DFC

“Many people do not have access to consumer credit, and any effort by retail establishments to ban the use of cash would be discriminatory towards those people,” said Rep. Paul D. Moriarty, D-Camden/Gloucester and one of the bill’s main sponsors, according to Chain Store Age. “The U.S. dollar is legal tender and should be accepted at any retail establishment in New Jersey.”

Researchers from South Korea’s central bank say issuing a central bank digital currency (CBDC) could have negative effects on the economy. The Bank of Korea (BoK) published a study on Thursday, which modeled the effects of a CBDC on liquidity at commercial banks. It found that if the public could access the theoretical digital currency directly, commercial banks’ demand deposits, or reserves, could be reduced – leaving them with a cash shortfall. That could eventually force them to compensate by raising interest rates on loans, the central bank explained.

The introduction of deposits in CBDC account essentially decreases supply of private credit by commercial banks, which raises the nominal interest rate and hence lowers a commercial bank's reserve-deposit ratio. This has negative effects on financial stability by increasing the likelihood of bank panic in which commercial banks are short of cash reserves to pay out to depositors. However, once the central bank can lend all the deposits in CBDC account to commercial banks, an increase in the quantity of CBDC which does not require reserve holdings can enhance financial stability by essentially increasing supply of private credit and hence lowering nominal interest rate.

The European Central Bank is floating the idea of using instant payment rails to link up national card schemes as a means to break the duopoly enjoyed by Visa and Mastercard, who between them account for over 80% of all EU card transactions.

"In this paper we examine what is new about cryptoassets and their technology and how they may affect core central bank functions. We do this by outlining what we think are the three most important research and policy questions for central bankers around cryptoassets and cryptocurrencies specifically. First, what is fundamentally new about the technology that underpins cryptocurrencies and other cryptoassets? Second, how do cryptocurrencies affect a central bank’s role in the economy? Third, given the two challenges of a rise of cryptoassets and a decline in the use of cash, should digital payments be left entirely to the private sector or should central banks issue their own digital currencies? We discuss these three policy questions and highlight what aspects of them are most important to central bankers. Finally, we raise several new questions to help guide researchers in studying cryptoassets and their underlying technology."

"The Bill & Melinda Gates Foundation today released a new open-source software for creating payment platforms that will help unbanked people around the world access digital financial services. The software is designed to provide a reference model for payment interoperability between banks and other providers across a country’s economy. It is available now, free-of-cost, for software developers to adapt and banks, financial service providers and companies to implement. Information on the code can be found at mojaloop.io."

The Bill and Melinda Gates Foundation have formed the Mojaloop Foundation to develop and promote a free, open-source real-time payments platform for nations and central banks. The Mojaloop software includes a directory for identifying account holders, a transfer system for routing payments, and a clearing and settlement layer that transfers funds among users’ financial institutions. The routing system relies partly on Interledger technology originally developed by Ripple. Mojaloop-based systems are hosted by each country’s authorities, but because they use a shared standard, they could eventually become interoperable across borders.

"A paper published by the Bank of Korea is “among the first” to analyse the impact a central bank digital currency would have on financial stability, the authors say. The conclusions of the paper, written by Young Sik Kim and Ohik Kwon, are somewhat mixed. "

Analysis at the IMF and the Bank of England demonstrates that we need to be clear about what central bank digital money is to achieve, how it relates to cash or bank deposits, and whether it could be a substitute for central bank reserves, which at present can only be owned by commercial banks.

"The US sanctions on the Venezuelan oil industry are preventing the country from accessing foreign currency, and may very well be the final nail in the petro’s coffin, analysts tell Central Banking."

"Central bankers need to take a view on the ongoing disruption to monetary systems, rather than simply expecting the issue will go away, argues Adam Csabay"

The Iranian government is engaging with blockchain startups that are laying what could be the groundwork for a new token ecosystem, CoinDesk has learned.

No universal case exists yet for CBDC. IMF research suggests that the popularity of CBDC and its impact will largely depend on its design features and, while risks exist, policies can be introduced to mitigate the costs and increase the benefits. As IMF Managing Director Christine Lagarde recently said in an influential speech, central banks should “investigate [CBDC] further, seriously, carefully, and creatively.”

"Japan’s central bank has examined the role of central bank digital currencies (CBDCs) in the current monetary system in a report released on Feb. 19. In the document, the bank describes the possible ways to implement a CBDC and the hypothetical consequences of different approaches. The report divides possible CBDCs in two categories, the first being those accessible to the general public in a form like banknotes, and the other as those limited for large-value settlements."

"Under the developments of digital innovation, global expansion of cashless payments and the emergence of crypto-assets, some argue that central banks should issue digital currencies that can be used by ordinary people instead of paper-based banknotes. The debates on central bank digital currencies are now gathering great attention from worldwide. Although many of major central banks, including the Bank of Japan, do not have an immediate plan to issue digital currencies that can replace banknotes, some central banks are seriously considering whether they should issue digital currencies in the near future or have already issued them as pilot studies. The debates on central bank digital currencies cover broad issues, such as their possible impacts on payment efficiency, banks' fund intermediation, liquidity crises and the transmission mechanism of monetary policy. All of these issues have important implications for the functions of money as well as its future. Digital innovation expands the possibility of money and enables new types of money with a variety of functions to emerge. These functions may include not only traditional payments but also processing various information and data attached to payments as well as executing transactions. In order to consider the pros and cons of central bank digital currencies as well as the future of money, it is needed to assess their possible impacts not only on payment efficiency but also on financial structure and the overall economy. It is also important to examine their impacts on effective utilization of data and the dynamics of "networks externality", which is one of major characteristics of payment infrastructure."

"Cash usage is shrinking in the Britain faster than in most places, and the debate about what to do about it is getting louder. That’s important because, like just about every country where digital payments are taking over, the UK doesn’t have much of a plan for what happens next."

"There is a lack of consensus around what role central banks should take in regulating the future of cash, according to a panel of experts. Speaking on a panel at the Future of Cash conference, central bankers and commercial bankers debated to what extent central banks should get involved in mandating banks and retailers to accept and/or distribute various denominations moving forward. "

Members of the public may be able to print their own single-use banknotes with integrated QR codes in the future, the head of the Netherlands Bank’s cash policy department said.

"The idea of issuing a central bank digital currency (CBDC) is too attractive to ignore, a postdoctoral researcher from the University of Luxembourg wrote in a study. The research was shared by the Oxford Business Law Blog on Friday, Feb. 22. Hossein Nabilou, a postdoctoral researcher at the Faculty of Law, Economics, and Finance of the University of Luxembourg, presented his findings in a study entitled “Central Bank Digital Currencies: Preliminary Legal Observations.” The report focused on potential challenges that launching a CBDC might cause for the European Central Bank (ECB)."

"The goat standard and the gold standard are identical concepts. In both cases the idea is that money has value because it is in some way associated with a real thing, for which it can be exchanged. However, this “commodity standard” model has now been largely abandoned. Today’s “fiat” currencies derive their value solely from the promises of their sovereign issuers. In effect, what has happened is that we have removed the real goats from the system, and now use only notional goats."

"The e-commerce giant has rolled out a service that will allow customers to purchase goods and then pay for them at a local Western Union retail agent. During checkout, a special QR code will be generated that will be used to verify the customer’s identity and matched to the order confirmation for payment. Dubbed Amazon PayCode, the cross-border payment option has been launched in Kenya in Africa, along with nine other countries in Asia and Latin America."

"The plan, for rural areas of China to go cashless, appears as in a series of guidelines put together by China’s top financial regulators: China's central bank, the Banking and Insurance Regulatory Commission, the Securities Regulatory Commission, the Ministry of Finance and the Ministry of Agriculture and Rural Affairs. The intention is to ensure that online financial services become more accessible to rural residents."

"Saudi Arabia aims to reduce the dependence on cash circulation through the continuous development of the national payment infrastructure to facilitate the transition to an electronic payment environment, said Dr Ahmed Abdulkarim Alkholifey, Governer of Saudi Arabian Monetary Agency (Sama)."

The National Bank of Ukraine, the country’s central bank, has been working on a pilot project to test the usefulness of a digital version of its currency, the Hryvnia. The bank announced today that it had completed the pilot and would be investigating further uses of the token.

"Last week we discussed consumer credit and the questions that remain around decentralized lending systems. This week we are taking on sovereign credit — and specifically what happens when companies and countries start fundraising via tokens instead of debt."

"The European Commission is considering new rules to speed up adaptation of an instant-payment system the European Central Bank introduced last year, challenging card companies and tech giants such as Visa and PayPal."

Marshall Island is among the few countries that have a national cryptocurrency. On Monday, Tangem, a renowned cryptocurrency hardware wallet developer based in Switzerland revealed that it had been selected to print physical blockchain notes for the nation’s upcoming national cryptocurrency.

"Saga addresses public policy concerns raised by these developments. Non-anonymous and reserve backed, Saga is supported by global subject-matter leaders. Saga sees itself as complementary to the existing financial system."