Mizuho Bank prepares roll out of proprietary digital currency
"Mizuho Bank is to launch its well-trailed proprietary digital currency in March, with the support of 60 regional domestic banks."
United Arab Emirates and Saudi Arabia Collaborate on New Cryptocurrency
"The cryptocurrency “will be strictly targeted for banks at an experimental phase with the aim of better understanding the implications of blockchain technology and facilitating cross-border payments.” The joint cryptocurrency project will also research the effect of a central currency on financial policies. The initiative reportedly seeks to protect customer interest, create standards for technology, and consider the cybersecurity risks while determining the impact of central currencies on monetary policies."
Paytm, UPI, Visa may have new rivals as RBI mulls new norms — Quartz India
"“The Reserve Bank had announced that it would encourage more players to participate in, and promote pan-India payment platforms…The objective is to minimise the concentration risk in the retail payments market, from a financial stability perspective and to give a fillip to innovation and competition,” it said. The RBI will be accepting comments from the public and the other stakeholders on the matter till Feb. 20."
Bahamian financial sector shrinks by more than a third in six years - Central Banking
"The Central Bank of The Bahamas said the decline was largely due to a “shift in business models” and “de-risking” of financial institutions, but other figures could indicate the industry is in slow contraction."
Iran Soon to Unveil Cryptocurrency With Aim to Skirt US and SWIFT: Source
"Iran could unveil its state-backed cryptocurrency at the Electronic Banking and Payment Systems conference in Tehran this week, local English-language news outlet Al Jazeera reported on Jan. 27. Iran, which has faced fresh sanctions from the United States since November, had previously planned to use blockchain-based financial tools as a way of sidestepping restrictions on its economic growth."
Iran Lifts Bitcoin Ban to Make Way For 'Crypto-Rial' - Bitcoinist.com
"Iran is currently in negotiations with eight foreign nations as part of efforts to incorporate cryptocurrency payments into international payment transactions. This move comes as the country looks for ways to counter US-led economic blockade."
Swiss Wallet Firm to Produce Physical Banknotes for Marshall Islands Digital Currency
"Tangem, a Switzerland-based ‘smart card’ wallet manufacturer will reportedly issue physical banknotes for the Sovereign (SOV), the state digital currency of the Marshall Islands, according to an announcement on Jan. 28."
Tangem To Produce Physical Blockchain Banknotes for the Marshall Islands' Digital Currency Legal Tender
"Each Tangem card will take the form of a unique physical banknote with secure blockchain-enabled microprocessor inside and combine the familiar advantages of paper banknotes with the security of blockchain technology. These protected notes will be fully transparent, 100% secure, decentralized, and represent a controllable mechanism of currency issuance and circulation for the state."
S. Korea's Central Bank Says It Won’t Issue a Digital Currency in Near Future
The official reportedly added that the BOK now plans to conduct further, more detailed studies into the prospects and impact of CBDC issuance.
Iran Launches Gold-backed Cryptocurrency as Anticipation for Crypto-Rial Grows to Evade US Sanctions
"A gold-backed cryptocurrency has been launched in the Islamic Republic of Iran,. The cryptocurrency known as Peyman (the Persian word for covenant) is the fruit of cooperation between four banks and Ghoghnoos Company."
Europe To Launch Financial Mechanism To Conduct Business In Iran
"Germany, France, and Britain are set to launch a mechanism to allow financial flows to be sent to Iran that would not violate U.S. sanctions in an attempt to keep alive the landmark 2015 nuclear deal. The so-called special-purpose vehicle (SPV), expected to come into force on January 31, will help European firms with legitimate business interests to use barter techniques to conduct business in Iran."
Who is Actually Going to Buy Iran's New Cryptocurrency?
"Iran is creating a state-backed cryptocurrency. The options for the digital token are currently open. Reportedly, it’s initially only for crypto companies to do business with the Central Bank of Iran. Later, it will be used as a means to facilitate payments between Iran and other countries for goods and services. Iran was kicked off the SWIFT network last year, essentially disabling their ability to trade efficiently. In response, Russia and other partner nations announced they’re working on a SWIFT-alternative using the blockchain."
The History of Money and the Future of Cryptocurrency
Cryptocurrencies might appear to be a natural step in the evolution of money—from metal coins to paper notes to digital bits, with each step allowing for a more effective means of payment. However, as economic historian Barry Eichengreen argues in a recent NBER working paper, “there is no straight line from commodity money to fiat money and from there to crypto, nor from metallic currency to paper currency and from there to digital.” The history of money is replete with many strange episodes along the way.
From Commodity to Fiat and Now to Crypto: What Does History Tell Us?
Over time, there has been a tendency for political jurisdictions and residents to converge on a single currency. Monopoly over seigniorage is a source of political power and a valuable lifeline when sovereignty is threatened. Moreover a uniform currency, insofar as it is free of counterparty and liquidity risk, facilitates economic activity. But will digital currencies now reverse this trend toward uniformity, given the apparent ease with which they can be created? The information sensitivity of those units, evident in the fact that they trade at varying prices, suggests that they do not yet provide the core functions of money. So-called stable coins are intended to bridge this gap, but whether they can be successfully scaled up and maintain their stability is doubtful. The one unit that can clearly meet these challenges is central bank digital currency. But there would be both costs and benefits of moving in this direction.
Iran launches gold-backed cryptocurrency 'PayMon'
"The Islamic Republic of Iran has reportedly launched a gold-backed cryptocurrency called “PayMon” – the Persian word for covenant – in cooperation with four local banks and the Ghoghnoos Company, in a move made following international sanctions."
Cashing In: How to Make Negative Interest Rates Work – IMF Blog
"While a dual currency system challenges our preconceptions about money, countries could implement the idea with relatively small changes to central bank operating frameworks. In comparison to alternative proposals, it would have the advantage of completely freeing monetary policy from the zero lower bound. Its introduction would reconfirm the central bank’s commitment to the inflation target, rather than raise doubts about it."
IMF Staff Floats Dual Money to Allow Much Deeper Negative Rates - Bloomberg
"IMF economists Ruchir Agarwal and Signe Krogstrup said that dividing the monetary base into two separate currencies -- cash and electronic money -- could allow rates to be cut even deeper below zero. E-money would pay whatever the policy rate is and cash would have an exchange rate against the e-cash, they wrote."
A dual-currency system would make negative rates work – IMF research - Central Banking
"The creation of a dual-currency system would allow negative rates to become more effective in dealing with future recessions, says research published by the International Monetary Fund. The proposal would allow central banks to transmit monetary policy faster, and shorten recessions, overcoming the limitations imposed by the zero lower bound, say authors Katrin Assenmacher and Signe Krogstrup."
NJ Legislators Pass Bill To Ban Cashless Stores | PYMNTS.com
“Many people do not have access to consumer credit, and any effort by retail establishments to ban the use of cash would be discriminatory towards those people,” said Rep. Paul D. Moriarty, D-Camden/Gloucester and one of the bill’s main sponsors, according to Chain Store Age. “The U.S. dollar is legal tender and should be accepted at any retail establishment in New Jersey.”
Korean Central Bank Study: Issuing Digital Currency Poses Financial Risk - CoinDesk
Researchers from South Korea’s central bank say issuing a central bank digital currency (CBDC) could have negative effects on the economy. The Bank of Korea (BoK) published a study on Thursday, which modeled the effects of a CBDC on liquidity at commercial banks. It found that if the public could access the theoretical digital currency directly, commercial banks’ demand deposits, or reserves, could be reduced – leaving them with a cash shortfall. That could eventually force them to compensate by raising interest rates on loans, the central bank explained.
Central Bank Digital Currency and Financial Stability | Bank of Korea
The introduction of deposits in CBDC account essentially decreases supply of private credit by commercial banks, which raises the nominal interest rate and hence lowers a commercial bank's reserve-deposit ratio. This has negative effects on financial stability by increasing the likelihood of bank panic in which commercial banks are short of cash reserves to pay out to depositors. However, once the central bank can lend all the deposits in CBDC account to commercial banks, an increase in the quantity of CBDC which does not require reserve holdings can enhance financial stability by essentially increasing supply of private credit and hence lowering nominal interest rate.
ECB chief says instant payments could break Visa/Mastercard duopoly
The European Central Bank is floating the idea of using instant payment rails to link up national card schemes as a means to break the duopoly enjoyed by Visa and Mastercard, who between them account for over 80% of all EU card transactions.
Crypto ‘Money’: Perspective of a Couple of Canadian Central Bankers - Bank of Canada
"In this paper we examine what is new about cryptoassets and their technology and how they may affect core central bank functions. We do this by outlining what we think are the three most important research and policy questions for central bankers around cryptoassets and cryptocurrencies specifically. First, what is fundamentally new about the technology that underpins cryptocurrencies and other cryptoassets? Second, how do cryptocurrencies affect a central bank’s role in the economy? Third, given the two challenges of a rise of cryptoassets and a decline in the use of cash, should digital payments be left entirely to the private sector or should central banks issue their own digital currencies? We discuss these three policy questions and highlight what aspects of them are most important to central bankers. Finally, we raise several new questions to help guide researchers in studying cryptoassets and their underlying technology."
Bill & Melinda Gates Foundation Releases Open-Source Software to Support Efforts that Expand Access to Financial Services in Developing Countries - Bill & Melinda Gates Foundation
"The Bill & Melinda Gates Foundation today released a new open-source software for creating payment platforms that will help unbanked people around the world access digital financial services. The software is designed to provide a reference model for payment interoperability between banks and other providers across a country’s economy. It is available now, free-of-cost, for software developers to adapt and banks, financial service providers and companies to implement. Information on the code can be found at mojaloop.io."
Mojaloop
The Bill and Melinda Gates Foundation have formed the Mojaloop Foundation to develop and promote a free, open-source real-time payments platform for nations and central banks. The Mojaloop software includes a directory for identifying account holders, a transfer system for routing payments, and a clearing and settlement layer that transfers funds among users’ financial institutions. The routing system relies partly on Interledger technology originally developed by Ripple. Mojaloop-based systems are hosted by each country’s authorities, but because they use a shared standard, they could eventually become interoperable across borders.
Decentral Bank – The world's first decentralized central bank
CBDC is mixed bag for financial stability – Bank of Korea - Central Banking
"A paper published by the Bank of Korea is “among the first” to analyse the impact a central bank digital currency would have on financial stability, the authors say. The conclusions of the paper, written by Young Sik Kim and Ohik Kwon, are somewhat mixed. "
The libertarian fantasies of cryptocurrencies | FT
Analysis at the IMF and the Bank of England demonstrates that we need to be clear about what central bank digital money is to achieve, how it relates to cash or bank deposits, and whether it could be a substitute for central bank reserves, which at present can only be owned by commercial banks.
Central Bank Digital Currencies: Preliminary Legal Observations by Hossein Nabilou :: SSRN
US sanctions on Venezuela could be death knell for petro - Central Banking
"The US sanctions on the Venezuelan oil industry are preventing the country from accessing foreign currency, and may very well be the final nail in the petro’s coffin, analysts tell Central Banking."