Ken Rogoff on the High Stakes of the Coming Digital Currency War
"The real challenge for the United States isn't Facebook's proposed Libra; it's government-backed digital currencies like the one planned by China."
To save the euro, turn it into a digital stablecoin
"A bond-backed currency would overcome problems created by incomplete monetary union"
Stablecoins as a euphemism for full-reserve banking
In a world where fully-reserved digital stablecoins reign supreme banks would have to pre-fund (by liquidating assets first), increasing the relative amount of liquid cash float the whole system needs to operate. The cash float being what it is (mostly government-debt backed), that amounts to even greater sums of guaranteed funding for the government instead of the private sector. That inevitably crowds out private investment simply because of who controls go-to “potential claims” on the economy.
U.S. Fed Floats Rule Change Targeting ‘Narrow Bank’ Concept
In March 2019 the U.S. Fed proposed amendments to its Regulation D (Reserve Requirements of Depository Institutions) to lower the rate of interest paid on excess balances ("IOER") maintained at Reserve Banks by "pass-through investment entities" (eligible institutions that hold a very large proportion of their assets in the form of balances at Reserve Banks). The Fed claims that PTIEs—could compromise its ability to conduct monetary policy by interrupting the transmission of IOER and Overnight Reverse Repurchase Agreement Facility rates to the federal funds rate. Also, a shift in deposits away from commercial banks could substantially reduce funding for loans, and that in times of financial stress, PTIEs could be procyclical in draining liquidity from the banking system.
British Virgin Islands Announces BVI~LIFE™ Digital Currency
The government of the British Virgin Islands, in partnership with LIFElabs.io, will be launching a government-backed stablecoin. The BVI is a British overseas territory that currently relies on the USD as its national currency. LIFEtokens will be pegged 1:1 against the USD and be accessible to both residents and tourists.
Payments innovations and the role of central banks - addressing challenges posed by stablecoins
"In Japan, the amount of cash outstanding is still increasing, and it does not seem that there is a demand for CBDC from the public at present. Nevertheless, the Bank of Japan has been conducting technical and legal research on this matter in order to stand ready when the need for CBDC may arise in the future."
The future of money and the payment system: what role for central banks?
The private sector will always have an important role to play in payments. The question is how to divide the work between private and public: Agustín Carstens
Brace for the Digital-Money Wars
If China digitizes its currency, as it plans to do, and the North Koreans use it to finance their missile program, it’s a flow of money that circumvents U.S. sanctions. That would force the U.S. to grapple with its own now-antiquated currency.
The next generation of digital currencies: in search of stability
Recent developments have re-opened the debate on the future of money. This Policy Contribution discusses two aspects: the implications of the rise of global private stablecoins, such as Facebook's Libra, and the role that public central bank digital currencies could play.
Changing USD Currency Not An Option For The BVI | Government of the Virgin Islands
Contrary to media reports, the Government of the Virgin Islands is not in the process of developing or launching its own national cryptocurrency, neither by itself nor in partnership with any other entity, to replace the US dollar with a digital currency. The British Virgin Islands adopted the US dollar as its currency in 1959 and have made no commitments to replace it as the official currency in any form.
Augmenting Fiat Currency with an Integrated Managed Cryptocurrency
In this work, we investigate how the governance features of a managed currency (e.g., a fiat currency) can be built into a cryptocurrency in order to leverage potential benefits found in the use of blockchain technology and smart contracts. The resulting managed cryptocurrency can increase transparency and integrity, while potentially enabling the emergence of novel monetary instruments.
Stablecoins in Cryptoeconomics. From ICOs to CBDCs
This Article aims to highlight the factual interconnections linking ICOs, cryptocurrencies, stablecoins and CBDCs: although these entities belonging to different contexts (securities law and capital formation, payment systems, monetary policy), they are intertwined and are part of the same evolution.
The Reserve Bank of Australia on crypto-assets, stablecoins and central bank digital currency
The Reserve Bank of Australia believes a "digital Australian dollar" would be an unnecessary disruption to the existing financial system, particularly for retail use. The bank cites research by accounting firm Ernst & Young that also found a CBDC would be the least effective solution for promoting growth in the Australian fintech sector.
Where a retail digital currency could thrive
The introduction of a digital currency really requires a country-by-country approach, taking into consideration local needs, circumstances and policies. Nonetheless, the demand for digital currency is more likely to rise in those places where the financial system is less developed and more fragmented.
Ethereum (ETH)-Based Stablecoin To Be Issued By ConsenSys
Joseph Lubin presented the framework of regulated Ethereum-based stablecoins at the Davos Economic Forum.
Influencing the Velocity of Central Bank Digital Currencies
This paper explores the assets and process necessary for creating a central bank digital currency on the Celo platform, as well as the potential impact on the financial system.
Don’t Say Unbanked; Say Differently Banked
If Walmart’s MoneyCard is any indication, many of America’s unbanked aren’t unbanked — they are differently banked. Instead of accessing banking services via traditional accounts, these people are connecting to it by prepaid credit cards, otherwise known as general purpose reloadable (GPR) prepaid cards. Walmart’s MoneyCard is one of the most well-known offerings. But even governments are sponsoring prepaid debit card programs, the Federal government’s DirectExpress card being the best example.
France’s Deputy Governor Outlines A Path For Stablecoin Payment Systems
Denis Beau, First Deputy Governor of the Bank of France, addressed the “What Ambitions For Europe” Stablecoin Conference. Paris Europlace and ConsenSys organized the event this January. Mr. Beau talked about the good and the bad. He outlined three tasks for regulatory authorities working on stablecoin adoption policies.
Governing the Coin: World Economic Forum Global Consortium for Digital Currency Governance
"The Global Consortium for Digital Currency Governance will aim to increase access to the financial system through innovative policy solutions that are inclusive and inter-operable Opportunities for financial inclusion will be only unlocked if the space is regulated properly and includes public-private cooperation across developed and high-growth markets."
Digital money and central bank digital currency: An executive summary
Central banks already issue digital money, but only to a select group of financial institutions. Central bank digital currency would extend this to households and firms. This column examines the proposal for such currency and assesses the opportunities and risks. It argues that while preparations for the launch of Libra have not proceeded according to plan, it has become clear that for central banks, maintaining the status quo is not an option.
Digital currencies: A question of trust
This OMFIF report centres on the findings of a global opinion poll on public trust in monetary institutions, payment characteristics and digital currency. The poll was conducted by Ipsos MORI across 13 advanced and emerging countries. Our findings suggest that central banks are well-positioned to issue digital currency. In almost all countries, respondents indicated that they would feel most confident in digital money issued by the domestic monetary authority. Respondents globally expressed a lack of confidence in digital money issued by a tech or credit card company, particularly respondents from advanced economies.
CBDC and Monetary Sovereignty
Wide adoption of a digital currency denominated in a different unit of account, such as Libra, presents a significant threat to monetary sovereignty and financial stability. Issuing a CBDC could potentially counter this threat. Making central bank money more user-friendly would increase its attractiveness as a means of payment in general and as an alternative to Libra in particular.
Trillion-Dollar Stimulus Jumpstarts Project To Issue Central Bank Currency On Ethereum
First conceived earlier this year, eThaler gets its name from the thaler, a silver coin used throughout Europe for hundreds of years, from which the word “dollar” is derived. A group of professionals from consulting firms Accenture and InfoSys and the Itau Bank in Brazil, have been working on the open-source project in their free time for the past six months to explore the future of central bank currency issued on a blockchain.
Private Companies Could Play Role in Digital Currency Issuance, Bank of England Says
Although the BoE has said crypto-assets don't meet the necessary criteria to be considered money, CBDC analyst Ben Dyson said, "that doesn't mean that it's impossible for somebody to improve upon that technology and create something that much better fulfills the qualities of money... We've seen proposals over the last year from large technology firms, for example, to build payments systems and crypto-assets that could function more as stable money."
Launch of the OMFIF Digital Monetary Institute
The Official Monetary and Financial Institutions Forum (OMFIF) has launched the Digital Monetary Institute, a high-level group of policy-makers, technologists, financiers and regulators to explore the challenges and opportunities of digital finance. The principal focus will be on payments instruments in wholesale and retail markets, with central bank digital currency being of particular interest.
Stanford Future of Digital Currency Initiative
The Initiative will focus on Digital Currencies of all forms across the entire ecosystem spectrum, from centralized to decentralized to hybrids including Central Bank Digital Currency (CBDC) and stablecoins amongst many others. Currently, more than 40 central banks are exploring some form of digital currency initiative. The Initiative will undertake research and evaluation of technical standards for interoperability in collaboration with key government, NGO and private industry stakeholders. The Initiative will also study and implement emerging cross-border business use cases related to supply chain, financial markets, charitable giving and macroeconomic impact of these instruments on promoting financial inclusion.
Who Should Provide Central Bank Digital Currency?
With this in mind, central banks should champion sCBDC. Let private providers compete in providing some sort of central bank–sanctioned version of digital currency to the masses. The central bank can limit itself to maintaining the back end and offering a degree of regulation. If sCBDC does not work, the central bank’s reputation won’t be tarnished. And, if sCBDC does take off, the central bank need not worry about its attention being diverted by all the day-to-day concerns of interacting with a retail clientele.
Fnality adviser: wholesale CBDCs not in central banks’ DNA
Fnality, formed of a consortium of 14 major banks, is aiming is to create the means of payment on-chain for financial markets by use of its Utility Settlement Coin (USC). The USC is similar to JPMorgan’s JPM Coin, but backed by central bank deposits. Fnality is currently seeking approval for such deposits from several central banks, including the Federal Reserve, the Bank of England and the European Central Bank, with the intentions to receive its first green light in Q3 of 2020.
Bank of England on payments after the Covid crisis – emerging issues and challenges
Changes in the way we pay and the challenges we’ve seen over the past several months pose two important and interrelated questions for central banks and regulators. First, how do we ensure that we have legislative and supervisory frameworks in place to support development of safe private sector innovation that could respond to these challenges? Here, it is clear that we need to ensure that new ways to pay and new forms of electronic money are offer equivalent protections to existing ones. And second, what is the right role for central banks in provision of the money we use to transact? I’m looking forward to the discussion.
Central banks and payments in the digital era
According to a special chapter of the BIS Annual Economic Report, digital innovation is radically reshaping the provision of payment services, and central banks are embracing this innovation. They promote interoperability, support competition and innovation, and operate public infrastructures - all essential for easily accessible, low-cost and high-quality payment services. And central bank digital currencies (CBDCs) can foster competition among private sector intermediaries, set high standards for safety and risk management, and serve as a basis for sound innovation in payments.