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Cross-Border Cross-Currency CBDCs and Automated Market-Making
Cross-Border Cross-Currency CBDCs and Automated Market-Making
R3 published a report on the application of automated market makers (AMMs) to cross-border and cross-currency central bank digital currency (CBDC). AMM structures, which are are common in the decentralized finance (DeFi) ecosystem, increase price transparency, work for low liquidity instruments, and bring the process of trading and settlement closer together. Such outcomes could benefit segments of today’s FX market. However, adapting AMM to  spot FX markets will need to answer questions including: who would run it, what formula might be appropriate for larger transactions, and how to incentivize participants.
#CBDC#Fintech#CrossBorder#R3#AMMs#DeFi#FX#DFC
·r3.com·
Cross-Border Cross-Currency CBDCs and Automated Market-Making
Banque de France conducts a new central bank digital currency experiment
Banque de France conducts a new central bank digital currency experiment
(June 25, 2021) "The Banque de France conducted a successful experiment on the use of central bank digital currency to settle the issuance of a French Government Bond (OAT, Obligation Assimilable du Trésor) by Agence France Trésor with a consortium of actors driven by Euroclear."
#Fintech#CBDC#wCBDC#Eurozone#Settlement#France#DFC
·banque-france.fr·
Banque de France conducts a new central bank digital currency experiment
India's biggest retailer trials digital rupee
India's biggest retailer trials digital rupee
India's Reliance Retail has teamed up with Icici Bank, Kotak Mahindra Bank and Innoviti Technologies to roll out central bank digital currency (CBDC) acceptance at its Freshpik stores. The rest of its locations will follow. Customers that want to pay with the digital rupee, will be given a dynamic digital rupee acceptance QR code that is scanned at checkout. Also Kotak Mahindra Bank rolled out a digital rupee pilot to select customers in Mumbai, Delhi and Ahmedabad, who will be sent an email/SMS invite to download the digital rupee Android app. https://www.livemint.com/companies/news/digital-currency-kotak-mahindra-bank-participates-in-rbi-s-pilot-launch-of-digital-rupee-11675324226856.html
#Fintech#CBDC#Asia#India#DFC
·finextra.com·
India's biggest retailer trials digital rupee
Update on Zimbabwe's central bank digital currency (CBDC) project
Update on Zimbabwe's central bank digital currency (CBDC) project
"The [Reserve Bank of Zimbabwe's (RBZ's)] CBDC Project continued to progress steadily in line with the envisaged CBDC Road Map. In this regard, in November 2022, the Bank rolled out a consumer survey that intends to solicit opinions on the design and nature of the CBDC and its overall acceptance/acceptability by stakeholders. As at January 23, 2023, the survey had received 2,286 responses."
#Fintech#CBDC#Africa#Zimbabwe#DFC
·rbz.co.zw·
Update on Zimbabwe's central bank digital currency (CBDC) project
Accounting for Digital Currencies
Accounting for Digital Currencies
A Research in International Business and Finance paper has found that current accounting standards do not precisely cover the treatment of digital currencies. It identifies a need for an accounting standard to provide guidance on the identification, classification, measurement, and presentation of digital currencies, but in the interim, existing standards can be amended to incorporate them to avoid inconsistent global accounting approaches.
#Fintech#CryptoAssets#CBDC#Accounting#DFC
·sciencedirect.com·
Accounting for Digital Currencies
Kazakhstan’s digital currency in PoC stage, per Binance, National Bank joint report
Kazakhstan’s digital currency in PoC stage, per Binance, National Bank joint report
The National Bank of Kazakhstan (NBK) will be conducting central bank digital currency (CBDC) proof-of-concept (PoC) work in 2023. This is according to a report published jointly by the central bank and Binance on digital asset regulation, the digital asset industry and decentralized finance (DeFi) in Central Asia. However, it mentioned that in 2023, the NBK is planning to build several PoC scenarios of integration between the experimental Digital Tenge platform and BnB chain in 2023 to explore opportunities of DeFi and TradFi industry players’ cooperation under central bank supervision. https://drive.google.com/file/d/1HBoDssEY_jf325m1Hg2RGPgVKiNFI85q/view
#Fintech#CBDC#Binance#Kazakhstan#Asia#DFC
·binance.com·
Kazakhstan’s digital currency in PoC stage, per Binance, National Bank joint report
Laos to launch CBDC proof of concept with Soramitsu
Laos to launch CBDC proof of concept with Soramitsu
Japanese software developer Soramitsu said the Bank of the Lao is launching a Digital Lao Kip (DLak) central bank digital currency (CBDC) proof of concept. Soramitsu was responsible for developing the Bank of Cambodia's Project Bakong blockchain-based payment system that has been incorrectly referred to as a CBDC system. This Bank of the Lao project looks like a CBDC platform (see figure in the Soramitsu post below). https://soramitsu.co.jp/dlak-cbdc
#Fintech#CBDC#Asia#Laos#Soramitsu#DFC
·ledgerinsights.com·
Laos to launch CBDC proof of concept with Soramitsu
The digital pound: A new form of money for households and businesses?
The digital pound: A new form of money for households and businesses?
The Bank of England (BoE) and HM Treasury launched a digital pound central bank digital currency (CBDC) consultation. Both want to ensure the public have access to safe money that is convenient to use as everyday lives become more digital, while supporting private sector innovation, choice and efficiency in digital payments. At this stage, they judge it likely that the digital pound will be needed, but a decision to go ahead  won't be taken until around the middle of the decade, and it wouldn't be launched until the second half of the decade. Alongside the consultation paper, the BoE published a technology working paper on its CBDC technology thinking.
#Fintech#CBDC#UnitedKingdom#DFC
·bankofengland.co.uk·
The digital pound: A new form of money for households and businesses?
BIS Innovation Hub unveils new stablecoin, DeFi, CBDC projects
BIS Innovation Hub unveils new stablecoin, DeFi, CBDC projects
The BIS Innovation Hub (BISIH) has unveiled its 2023 work program. This includes previously unannounced projects on stablecoins, DeFi and CBDC, including Project Pyxtrial at the London Centre that will monitor stablecoins to ensure that the backing assets at least match the stablecoin issuance. And "going into its fourth year of life, the BIS Innovation Hub is reaching a cruising altitude, with 21 ongoing and five concluded projects. The Hub will increase the integration of its global network with additional cross-centre projects such as Mariana, which connects the Singapore, Swiss and upcoming Eurosystem centres, and others." https://www.bis.org/about/bisih/about.htm?m=1%7C441%7C713
#Fintech#Payments#CrossBorder#BIS#CBDC#DFC
·ledgerinsights.com·
BIS Innovation Hub unveils new stablecoin, DeFi, CBDC projects
BoE Governor Jon Cunliffe on a potential digital pound
BoE Governor Jon Cunliffe on a potential digital pound
The Bank of England is proposing a limit of between £10,000 and £20,000 per individual as the appropriate balance between managing risks and supporting wide usability of the digital pound. The Technology Working Paper accompanying the Consultation Paper sets out an illustrative and complementary conceptual model consisting of a core ledger, API layer, analytics and alias service. The core ledger operated by the Bank might be centralised, running as a traditional database, or it might use Distributed Ledger Technology (whether a blockchain or another form of the technology). The Bank would provide the digital pound and the central infrastructure, including the ‘core ledger’. Private sector firms – which could be banks or approved non-bank firms – would provide the interface between the Bank’s central infrastructure and users by offering wallets and payment services. These private companies would be able to integrate the digital pound, as the settlement asset, into the services they would offer to wallet holders. The wallets would be operated on a ‘pass-through’ basis. That is to say, they would not constitute a claim on the wallet provider in the way that a bank account is a claim on a bank. Nor would they represent a custody arrangement. Rather, the wallets would hold all of the customer related information and ‘pass-through’ the customers instructions to the Bank’s infrastructure. All of the digital pounds would be held on the Bank of England’s central ledger.
#Fintech#CBDC#UnitedKingdom#DFC
·bankofengland.co.uk·
BoE Governor Jon Cunliffe on a potential digital pound
Brazil central bank to launch its digital currency in 2024
Brazil central bank to launch its digital currency in 2024
Banco Central do Brasil (BCB) reportedly aims to launch its central bank digital currency (CBDC) in 2024. It will be designed to encourage banks to tokenize their assets, so it sounds like it's being designed for niche cases, rather than general purpose usage.The huge popularity of the BCB's PIX payment system might argue for such an approach. Its use now surpasses transactions with credit and debit cards in the country.
#Fintech#CBDC#LATAM#Brazil#PIX#DFC
·reuters.com·
Brazil central bank to launch its digital currency in 2024
Asia’s Interest in Wholesale CBDC—and Challenges to Cross-border Use
Asia’s Interest in Wholesale CBDC—and Challenges to Cross-border Use
In the years ahead, new financial market infrastructures based upon digitized central bank liabilities called wholesale CBDCs may emerge in Asia. Given the dollar’s preeminent role in intra-Asia trade and finance, how these new systems are linked to each other—and to dollar payments channels—will depend in part on the role that U.S. institutions play. The launch of new, technologically sophisticated national-level large-value payment systems across emerging market economies in Asia could ultimately help advance U.S. interests in the region—including by increasing the efficiency and reducing the costs of converting dollars into local currencies. The extent to which this will happen depends in part on whether Washington creates a policy environment that helps facilitate U.S. institutions and technologies in playing a more significant role in the build-out of more efficient, lower-cost cross-border channels for wholesale financial transactions in Asia.
#Fintech#CBDC#wCBDC#CrossBorder#DFC
·carnegieendowment.org·
Asia’s Interest in Wholesale CBDC—and Challenges to Cross-border Use
Proposing an interval design feature to central bank digital currencies
Proposing an interval design feature to central bank digital currencies
This paper adds to the extensive and rapidly growing literature by proposing a new type of Central Bank Digital Currency with an embedded time-limitation design feature based on a validity interval within which time-period the digital currency is an effective claim against the central bank. We call this interval Central Bank Digital Currency. Focusing on four use cases, we analyze the merits of the proposed interval design feature. We find that there are several potential applications in the context of liquidity management, lending, monetary policy of central banks and derivative transactions. It can be argued that interval CBDC have several potential advantages, including the reduction of counterparty credit risk, enabling remuneration, and enlarging the monetary and fiscal toolkit.
#Fintech#CBDC#DFC
·sciencedirect.com·
Proposing an interval design feature to central bank digital currencies
Indonesia launches wholesale CBDC consultation
Indonesia launches wholesale CBDC consultation
Bank Indonesia (BI) launched a consultation for the first phase of its three-stage Project Garuda, central bank digital currency (CBDC) initiative. The current consultation is the first of two wholesale CBDC iterations, focused on basic functionality, including integration with the real time gross settlement (RTGS) system, and covers banks and "wholesalers" who will be responsible for distributing a future retail digital rupiah. The digital rupiah will use a permissioned blockchain network. The second phase of the project will include the settlement of tokenized securities, as well as other wholesale use cases. The third phase will focus on retail CBDC. https://www.bi.go.id/en/rupiah/digital-rupiah/Documents/Consultative-Paper-Rupiah-Digital-BI.pdf
#Fintech#CBDC#Asia#Indonesia#wCBDC#DFC
·ledgerinsights.com·
Indonesia launches wholesale CBDC consultation
Five hurdles to mint a CBDC
Five hurdles to mint a CBDC
Huw Van Steenis: Many central bankers are proposing to create a “Goldilocks CBDC”: Not so much in circulation that it causes a run on the banking system as individuals switch savings to CBDCs, but not so little that it is irrelevant. But is it really worth spending many billions for something so limited and risky? And what is the use case? The history of money suggests creating a Goldilocks scheme is going to be difficult. But it also shows many monetary false starts of technology and ideas that were later adopted. Here are a five things to consider. First, work needs to be carried out to understand why all CBDC pilots so far have disappointed. Second, do not underestimate the potential financial stability and monetary policy impacts. Third, the focus should be on wholesale, not retail. Fourth, only use systems battle-tested at scale (hurdle for critical market infrastructure should be very high). Finally, there should be an honest conversation about the implications for privacy if central banks can track spending of CBDCs, issues of competition with private banks and the structure of finance before committing to the more radical versions of CBDCs.
#Fintech#CBDC#UnitedKingdom#DFC
·ft.com·
Five hurdles to mint a CBDC
Central Bank of Brazil to Test Security and Transaction Privacy Levels of the Digital Real
Central Bank of Brazil to Test Security and Transaction Privacy Levels of the Digital Real
Banco Central do Brasil will reportedly focus its first digital real tests on determining the levels of privacy and security that can be achieved with the proposed central bank digital currency (CBDC) infrastructure. The tests will be conducted later this year and will set up a simplified operation to transact with a still-to-be-determined tokenized asset. The tests would start after the current laboratory phase of the digital real, which is currently being conducted as a part of the open LIFT challenge project that is testing nine different proposals. https://einvestidor.estadao.com.br/comportamento/real-digital-primeiro-teste/
#Fintech#CBDC#LATAM#Brazil#DFC
·news.bitcoin.com·
Central Bank of Brazil to Test Security and Transaction Privacy Levels of the Digital Real
The National Bank of Georgia Advances Digital Lari Project
The National Bank of Georgia Advances Digital Lari Project
The National Bank of Georgia (NBG) is inviting fintech companies to express interest in participating in its digital lari central bank digital currency (CBDC). In April 2021, NBG launched the first stage of the project and invited interested financial technology providers to participate. Now the NBG will select a technological partner based on information provided by the companies, including the CBDC system, technical capabilities, security, and technological proposal for the pilot project. The deadline for submissions is February 15, 2023.
#Fintech#CBDC#Asia#Georgia#DFC
·nbg.gov.ge·
The National Bank of Georgia Advances Digital Lari Project
India's retail CBDC pilot does 770,000 transactions in 2 months
India's retail CBDC pilot does 770,000 transactions in 2 months
The Reserve Bank of India (RBI) said that the number of transactions using its retail CBDC had reached 770,000 since the pilot started at the end of November 2022. Volumes are small because most transactions are very low value. So far, there are 50,000 end users and 5,000 merchants involved. Eight banks are participating across five cities, with five more banks onboarding and another nine cities planned.
#Fintech#CBDC#Asia#India#DFC
·ledgerinsights.com·
India's retail CBDC pilot does 770,000 transactions in 2 months
Estimating Digital Infrastructure Investment Needs to Achieve Universal Broadband
Estimating Digital Infrastructure Investment Needs to Achieve Universal Broadband
The IMF published  a paper that develops a detailed model to evaluate the necessary investment requirements to achieve affordable universal broadband. The results indicate that approximately $418 billion needs to be mobilized to connect all unconnected citizens globally (targeting 40-50 GB/Month per user with 95 percent reliability). The bulk of additional investment is for emerging market economies (73%) and low-income developing countries (24%). It also finds that if the data consumption level is lowered to 10-20 GB/Month per user, the total cost decreases by up to about half, whereas raising data consumption to 80-100 GB/Month per user leads to a cost increase of roughly 90% relative to the baseline. Moreover, a 40% cost decrease occurs when varying the peak hour quality of service level from the baseline 95% reliability, to only 50% reliability. The paper concludes that broadband policy assessments should be explicit about the quantity of data and the reliability of service provided to users. Failure to do so will lead to inaccurate estimates and, ultimately, to poor broadband policy decisions.
#Fintech#Offline#Infrastructure#CBDC#DFC
·imf.org·
Estimating Digital Infrastructure Investment Needs to Achieve Universal Broadband
Central Bank Digital Currencies and Banking: Literature Review and New Questions
Central Bank Digital Currencies and Banking: Literature Review and New Questions
The Bank of Canada (BoC) published a paper that reviews the literature on central bank digital currencies (CBDCs), focusing on their potential impacts on private banks. It evaluate these impacts in three areas of traditional banking: payments, lending and liquidity and maturity transformation. For each area, it discusses the lessons learned and identifies gaps in the research yet to be fully explored. It also takes a broader look at CBDCs and highlights two promising directions for future research. One is to study CBDCs through the lens of industrial organization, exploring issues such as platform competition and business models. The second is the crypto space and its new developments such as stablecoins and decentralized finance.
#Fintech#CBDC#DFC
·bankofcanada.ca·
Central Bank Digital Currencies and Banking: Literature Review and New Questions
What emerging markets can teach about CBDC innovation
What emerging markets can teach about CBDC innovation
OMFIF and G+D: "Everyone should have access to convenient, secure digital payments and other financial services. CBDC has the potential to make this a reality. It is a digital version of physical cash – a ubiquitous and fully inclusive financial instrument that people can use independently from the issuer. For the 1.4bn unbanked adults globally, as well as unbanked children who form the next generation, CBDCs promote participation in the digital economy. This should also inspire developed nations to leverage offline functionality, where a bank account is not needed, and introduce a digital form of public currency that is simple, resilient and universally accepted. CBDCs could ease life for many people by offering a cheaper way for cross-border payments for migrant workers or enabling digital payments for small merchants like rural market vendors."
#Fintech#CBDC#OMFIF#G+D#DFC
·omfif.org·
What emerging markets can teach about CBDC innovation
Project Polaris: secure and resilient CBDC systems, offline and online
Project Polaris: secure and resilient CBDC systems, offline and online
The BID Innovation Hub Nordic Centre Project Polaris is exploring the provision of offline central bank digital currency (CBDC) payments functionality, which could address requirements for resilience, crisis robustness, financial inclusion, cash resemblance, accessibility and other desiderata. Central banks considering the potential implementation of CBDCs with offline functionality must take into account issues such as security, privacy, risks, the types of solution, their maturity and applicability, and operational factors, among others.
#Fintech#CBDC#Offline#BIS#DFC
·bis.org·
Project Polaris: secure and resilient CBDC systems, offline and online
UAE Plans to Issue a CBDC to Promote Digital Payments
UAE Plans to Issue a CBDC to Promote Digital Payments
The Central Bank of the United Arab Emirates (UAE) is planning to issue a central bank digital currency (CBDC) for domestic and cross-border payments in order to help drive innovation for domestic payments, and address the problems and inefficiency of cross-border payments and respectively. The issuance of a digital dirham is one of nine initiatives of the central bank's Financial Infrastructure Transformation Program. https://www.centralbank.ae/media/mdupathy/cbuae-launches-a-financial-infrastructure-transformation-programme-to-accelerate-the-digital-transformation-of-the-financial-services-sector-en.pdf
#Fintech#CBDC#UAE#DFC
·coindesk.com·
UAE Plans to Issue a CBDC to Promote Digital Payments
Central Banks Dabbling in Crypto Smacks of Mission Creep
Central Banks Dabbling in Crypto Smacks of Mission Creep
"Digital currencies put central banks on a slippery slope towards unjustifiable infringement of civil liberties and encroachment into the marketplace. For once, both big commercial banks and startups have aligned interest here to resist the regulatory overreach. The disruption to the banking system is potentially vast, if retail money suddenly flooded into a central bank depository, when the next unseen crisis surely comes. Regardless, be afraid of the consequences of choking off competition in the financial system, let alone stifling fintech entrants. "
#Fintech#CBDC#StrawMan#DFC
·washingtonpost.com·
Central Banks Dabbling in Crypto Smacks of Mission Creep
Reserve Bank of India's global hackathon targets CBDC, blockchain scalability
Reserve Bank of India's global hackathon targets CBDC, blockchain scalability
The Reserve Bank of India (RBI) launched the HaRBInger 2023 hackathon that includes retail CBDC use cases. These include the disbursal of social benefits, and offline usage where the wallets must be able to independently verify the authenticity of transactions without communicating with the server during the transactions, while mitigating the risk of double spending. Registration runs from February 22, with proposals due by March 24. The first prize is Rupees 4 million ($48,000), with winners to be announced mid-August. https://www.rbi.org.in/Scripts/BS_PressReleaseDisplay.aspx?prid=55218
#Fintech#CBDC#HackaThon#India#Asia#Offline#DFC
·ledgerinsights.com·
Reserve Bank of India's global hackathon targets CBDC, blockchain scalability
Ukraine Speeds Up Digital Hryvnia Project, Plans Pilot for This Year
Ukraine Speeds Up Digital Hryvnia Project, Plans Pilot for This Year
Ukraine’s Ministry of Digital Transformation and Deputy Prime Minister Mykhailo Fedorov has reportedly instructed the National Bank of Ukraine (NBU) to launch its e-hryvnia central bank digital currency (CBDC) pilot this year, instead of the originally planned 2024. The NBU published an e-hryvnia concept note in November 2022, and in January 2023 Tascombank carried out CBDC tests on the Stellar network.
#Fintech#CBDC#Ukraine#DFC
·news.bitcoin.com·
Ukraine Speeds Up Digital Hryvnia Project, Plans Pilot for This Year