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China’s Digital Currency and Blockchain Network: Disparate Projects or Two Sides of the Same Coin?
China’s Digital Currency and Blockchain Network: Disparate Projects or Two Sides of the Same Coin?
“China is simultaneously developing two ambitious projects that aim to digitize key parts of its economy and, if successful, may have broad implications for economies beyond its borders. Often conflated, the Digital Yuan (数字人民币, shùzì rénmínbì, also known as e-CNY) and the Blockchain-based Service Network (BSN, 区块链服务网络, qūkuàiliàn fúwù wǎngluò) are distinct technologies—and the success of either is not uniquely predicated on that of the other. But experts, as well as the organizations spearheading these projects, suggest that they have the potential to augment one another in the future.”
#Fintech#BSN#China#CBDC#Blockchain#DFC
·digichina.stanford.edu·
China’s Digital Currency and Blockchain Network: Disparate Projects or Two Sides of the Same Coin?
Global toolkit on regulatory sandbox for central bank digital currency
Global toolkit on regulatory sandbox for central bank digital currency
The United Nations has published a sandbox framework that maps out the steps and key elements for the designing and operationalizing central bank digital currency (CBDC). First a proof of concept (PoC) is used as part of the selection process for the CBDC issuing system, and then the sandbox is used to test the basic capabilities of the platform to issue CBDC securely. Then banks and other payment service providers (PSPs) are brought in to test settlement functions. When key criteria have been met, then the CBDC can be released for pilots with real CBDC for use with selected groups of users, merchants, and other stakeholders. The framework was developed in collaboration with the Maldives Monetary Authority, and the work goes back at least to September 2022.
#Fintech#CBDC#UnitedNations#Maldives#DFC
·unescap.org·
Global toolkit on regulatory sandbox for central bank digital currency
National Bank of Kazakhstan launches digital tenge pilot
National Bank of Kazakhstan launches digital tenge pilot
The National Bank of Kazakhstan (NBK) kicked off a central bank digital currency (CBDC) pilot involving second tier banks and their clients. The architecture of the platform allows the use of digital tenge by opening a digital account in the mobile application of the banks, between which users can make payments and money transfers. Also, Almaty city administration will distribute automated social support payments using smart contract technology. Also, participating banks have issued digital cards in cooperation with international payment systems like MasterCard and Visa, so that . holders can make digital tenge payments and transfers with familiar form factors.
#Fintech#CBDC#Kazakhstan#DFC
·nationalbank.kz·
National Bank of Kazakhstan launches digital tenge pilot
IMF Central Bank Digital Currency (CBDC) Virtual Handbook
IMF Central Bank Digital Currency (CBDC) Virtual Handbook
The IMF launched its Central Bank Digital Currency (CBDC) Virtual Handbook, a reference guide for policymakers and experts at central banks and ministries of finance. It also serves as the basis for the IMF’s engagement with country authorities and other stakeholders. The CBDC Handbook aims to collect and share knowledge, lessons, empirical findings, and frameworks to address policymakers’ most frequently asked questions on CBDCs. As the IMF's body of knowledge and analysis grows, it will continue to add about five chapters every year aiming to provide about twenty chapters by 2026. Moreover, chapters will be periodically updated, reflecting evolving views.
#Fintech#CBDC#IMF#DFC
·imf.org·
IMF Central Bank Digital Currency (CBDC) Virtual Handbook
HRF Launches Central Bank Digital Currency Tracker
HRF Launches Central Bank Digital Currency Tracker
The Human Rights Foundation (HRF) launched a central bank digital currency (CBDC) tracker that focuses on civil liberties and human rights impacts. of people living under authoritarian regimes. According to tracker, central banks in 119 countries are currently researching, piloting, or deploying CBDCs, and the HRF estimates that 3.7 billion people (46% of the world population) are living under autocracies currently experimenting with CBDCs. The coverage is similar to that provided by the Atlantic Council's CBDC tracker, and similarly double counts currency zone countries to pump up the numbers, which the crowd-sourced CBDCTracker.org does not do.
#Fintech#CBDC#Cato#HumanRights#DFC
·hrf.org·
HRF Launches Central Bank Digital Currency Tracker
The Subtle Art of Slow: The CBDC Adoption Journey
The Subtle Art of Slow: The CBDC Adoption Journey
Jonas Gross and Conrad Kraft argue that, although the slow uptake of retail CBDC pilots and launches may be viewed as disappointing by some, it isn't uncommon among transformative payment technologies (e.g., credit cards, online banking and e-wallets). They provide a number of key factors that can guide the gradual transition to wider-spread CBDC adoption, such as education and awareness, maintaining a focus on technological advancements and security, developing regulations that support CBDC growth, and collaborating with all stakeholders, including merchants, banks and payment service providers. And most importantly, "CBDC must offer unique features that surpass the capabilities of existing payment instruments... A CBDC that merely replicates current digital money, differing only in its central bank backing (largely imperceptible to potential users), won't attract widespread use."
#Fintech#CBDC#DFC
·coindesk.com·
The Subtle Art of Slow: The CBDC Adoption Journey
CBDC and Privacy: A Randomized Survey Experiment
CBDC and Privacy: A Randomized Survey Experiment
A Bank for International Settlements (BIS) study found privacy-preserving variations of central bank digital currency (CBDC) design have significant effects on willingness to use CBDC to purchase privacy-sensitive products (e.g., psychiatric services and adult products). It was based on a survey of a nationally representative sample of over 3,500 Korean participants. The willingness to use CBDC substantially increases with the provision of information about the privacy benefits of using it. Finally, these effects vary with respondents' trust in public or private institutions with regard to privacy protection and their demographic characteristics.
#Fintech#CBDC#Privacy#Korea#DFC
·bis.org·
CBDC and Privacy: A Randomized Survey Experiment
Meeting the need for higher CBDC privacy
Meeting the need for higher CBDC privacy
The current draft of the digital euro legislation calls for increased privacy for close-proximity offline payments, which is seen as consistent with the European Union AML/CFT framework risk-based approach. The European Data Protection Board (EDPB) and European Data Protection Supervisor (EDPS) suggest increased privacy for low-value online payments too, but not as private as offline transactions, because online transactions would not be limited to proximity payments, resulting in a potentially attractive model for criminals. Hence, they recommend transaction size limits above which complete checks can occur that are lower for online than offline transactions. However, Atakan Kavuklu suggests equalizing the limits at the higher level for all low-value proximity payments (e.g., those using NFC and Bluetooth connections). He believes this could benefit the acceptance and success of a digital euro.
#Fintech#CBDC#Privacy#DFC
·linkedin.com·
Meeting the need for higher CBDC privacy
CBDC and Bank Disintermediation in a Portfolio Choice Model
CBDC and Bank Disintermediation in a Portfolio Choice Model
The IMF published a paper that develops a model to determine the conditions in which the introduction of an interest-bearing CBDC would lead to lower deposits and lending in the banking sector. It finds that richer households increase their holdings of deposits as banks increase deposit interest rates in reaction to the CBDC introduction, which is offset by poorer households switching from deposits to the CBDC. Total deposits are more likely to fall when the mass of poorer households is large and when it is relatively costly to access bank accounts, which tends to be the case in emerging market and developing economy countries. However, even then the impact on lending is quantitatively small if banks have access to other forms of funding, such as wholesale or central bank financing.
#Fintech#CBDC#FinancialStability#DFC
·imf.org·
CBDC and Bank Disintermediation in a Portfolio Choice Model
CBDCs: A Lesson in the Power to Disobey
CBDCs: A Lesson in the Power to Disobey
R3's Jack Fletcher does a nice dismantling of the dystopian case against central bank digital currency (CBDC). First he points out that there are technical solutions to privacy available through distributed ledger technology (DLT) infrastructure that far surpass anything that is available in existing digital solutions, so a CBDC could be as private as cash. Secondly, in a world of payment options, why would anyone use a surveillance CBDC when they could simply use Visa or Mastercard or cash instead? And access to cash is something that no government or central bank is keen to remove. Indeed, they must now step in as consumer preferences drive it to redundancy. But with cash use declining as a global trend, Jack does acknowledge that society must consider a future world whereby it no longer exists and our privacy and our freedom to disobey is removed with it.
#Fintech#CBDC#Dystopia#DFC
·tabbforum.com·
CBDCs: A Lesson in the Power to Disobey
Exploring the potential of central bank digital currency
Exploring the potential of central bank digital currency
"This study delves into the benefits and risks of central bank digital currency (CBDC) and examines social adaptation, and education using expert interviews and conference insights. Vital findings stress the need for targeted educational efforts to facilitate CBDC adoption. The research also emphasizes best practices, engaging external experts, and a phased introduction strategy for safe and efficient implementation. Highlighting key stages, it underscores addressing genuine market needs for successful CBDC introduction. Overall, prudent risk management, strategic education, and well-planned phased deployment are crucial for successful CBDC implementation."
#Fintech#CBDC#DFC
·sciencedirect.com·
Exploring the potential of central bank digital currency
Central Bank Digital Currency—Initial Considerations
Central Bank Digital Currency—Initial Considerations
The IMF published a summary of the first five chapters of its forthcoming central bank digital currency (CBDC) handbook. These cover a framework to guide countries’ CBDC exploration, as well as implications for monetary policy transmission, capital flow management measures, and financial inclusion.
#Fintech#CBDC#IMF#DFC
·imf.org·
Central Bank Digital Currency—Initial Considerations
CBDCs will further fragment the global economy—and could threaten the dollar
CBDCs will further fragment the global economy—and could threaten the dollar
The Atlantic Council published an article that argues that if the U.S. Federal Reserve doesn't initiate a digital dollar strategy domestically there is a significant risk that the United States will be missing in action regarding cross-border payments interoperability. "Driving digital dollar policy through a tokenized banking system and bank-issued stablecoins will do little to address the frictions and costs discussed [in the article]. Markets and central bank reserve policies could easily shift to least-cost alternatives, leaving the Fed with oversight of a smaller universe of economic activity. Actively and publicly exploring CBDC architecture and policy options will at least ensure that U.S. priorities are part of the global conversation - if you are not at the table, you are on the menu!”
#Fintech#CBDC#UnitedStates#DFC
·atlanticcouncil.org·
CBDCs will further fragment the global economy—and could threaten the dollar
Trust in government OECD data
Trust in government OECD data
I've looked for cross-country comparisons of residents' trust in government, and so far this OECD metric is the best I've found, and the range is quite significant from Switzerland at the very trusting end (84% responding "yes" to the question of confidence in the government) to 31% from Americans, which could explain their tendency to be anti-CBDC.
#Fintech#CBDC#Privacy#Trust#OECD#Dystopia#DFC
·data.oecd.org·
Trust in government OECD data
Digital renminbi: zero merchant fees negatively impacting CBDC adoption?
Digital renminbi: zero merchant fees negatively impacting CBDC adoption?
An article in China's Sina news service claims that eCNY uptake may be lagging because of a lack of merchant point-of-sale (POS) terminals that can process eCNY transactions. It's not because of transaction fees, because they are zero on eCNY transactions, and not for a lack of equipment, because existing POS terminals can be adapted to process eCNY transactions. The problem is supposedly that the POS equipment manufacturers get a cut of the transaction fees, so there's no incentive for them to adapt existing POS equipment. However, the People’s Bank of China (PBOC) reportedly said that it actively offers free upgrades to POS equipment or free equipment. https://finance.sina.cn/stock/yjdt/2023-11-20/detail-imzvffna9789519.d.html
#Fintech#CBDC#China#DFC
·ledgerinsights.com·
Digital renminbi: zero merchant fees negatively impacting CBDC adoption?
China Debuts Solar Power Digital Yuan Smart Contracts
China Debuts Solar Power Digital Yuan Smart Contracts
State Grid Suzhou Power Supply Company reportedly completed the first digital yuan smart contract transaction in the solar power industry. The deal was struck the CBDC with the materials and textiles firm Suzhou Shicheng Material Technology that had struck a smart contract loan-type financing deal with a local bank branch. After Suzhou Shicheng Material Technology used electricity over an agreed period, State Grid Suzhou Power Supply issued a bill, causing the contract to close, and Suzhou Shicheng Material Technology's digital yuan wallet was automatically debited after the issuance of the bill.
#Fintech#CBDC#China#SmartContracts#DFC
·cryptonews.com·
China Debuts Solar Power Digital Yuan Smart Contracts
Kazakhstan central bank pilots digital tenge smart contracts
Kazakhstan central bank pilots digital tenge smart contracts
Binur Zhalenov, CEO of the National Bank of Kazakhstan National Payments Corporation, has described a pilot that uses digital tenge smart contracts to optimize government subsidies, in this case involving school canteen subsidies. Each school student in Almaty has an "ONAY!" transportation card. When a student uses this card in the school canteen, a smart contract is triggered that transfers digital tenge from the school's account directly to the canteen operator's account, but only when the student actually receives the service. This significantly cuts down on unnecessary reporting, canteens receive funds instantly after providing services, and ensures clear visibility of government fund usage.
#Fintech#CBDC#Kazakhstan#SmartContracts#DFC
·linkedin.com·
Kazakhstan central bank pilots digital tenge smart contracts
Currency Network | CBDC Ecosystem Solution
Currency Network | CBDC Ecosystem Solution
"We have built the most advanced CBDC ecosystem solution based on the concept of Chaum and Moser's eCash 2.0 that holds the promise of cash-like privacy. With our solution, Central Banks will be able to launch a sovereign digital currency that compliments hard-cash and supplements Commercial Bank money, helping them to maintain monetary and fiscal stability with greater control over the economy."
#Fintech#CBDC#Vendor#DFC
·currencynet.io·
Currency Network | CBDC Ecosystem Solution
Canton of Zurich issues digital bond settled with wholesale CBDC
Canton of Zurich issues digital bond settled with wholesale CBDC
The Canton of Zurich issued a CHF 100 million digital bond via the SIX Digital Exchange (SDX) that will settle on December 1, 2023 using a wholesale central bank digital currency (CBDC) issued by the Swiss National Bank (SNB), marking the launch of the SNB's Project Helvetia pilot. The pilot will run to June 2024, and according to the SNB "does not constitute a commitment on its part to introduce wholesale CBDC on a permanent basis. Rather, the SNB aims to test the various models for settling tokenized assets". https://www.snb.ch/en/publications/communication/press-releases/2023/pre_20231102
#Fintech#CBDC#wCBDC#Switzerland#Tokenization#Settlement#Blockchain#DFC
·ledgerinsights.com·
Canton of Zurich issues digital bond settled with wholesale CBDC
A digital euro: gauging the financial stability implications
A digital euro: gauging the financial stability implications
"The envisaged design of a digital euro would address financial stability concerns by applying adequate holding limits. The cap on individual holdings would set an upper bound for the amount of digital euro in circulation and prevent the materialisation of high deposit outflows. Recent studies show that setting a digital euro holding limit of €3,000 per person would be effective in containing the impact on banks’ liquidity risks and funding structures. With such a limit in place, outflows of household overnight deposits from the euro area banking sector could only occur (up to a maximum of 15%) in the following highly unlikely circumstances: (i) if all euro area citizens adopted the digital euro simultaneously, and (ii) they all shifted bank deposits to the digital euro at the upper bound of the holding limit instantaneously and then held these on a continuous basis. However, the actual level of the individual holding limit would be calibrated closer to the possible introduction of a digital euro to reflect the economic conditions prevailing at that time."
#Fintech#CBDC#Eurozone#ECB#DFC
·ecb.europa.eu·
A digital euro: gauging the financial stability implications
Freedom House Report
Freedom House Report
"Freedom House rates people’s access to political rights and civil liberties in 210 countries and territories through its annual Freedom in the World report. Individual freedoms—ranging from the right to vote to freedom of expression and equality before the law—can be affected by state or nonstate actors."
#Fintech#CBDC#Privacy#Democracy#Freedom#DFC
·freedomhouse.org·
Freedom House Report
India liaises with US, Hong Kong, Swift for cross border CBDC
India liaises with US, Hong Kong, Swift for cross border CBDC
The Reserve Bank of India (RBI) is reportedly in discussions with the U.S. Federal Reserve, the Hong Kong Monetary Authority (HKMA) and Swift regarding the potential to use a central bank digital currency (CBDC) for cross border payments. RBI Governor Shaktikanta Das has said the central bank is "even more convinced that CBDC can be the most effective and efficient mode for cross border payments."
#Fintech#CBDC#CrossBorder#India#HongKong#SWIFT#UnitedStates#DFC
·ledgerinsights.com·
India liaises with US, Hong Kong, Swift for cross border CBDC
Thai government to distribute "time-stamped" digital money
Thai government to distribute "time-stamped" digital money
The Thai Prime Minister reportedly announced a 10,000 baht handout of "time stamped" blockchain-based digital money to the 50 million Thais earning less than 70,000 baht per month. It is time stamped in that recipients must begin spending the money within six months on food, nonalcoholic beverages and consumer products bought in stores, and only within their electoral districts.
#Fintech#CBDC#GovCoins#SmartContracts#Programmability#Gesell#Thailand#DFC
·asia.nikkei.com·
Thai government to distribute "time-stamped" digital money
Four foreign banks join China's CBDC pilot trials
Four foreign banks join China's CBDC pilot trials
Four foreign banks have reportedly integrated China's digital yuan (e-CNY) into their payment platforms (Standard Chartered, Hong Kong-based HSBC and Hang Seng Bank, and Taiwan's Fubon Bank). All four will allow their clients to transfer and withdraw e-CNY. For example, Hang Seng Bank and HSBC allow personal banking customers to bind debit cards within the official e-CNY app and redeem digital renminbi. They can also top up the digital renminbi wallet through the Hang Seng China Mobile Banking App.
#Fintech#CBDC#China#DFC
·cointelegraph.com·
Four foreign banks join China's CBDC pilot trials
Whose liability is it anyways? CBDC Edition
Whose liability is it anyways? CBDC Edition
Introducing a CBDC risks destabilizing the banking system and worsening panics. The Federal Reserve tried to lessen that risk by “including” banks in the process by proposing an intermediated CBDC. Yet, with an intermediated CBDC, banks would have to cover regulatory and overhead costs to maintain CBDC accounts even though they would have no loan revenue from those funds since the CBDC is still a liability of the central bank. Moreover, shrinking the supply of deposits would likely lead to costlier credit. That means loans will be more expensive for everyone.
#Fintech#CBDC#FinancialStability#Cato#DFC
·cato.org·
Whose liability is it anyways? CBDC Edition
Bank of Canada publishes report on digital dollar consultations
Bank of Canada publishes report on digital dollar consultations
The Bank of Canada published a report on the feedback it has received to date about a potential digital Canadian dollar. It confirmed that Canadians place a high value on central bank-backed cash and want to maintain access to bank notes. Also, Canadians value their right to privacy and many expressed concerns that a digital dollar could compromise that right. In addition, they don't want a digital dollar that will add to financial stability risks. The Bank reconfirmed that likelihood of a digital loonie being needed is still uncertain, and the ultimate decision whether to go ahead with one depends on the Parliament.
#Fintech#CBDC#Canada#DFC
·bankofcanada.ca·
Bank of Canada publishes report on digital dollar consultations
Central Bank of Solomon Islands to start CBDC proof of concept
Central Bank of Solomon Islands to start CBDC proof of concept
The Central Bank of Solomon Islands (CBSI) started a retail CBDC ("Bokolo Cash") proof-of-concept (PoC) on November 1, 2023. The CBSI has been testing the Soramitsu-provided system for domestic and foreign payments, including simulated international remittances. Within the PoC, users will be able to seamlessly scan a QR code with their Bokolo Cash wallet to send instant cash payments to selected merchants or make peer-to-peer transfers.
#Fintech#CBDC#SolomonIslands#Soramitsu#DFC
·finextra.com·
Central Bank of Solomon Islands to start CBDC proof of concept
Rwanda's CBDC development process still underway
Rwanda's CBDC development process still underway
The National Bank of Rwanda (NBR) reportedly has determined that a retail CBDC is needed in the country. However, the central bank is still in the early stages of its CBDC research, and it will take about two years before it would ready for launch.
#Fintech#CBDC#Rwanda#DFC
·allafrica.com·
Rwanda's CBDC development process still underway
Retail CBDC implications for banking and financial stability
Retail CBDC implications for banking and financial stability
The U.S. Federal Reserve (Fed) published a review of the literature that examines the risks to the banking sector associated with retail CBDC introduction. These include the possibility of bank disintermediation and associated contraction in bank credit, as well as potential adverse effects on financial stability. The recycling of the new CBDC liability through asset purchases or lending by the central bank plays an important role in determining the economic consequences of the introduction of a CBDC. Ultimately, the effects of a CBDC depend critically on its design features, of which remuneration is the one discussed most often in the literature.
#Fintech#CBDC#DFC
·federalreserve.gov·
Retail CBDC implications for banking and financial stability
CBDC information security and operational risks to central banks
CBDC information security and operational risks to central banks
The Bank for International Settlements (BIS) published a report that analyses the operating, technology, third-party and business continuity risks for the central banks that issue central bank digital currency (CBDC). It proposes an integrated risk-management framework that can be applied to the entire life cycle of a CBDC. For CBDCs to be a reliable means of payments, central banks need to address, among others, the risks of interruptions or disruptions and ensure integrity and confidentiality. Key risk are the potential gaps in central banks' internal capabilities and skills. While many of the CBDC-related activities could in principle be outsourced, doing so requires adequate capacity to select and supervise vendors.
#Fintech#CBDC#CyberSecurity#BIS#DFC
·bis.org·
CBDC information security and operational risks to central banks