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SWIFT hails results of CBDC connector testing
SWIFT hails results of CBDC connector testing
SWIFT says a new round of sandbox testing has found that its central bank digital currency interlinking technology can enable financial institutions to carry out a wide range of transactions using central bank digital currency (CBDC) and other forms of digital tokens, easily incorporating them into their business practices. Over six months, SWIFT worked with 38 global institutions and over 125 sandbox users, and made more than 750 transactions, including simulated digital trade, tokenized asset and FX networks, as well as CBDCs for payments. The testing showed that SWIFT’s CBDC connector has the potential to simplify and speed up trade flows, unlock growth in tokenized securities markets, and enable efficient FX settlement, while allowing financial institutions to continue to make use of their existing infrastructure.
#Fintech#CBDC#SWIFT#DFC
·swift.com·
SWIFT hails results of CBDC connector testing
The provision of multiple digital euro accounts to individual end users
The provision of multiple digital euro accounts to individual end users
The European Central Bank (ECB) published a technical note on the potential impact of users holding multiple digital euro accounts. Under the European Commission’s proposed digital euro regulations digital euro users would be able to hold multiple digital euro payment accounts with the same or different payment service providers (PSPs). This entails technical difficulties regarding the interplay of these accounts with the management of a consolidated holding limit. The analysis shows that it is technically feasible to provide users with multiple accounts in conjunction with an individual holding limit, but trade-offs would be necessary, mainly in terms of user experience as well as technical and operational implementation for PSPs.
#Fintech#CBDC#Eurozone#ECB#DFC
·ecb.europa.eu·
The provision of multiple digital euro accounts to individual end users
Kazakhstan tests cCBDC use in public procurement
Kazakhstan tests cCBDC use in public procurement
Kazakhstan authorities are planning to pilot the use smart contract-powered digital tenge to ensure that funds related to public procurement and government subsidies are spent precisely for their intended purposes. The Ministry of Finance and Anti-Corruption Agency as well as other key entities have signed a roadmap to collaborate with the National Bank of Kazakhstan on this particular central bank digital currency (CBDC) use case. This is made possible through the integration with government databases and registries, maintaining white and black lists of legal entities, goods and service categories.
#Fintech#CBDC#Kazakhstan#DFC
·globalgovernmentfintech.com·
Kazakhstan tests cCBDC use in public procurement
Russian Central Bank and Finance Ministry discussing tests of budget payments in digital rubles
Russian Central Bank and Finance Ministry discussing tests of budget payments in digital rubles
The Bank of Russia and Russian Ministry of Finance are reportedly considering piloting the use of digital rubles for some social payments to citizens and subsidies to businesses, to ensure the targeted use of budget funds. In addition, the pilot would test the use of digital rubles for payments to the government.
#Fintech#CBDC#Russia#DFC
·interfax.ru·
Russian Central Bank and Finance Ministry discussing tests of budget payments in digital rubles
Digital Currencies Impact on Financial Stability and Financial Cycle
Digital Currencies Impact on Financial Stability and Financial Cycle
The Bank of Albania published a paper on the potential impact of digital currencies, including central bank digital currency (CBDC) on banking-centric small open economies. It concludes that the main risks come from global stablecoins, should they achieve major traction, which could result in large-scale currency substitution ("stablecoinization"). An effective policy approach towards global stablecoins would be through the cooperation of international standard-setting organizations and national authorities.
#Fintech#CBDC#Albania#DFC
·papers.ssrn.com·
Digital Currencies Impact on Financial Stability and Financial Cycle
A Macroeconomic model of central bank digital currency
A Macroeconomic model of central bank digital currency
A paper by a couple of San Francisco Federal Reserve Bank staff (Pascal Paul and Mauricio Ulate) published a paper that uses a New Keynesian DSGE model to study the introduction of a remunerated retail central bank digital currency (CBDC). At the heart of the model are monopolistic banks with market power in deposit and loan markets. When a remunerated retail CBDC is introduced, households benefit from an expansion of liquidity services and higher deposit rates as bank deposit market power is curtailed. However, even though deposits also flow out of the banking system and bank lending contracts, the paper finds substantial welfare gains as long as the CBDC interest rate doesn't exceed the policy rate minus 1%.
#Fintech#CBDC#rCBDC#DFC
·pascalpaul.de·
A Macroeconomic model of central bank digital currency
Connectedness between CBDC development status, financial stability and digital assets
Connectedness between CBDC development status, financial stability and digital assets
The Journal of International Financial Markets, Institutions and Money published a paper that examines the interconnectedness CBDC development and adoption levels, digital asset returns and financial stability. (CBDC development and adoption was measured with a news media coverage based "CBDC Uncertainty Index" developed by Wang et al (2022).) The paper finds a significant level of connectedness between CBDCs, digital assets and financial stability, but only a weak positive connectedness between CBDCs and returns on digital assets. Furthermore, the study finds bidirectional connectedness between CBDCs and other financial stability measures, suggesting that changes in CBDC performance can influence the overall stability of the financial system, and vice versa. [Wang paper: https://www.sciencedirect.com/science/article/pii/S0040162522002414]
#Fintech#CBDC#CryptoAssets#FinancialStability#DFC
·sciencedirect.com·
Connectedness between CBDC development status, financial stability and digital assets
CBDC and Other Digital Payments in Sub-Saharan Africa: A Regional Survey
CBDC and Other Digital Payments in Sub-Saharan Africa: A Regional Survey
The IMF published a Fintech Note on key findings from the Sub-Saharan Africa CBDC and Digital Payments Survey, shedding light on the motivations, benefits, and challenges of CBDC adoption, as well as the developments of digital private money and crypto assets in sub-Saharan Africa. More than 75% of the 33 central banks surveyed are engaged in—or are planning to engage in—CBDC research or pilot activities. Of these, roughly two-thirds are in the research phase, and slightly over one-third are planning to conclude their CBDC pilot programs within the next two years. More than a quarter are actively preparing to launch a CBDC by 2028, although legal challenges pose major hurdles to getting to that point. Financial inclusion, efficiency in domestic payments and facilitating remittances are the most dominant motivations for CBDC adoption. Fast payment systems and e-Money (such as mobile money) are considered as quick wins in sub-Saharan Africa, and about two-thirds of countries are in the process of implementing or considering fast payment systems that are mostly accessible through mobile phones or the internet.
#Fintech#CBDC#CryptoAssets#MobileMoney#FastPayments#Africa#IMF#DFC
·imf.org·
CBDC and Other Digital Payments in Sub-Saharan Africa: A Regional Survey
Thailand retail CBDC pilot test project update (Thai only for now)
Thailand retail CBDC pilot test project update (Thai only for now)
The Bank of Thailand (BOT) published an update on its retail central bank digital currency (CBDC) pilot testing. Although the pilot successfully demonstrated the potential of the technology behind the retail CBDC system, the BOT said it has no plans to launch one and will use the technology design to further develop a more efficient payment system in the future. I’d like to say more about the paper, but it’s supposedly written in Thai, although Google Translate doesn’t seem to think so, and just returns gibberish.
#Fintech#CBDC#Thailand#DFC
·bot.or.th·
Thailand retail CBDC pilot test project update (Thai only for now)
Powell's CBDC Puzzle: Deciphering Where the Fed Stands
Powell's CBDC Puzzle: Deciphering Where the Fed Stands
The Cato Institute published an article calling for the Federal Reserve to share more information regarding where it stands with respect to central bank digital currency (CBDC). The article recommends that the Fed come clean on the specific criteria that would influence it to make an official decision on whether it would or would not recommend launching a digital dollar. The article also calls on the Fed to come clean on whether it believes it has the authority to issue an intermediated CBDC, given that the Federal Reserve Act does not authorize direct Fed accounts for individuals, but may allow for an intermediated one. Also, it would be useful to know whether the Fed believes it has the authority to issue a distributed ledger technology (DLT) based wholesale CBDC, given that it already "issues" centralized ledger technology-based wholesale CBDC (e.g., commercial bank reserve accounts).
#Fintech#CBDC#UnitedStates#Cato#DFC
·cato.org·
Powell's CBDC Puzzle: Deciphering Where the Fed Stands
Politics aside, what’s the plan for US central bank digital currency?
Politics aside, what’s the plan for US central bank digital currency?
The Hill published an article that calls for leaving the politics and fearmongering designed to squelch meaningful debate around a digital dollar and proceed with caution. Instead, it calls for investing in central bank digital currency (CBDC) research from a technical, legal, ethical and international perspective. That would include reviewing and possibly amending country’s legislation, laws and justice system so that it better protects individual freedoms, including the freedom to transact and the right to financial and individual privacy. The article points out that designing a CBDC with privacy controls that prevent government surveillance is possible, and this kind of technical development should continue. "To outright ban research, development and experimentation on CBDCs without attempting to find technological solutions to legitimate privacy risks first is a lazy and incomplete response that borders on censorship."
#Fintech#CBDC#UnitedStates#Privacy#DFC
·thehill.com·
Politics aside, what’s the plan for US central bank digital currency?
The external financial spillovers of CBDCs
The external financial spillovers of CBDCs
The Journal of Economic Dynamics and Control (JEDC) published a paper that studies the macroeconomic consequences of a foreign CBDC available to residents in a small open economy using a DSGE model. It finds that a gradual and permanent increase in the domestic households' preferences toward the foreign CBDC leads to a structural reduction in economic activity, especially if the CBDC is designed to be similar to domestic deposits. The paper suggests several policy responses that may smooth the transition, limit disruptive effects and avoid the long-run GDP loss. It also shows that an economy with a large stock of foreign CBDC is better shielded from exogenous increases in the interest rate on foreign debt, if the CBDC remuneration remains constant.
#Fintech#CBDC#FinancialStability#DFC
·sciencedirect.com·
The external financial spillovers of CBDCs
Idemia works with Qualcomm for offline CBDC payments
Idemia works with Qualcomm for offline CBDC payments
Idemia is working with Qualcomm to offer users offline payments on smartphones for central bank digital currencies (CBDCs) through the Snapdragon 8-series Mobile Platform which requires a Qualcomm Secure Processor Unit. Customers can make payments with traditional cards, biometric cards, smart phones, or smart watches. Idemia has already demonstrated offline CBDC on different payment devices. Now it can handle credentials and conduct payments offline, leveraging an integrated secure element in users’ phones.
#Fintech#CBDC#Payments#Offline#DFC
·biometricupdate.com·
Idemia works with Qualcomm for offline CBDC payments
Between mBridge and SWIFT, Which Holds More Promise for Developing Countries?
Between mBridge and SWIFT, Which Holds More Promise for Developing Countries?
"mBridge stands out as an attractive choice for developing countries, especially due to its capability to support economic sovereignty, facilitate integration with existing financial infrastructure, and garner geopolitical support from BRICS countries. However, this does not diminish the value and importance of the SWIFT project, which, with its focus on interoperability and a long track record in the global payment system, provides a solid foundation for countries preparing to transition to more advanced and complex technologies."
#Fintech#CBDC#CrossBorder#mCBDC#SWIFT#BIS#DFC
·moderndiplomacy.eu·
Between mBridge and SWIFT, Which Holds More Promise for Developing Countries?
Bank of China launches eCNY offline payments for Qingdao Rail Transit
Bank of China launches eCNY offline payments for Qingdao Rail Transit
The Qingdao branch of the Bank of China (BOC) has rolled out a new payment option for Qingdao Rail Transit through digital yuan hardware wallets for payments without network and electricity. This “deferred payment” system allows travelers to use the public transit service first and pay later with the hardware wallet featured enabled on users’ smartphones. This functionality requires the use of an Android-based smartphone running a "Super SIM" card that stores digital yuan account information for use when there's no network or electricity, introduced by China Mobile, China Telecom, and China Unicom in 2023. https://baijiahao.baidu.com/s?id=1794932657646082801&wfr=spider&for=pc
#Fintech#CBDC#Offline#China#DFC
·cryptonews.com·
Bank of China launches eCNY offline payments for Qingdao Rail Transit
CBDCs: Consumer Attitudes and Expectations in the United States
CBDCs: Consumer Attitudes and Expectations in the United States
The Federal Reserve Bank of Philadelphia conducted a survey in October 2022 in which it asked consumers about their interest in retail central bank digital currency (CBDC). 52.6% of respondents said they would possibly use a digital dollar, but widespread consumer adoption will require that the product does not require fees to access or use (63.5% of respondents who would possibly use a digital dollar), be accepted widely in the marketplace (57.3%), provides high levels of security and privacy for consumers (42.0%), and bear interest (39.2%). At the same time, not all consumers were confident they could render an opinion about a CBDC.
#Fintech#CBDC#UnitedStates#DFC
·philadelphiafed.org·
CBDCs: Consumer Attitudes and Expectations in the United States
First participants in ECB wholesale DLT announced
First participants in ECB wholesale DLT announced
The European Central Bank (ECB) published the list of the first institutions to participate in its trials of the settlement of wholesale transactions on distributed ledger technology (DLT) based platforms using central bank money. The list is comprised of five central banks, ten institutions, six market DLT operators and five central banks. The trials will involve real transactions as well as mock simulations, with most of the tests focusing on securities settlement. There also plans to consider use cases for payment versus payment (FX) and cross border payment. Three settlement solutions are part of the trials, provided by the central banks of Germany (RTGS-based "trigger" solution), France (wholesale central bank digital currency (CBDC) solution) and Italy (TIPS Hashlink solution). https://www.ecb.europa.eu/press/intro/news/html/ecb.mipnews240403.en.html
#Fintech#CBDC#wCBDC#Settlement#DLT#ECB#Eurozone#DFC
·ledgerinsights.com·
First participants in ECB wholesale DLT announced
RBI to broaden e-rupee's retail access beyond banks
RBI to broaden e-rupee's retail access beyond banks
The Reserve Bank of India (RBI) plans to its make e-rupee central bank digital currency (CBDC) accessible to a broader segment of users by enabling non-bank payment system operators to offer CBDC wallets. Such non-bank payment system operators, include third-party payment app providers like PhonePe, Google Pay and Paytm. This expansion will facilitate testing of the resiliency of CBDC platform to handle multi-channel transactions, and hopefully help lift underwhelming transaction volumes. https://rbi.org.in/scripts/BS_PressReleaseDisplay.aspx?prid=57638
#Fintech#CBDC#India#DFC
·reuters.com·
RBI to broaden e-rupee's retail access beyond banks
Reserve Bank of Zimbabwe launches new ZiG “structured” currency
Reserve Bank of Zimbabwe launches new ZiG “structured” currency
The Reserve Bank of Zimbabwe (RBZ) launched a new “structured” currency called “Zimbabwe Gold” (ZiG) that will be anchored to a weighted value of the central bank’s precious metal (mainly gold) and foreign currency reserves. As of April 5, 2024, the RBZ had reserve assets of US$100 million in cash and 2,522 kgs of gold (US$185 million) to back the entire local currency component of reserve money which stood at ZW$2.6 trillion (US$90 million). ZiG notes and coins shall be issued in denominations made up of 1ZiG, 2ZiG, 5ZiG, 10ZiG, 20Zig, 50ZiG, 100ZiG, and 200ZiG, but no mention is made of what becomes of the ZiG (now GBDT) wallets, assuming such wallets ever existed.
#Fintech#CBDC#Zimbabwe#DFC
·rbz.co.zw·
Reserve Bank of Zimbabwe launches new ZiG “structured” currency
Ethiopian central bank to undertake digital currency study
Ethiopian central bank to undertake digital currency study
The National Bank of Ethiopia (NBE) is reportedly embarking on a study on the use of a central bank digital currency (CBDC) as part of its Homegrown Economic Reform Agenda (HGER). The NBE is set to initiate the study in June 2024 under the macroeconomic team led by Girma Birru, according to the latest HGER detail matrix covering three years leading up to 2026.
#Fintech#CBDC#Ethiopia#DFC
·thereporterethiopia.com·
Ethiopian central bank to undertake digital currency study
Clearstream joins ECB DLT for wholesale CB money settlement trials
Clearstream joins ECB DLT for wholesale CB money settlement trials
Clearstream, Deutsche Börse Group’s post-trade business, joins the European Central Bank (ECB) trials and experiments, aimed at exploring the potential of distributed-ledger technology (DLT) for wholesale central bank money settlement. Clearstream aims to assess the feasibility of using DLT for wholesale transaction processing, using tokenized securities, including conducting euro-denominated issuance and delivery-versus-payment (DvP) transactions across different use-cases and payment models. Three solutions will be tested by the central banks of Germany (Trigger solution), France (wholesale central bank digital currency (CBDC)) and Italy (TIPS Hashlink).
#Fintech#CBDC#wCBDC#Settlement#Tokenization#Blockchain#DLT#ECB#DFC
·clearstream.com·
Clearstream joins ECB DLT for wholesale CB money settlement trials
CBDCs and financial integrity: finding the trade-off between privacy and traceability
CBDCs and financial integrity: finding the trade-off between privacy and traceability
"This paper aims to focus, in particular, on two complementary and co-related aspects involving CBCDs: (i) how can the full digitalisation and centralisation of the transaction ledger be combined with privacy and (ii) to what extent CBDCs affect the allocation of burden and the responsibility over supervision of retail transactions. Eminently, the use of cash ensures a form of default privacy that protects the individual against State and private intrusion. While this privacy has caused concern, due to its criminogenic potential, and has been consequently limited by anti-money laundering (AML) regulations, the remaining cone of shadow cash guarantees is a crucial limit to control. In the context of a shifting financial system, undergoing deep transformation due to increasing datafication and decentralisation of the market, a new governance of financial supervision and record-keeping—up to now based on a unique and centralised ledger—is crucial to redefine the trade-off between financial integrity and privacy. This article will examine the origins and characteristics of CBDCs, to then analyse how the trade-off between control and privacy is set to reshape this new architecture."
#Fintech#CBDC#Eurozone#Privacy#DFC
·link.springer.com·
CBDCs and financial integrity: finding the trade-off between privacy and traceability
Macroeconomic Modelling of CBDC: A Critical Review
Macroeconomic Modelling of CBDC: A Critical Review
The ECB's Ulrich Bindseil con-authored a paper that argues that macroeconomic models of CBDC often start from an early CBDC narrative which is no longer in line with the one of central banks actually working on CBDC. These include not accounting for design features communicated by central banks, such as no-remuneration, quantity limits, access restrictions, and automated sweeping functionality linking CBDC wallets with commercial bank accounts. Also, they do not explain well enough the difference between CBDC and banknotes within their macro-economic models, apart from remuneration.
#Fintech#CBDC#ECB#DFC
·papers.ssrn.com·
Macroeconomic Modelling of CBDC: A Critical Review
SNB Chair reflects on wholesale CBDC pilots. Retail too risky
SNB Chair reflects on wholesale CBDC pilots. Retail too risky
Swiss National Bank (SNB) Chair Thomas Jordan provided an update on the central bank's central bank digital currency (CBDC) experiments and thinking. Firstly, the SNB's position remains that there is no need for a Swiss retail CBDC because digital payment requirements are already satisfied, and there are possibly far-reaching consequences for the financial system. However, the SNB continues to advance its wholesale CBDC work aimed at settling tokenized securities on the SIX Digital Exchange (SIX) platform. He also called attention to the unusual approach of issuing the CBDC on a third-party (i.e., SDX) platform. However, as pointed out by Ledger Insights, SIX also operates the Swiss real-time gross settlement (RTGS) system, so a trust relationship already exists. However, the SNB is also evaluating other options for tokenized securities settlement, such as the RTGS "trigger" solutions being tested by the European Central Bank in its wholesale CBDC experiments. https://www.snb.ch/en/publications/communication/speeches/2024/ref_20240408_tjn
#Fintech#CBDC#wCBDC#Tokenization#Settlement#Switzerland#DFC
·ledgerinsights.com·
SNB Chair reflects on wholesale CBDC pilots. Retail too risky
Bank of Russia expects CBDC to take 5-7 years to achieve mass use
Bank of Russia expects CBDC to take 5-7 years to achieve mass use
Bank of Russia Governor Elvira Nabiullina provided an update on its digital ruble pilot to the State Duma. A serious scaling will happen no earlier than 2025, depending on how the pilot is going, and after that, it will take five to seven years to become a mass product. The Governor said that “this will be a natural process, because the choice of the people themselves, the business, is fundamental, it should be convenient for them.
#Fintech#CBDC#Russia#DFC
·pnp.ru·
Bank of Russia expects CBDC to take 5-7 years to achieve mass use
Valuing Safety and Privacy in Retail Central Bank Digital Currency
Valuing Safety and Privacy in Retail Central Bank Digital Currency
The Reserve Bank of Australia (RBA) published a paper that explores the merits of introducing a retail central bank digital currency (CBDC) in Australia, focusing on the extent to which consumers would value having access to a digital form of money that is even safer and potentially more private than commercial bank deposits. The results suggest that the average consumer attaches no value to the added safety of a CBDC. This is consistent with bank deposits in Australia already being perceived as a safe form of money, and physical cash issued by the RBA continuing to be available as an alternative option. Privacy settings of a CBDC, which can take various forms, look more consequential for the CBDC value proposition. However, no clear relationship was found between safety or privacy valuations and the degree of consumers' cash use.
#Fintech#CBDC#Australia#DFC
·rba.gov.au·
Valuing Safety and Privacy in Retail Central Bank Digital Currency
Observations from the Retail CBDCs of the Caribbean
Observations from the Retail CBDCs of the Caribbean
The Kansas City Fed published an article by Franklin Noll that analyzes the underwhelming adoption of retail CBDC in the three Caribbean jurisdictions where they have been launched (Bahamas and Jamaica) or are being piloted (Eastern Caribbean Currency Union). It concludes that, to spur adoption it needs to add value relative to cash, be widely accepted, readily accessed, and easily used. Also, the new platform may need to be integrated into existing payments systems; into ways that consumers, merchants, and banks do business; and, ultimately, into people's lives.
#Fintech#CBDC#Caribbean#ECCB#Bahamas#Jamaica#DFC
·kansascityfed.org·
Observations from the Retail CBDCs of the Caribbean
Atlantic Council calls for global interoperability standards for CBDC
Atlantic Council calls for global interoperability standards for CBDC
The Atlantic Council published an updated version of their "Standards And Interoperability: The Future Of The Global Financial System" white paper calling for calling for global interoperability standards around central bank digital currency (CBDC). It sets some common definitions and understanding of the current state of international standards for those seeking to understand the current state of international standards and existing gaps and areas for improvement. It also notes that, standards ensuring consistency and seamless functionality are not static; they must be flexible enough to accommodate advancements in digital currency technology, shifts in economic priorities, and changing societal perspectives on digital assets. https://digitaldollarproject.org/standards-and-interoperability-the-future-of-the-global-financial-system/
#Fintech#CBDC#Interoperability#DFC
·ledgerinsights.com·
Atlantic Council calls for global interoperability standards for CBDC
Hong Kong still cautious about introducing a retail CBDC
Hong Kong still cautious about introducing a retail CBDC
Hong Kong Monetary Authority (HKMA) CEO Eddie Yue remains skeptical about the benefits of a retail central bank digital currency (CBDC). H started by listing some of the potential benefits, including serving as a fundamental layer to facilitate interoperability and interlinking between various future digital economy participants. Also, it could act as a bridge between different types of privately-issued digital money, and ensure all private money to be exchangeable with a public money on demand and at par. He also envisioned that a retail CBDC could be a potential “backbone” and anchor, bridging a legal tender and digital assets, offering price stability and confidence needed to empower more innovations, and developing a vibrant sector and ecosystem for digital assets in Hong Kong. Nevertheless, Mr. Yue said that more research is needed on whether its benefits outweigh the risks, particularly "given the generally efficient and competitive retail payment ecosystem in Hong Kong" [and the HKMA] will continue to take a use-case driven approach in thinking about whether and when to introduce a retail CBDC." https://www.hkma.gov.hk/eng/news-and-media/speeches/2024/04/20240411-1/
#Fintech#CBDC#HongKong#DFC
·ledgerinsights.com·
Hong Kong still cautious about introducing a retail CBDC
Managing the transition to central bank digital currency
Managing the transition to central bank digital currency
"Most studies on central bank digital currencies focus on the effects after they become well established. This column analyses the macroeconomic effects in the transition to the new equilibrium. Using a two-country model with financial frictions, it shows that, under plausible assumptions for demand for central bank digital currency, the transition is characterised by volatility in the digital currency, cash, and deposits, leading to volatility in loan rates, investment, and consumption. Binding caps on holdings of the digital currency during the transition period are shown to be most effective in reducing disintermediation and output losses and in minimising international spillovers."
#Fintech#CBDC#Eurozone#DFC
·cepr.org·
Managing the transition to central bank digital currency