Central banks of Honduras, Guatemala eye digital currencies
The central banks of Honduras and Guatemala are reportedly studying digital currencies with the aim of eventually introducing them into the economy, including via a central bank digital currency (CBDC).
China’s Central Bank Reports Progress, Challenges On E-CNY Adoption
People’s Bank of China (PBOC) Deputy Governor Fan Yifei provided a progress report on the PBOC's e-CNY central bank digital currency (CBDC) pilot project. So far there have been no technical glitches, but the PBOC is working to support the connection between e-CNY and traditional payment systems and the connection between e-CNY digital wallets and bank accounts. He also mentioned that regulations need to be improved and optimized. For example, setting the boundaries between account- and value-based transactions may need to be refined (account-based transfers are large-scale transfers, while value-based transfers are smaller offline P2P payments). According to Richard Turrin, a Shanghai-based fintech consultant who recently published Cashless: China’s Digital Currency Revolution, "One big issue... would be what limit to put on value-based transfers to make them cash-like especially for rural users.
China explores using blockchain for digital yuan CBDC issuance
Di Gang, Deputy Director of the PBOC Digital Currency Research Institute, reportedly said the central bank is exploring using distributed ledger technology (DLT) at the e-CNY issuance layer. Until now, the PBOC has been working with a centralized ledger technology approach because of DLT's immaturity, performance, and scalability challenges. However, he acknowledged that perhaps these can be addressed using sidechains, multichain architectures and hardware acceleration.
The Reserve Bank of Australia has posted a job advertisement for multiple positions within its new central bank digital currency (CBDC) research team. The cross-disciplinary team is researching "whether there is a case for a CBDC in Australia, and if so, how it might be designed and what benefits and other implications it would have."
Turkish central bank taps local tech firms for digital currency R&D
The Central Bank of the Republic of Turkey (CBRT) continues to research the potential benefits of introducing a digital Turkish lira. As part of the Digital Turkish Lira Collaboration Platform, the CBRT has signed of memoranda of understanding with three domestic research and technology companies. With these firms, the CBRT will develop a prototype "Digital Turkish Lira Network" and run limited closed-circuit pilot tests. Based on the results of those tests, the CBRT will unveil advanced phases of the pilot study that will reflect a broader participation. The CBRT has made no final decision regarding the issuance of the digital Turkish lira. https://www.tcmb.gov.tr/wps/wcm/connect/EN/TCMB+EN/Main+Menu/Announcements/Press+Releases/2021/ANO2021-40
China’s E-CNY Rollout Enters ‘sprint Stage’ For Beijing Winter Olympics
People’s Bank of China (PBOC) Deputy Governor Fan Yifei said the infrastructure construction for e-CNY use during the Winter Olympics has entered a “sprint stage.” Fan also said e-CNY preparation teams at the Olympic venues “should heighten their sense of mission and urgency, and push ahead with the pilot work in a solid and orderly manner with a strict and meticulous attitude.” http://www.pbc.gov.cn/goutongjiaoliu/113456/113469/4342636/index.html
"While the motivation behind the inclusion of TEEs in mobile devices is positive, the current implementations are still lacking in many regards. The introduction of new features and the ever increasing number of trustlets result in a dangerous expansion of the TCB. This fact, coupled with the current lack of exploit mitigations in comparison to those offered by modern operating systems, make TEEs a prime target for exploitation."
Royal Monetary Authority of Bhutan, Ripple Partner to Pilot CBDC Using Private Blockchain
Bhutan’s Royal Monetary Authority (RMA) will use a private version of Ripple Lab's open-source XRP Ledger solution to pilot retail, wholesale and cross border use cases for a digital Ngultrum central bank digital currency (CBDC) in phases. Ripple’s CBDC solution ensures central banks have greater control over issuance, management, privacy, and validation than they would get with public blockchains, and it can handle payments at the volume of transactions required by a successful retail CBDC.
Ahead of October Launch, eNaira Platform Goes Live
Nigeria's eNaira retail central bank digital currency (CBDC) will launch on October 1, 2021. Nigerians can now download the eNaira app from either the Google Play or Apple App stores, onboard themselves and fund their eNaira wallet using their bank account or with cash at a registered agent location. https://enaira.com/
Inthanon-LionRock to mBridge: Building a multi CBDC platform for international payments
A prototype payment platform developed by the Bank for International Settlements Innovation Hub and the Hong Kong Monetary Authority, Bank of Thailand, People's Bank of China, and Central Bank of the United Arab Emirates, demonstrated the potential of using multiple central bank digital currency (mCBDC) and distributed ledger technology (DLT) for delivering real-time, cheaper and safer cross-border payments and settlements. The mBridge project common prototype platform for mCBDC settlements, part of phase two of Project Inthanon-LionRock, was able to complete international transfers and foreign exchange operations in seconds, as opposed to the several days normally required for any transaction to be completed using the existing network of commercial banks and operate in a 24/7 basis. The cost of such operations to users can also be reduced by up to half.
"The National Bank of Tajikistan informs that it has not signed any cooperation agreement with Fantom Foundation on Digital Currency Platform (CBDC) and has no intentions to do so. The information on introduction of Digital Currency Platform (CBDC) through the National Bank of Tajikistan in the Republic of Tajikistan is incorrect and untrue, therefore the National Bank of Tajikistan has already sent a letter to the Fantom Foundation concerning the disclosure of false information."
The Celo Foundation launched Provo, a sandbox for public and official sector experimentation on Celo that’s designed to allow central banks to explore and experiment with central bank digital currency (CBDC) and other digital assets. Provo will enable financial and regulatory authorities to test CBDC designs and implementation mechanisms in permissioned and/or permissionless, risk-free environments on the Celo platform.
Bank of England Announces Membership of CBDC Engagement and Technology Forums
The Bank of England and HM Treasury have today announced the membership of the central bank digital currency (CBDC) Engagement and Technology Forums. The creation of these groups was announced in April 2021, alongside the CBDC Taskforce which coordinates the exploration of a potential UK CBDC. The Engagement Forum consists of senior stakeholders from industry, civil society and academia to gather strategic input on policy considerations and functional requirements pertaining to CBDC. The Forum will have an important role in helping the Bank and HM Treasury understand the practical challenges of designing, implementing and operating a CBDC.
Nigeria's eNaira central bank digital currency (CBDC) which was scheduled to launch on October 1, may not go as planned due to an infringement by the central bank's infringement of the trademark of a Nigerian company ENAIRA PAYMENT SOLUTIONS LIMITED (RC 508500), which was incorporated in 2004. The company’s attorney, Olakunle Agbebi & Co. has reportedly approached the Federal High Court in Suit No. FHC/AB/CS/113/2021 between ENaira Payment Solutions Limted v. Central Bank of Nigeria. The action includes an order to restrain the central bank from proceeding with the proposed launch.
Cabs In Chinese City Xi'an Pilot Digital RMB As Fare
"The Xi’an taxi industry and the Bank of Xi’an have reportedly launched an eCNY pilot program to accept eCNY as fare, becoming the first city in China to accept digital renminbi as a taxi fare. Ten cabs selected as pilot vehicles have QR codes posted, and passengers can scan the QR codes to pay the fare with digital yuan."
New Zealand central bank consults on retail central bank digital currency
The Reserve Bank of New Zealand published a discussion papers seeking public feedback to assess retail central bank digital currency (CBDC) use cases. The central bank emphasized that a potential New Zealand CBDC would be digital money issued by the bank alongside cash. The central bank notes that while the amount of cash in circulation has been growing in New Zealand, it is still used “proportionately less for transactions by most people."
Court okays eNaira rollout as CBN postpones launch
The Central Bank of Nigeria (CBN) reportedly deferred the launch of the eNaira central bank digital currency (CBDC) in deferrence to other key activities lined up to commemorate the country’s 61st Independence Anniversary. The launch was scheduled for October 1, and Nigerians have already been able to download the eNaira app from either the Google Play or Apple App stores for some days now. Also, a trademark infringement lawsuit by Nigerian company Enaira Payment Solutions, that had threatened to restrain the launch, had been cleared away the day before.
"According to David Andolfatto a Canadian retail CBDC is, in principle, an attractive proposition. But given the system currently in place and the prospects for its near-term evolution, a retail CBDC on its own is, in my opinion, not an essential initiative at this point in time. For consumers, a retail CBDC would mostly replicate what they already have available. As such, the initiative is not likely to attract business away from private-sector PSPs or serve to discipline private-sector pricing protocols and rewards programs. For a CBDC to be successful in this regard, legislation (or moral suasion) designed to alter private-sector marketing behaviour is likely required. But if such legislation were forthcoming, the rationale for a retail CBDC is even further diminished. On the other hand, a wholesale CBDC (together with legislation governing pricing protocols) seems like the most straightforward way to promote competition and fairness in the Canadian payments system. While I see no reason why a CBDC could not work in principle, I also do not see why it is essential in practice. It probably makes more sense to let the Bank of Canada focus on its core competencies — monetary policy, regulation and wholesale payments — and let a regulated private sector manage retail payments."
George Selgin: There are a many reasons why I also favor a division of labor in which the Fed sticks to being a wholesale dealer in payments media, leaving the retail side of the business to banks and other private-sector payment services providers.
Crypto Boom Poses New Challenges to Financial Stability
A chapter from the IMF's forthcoming Global Financial Stability Report concludes that tougher regulation is needed to prevent the rapid growth in crypto-assets leading to financial instability, defrauding of consumers and the funding of terrorism. The chapter drew particular attention to the widespread and rapid adoption of crypto-assets in emerging markets and developing economies (EMDEs), which could "pose significant challenges by reinforcing dollarization forces in the economy — or in this case cryptoization — where residents start using crypto-assets instead of the local currency, reducing the ability of central banks to effectively implement monetary policy... [In such cases] authorities should prioritize strengthening macroeconomic policies and consider the benefits of issuing central bank digital currency and improving payment systems. In some EMDEs, cryptoization can be driven by weak central bank credibility, vulnerable banking systems, inefficiencies in payment systems and limited access to financial services... [Also,] globally, policymakers should prioritize making cross-border payments faster, cheaper, more transparent and inclusive through the G20 Cross Border Payments Roadmap."
The People’s Ledger: How to Democratize Money and Finance the Economy
The Biden administration is nominating law professor Saule Omarova to head the Office of the Comptroller of the Currency (OCC). Omarova recently wrote a paper that outlines a series of structural reforms that would radically redefine the role of a central bank as the ultimate public platform for generating, modulating, and allocating financial resources in the economy. Beginning with the liability side of the central bank balance sheet (the "People's Ledger") she advocates the issuance of retail central bank digital currency (CBDC) and concurrent migration of all transaction deposit accounts from private banks to the central bank. On the asset side, she advocates a comprehensive qualitative restructuring of the central bank’s investment portfolio, which would maximize its capacity to channel credit to productive uses in the nation’s economy. She shows how the proposed reforms would make the financial system less complex, more stable, and more efficient.
On October 1, the Central Bank Of Venezuela slashed six zeroes from the currency, effectively making 1,000,000 Bolivares just 1 Bolivar now, to make payments and currency handling easier. The measure was announced in August, where the central bank announced it was changing the name of the currency to the “Digital Bolivar,” which sparked speculation about a possible issuance of a central bank digital currency (CBDC) in the country. But the bank did not present any reports in this regard and instead announced the issuance of new bills to complement the redenomination plan.
Laos to Study Digital Currency With Help From Japanese Fintech, Report Reveals
The Bank of the Lao People’s Democratic Republic is reportedly launching a CBDC study. The monetary authority has employed the Japanese fintech firm Soramitsu which was involved in a similar project in neighboring Cambodia (Project Bakong). (Laos recently signed a memorandum of understanding with the Japan International Cooperation Agency.)
HKMA Technical Whitepaper on Retail Central Bank Digital Currency
The Hong Kong Monetary Authority (HKMA) released a technical whitepaper on retail e-HKD central bank digital currency (CBDC). Building on the model for retail CBDC that the HKMA is jointly investigating with the Hong Kong Centre of the BIS Innovation Hub, the Whitepaper explores potential technical design options for issuing and distributing retail CBDCs. It aims to explore technology solutions that address the problems of cross-ledger synchronisation, over-issuance prevention, privacy-preserving transaction traceability, and different two-tier distributions models.
"The United States Postal Service (USPS) has taken the most dramatic step in a half-century to re-establish a postal banking system in America. In four pilot cities, customers can now cash payroll or business checks of up to $500 at post office locations, and have the money put onto a single-use gift card. It’s the most far-reaching executive action that the Biden administration has taken since Inauguration Day."
"Should the U.S. Postal Service get into the banking business? U.S. Senators Kirsten Gillibrand (D-N.Y.) and Bernie Sanders believe it should, and have introduced the Postal Banking Act. The idea is that with 8.4 million unbanked American households, banks are doing a bad job of serving low-income people. If the U.S. Postal Service (USPS) began offering banking services, it may be able to reach these people."
Fine, go ahead and mint the damn trillion-dollar coin. And then hang it on the wall or put it on display as a symbol of monetary – and legal – incompetence. Proposed by Democrat members of Congress as a solution to the U.S. debt ceiling impasse, the idea behind the coin is deceptively simple: There’s a loophole in the U.S. law allowing the Treasury Department to keep spending even after the limit on how much public debt can be incurred – the debt ceiling – has been reached. The ploy is to use a rule that authorizes Treasury to issue a platinum coin “in accordance with such specifications, designs, varieties, quantities, denominations, and inscriptions as the Secretary, in the Secretary’s discretion, may prescribe from time to time.” Pushback from Rohan Grey: https://twitter.com/rohangrey/status/1445131064872030211 and response from Marcelo Prates: https://twitter.com/MarceloMPrates/status/1445139106732953613
All your questions about the Trillion Dollar Platinum Coin, Answered
"There are many proposals coming out of congress for how to respond to the Coronavirus-induced depression and deliver economic relief to households. Only one however, involves sending and/or delivering a debit card to every single resident of the United States and funding this expenditure by minting a trillion dollar platinum coin. This is Representative Rashida Tlaib’s proposal, co-authored by my colleague at the Modern Money Network, Rohan Grey. Rohan actually wrote his entire job market paper on the Platinum Coin, which I encourage you to read if you’re really interested in the technicalities, but I wanted to cover some basic details"
