter is the most powerful – price flexibility dominates quantitative restrictions.  That a CBDC increases asymmetries in the international monetary system by reducing monetary policy autonomy in foreign economies, but not domestically, suggests in addition that introducing a CBDC sooner, rather than later, could give rise to a significant first-mover advantage."

"For its next edition of the pie chart, Tether should consider catering to this demand by providing a long list of explanatory notes. Tether will be publishing its next pie chart sometime in the middle of August. Given its flagging issuance, Tether has every reason to do a better job than before. The whole cryptocurrency world will be watching."

According to this paper co-written by the Diem Association's Christian Catalini, fiat-backed stablecoins must rely on reserves of high-quality, liquid assets and be subject to a framework that protects coin holders from credit risk, market risk, operational risk, as well as the insolvency or bankruptcy of the issuer. Although decentralized stablecoin designs eliminate the need to trust an intermediary, they are either exposed to death spirals, or highly capital inefficient, as they must be highly over-collateralized to account for the lack of an intermediary. While these trade-offs might be acceptable for narrow use cases within the cryptocurrency space, without a breakthrough in decentralized stablecoin design, they are likely to limit the usefulness of these coins for mainstream adoption.

Federal Reserve Governor Christopher Waller said he is “highly skeptical” about the a U.S. central bank digital currency (CBDC). He remains "skeptical that a [it] would solve any major problem confronting the U.S. payment system." Waller also said he saw no reason why the dollar wouldn’t continue to dominate the international payment system even if other nations started using digital currencies for cross-border contracts. He also found it "implausible... that developing a CBDC is the simplest, least costly way to reach the [unbanked]."

Samsung Electronics will reportedly participate in the Bank of Korea's central bank digital currency (CBDC) proof-of-concept (PoC) work reportedly co-managed by Ground X, a blockchain affiliate of messenger platform, Kakao. Ground X has partnered with ConsenSys to create the Klaytn Ethereum-based public-permissioned blockchain that the PoC will be run on. Ground X will start work in August, with the first phase to be completed by December.

"OceanBase Community Edition is an open source distributed HTAP (Hybrid Transactional/Analytical Processing) database management system with a native distributed architecture and supports enterprise-level features such as financial-level high availability, transparent horizontal expansion, distributed transactions, multi-tenancy, and syntax compatibility. . The OceanBase core has passed the test of large-scale commercial scenarios, has served many industry customers, and is now continuing to build core technology competitiveness in the future."

"OceanBase is a distributed, scalable, shared-nothing relational DBMS developed by Alibaba. The goal of OceanBase is to serve for financial scenarios which are demanding on performance, cost, scalability, and requires database with high availability and strong consistency. It is designed and optimized for OLTP applications on relational structured data, though its shared-nothing structure also supports OLAP applications."

"OceanBase is an enterprise distributed relational database with high availability, high performance, horizontal scalability, and compatibility with SQL standards."