ECCB is Scheduled to Launch Its CBDC Pilot in June 2020
In mid-March 2020, Bitt and the ECCB conducted preliminary testing of the DXCD CBDC applications with select stakeholder groups in St. Kitts and Nevis, Antigua and Barbuda, and Grenada. A full-blown pilot is scheduled to launch in June 2020.
Protecting the continuity and safety of payments during the coronavirus crisis
"A high-level ECB task force is currently examining the pros and cons of introducing a digital euro, which could be used by intermediaries or even by citizens through their electronic devices for their day-to-day spending needs. However, our analysis of the opportunities and challenges of CBDC should not discourage or crowd out market-led initiatives aimed at introducing private electronic means of payment with similar features in terms of user needs."
Digital Dollars Can Reduce Unemployment, Here's How
@MMPrts proposes a unique CBDC that reverses the process by which money is created and put in circulation. The "MttP" would be issued by employers as wages. Banks would have to accept payments in MttP or exchange MttPs for dollar balances in bank accounts at face value. Banks would redeem MttPs at the central bank in exchange for reserves.
China starts major trial of state-run digital currency
Trials of China's CBDC have reportedly started in several cities, with some public servants in Shenzhen, Suzhou, Chengdu and Xiong'an now receiving their salaries in CBDC already.
Central Bank Digital Currency: an innovation in payments
An R3 white explores proposed CBDC models and applications from across the globe, and examines technologies for different implementations based on recent engagements with central banks and payment infrastructure providers. It discusses use cases that CBDCs are solving, the benefits they may unlock, minimum viable ecosystems, the difference between the hybrid, synthetic and direct models, and the technologies, including blockchain, that are being considered.
How Biometric Wallets and eMoney Ensure Nations Can Respond to Pandemics
The U.S. government needs a stimulus payment system that ensures the policy objectives are met. It could be based on programmable eMoney ("digital dollars") or eVouchers that are time-stamped, purpose-limited, and even location-limited to prevent users from hoarding them. Loans to small businesses could be tied to payroll or capital expenditure. Such eMoney or eVouchers could be sent or received directly to users’ eWallet accounts and settled over an automated clearing house.
White Paper : Why are Central Banks Interested in Digital Currency?
With a decrease in the use of cash, the objectives pursued by the Central Banks with an electronic and universally accessible form of money are to anticipate the disappearance of cash, create an efficient and cheap means of payment, and strengthen regulatory controls. It is not a matter of “if” but a matter of “when”. Central Banks must define the objectives first, then get the design parameters right while carefully assessing the second order effects; and conduct thorough pilots before launching a central bank digital currency.
Gates Foundation's Mojaloop Finance Code Gains in Africa And Asia
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.
The Central Bank Digital Currency Survey 2020 – debunking some myths
According to the results of Central Banking’s inaugural CBDC survey very few central banks plan to issue CBDCs, in any form, within the next five years. Moreover, much-vaunted blockchain technology is viewed as having limited applications – despite the Libra Association sticking with a version using Byzantine algorithms. And the idea of a decentralised currency is a non-starter – centralised controls are essential from a public-sector perspective.
Overview of Central Bank Digital Currency - State of Play
This SUERF note provides an overview of the state of play regarding the development of central bank digital currencies across the world. It describes the leading central banks current initiatives and outlines the main aims and design features of their CBDC projects.
The European Central Bank is stepping up its analytical investigations into the potential for creating a central-bank backed digital currency for retail customers, a move which would be "a game changer" for the banking industry, says the ECB's Yves Mersch.
Without privacy, do we really want a digital dollar?
If governments do decide to develop a publicly-run digital alternative to existing bank-mediated payments and physical cash, then technologies pioneered in the cryptocurrency space should deliver scale and accountability while preserving much of the privacy and freedom inherent in cash transactions, privacy and freedom that are essential to a free and democratic society.
A CBDC could be designed so that anyone can get as much anonymous money as they want. But they'd have to pay for this privilege. One way is by charging a hourly fee, or a negative interest rate, on anonymous balances or set a large withdrawal fee, say 5% for anomymity. These revenues might be used by the government to to bolster the budgets of fraud departments, or to compensate victims of ransomware. But an anonymity tax puts regular people and criminals into the same bucket and it subtly ostracizes licit users of anonymous CBDC.
Mauritius Central Banker Confirms Island's Digital Currency Plans
Governor Harvesh Seegolam said the Bank of Mauritius would be embarking on a pilot in the near future, though he declined to share many details. Seegolam said any CBDC would have to be distributed through the established banking system, even if the central bank issues the actual currency, to avoid the risk of destabilizing the island's financial system. (See also https://www.bom.mu/media/speeches/shaping-new-banking-landscape)
To keep pace with international developments in the digital currency space, the Bank of Mauritius has engaged in discussions with some international institutions for the introduction of a central bank digital currency for retail and wholesale payments in Mauritius.
Bank of England: No Compromise on Our Principles for Any Future CBDC
Wise words from the BoE's Simon Scorer: "We're clear that any choice of technology around a CBDC should be led by a set of requirements and not the other way around... We would not let the choice of technology dictate the design; instead, what we would do is decide what functionality the CBDC requires, what our design principles are, and then we would choose what technology is most appropriate."
Central bank digital currency can be safe and private, claims CipherTrace
Blockchain forensics firm CipherTrace wants to expand its business to central banks. A new initiative aims to help central banks launch their own digital currencies in a safe, private, and regulatory compliant manner. CipherTrace, funded by DARPA, already works with banks and governments around the world.
Is Central Bank Currency Fundamental to the Monetary System?
This Bank of Canada paper discusses whether the ability of individuals to convert commercial bank deposits into central bank money is fundamentally important for the monetary system. This is a significant question since the use of cash—the only form of central bank money that the public currently has access to—is declining rapidly in many countries. The question is also highly relevant to the discussion around whether central banks need to issue a retail central bank digital currency. The paper concludes that depositors’ need for control could be a reason why cash or a CBDC is essential, even in countries with strong measures safeguarding commercial bank money.
This column written by IMF staff proposes a framework for analyzing CBDC design tradeoffs to mitigate bank disintermediation risk while maintaining diverse payment instruments. Currency that closely competes with deposits would likely depress bank credit, while cash-like currency could lead to the disappearance of cash. It concludes that making CBDC interest-bearing may help alleviate this trade-off.
The Digital Euro and the Role of DLT for Central Bank Digital Currencies
This paper discusses the forms and advantages of a DLT-based digital Euro. It analyzes current CBDC projects and explains the intentions behind the respective CBDC projects. In addition, possible threats for the financial system caused by a CBDC introduction, such as financial stability and data protection concerns, are discussed, and possible solutions are outlined. http://explore-ip.com/2020_The-Digital-Euro-and-the-Role-of-DLT-for-Central-Bank-Digital-Currencies.pdf
Banque de France announces first successful test of a wholesale digital euro
On May 14 the Banque de France completed a test of a blockchain-based wholesale digital euro to settle a securities trade with Societe Generale. The French central bank will continue to run more experiments involving sending the digital euro between other banks.
This paper discusses the pros of adopting government-issued digital currencies as well as a supranational digital iCurrency. One such pro is to get rid of paper money (and coinage), a ubiquitous medium for spreading germs, as highlighted by the recent coronavirus outbreak. It sets forth three policy recommendations for adapting mobile devices as new digital wallets, regulatory oversight of sovereign digital currencies and user data protection, and a supranational digital iCurrency for facilitating international digital monetary linkages.
"CBDCs are sometimes viewed as synonymous to, or as replacements for, digital currencies like Bitcoin, but they represent a meaningful departure from the decentralized protocols inherent to many cryptocurrencies. If CBDCs gain traction, they may actually bolster the value proposition of Bitcoin and other digital currencies. "
JPMorgan Says Central Bank Digital FX a Danger to U.S. Power
JPMorgan analysts don’t see the U.S. dollar being toppled as the world’s reserve currency anytime soon, but “more fragile” aspects of dollar dominance, including in trade settlement and the SWIFT messaging system, could be at risk. “Offering a cross-border payments solution built on top of a digital dollar would, particularly if designed to be minimally disruptive to the structure of the domestic financial system, be a very modest investment to protect a key means to project power in the global economy,” they said. “For high-income countries and the U.S. in particular, digital currency is an exercise in geopolitical risk management.”
Central Bank Digital Currencies Need Decentralization
"A CBDC 2.0 will be issued and decentrally governed either on a national or on a supranational level, across multiple jurisdictions. This implies a different set of legal, monetary, and fiscal policies, some of them automated, required to be codified and put in place across nations... Decentralized governance will result in fast and cheap cross-border transactions, pseudonymity, personal data protection, and international operability. CBDC 2.0 will be interoperable at the protocol level so that data exchange and functionality should be easily accessible and transferable... The currency should be interoperable on a supranational level, meaning that emerging economies could suffer less from purchasing power inequality."
US Federal Reserve Bank Segregated Balance Accounts
This paper describes segregated balance accounts (SBAs), a concept for a new type of account that could provide increased competition for deposits, reduce system-wide balance sheet costs, and improve the transmission of monetary policy by facilitating greater pass-through of interest on excess reserves (IOER).
All in all, we worry that the rise of segmented narrow banks could leave the Federal Reserve facing a risk of disintermediation that would diminish the supply of private credit, potentially in a disruptive way. Returning to a pre-crisis world of scarce reserves would diminish this threat at the cost of a sacrificing a useful tool for financial stability. In theory, Congress might find this outcome sufficiently unappealing to restrict SBA-only banks, but that possibility seems remote.
China's central bank governor says there is no timetable for digital currency launch
People's Bank of China Governor Yi Gang has said that the central bank doesn’t yet have a timetable for the official launch of digital yuan. He also confirmed that the PBOC has been internally testing its digital currency, known as Digital Currency/Electronic Payment (DC/EP), in four cities - Shenzhen, Xiong'An New Area, Chengdu, and Suzhou - since April. Yi also confirmed that DC/EP might see use during the 2022 Beijing Winter Olympics “to verify theoretical reliability and system stability.” http://www.pbc.gov.cn/goutongjiaoliu/113456/113469/4028235/index.html
Digital Dollar Project Publishes its US Central Bank Digital Currency White Paper
The Digital Dollar Project white paper calls for a tokenized US dollar that will operate alongside existing fiat currency and commercial bank money, and maintain the current two-tiered banking system. It will support a balance between individual privacy rights and necessary compliance and regulatory processes. The technological architecture will offer the flexibility to adapt configurability based on policy and economic considerations, and possibly (but not necessarily) be based on distributed ledger technology.
Here's a CBDC Tracker covers similar territory. The main difference is that it includes wholesale CBDC and some initial sovereign offerings (ISOs) such as the Marshall Islands SOV and Venezuelan Petro. Also it includes projects that are arguably simply central bank run blockchain-based payment rails (eg Cambodia's Project Inthanon). Finally, as far as I can tell, the tabulation doesn't include links to the official (or unofficial) sources of the information. But, on the other hand, it includes some useful information that doesn't fit my more compact presentation, like announcement date, status, technology, and programmability.
