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Sri Lanka plans proof of concept for CBDC
Sri Lanka plans proof of concept for CBDC
The Bank of Sri Lanka reportedly may introduce a central bank digital currency (CBDC) by the end of this year (2024). On January 10, 2023, two central bank executives reportedly told the Parliamentary Committee on Ways and Means is already planning proof of concept work to see if a CBDC meets the central bank’s requirements. https://www.dailymirror.lk/breaking-news/Central-Bank-to-introduce-digital-currency-by-the-end-of-this-year/108-274975
#Fintech#CBDC#SriLanka#DFC
·ledgerinsights.com·
Sri Lanka plans proof of concept for CBDC
Bank of Russia plans to launch direct support for CBDC
Bank of Russia plans to launch direct support for CBDC
The Bank of Russia reportedly plans to launch a direct support line for digital ruble end users. They published a request for proposals stating that it wants “to assess the cost of performing work to create a multi-channel digital complex for recording telephone conversations, organizing the reception of calls, recording them, using and storing records as part of the launch of the first line of customer support for the Bank Russia. https://www.kommersant.ru/doc/6466071
#Fintech#CBDC#Russia#DFC
·ledgerinsights.com·
Bank of Russia plans to launch direct support for CBDC
Bank of Japan, Finance ministry hold first digital yen CBDC meeting
Bank of Japan, Finance ministry hold first digital yen CBDC meeting
The Bank of Japan and the Ministry of Finance reportedly held their first(!) meeting to discuss a potential digital yen on January 26, 2024. The meeting also involved representatives from the Cabinet Office and National Police Agency. Observers from the Fair Trade Commission and the Personal Information Protection Commission. The Ministry outlined the need to ensure a CBDC can coexist with existing private sector digital payment firms, enhance payment convenience and protect users' personal information. https://www3.nhk.or.jp/shutoken-news/20240126/1000101448.html
#Fintech#CBDC#Japan#DFC
·ledgerinsights.com·
Bank of Japan, Finance ministry hold first digital yen CBDC meeting
UAE makes first digital dirham transfer via mBridge CBDC platform
UAE makes first digital dirham transfer via mBridge CBDC platform
The Central Bank of the United Arab Emirates (CBUAE) conducted its first cross-border digital dirham transfer using the mBridge central bank digital currency (CBDC) platform on January 29, 2024. A 50 million dirhams transfer was sent to China. https://gulfnews.com/business/video-first-cross-border-payment-made-using-uaes-digital-dirham-1.100731629
#Fintech#CBDC#WCBDC#CrossBorder#BIS#UAE#DFC
·cointelegraph.com·
UAE makes first digital dirham transfer via mBridge CBDC platform
Belarus Advances CBDC on Hyperledger Fabric
Belarus Advances CBDC on Hyperledger Fabric
The Belarus government-owned Center of Bank Technologies has reportedly initiated the construction of a central bank digital currency (CBDC) platform. The Center also posted a job vacancy for backend developers with expertise in Hyperledger Fabric and smart contract development experience. Plus, last week the National Bank of Belarus Deputy Chairman of the Board reportedly called the digital ruble project a "significant areas of development in the payment sector." https://neg.by/novosti/otkrytj/v-belarusi-nachalas-razrabotka-platformy-dlya-tsifrovogo-rublya/
#Fintech#CBDC#Belarus#Hyperledger#DFC
·cryptotimes.io·
Belarus Advances CBDC on Hyperledger Fabric
The impact of a digital euro on financial stability and consumer welfare
The impact of a digital euro on financial stability and consumer welfare
The European Banking Federation (EBF) published a paper that examines the impact of different digital euro holding limits on bank deposit outflows. It confirmed that the higher the limit, the greater the outflows, with smaller banks being the most vulnerable, and the effect greater when the banking system is under stress.
#Fintech#CBDC#Eurozone#FinancialStability#DFC
·ebf.eu·
The impact of a digital euro on financial stability and consumer welfare
Offline payments for smartphones
Offline payments for smartphones
Crunchfish published a paper by Lipis Advisors on the challenges of implementing offline payments on smartphones and how to mitigate the risks. Offline payments require a much higher security than what is offered by the smartphone rich execution environment (REE). This higher level of security may be achieved by implementing offline payments as a trusted application (TA) protected by a tamper-resistant element (TRE) that provides a secure runtime and storage for both cryptographic keys and other offline assets, such as the offline balance and risk rules. The TRE can be provided either as a hardware-based standalone TRE or a software-based app-integrated TRE, the trade-off being the higher security of the former versus the greater scalability of the latter.
#Fintech#CBDC#Payments#Offline#Crunchfish#DFC
·crunchfish.com·
Offline payments for smartphones
CBDC and the banking system
CBDC and the banking system
Banca D'Italia published a paper on the channels through which the introduction of a central bank digital currency (CBDC) may affect the banking system and the economy at large. The paper also provides a set of illustrative exercises about the potential impact of a CBDC on the funding structure and profitability of banks using data on the Italian banking system between June 2021 and March 2023. It finds that the impact depends on how credit institutions re-optimize their balance sheets in response to the outflow of deposits induced by the CBDC. It finds that the potential impact could be manageable if there were individual holding limits and the CBDC were introduced in an environment characterized by ample liquidity and stable funding for banks.
#Fintech#CBDC#FinancialStability#DFC
·bancaditalia.it·
CBDC and the banking system
17 banks added to Russia's CBDC pilot
17 banks added to Russia's CBDC pilot
17 banks are gearing up to join the Bank of Russia's digital ruble pilot program. They have already signed an agreement with the central bank and are now implementing the necessary systems to participate in the upcoming expanded pilot. Currently, 13 banks are already participating in the pilot, along with around 600 citizens and 30 trading and service companies. https://cbr.ru/press/event/?id=18383
#Fintech#CBDC#Russia#DFC
·news.bitcoin.com·
17 banks added to Russia's CBDC pilot
11 states have pending anti-CBDC legislation
11 states have pending anti-CBDC legislation
13 U.S. states have now passed, or may soon pass, anti-CBDC legislation. Some are aimed at preventing the state from accepting CBDC as payment, and many many additionally block participation in CBDC trials. Others are excluding CBDC from the definition of money in the Uniform Commercial Code (UCC) so businesses can't use CBDC to discharge liabilities.
#Fintech#CBDC#UnitedStates#DFC
·ledgerinsights.com·
11 states have pending anti-CBDC legislation
ASAP: A Conceptual Model for Digital Asset Platforms
ASAP: A Conceptual Model for Digital Asset Platforms
The IMF published a paper that introduces, and illustrates the use of, the ASAP (Access, Service, Asset, Platform) conceptual Digital Asset Platforms (DAP) model. Just as the utilization of a seven-layer TCP/IP model has been fundamental to the interoperability of the internet, it is anticipated that the four-layer ASAP DAP model will similarly promote cross-platform and cross-border interoperability. The model is illustrated through examples and use cases, such as asset tokenization and the concept of purpose bound money (PBM) being explored by the Monetary Authority of Singapore (MAS).
#Fintech#IMF#PBM#Singapore#Tokenization#CBDC#DFC
·imf.org·
ASAP: A Conceptual Model for Digital Asset Platforms
Issuing a Wholesale Central Bank Digital Currency: Why and How
Issuing a Wholesale Central Bank Digital Currency: Why and How
Intereconomics published a paper by Christian Pfister on the whys and hows of issuing distributed ledger technology (DLT) based wholesale central bank digital currency (CBDC). The whys focus on the provision of a safe and liquid settlement instrument that would be directly available in a DLT environment, thus preserving the anchoring role of central bank money in this environment. The hows focus on the potential perimeter of the use of wholesale CBDC (e.g., whether to integrate with a "regulated liabilities network) , the consequences for monetary policy and precautions central banks should take.
#Fintech#CBDC#WCBDC#DFC
·intereconomics.eu·
Issuing a Wholesale Central Bank Digital Currency: Why and How
CBDC and monetary sovereignty
CBDC and monetary sovereignty
A chapter published in a legal conference volume published by the European Central Bank (ECB) investigated the potential rationale for the introduction of a central bank digital currency (CBDC) to preserve monetary sovereignty. It concluded that the introduction of a CBDC as a protective measure when the currency substitution is caused by unfavorable economic conditions is neither effective nor appropriate for such purposes. And it identified only a very limited set of circumstances when the issuance of a CBDC might be appropriate to push back on the use of technologically superior foreign money. And more bluntly, it concluded that "a digital euro might help defend the monetary sovereignty of the euro area Member States by facilitating cross-border payments as a conduit, mitigating dependence on foreign infrastructure for pan-European payments, serving as a catalyst for the promotion of technologically new payment functionalities and offering a digital complement to cash. In its planned form, however, the digital euro is not (yet) fit for purpose. Its statutory privilege compared to cash and its holding limits will prevent it from fulfilling its anchoring function. Its issuance would thus weaken rather than strengthen the euro area’s monetary sovereignty in the long run." [starts on page 165]
#Fintech#CBDC#MonetaryPolicy#Eurozone#ECB#DFC
·ecb.europa.eu·
CBDC and monetary sovereignty
Indian CBDC pilot progresses to programmable, offline usage
Indian CBDC pilot progresses to programmable, offline usage
The Reserve Bank of India (RBI) plans to add programmability and offline payments to its central bank digital currency (CBDC) pilot. "Programmability will facilitate transactions for specific/targeted purposes, while offline functionality will enable these transactions in areas with poor or limited internet connectivity." It sounds like programmability will take the form of "purpose-bound money" that embeds ("bounds") programming logic denoting its use based on programmed conditions that becomes "unbounded" once those conditions are met. https://www.rbi.org.in/Scripts/BS_PressReleaseDisplay.aspx?prid=57277
#Fintech#CBDC#India#Programmability#Offline#PBM#DFC
·ledgerinsights.com·
Indian CBDC pilot progresses to programmable, offline usage
Central Bank Digital Currency and Banking Choices
Central Bank Digital Currency and Banking Choices
The Bank of Canada (BOC) published a paper that uses a structural model where each household chooses which financial institution to deposit their digital money with, to estimate the extent to which a central bank digital currency (CBDC) competes with bank deposits. It uses a unique Canadian dataset which contains information on households’ bank choices for a rich set of financial products. The paper finds that non-interest-bearing CBDC that does not provide complementary financial products can substantially crowd out bank deposits only if it provides an extensive service network. Also, a Canadian CBDC that uses post offices as service locations would benefit rural households more than a CBDC that uses bank branches as service locations.
#Fintech#CBDC#Canada#FinancialStability#DFC
·bankofcanada.ca·
Central Bank Digital Currency and Banking Choices
Canadian CBDC study asserts bank deposit switching will be just 12% without limits
Canadian CBDC study asserts bank deposit switching will be just 12% without limits
"Economists at the Bank of Canada ran a model to assess the impact of introducing a retail central bank digital currency (CBDC) on bank deposits. It’s widely expected that a proportion of bank deposits will switch to a CBDC. The economists believe that most assessments neglect the fact that banks provide products that complement deposits, such as mortgages and credit cards. If you assume consumers don’t care about the other products their bank offers, then 39% of deposits could be crowded out by CBDC. "
#Fintech#CBDC#Canada#FinancialStability#DFC
·ledgerinsights.com·
Canadian CBDC study asserts bank deposit switching will be just 12% without limits
Philippines to have digital currency in 2 years
Philippines to have digital currency in 2 years
The Governor of Bangko Sentral ng Pilipinas (BSP) reportedly expects to put in place within the next two years a wholesale central bank digital currency (CBDC). However, blockchain or distributed ledger technology (DLT) won’t be used, which brings into question whether it is a "wholesale CBDC". Market convention defines a retail CBDC as being technology agnostic (it can be DLT-based or not), but it defines wholesale CBDC as being DLT-based. Otherwise, every non-DLT central bank-run digital payment system (e.g., real-time gross settlement systems) would be on the list of wholesale CBDC projects.
#Fintech#CBDC#WCBDC#Philippines#DFC
·business.inquirer.net·
Philippines to have digital currency in 2 years
Why NZ central bank quip about people trusting printed money is dangerous
Why NZ central bank quip about people trusting printed money is dangerous
"During a parliamentary committee hearing, Adrian Orr, Governor of the Reserve Bank of New Zealand made a joke. 'It’s a great business to be in central banking. You print money and people believe it. Touch wood,' said Orr. The Committee laughed." https://vimeo.com/showcase/10758103/video/912104765
#Fintech#CBDC#NewZealand#CryptoAssets#DFC
·ledgerinsights.com·
Why NZ central bank quip about people trusting printed money is dangerous
Draft digital euro legislation supports permissionless blockchains
Draft digital euro legislation supports permissionless blockchains
The most recent draft of the digital euro legislation being discussed by the European parliamentary Committee on Economic and Monetary Affairs includes support for permissionless blockchains. “Conditional payments in Digital Euros may also be carried out on permissionless distributed ledgers where until now only privately issued assets like crypto-assets or stable coins are available as a means of payment. With the approval and under conditions set by the European Central Bank (ECB), the Digital Euro would be made available as a token to be referenced on these chains.” The ECB and European Council previously stated they don’t want programmable money at the base layer, so the legislation now specifies conditional payments will happen in the “layer above”. https://www.europarl.europa.eu/doceo/document/ECON-PR-758954_EN.pdf
#Fintech#CBDC#Eurozone#DFC
·ledgerinsights.com·
Draft digital euro legislation supports permissionless blockchains
Digital Euro: The Case Against Legal Tender
Digital Euro: The Case Against Legal Tender
SUERF published an article by Christian Pfister that the notion of legal tender is a “barbarous relic” that is unfit in a digital environment where there is a wide choice of payment instruments. Furthermore, making the digital euro legal tender could even undo some the expected benefits of its launch and entail risks. That is not to say that making a retail central bank digital currency (CBDC) legal tender may be more justified in a context where the wide majority of payments are made in cash and the public authorities wish to encourage the modernization of payments, i.e. in some developing and emerging economies.
#Fintech#CBDC#Eurozone#LegalTender#DFC
·suerf.org·
Digital Euro: The Case Against Legal Tender
EU Parliamentary Committee votes in favor of 'digital euro' CBDC
EU Parliamentary Committee votes in favor of 'digital euro' CBDC
"The European Parliament's Committee on Civil Liberties and Justice (LIBE) reportedly has overwhelmingly voted to endorse the latest digital euro report backing the European Central Bank's (ECB) proposed digital euro, taking the bloc one step closer to a central bank digital currency (CBDC). The draft legislation would make a proposed CBDC legal tender and was passed by a resounding 48 in favor of with only six against (and with seven abstentions)."
#Fintech#CBDC#Eurozone#DFC
·coingeek.com·
EU Parliamentary Committee votes in favor of 'digital euro' CBDC
Nigeria's eNaira Soars to N10.26 Billion in Circulation
Nigeria's eNaira Soars to N10.26 Billion in Circulation
"Nigeria's digital currency, eNaira outstandings have reportedly reached N10.26 billion as of September 30th, 2023. This 302% growth in just nine months indicates a rising acceptance of Africa's first Central Bank Digital Currency (CBDC), launched by the Central Bank of Nigeria (CBN) in October 2021." Unfortunately, I can only find 2022 data on the CBN website. https://www.cbn.gov.ng/documents/Statbulletin.asp
#Fintech#CBDC#Nigeria#DFC
·bnnbreaking.com·
Nigeria's eNaira Soars to N10.26 Billion in Circulation
Digital euro: Debunking banks’ fears about losing deposits
Digital euro: Debunking banks’ fears about losing deposits
In parallel to yesterday's VoxEU article, the European Central Bank (ECB) posted an article by the same three senior officials that debunked fears that a commercial bank customers might withdraw deposits to hold digital euro. "Banks are barking up the wrong tree when they rely on studies that overlook the outlined design features of a digital euro. In doing so, they ignore the many other challenges they need to address to ensure stable funding through deposits. Banks need to offer attractive products and services that incentivize customers to hold their deposits with them instead of migrating to new and powerful private competitors."
#Fintech#CBDC#Eurozone#ECB#DFC
·ecb.europa.eu·
Digital euro: Debunking banks’ fears about losing deposits
Bank of England and HM Treasury RFI on digital pound privacy
Bank of England and HM Treasury RFI on digital pound privacy
The Bank of England (BOE) and HM Treasury published a digital pound request for information on privacy, meaning the protection of users’ personal and transaction data, and ensuring they have control and visibility over who can process their data and for what purposes. However, the digital pound would not be anonymous because the ability to identify and verify users is needed to prevent financial crime, but the BOE and government will not access users’ personal data in a digital pound ecosystem. In that regard, the BOE is exploring technological solutions to prevent it from being able to access personal data via the core ledger. The deadline for responding is March 12, 2024. https://www.bankofengland.co.uk/the-digital-pound/digital-pound-working-groups
#Fintech#CBDC#UnitedKingdom#DFC
·app.keysurvey.co.uk·
Bank of England and HM Treasury RFI on digital pound privacy
City of St Gallen to issue CHF 100 million digital bond on SDX
City of St Gallen to issue CHF 100 million digital bond on SDX
The Swiss City of Saint Gallen will use the SIX Digital Exchange (SDX) to issue a CHF 100 million, three year digital bond. This is the fourth municipality to issue a digital bond on SDX in the last three months. It coincides with wholesale central bank digital currency (CBDC) trials conducted by SDX, where the wholesale CBDC issued by the Swiss National Bank is used to settle the bond issuances.
#Fintech#CBDC#wCBDC#Tokenization#Settlement#Switzerland#DFC
·ledgerinsights.com·
City of St Gallen to issue CHF 100 million digital bond on SDX
Managing the transition to central bank digital currency
Managing the transition to central bank digital currency
De Nederlandsche Bank (DNB) published a paper that studies the transition from a steady-state without central bank digital currency (CBDC) to one in which the home country issues a CBDC using a two-country dynamic stochastic general equilibrium (DSGE) model with financial frictions. In the new steady state, the availability of CBDC, which is liquid and storage-cost-free, improves welfare. During the transition, however, demand for CBDC and money overshoot, thus crowding out bank deposits and leading to initial declines in investment, consumption, and output. However, these negative effects can be reduced with binding caps, with an optimal level of around 40% of the CBDC demand in the steady state. A two-tiered remuneration scheme is also effective in smoothing the transition if the penalty interest rate is extremely high (e.g., a negative 300% interest rate on holdings above 50% steady-state demand).
#Fintech#CBDC#Netherlands#FinancialStability#DFC
·dnb.nl·
Managing the transition to central bank digital currency
Rise of Digital Money: Implications for Pacific Island Countries
Rise of Digital Money: Implications for Pacific Island Countries
The IMF published an overview of the development of digital money and payment systems in twelve Pacific island countries (PICs), assessing potential benefits and risks, with a focus on how they can harness digital technology to enhance financial inclusion and payment efficiency while minimizing risks. The paper also examines the prerequisites for successfully adopting various forms of digital money and proposes a strategic framework for policy decisions (see Figure 10). It advocates a gradual, well-informed approach, tailored to PICs' unique monetary and financial circumstances, including the presence of national currencies and the maturity of payment systems. Moreover, the paper suggests that a regional approach could help address capacity and scalability challenges in introducing new digital money forms and payment methods in PICs.
#Fintech#CBDC#Asia-Pacific#Palau#Marshall_Islands#IMF#DFC
·imf.org·
Rise of Digital Money: Implications for Pacific Island Countries
US Republican Senators file bill to ban Fed from issuing a digital dollar
US Republican Senators file bill to ban Fed from issuing a digital dollar
U.S. Republican Party Senators Ted Cruz, Bill Hagerty, Rick Scott, Ted Budd, and Mike Braun, re-introduced the CBDC Anti-Surveillance State Act, that would prohibit the Federal Reserve from issuing a retail central bank digital currency (CBDC). The original version was filed by Republican House Representative Tom Emmer in September 2023. Former President Donald Trump, the front-runner in the Republican leadership race, has also promised to ban the creation of a CBDC if elected President. https://www.hagerty.senate.gov/wp-content/uploads/2024/02/cbdc_anti-surveil-_lance_state_act.pdf
#Fintech#CBDC#Dystopia#UnitedStates#DFC
·coindesk.com·
US Republican Senators file bill to ban Fed from issuing a digital dollar