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As the Bank of Canada prepares for a digital loonie, democratic concerns loom large
As the Bank of Canada prepares for a digital loonie, democratic concerns loom large
"Democratic concerns must be a part of the discussion about a national digital currency. Similar worries about privacy, surveillance and national digital currency were also raised in the European Union, the United States and elsewhere. Launching the digital Canadian dollar is a political decision, not a technological one. Ensuring freedom is the same. For the digital Canadian dollar and the Bank of Canada to be trusted, these worries must be addressed and mitigated. If the decision to issue this digital money is made, it needs to be done in a responsible manner"
#Fintech#CBDC#Canada#Privacy#Surveillance#DFC
·theconversation.com·
As the Bank of Canada prepares for a digital loonie, democratic concerns loom large
Privacy-Enhancing Technologies for Financial Data Sharing
Privacy-Enhancing Technologies for Financial Data Sharing
While some regulations (e.g., GDPR, FCRA, and CCPA) help to prevent institutions from freely sharing clients' sensitive information, some regulations (e.g., BSA 1970) require FIs to share certain financial data with government agencies to combat financial crime. This creates an inherent tension between the privacy and the integrity of financial transactions. In the past decade, significant progress has been made in building efficient privacy-enhancing technologies that allow computer systems and networks to validate encrypted data automatically. In this paper, we investigate some of these technologies to identify the benefits and limitations of each, in particular, for use in data sharing among FIs. As a case study, we look into the emerging area of Central Bank Digital Currencies (CBDCs) and how privacy-enhancing technologies can be integrated into the CBDC architecture. Our study, however, is not limited to CBDCs and can be applied to other financial scenarios with tokenized bank deposits such as cross-border payments, real-time settlements, and card payments.
#Fintech#CBDC#Privacy#FinancialIntegrity#DFC
·arxiv.org·
Privacy-Enhancing Technologies for Financial Data Sharing
SNB to launch central bank digital currency pilot
SNB to launch central bank digital currency pilot
The Swiss National Bank (SNB) will reportedly to issue a wholesale central bank digital currency (CBDC) on Switzerland's SIX digital exchange as part of a pilot. "This is not just an experiment, it will be real money equivalent to bank reserves and the objective is to test real transactions with market participants." This sounds very much like the next phase of Project Helvetia, which explored how the SNB could offer settlement in central bank money in a future with more tokenized financial assets based on distributed ledger technology (DLT).
#Fintech#CBDC#wCBDC#Settlement#Switzerland#BIS#DFC
·reuters.com·
SNB to launch central bank digital currency pilot
The Digital Dollar Project Publishes a Risk Framework for Consideration of a U.S. CBDC
The Digital Dollar Project Publishes a Risk Framework for Consideration of a U.S. CBDC
"The Digital Dollar Project (DDP) today released the first in a series of risk- and privacy- focused working papers, "Secure Adoption of a Digital Dollar – Operational and Compliance Risks for the U.S. Banking Sector." This working paper offers a draft unified risk framework outlining possible impacts on the private sector, specific to federal and state-chartered banks, in consideration of a potential U.S. central bank digital currency (CBDC). The working paper is meant to be a catalyst for broad public discussion and can be accessed here."
#Fintech#CBDC#UnitedStates#DFC
·prnewswire.com·
The Digital Dollar Project Publishes a Risk Framework for Consideration of a U.S. CBDC
European Commission publishes digital euro package
European Commission publishes digital euro package
The European Commission published proposals, one aimed at ensuring continuing access to euro banknotes and coins across the euro area, and the other establishing the legal framework for a possible digital euro. If the latter is adopted by the European Parliament and Council, it will ultimately be for the European Central Bank (ECB) to decide if and when to issue the digital euro. According to the digital euro proposed legislation, the digital euro would not be required to have a bank account, and it could be used to transfer funds while offline as long as there is physical proximity between the devices of the payer and the payee. Also, it would be possible to hold digital euro locally stored on electronic devices up to a certain threshold. Basic services, including when making purchases in digital euro, whether nationally or across border, will not incur fees. However, commercial banks could charge customers for their accounts to which the digital euro may be linked, and for voluntary, non-basic services such as conditional payments.
#Fintech#CBDC#Eurozone#DFC
·finance.ec.europa.eu·
European Commission publishes digital euro package
BIS publishes Project Mariana interim report
BIS publishes Project Mariana interim report
The Bank for International Settlements (BIS) published an interim report on Project Mariana, which investigates combining FX trading and settlement in cross-border transactions into a single instantaneous step using automated market makers (AMMs) and wholesale central bank digital currencies (CBDCs) to eliminate credit and settlement risk. The project also examined cross-border interoperability using wholesale CBDC based on a uniform technical standard, as a way to future-proof CBDC developments. In addition, Mariana investigated asset mobility between different blockchain-based networks using bridges.
#Fintech#CBDC#wCBDC#FX#BIS#DFC
·bis.org·
BIS publishes Project Mariana interim report
CBDC Global Interoperability Principles
CBDC Global Interoperability Principles
The World Economic Forum (WEF) published a report that analyses CBDCs from a regional perspective, identifying unique aspects and areas of alignment among jurisdictions. It highlights key CBDC principles that will facilitate interoperability with various types of payment systems, technical standards, regulatory standards and legacy payment architecture and infrastructure, that will allow participants in different systems to conduct, clear and settle payments or financial transactions across systems without participating in multiple systems. The report calls for public-private cooperation, regulatory consistency, innovation and participation in standards development.
#Fintech#CBDC#Interoperability#WEF#DFC
·weforum.org·
CBDC Global Interoperability Principles
ECB may launch DLT-based WCBDC trials or experiments in 2024
ECB may launch DLT-based WCBDC trials or experiments in 2024
The European Central Bank (ECB) "new technologies for wholesale settlements contact group" held its first meeting on June 21, 2023, marking the start of the Eurosystem’s exploratory work on how wholesale financial transactions recorded on distributed ledger technology (DLT) platforms could be settled in central bank money. Exploratory work is expected to begin in 2024 with trials or experiments to launch later in 2024. Initially, three types of interoperability solutions will be explored; the Deutsche Bundesbank's trigger, Banca d'Italia's TIPS Hash-Link, and the Banque de France's wholesale central bank digital currency (WCBDC) based full-DLT interoperability solutions.
#Fintech#CBDC#wCBDC#Eurozone#Settlement#DFC
·ecb.europa.eu·
ECB may launch DLT-based WCBDC trials or experiments in 2024
Demystifying wholesale central bank digital currency
Demystifying wholesale central bank digital currency
"There is a widespread misconception that wholesale CBDC does not yet exist. In fact, central bank money has been available in digital form for wholesale transactions between banks for decades. This misconception is fuelled by the commonly held assumption that wholesale CBDC needs to be operated using DLT. But wholesale CBDC is not synonymous with DLT, as it can be based on any digital technology. In the euro area, the Eurosystem offers banks the possibility of settling wholesale digital transactions through its TARGET Services using a centralised ledger."
#Fintech#CBDC#wCBDC#ECB#DFC
·ecb.europa.eu·
Demystifying wholesale central bank digital currency
Italian banks cooperate in CBDC project
Italian banks cooperate in CBDC project
And speaking of Banca d'Italia, according to ThePaypers, Associazione Bancaria Italiana (ABI) has brought together 18 commercial banks to collaborate with the central bank in a CBDC pilot. In this Project Leonidas the banks use a shared private ledger to streamline interbank payments using a pretend DLT-based wholesale CBDC. This sounds very similar to the ABI's Project Punta, a DLT-based platform now in production that  is used to settle small interbank transactions, with Project Leonidas being a scaled up version to handle large interbank transactions. However, it doesn't seem to actually be CBDC-based, even though it's been accepted into the Banca d'Italia's Milano Hub innovation facilitator. In other words, the "wholesale CBDC" used is not tokenized CeBM.
#Fintech#CBDC#Italy#wCBDC#DLT#DFC
·thepaypers.com·
Italian banks cooperate in CBDC project
UAE plans to issue a CBDC to promote digital payments
UAE plans to issue a CBDC to promote digital payments
On February 12, 2023, the Central Bank of the United Arab Emirates (CBUAE) published its Financial Infrastructure Transformation (FIT) Programme to accelerate the digital transformation in the financial services sector. It comprises implementation of nine key initiatives, including the issuance of central bank digital currency (CBDC) for cross-border and domestic uses.
#Fintech#CBDC#UAE#DFC
·centralbank.ae·
UAE plans to issue a CBDC to promote digital payments
A well-designed digital euro would avoid risks for financial stability and banks’ profitability
A well-designed digital euro would avoid risks for financial stability and banks’ profitability
The  European Commission (EC) published an assessment of digital euro issuance on financial stability and commercial bank balance sheets. It concludes that a digital euro would not pose any significant risks to financial stability as long as take-up does not exceed EUR 3,000, although small banks that normally rely mostly on deposits as a source of funding, could face a potential decrease in profitability. A digital euro produces only small changes in the response of the economy to macroeconomic shocks, especially with a cap on holdings.
#Fintech#CBDC#Eurozone#FinancialStability#DFC
·joint-research-centre.ec.europa.eu·
A well-designed digital euro would avoid risks for financial stability and banks’ profitability
Initial Eswatini Digital Lilangeni Design Paper
Initial Eswatini Digital Lilangeni Design Paper
[May 25, 2023] The Central Bank of Eswatini (CBE) has published a consultative paper that sets out the design characteristics of a potential retail digital lilangeni. The Bank has partnered with Giesecke+Devrient (G+D) to advance its research and exploration of CBDCs and is now entering the experimentation phase of its CBDC project. It will be based on a two-tiered operating model, where the CBE operates the core infrastructure and intermediaries are in charge of distributing CBDC to end users, once obtained from the CBE, and handle all customer-facing activities. It will be unremunerated, transactions will be free of charge to consumers, and it will enable true and full interoperability with the existing payment methods and wholesale and retail infrastructures. Offline functionality will ensure continued usage even in the absence of an internet connection, during power outages, or simply in certain rural areas. Some payments with - and wallets that store - digital lilangeni will be equipped with programmability features for value-added and innovative use case scenarios.
#Fintech#CBDC#Eswatini#DFC
·centralbank.org.sz·
Initial Eswatini Digital Lilangeni Design Paper
59% of Canadians would use a central bank digital currency, but many have concerns
59% of Canadians would use a central bank digital currency, but many have concerns
Canadian personal wealth management firm WealthRocket published the results of a survey of 1,500 Canadian adults on their attitudes towards retail central bank digital currency (CBDC). More than half said they would be willing, to varying degrees, to use a CBDC. Of that total, 43% are somewhat willing, 11% are very willing, and 5% are extremely willing. A quarter of respondents, on the other hand, say they're not at all willing to use a central bank digital currency in Canada. And 16% say they don’t understand enough to make a decision right now, suggesting a gap in public awareness.
#Fintech#CBDC#Canada#DFC
·wealthrocket.com·
59% of Canadians would use a central bank digital currency, but many have concerns
India negotiates cross-border CBDC payments with global central banks
India negotiates cross-border CBDC payments with global central banks
The Reserve Bank of India (RBI) is reportedly in dialogue with its counterparts from at least 18 other countries on the possibility of cross-border payments in the digital rupee. Banks from these countries have already opened rupee vostro accounts since July 2022. India is eager to promote CBDC as a payment method for importing Indian goods for countries that are struggling with the U.S. dollar supply. https://economictimes.indiatimes.com/news/economy/finance/rbi-in-talks-with-leading-global-peers-to-promote-digital-rupee-payments/articleshow/101288604.cms
#Fintech#CBDC#India#CrossBorder#Payments#DFC
·cointelegraph.com·
India negotiates cross-border CBDC payments with global central banks
Digital Euro and Privacy: Analysis of the EC Regulatory Proposal
Digital Euro and Privacy: Analysis of the EC Regulatory Proposal
On June 28, the European Commission published a regulatory proposal for the digital euro, on which the it suggested a way to design a digital euro and how to integrate it into EU laws. Jonas Gross reviewed the proposal with a focus on its privacy aspects, including how it can be ensured that major design elements, such as related to privacy, will not be changed over time. It will need clear rules on governance and democratic political procedures for changes in the design. Further, it should be seriously considered to make (part of) the code open source, e.g., around the exact data that is recorded.
#Fintech#CBDC#Eurozone#Privacy#DFC
·jonasgross.info·
Digital Euro and Privacy: Analysis of the EC Regulatory Proposal
Central bank digital currencies and democratic values
Central bank digital currencies and democratic values
The OECD published a paper, with contributions from Satoshi Capital Advisors, that explores how the design and implementation of central bank digital currencies (CBDCs) can help countries mitigate threats to individual liberties and human rights, as well as promote the equitable treatment of citizens, the protection of privacy, and citizens’ trust in central banks. The sound governance architecture of CBDC systems can further support these objectives.
#Fintech#CBDC#OECD#Privacy#DFC
·oecd.org·
Central bank digital currencies and democratic values
Project Polaris: closing the CBDC cyber threat modelling gaps
Project Polaris: closing the CBDC cyber threat modelling gaps
The BIS Innovation Hub (BISIH) published a report on Part II of its Project Polaris which focused on the risk and resilience aspects of CBDCs built on distributed ledger technology (DLT) based platforms. It analyses several notable DLT attacks in the decentralized finance (DeFi) domain, revealing that there are gaps in existing threat modelling techniques that may not adequately address the threats and associated security controls to properly protect CBDCs that make use of novel technology (e.g., DLT, smart contracts) from the tactics, techniques and procedures (TTPs) used by threat actors in the DeFi space. Additionally, the "mean time to attack" (based on the DLT attacks studied in this analysis) is around 10 months from the launch of a DeFi implementation and the successful compromise. Hence, CBDC issuers must be positioned to monitor and repel both well understood and novel TTPs.
#Fintech#CBDC#DLT#DeFi#CyberSecurity#DFC
·bis.org·
Project Polaris: closing the CBDC cyber threat modelling gaps
RBZ begins digital dollar dry-run
RBZ begins digital dollar dry-run
The Reserve Bank of Zimbabwe (RBZ) has reportedly started testing the feasibility of a digital currency backed by gold that will be accepted as a legal tender for peer to peer and peer to business transactions. The hope is that it will stanch store-of-value motivated conversions out of Zimbabwe dollars into U.S. dollars, that is depressing the former's value in foreign exchange markets.
#Fintech#CBDC#Gold#Zimbabwe#Africa#DFC
·businesstimes.co.zw·
RBZ begins digital dollar dry-run
Russian digital ruble could be launched as soon as 2025
Russian digital ruble could be launched as soon as 2025
The Central Bank of Russia reportedly expects the digital ruble to launch as soon as 2025. A pilot test is expected to take place this year (2023) after the State Duma, the lower house of the Russian parliament, passes the digital ruble law. If passed by July  the CBDC pilot test could start in August.
#Fintech#CBDC#Russia#DFC
·forbes.ru·
Russian digital ruble could be launched as soon as 2025
Update on The Bahamas Digital SandDollar
Update on The Bahamas Digital SandDollar
The Central Bank of the Bahamas (CBOB) published its monthly SandDollar update. At end-June there were $1,093,373 of SandDollars in circulation (about 0.20% of total currency in circulation). The report also runs through the CBOB's extensive SandDollar outreach activities. Also, technical upgrades that allow top-ups to any SandDollar-enabled mobile application from domestic bank accounts were completed.
#Fintech#CBDC#Bahamas#DFC
·centralbankbahamas.com·
Update on The Bahamas Digital SandDollar
US CBDC Legislation Recap
US CBDC Legislation Recap
"Several members of Congress have introduced legislation in response to the concerns that have been voiced over central bank digital currency, or CBDC. To help keep everyone up to speed, the table and paragraphs below offer an overview of the bills that have been introduced during the 118th Congress."
#Fintech#CBDC#Cato#UnitedStates#DFC
·cato.org·
US CBDC Legislation Recap
Identity-based cryptography
Identity-based cryptography
"Identity-based cryptography is a type of public-key cryptography in which a publicly known string representing an individual or organization is used as a public key. The public string could include an email address, domain name, or a physical IP address."
#Fintech#CBDC#Offline#Cryptography#DFC
·en.wikipedia.org·
Identity-based cryptography
Making headway - Results of the 2022 BIS CBDC survey
Making headway - Results of the 2022 BIS CBDC survey
The BIS published a survey, carried out in late 2022, of 86 central banks on their views and plans regarding central bank digital currencies (CBDCs). 93% are engaged in some form of CBDC work and that the work on retail CBDC is more advanced than on wholesale CBDC. The results also indicate that emerging market and developing economies (EMDEs) are more advanced in their CBDC work than advanced economies (AEs). In addition, 80% of central banks surveyed see potential value in having both a retail CBDC and a fast payment system (FPS), because CBDC allows access to a wider set of financial institutions and the unbanked population. Also, programmability and offline payments were mentioned as features that an FPS may not provide.
#Fintech#CBDC#BIS#FastPayments#DFC
·bis.org·
Making headway - Results of the 2022 BIS CBDC survey
Pan EU DLT network for tokenized currency, assets proposed by Banque de France
Pan EU DLT network for tokenized currency, assets proposed by Banque de France
The Governor of the Banque de France, proposed a pan European DLT infrastructure. It would support CBDC and tokenised bank deposits to settle transactions for DLT-based tokenized assets on the same network. It acknowledged the concept is echoed in the BIS’s recent paper on a ‘game changing’ Unified Ledger and the IMF’s XC concept for cross border payments. https://www.banque-france.fr/en/intervention/regulation-and-innovation-yin-and-yang-financial-sector
#Fintech#CryptoAssets#Tokenization#DLT#France#CBDC#RegulatedLiabilityNetwork#DFC
·ledgerinsights.com·
Pan EU DLT network for tokenized currency, assets proposed by Banque de France
Lessons learnt from BIS Innovation Hub CBDC projects
Lessons learnt from BIS Innovation Hub CBDC projects
The BIS published a report on the key insights and lessons learnt from its Innovation Hub's 12 central bank digital currency (CBDC) projects. For domestic use cases, two projects investigate wholesale CBDC (wCBDC) and five look at retail CBDC (rCBDC). Across borders, four experiments look at wCBDC and one looks at rCBDC. For each category, the report discusses key insights and lessons learnt from the perspectives of desirability, feasibility and viability. The report also contains tables and an annex that give details of the projects I haven't seen before.
#Fintech#CBDC#wCBDC#rCBDC#BIS#DFC
·bis.org·
Lessons learnt from BIS Innovation Hub CBDC projects
Payments Platform Nuggets Working With Bank of England on Privacy Layer for Digital Pound
Payments Platform Nuggets Working With Bank of England on Privacy Layer for Digital Pound
Payments platform Nuggets is working with the Bank of England to develop a privacy and identity layer for a potential digital pound. The platform, which enables decentralized identity, plans to design a private and secure system to prevent the tracking and correlation of transactions, as well as prevent fraud and money laundering. Nuggets said that it plans to implement zero-knowledge proofs on its privacy layer, which will enable people to verify their identity without sharing their data. https://nuggets.life
#Fintech#CBDC#Identity#UnitedKingdom#DFC
·coindesk.com·
Payments Platform Nuggets Working With Bank of England on Privacy Layer for Digital Pound
Russian parliament passes digital ruble bill
Russian parliament passes digital ruble bill
The lower chamber of the Federal Assembly of the Russian Federation, the State Duma, passed the digital ruble bill on July 11, 2023. It sets various legal definitions, as well as the general guidelines for the CBDC ecosystem, including free payments and transfers or individuals and a 0.3% fee for corporate clients. The legislation now moves to the assembly’s upper chamber, the Federation Council, and, if passed, to the president’s desk, after which the Bank of Russia plans to launch pilot testing.
#Fintech#CBDC#Russia#DFC
·cointelegraph.com·
Russian parliament passes digital ruble bill
Bank of China tests SIM card NFC payments for e-CNY
Bank of China tests SIM card NFC payments for e-CNY
The Bank of China has partnered with China Telecom and China Unicom to test SIM card near-field communication (NFC) payments for the e-CNY on specific Android smartphones in certain regions. The SIM card hardware wallet shares its balance with the main wallet, eliminating the need for separate top-ups. In order to make payments, users are only required to move their mobile phones close to point of sales terminals, even with a switched-off smartphone.
#Fintech#CBDC#China#Offline#NFC#DFC
·thepaypers.com·
Bank of China tests SIM card NFC payments for e-CNY
HKMA advancing with CBDC experiments but not ready to commit
HKMA advancing with CBDC experiments but not ready to commit
The Hong Kong Monetary Authority (HKMA) has yet to determine if it should issue CBDC, but it continues to experiment. 16 firms are participating in the pilot programs, working on 14 projects on topics including programmable payments, tokenized deposits, settlement of tokenized assets and offline payments. Cross-border payments applications are especially thorny due to the legal challenges of connecting payments across multiple jurisdictions, which requires a lot of political will across multiple jurisdictions.
#Fintech#CBDC#HongKong#DFC
·omfif.org·
HKMA advancing with CBDC experiments but not ready to commit