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CBDC remuneration in a world with low or negative nominal interest rates
CBDC remuneration in a world with low or negative nominal interest rates
The prospect of central bank digital currency (CBDC) has raised concerns over its potential to cause structural (i.e. permanent) or cyclical (i.e. crisis-related, temporary) bank disintermediation. Moreover, negative interest rate policy is incompatible with the unconstrained supply of zero-remunerated CBDC. This column argues that a two-tier remuneration system for CBDC would be an efficient solution to these issues. It would allow households to access the CBDC as a means of payment with non-negative remuneration and would also make it possible to overcome the perceived dichotomy between retail and wholesale CBDC.
#Fintech#CryptoAssets#CBDC#DFC
·voxeu.org·
CBDC remuneration in a world with low or negative nominal interest rates
Eggs in One Basket: Security and Convenience of Digital Currencies
Eggs in One Basket: Security and Convenience of Digital Currencies
Digital currencies store balances in anonymous electronic addresses. We analyze the trade-offs between safety and convenience of aggregating balances in addresses, electronic wallets and banks. In our model agents balance the risk of theft of a large account with the cost to safeguarding a large number of passwords of many small accounts. Account custodians (banks, wallets and other payment service providers) have different objectives and tradeoffs on these dimensions; we analyze the welfare effects of differing industry structures and interdependencies, and in particular the consequences of "password aggregation" programs which in effect consolidate risks across accounts.
#Fintech#CryptoAssets#CBDC#DFC
·research.stlouisfed.org·
Eggs in One Basket: Security and Convenience of Digital Currencies
Security and convenience of a central bank digital currency
Security and convenience of a central bank digital currency
This Bank of Canada paper discusses how an anonymous central bank digital currency (CBDC) would pose certain security risks to users. These risks arise from how balances are aggregated, from their transactional use and from the competition between suppliers of aggregation solutions. The central bank could mitigate these risks in the design of the CBDC by limiting balances or transfers, modifying liability rules or imposing security protocols on storage providers.
#Fintech#CryptoAssets#CBDC#DFC
·bankofcanada.ca·
Security and convenience of a central bank digital currency
PBOC’s digital currency already used for pilot transactions worth 1.1 billion yuan
PBOC’s digital currency already used for pilot transactions worth 1.1 billion yuan
China's Digital Currency Electronic Payment (DC/EP) central bank digital currency (CBDC) has been used for more than 1.1 billion yuan worth of transactions as part a series of ongoing pilot programs, according to People‘s Bank of China Deputy Governor Fan Yifei. 3.13 million transactions were processed using the currency, which has been undergoing tests for much of the past year in major cities, such as Shenzhen and Xiongan. Pilots also will be conducted at the coming Winter Olympics in 2022. The pilot programs made “positive progress”, with more than 6,700 use cases implemented as of late August for transactions ranging from bill payments and transport to government services, Fan said.
#Fintech#CryptoAssets#CBDC#DFC
·scmp.com·
PBOC’s digital currency already used for pilot transactions worth 1.1 billion yuan
What CBDC Is (Not) About – Part I
What CBDC Is (Not) About – Part I
There is no reason at all why distributed ledger technology (DLT) should be any more suited than other technologies. In fact, there's is little reason why a CBDC should run on DLT at all, as shown in early implementations which took place long before the blockchain hype, like the Bank of Finland's Avanti smart card payment system in the 1990s). Irrespective of the exact design and implementation details, CBDC is about a power shift from the private sector (financial institutions) to the public sector (central banks). If implemented, it has the potential to fundamentally reshape our current monetary and financial systems, with implications not yet fully understood.
#Fintech#CryptoAssets#CBDC#DFC
·mrauchs.com·
What CBDC Is (Not) About – Part I
Bank of Canada calls central bank digital currencies risky, especially storage
Bank of Canada calls central bank digital currencies risky, especially storage
"An anonymous token-based central bank digital currency (CBDC) would pose particular security risks," the Bank of Canada wrote in its Oct. 5 report. "These risks arise from how balances are aggregated and stored, how CBDC is used for transactions, and how various solutions such as e-wallets, crypto exchanges and banks compete to attract users."
#Fintech#CryptoAssets#CBDC#Canada#DFC
·cointelegraph.com·
Bank of Canada calls central bank digital currencies risky, especially storage
Inside the Marshall Islands’ New Cryptocurrency: The SOV
Inside the Marshall Islands’ New Cryptocurrency: The SOV
If the Republic of the Marshall Islands’ state-sponsored SOV cryptocurrency takes off SFB Technologies, the software company building the coin, would become incredibly wealthy. SFB Technologies would receive 7.5% of the coin’s supply, which it could use after five years of its launch—which could be at any point after the 18-month-long presale begins, if the government implements the idea. The SOV Foundation, the non-profit overseeing the development of the project, will hold its presale for SOV in the next couple of months, just in case the Marshall Islands’ government, which is still deliberating whether to issue the coin, goes ahead with the project. The SOV will be built on the Algorand blockchain.
#Fintech#CryptoAssets#Sovereign#CBDC#SOV#DFC#Marshall_Islands
·decrypt.co·
Inside the Marshall Islands’ New Cryptocurrency: The SOV
CBDC, KSICash and our Partnership with the Estonian Central Bank
CBDC, KSICash and our Partnership with the Estonian Central Bank
Digital Currencies have always been on Guardtime’s agenda. Indeed, our first conversations about building a digital cash system with Central Banks started in the early 2000s. Although there was no clear market opportunity then, we continued to do fundamental research. Over the last 5 years our research efforts intensified, leading to the invention of KSICash, a full stack infrastructure for CBDC built on KSI Blockchain. Over the weeks and months ahead we will have a lot to say about KSICash, its properties and why we think it can be a strong candidate for a CBDC, meeting the scalability, performance, security and resilience requirements that central banks will demand.
#Fintech#CryptoAssets#CBDC#Blockchain#DFC
·guardtime.com·
CBDC, KSICash and our Partnership with the Estonian Central Bank
Sibos 2020: What percentage of cross-border payments could be made in CBDCs?
Sibos 2020: What percentage of cross-border payments could be made in CBDCs?
43% of delegates at SWIFT's Sibos 2020 conference think that central bank digital currency (CBDC) will see widespread adoption in the next five years. Another 43% said they would take off within ten years and 14% said they would do so within the next year. However, only 5% thought that cross-border payments would be conducted using CBDCs in five years' time, the vast majority citing limitations of FX and non-harmonised financial integrity regulations, which would remain even when using CBDCs. (Sibos was previously known as SWIFT International Banking Operations Seminar and is organized by the Society for Worldwide Interbank Financial Telecommunication (SWIFT)).
#Fintech#CryptoAssets#CBDC#DFC
·finextra.com·
Sibos 2020: What percentage of cross-border payments could be made in CBDCs?
BOK to virtually test distribution of digital currency next year
BOK to virtually test distribution of digital currency next year
The Bank of Korea is reportedly planning to start testing the distribution of blockchain-based central bank digital currency (CBDC) next year. It announced in April that it had launched a 22-month pilot program that would run through December 2021. The distribution and circulation test is the final part of the three-step pilot program. Phase 2, which focuses on analyzing related processes and seeking outside consulting, started recently. Phase 1, designing and checking the technology, ended in July. Blockchain technology will be used to keep track of digital currency transactions.
#Fintech#CryptoAssets#CBDC#DFC
·koreaherald.com·
BOK to virtually test distribution of digital currency next year
Shenzhen to give out 10 million yuan 'gift money' in digital RMB
Shenzhen to give out 10 million yuan 'gift money' in digital RMB
The People’s Bank of China and are reportedly going to hand out 10 million digital yuan as “red envelope” gifts to citizens. Red envelopes are a traditional way of gifting cash in China on holidays or for special occasions such as weddings. The money will be distributed equally to 50,000 recipients through lottery. Residents can use the money at 3,389 designated merchants, including restaurants, supermarkets, gas stations, metro stations, department stores, and other businesses in Luohu District within next week.
#Fintech#CryptoAssets#CBDC#DFC
·news.cgtn.com·
Shenzhen to give out 10 million yuan 'gift money' in digital RMB
Central banks and BIS publish first central bank digital currency (CBDC) report laying out key requirements
Central banks and BIS publish first central bank digital currency (CBDC) report laying out key requirements
The Bank of Canada, European Central Bank, Bank of Japan, Sveriges Riksbank, Swiss National Bank, Bank of England, Board of Governors of the Federal Reserve and Bank for International Settlements have collaborated on a report setting out common foundational principles and core features of a central bank digital currency (CBDC). These principles emphasise that, in order for any jurisdiction to consider proceeding with a CBDC, certain criteria would have to be satisfied. Specifically, authorities would first need to be confident that issuance would not compromise monetary or financial stability and that a CBDC could coexist with and complement existing forms of money, promoting innovation and efficiency.
#Fintech#CryptoAssets#CBDC#DFC
·bis.org·
Central banks and BIS publish first central bank digital currency (CBDC) report laying out key requirements
The Bank of Japan's Approach to Central Bank Digital Currency
The Bank of Japan's Approach to Central Bank Digital Currency
The Bank of Japan (BoJ) published its approach to retail central bank digital currency (CBDC). Although it currently has no plans to issue CBDC, from the viewpoint of ensuring the stability and efficiency of the overall payment and settlement systems, the Bank considers it important to prepare thoroughly to respond to changes in circumstances in an appropriate manner. It has plans for PoC trials in 2021.
#Fintech#CryptoAssets#CBDC#DFC
·boj.or.jp·
The Bank of Japan's Approach to Central Bank Digital Currency
Central banks are not constrained by AML regulations in designing CBDCs
Central banks are not constrained by AML regulations in designing CBDCs
Central banks and related authorities are increasingly publishing papers explaining what the design of a central bank digital currency (CBDC) might look like. In itemizing the various design choices available, they explain that any design will be constrained by the necessity to "comply with AML law." However, no such constraint exists in reality and the various central bank papers that bring this up do no cite any specific law or regulation. It seems to be a tic on the part of the paper authors who seem to be assuming there must be such a law and are thus artificially limiting their design choices.
#Fintech#CryptoAssets#CBDC#AMLCFT#FinancialIntegrity#Privacy#DFC
·moneyandpower.org·
Central banks are not constrained by AML regulations in designing CBDCs
The ECB's digital euro: anonymous or not?
The ECB's digital euro: anonymous or not?
According to Aleksi Grym, a digital euro might not fall under e-money laws - could also fall under bank deposits, or it might require an entirely new legal category. Also, 5AMLD is just one directive, but payments are regulated by many directives, regulations, and national legislation, different in each country. Legislation is not uniform across the EU. Also. a key point is that even if something (anonymity in this case) would be really beneficial to have, it doesn't necessarily mean it should be the central bank who provides it.
#Fintech#CryptoAssets#CBDC#AMLCFT#FinancialIntegrity#Privacy#DFC
·twitter.com·
The ECB's digital euro: anonymous or not?
Council of Economic Advisors to Ring in Marshall Islands’ Final Phase of SOV Issuance
Council of Economic Advisors to Ring in Marshall Islands’ Final Phase of SOV Issuance
The SOV Development Foundation, a Marshall Islands foundation overseeing the development, distribution and implementation of the Sovereign (SOV) blockchain, today announced its board of economic and technical advisors as the final phase in preparation for the first public auction of rights to the SOV, a blockchain-based cryptocurrency and the official legal tender of the Marshall Islands.  The Marshall Islands and the SOV Development Foundation are ushering in a groundbreaking development in decentralized finance (DeFi), which is transforming the finance industry and now one of the fastest growing sectors in crypto.
#Fintech#CryptoAssets#CBDC#SOV#DFC#Marshall_Islands
·globenewswire.com·
Council of Economic Advisors to Ring in Marshall Islands’ Final Phase of SOV Issuance
The international dimension of a central bank digital currency
The international dimension of a central bank digital currency
This column by three ECB economists argues that central bank digital currency (CBDC) would not only have domestic macroeconomic and financial implications for the issuing economy, they would also have implications for the rest of the world. In particular, the unique characteristics of a CBDC, if used internationally, would create a new "super charged" uncovered interest parity condition which would induce stronger international linkages in a quantitatively relevant way.
#Fintech#CryptoAssets#CBDC#DFC
·voxeu.org·
The international dimension of a central bank digital currency
Digital Dollar Project Pilot Scenarios
Digital Dollar Project Pilot Scenarios
The Digital Dollar Project published initial proposals for nine distinct pilot programs to identify practical opportunities to test and evaluate key features of a U.S. central bank digital currency (CBDC) or “digital dollar.” The pilot programs are designed to explore how a U.S. CBDC could serve important public policy goals while addressing specific challenges faced by different economic stakeholders, including consumers, businesses, financial institutions, and fintechs. Some of the most compelling opportunities available with a U.S. CBDC include development of low-cost digital wallets as on-ramps to bank-lite products for un- and underbanked populations. The Project seeks to solicit feedback, engagement and interest in the pilot proposals. [email protected]
#Fintech#CryptoAssets#CBDC#DFC
·digitaldollarproject.org·
Digital Dollar Project Pilot Scenarios
FSB delivers a roadmap to enhance cross-border payments
FSB delivers a roadmap to enhance cross-border payments
The Financial Stability Board (FSB) published a roadmap to enhance cross-border payments. It addresses the key challenges often faced by cross-border payments and the frictions in existing processes that contribute to these challenges. The roadmap provides a high-level plan, which sets ambitious but achievable goals and milestones, and is designed to allow for flexibility and adaptation in the path to get there as the work progresses, while ensuring that the safeguards in terms of secure processing and legal compliance are observed. It encompasses a variety of approaches and time horizons, in order to achieve practical improvements in the shorter term while acknowledging that other initiatives will need to be implemented over longer time periods.
#Fintech#CryptoAssets#CrossBorder#CBDC#DFC
·fsb.org·
FSB delivers a roadmap to enhance cross-border payments
Retail Central Bank Digital Currency: Design Considerations and Rationales
Retail Central Bank Digital Currency: Design Considerations and Rationales
The Reserve Bank of Australia's view is that the public policy case for issuing a general purpose or retail central bank digital currency (CBDC) in Australia is still to be made. However, consistent with the Bank's mandate to promote competition and efficiency in the payments system and contribute to the stability of the financial system, it will be continuing to consider the case for a CBDC, including how it might be designed, the potential benefits and policy implications, and the conditions in which significant demand for a CBDC might emerge.
#Fintech#CryptoAssets#CBDC#DFC
·rba.gov.au·
Retail Central Bank Digital Currency: Design Considerations and Rationales
Marshall Islands readies to make waves in digital currency
Marshall Islands readies to make waves in digital currency
The Marshall Islands SOV Foundation is set to start selling SOV subscription rights to international investors by auction over a period of 18 months, to give the government time to judge how the SOV works within the current market and also assess demand for the instrument. It will give the government an indication of how strong is international interest, the liquidity on the exchanges and if the instrument will be volatile. The pilot will allow them time to make up their mind about whether to push forward with a full-scale launch and put in place the relevant institutions and regulations.
#Fintech#CryptoAssets#CBDC#SOV#DFC#Marshall_Islands
·centralbanking.com·
Marshall Islands readies to make waves in digital currency
A proposal for an Asian digital common currency
A proposal for an Asian digital common currency
This column advocates the introduction of an Asian digital common currency as a multilateral synthetic currency comparable to the euro. It argues that the benefits it would bring – such as a deepening cooperation within multilateral frameworks and the protection of the rights of small and medium-sized countries – are greater than the disadvantages of inefficiencies in multilateral frameworks.
#Fintech#CryptoAssets#CBDC#DFC
·voxeu.org·
A proposal for an Asian digital common currency
The flipside of China’s central bank digital currency
The flipside of China’s central bank digital currency
This Australian Stretegic Policy Institute policy brief aims improve baseline understanding of the Peoples' Bank of China's e-yuan's structural mechanics and place the project in its political and bureaucratic context. The e-yuan is being developed and implemented domestically first, but could allow China to shape global standards for emerging financial technologies. It also creates opportunities for China to bypass the U.S.-led financial system, which it perceives as a threat to its security interests, potentially disrupting existing systems of global financial governance. Through e-yuan, Beijing could over time move away from the SWIFT system and bypass international sanctions.
#Fintech#CryptoAssets#CBDC#DFC
·aspi.org.au·
The flipside of China’s central bank digital currency
Spain’s Central Bank Prioritizes Digital Currency Research
Spain’s Central Bank Prioritizes Digital Currency Research
Banco de España, in its strategic plan from 2020 to 2021, is prioritizing research into the implications for the financial system and the economy as a whole of the introduction of a central bank digital currency, considering various design proposals and including aspects relating to digital identification.
#Fintech#CryptoAssets#CBDC#DFC
·bde.es·
Spain’s Central Bank Prioritizes Digital Currency Research
Money and legislation need to be adapted to digitalisation
Money and legislation need to be adapted to digitalisation
Riksbank Governor Stefan Ingves presented his views on what needs to be done to ensure the central bank can continue to carry out its tasks in the future. There shall be enough cash in case the electronic systems break down. There shall be a national, state-issued ID card with e-identification. There shall be digital state money as legal tender, an e-krona, issued by the Riksbank. It shall be possible to make instant payments in Swedish krona, using state money, and between currencies across borders, 24/7.
#Fintech#CryptoAssets#CBDC#DFC
·riksbank.se·
Money and legislation need to be adapted to digitalisation
China's $1.5 million digital currency giveaway impressed analysts. Shoppers, not so much
China's $1.5 million digital currency giveaway impressed analysts. Shoppers, not so much
China’s experimental $1.5 million giveaway of digital yuan to Shenzhen citizens ended on Sunday with acclaim from currency analysts. Under the week-long programme, the People’s Bank of China (PBOC) gave 200 yuan to each of 50,000 consumers selected in a lottery in digital “red envelopes". The online wallet was accessible via an app, without need for an existing bank account, with payments accepted via smartphone scans in downtown outlets in China’s fourth-biggest city, from luxury goods retailers to snack stores. However, skeptical reactions among some Shenzhen recipients of the giveaway - long used to scanning phones to pay for goods with other systems - showed the PBOC has work to do in convincing consumers of the benefits of a central bank-backed digital yuan.
#Fintech#CryptoAssets#CBDC#DFC
·uk.reuters.com·
China's $1.5 million digital currency giveaway impressed analysts. Shoppers, not so much
What CBDC Is (Not) About: Part III
What CBDC Is (Not) About: Part III
Absent stricter banking regulation, the central bank is subject to the same competitive forces as everyone else in the market: it needs to compete. Public money on its own is not a sufficient differentiator, particularly in 'normal' times (i.e. no acute financial crisis) where most people wouldn't really know the difference, anyway. Instead, users first and foremost value convenience, speed, and ease of use – features which public sector services are not necessarily most renowned for. In the very competitive payments market, it is thus plausible that CBDC lacks a sufficiently compelling value proposition for warranting users to switch from well-established private solutions. The resulting low-impact scenario will have, as the name suggests, little implications for the structure of our monetary and financial systems.
#Fintech#CryptoAssets#CBDC#DFC
·mrauchs.com·
What CBDC Is (Not) About: Part III
Fed's Powell warming to U.S. digital currency
Fed's Powell warming to U.S. digital currency
In the wake of a high-profile public test of China’s digital yuan via public lottery, U.S. Federal Reserve Chairman Jerome Powell spoke about central banks digital currencies and said… go slow. “I actually do think this is one of those issues where it’s more important for the United States to get it right than it is to be first, given the dollar’s important role globally,” Powell said on an International Monetary Fund (IMF) panel on October 19. “Getting it right means that we not only look at the potential benefits of a CBDC, but also the potential risks and also recognize the important trade-offs.”
#Fintech#CryptoAssets#CBDC#DFC
·modernconsensus.com·
Fed's Powell warming to U.S. digital currency