Bahamas Central Bank Confirms CBDC ‘Sand Dollar’ to Launch In Less Than 30 Days

The Bahamas Central Bank has confirmed that its pipeline CBDC ‘Sand dollar’ will roll out next month as anticipated. This will mark the first retail-oriented CBDC to be integrated with fundamental financial market pillars as the world gradually shifts to digital payments. According to the announcement, Bahama’s Sand dollar is ready for national release and will be scaled past the pilot regions of Abaco and Exuma as of October 20.

Notably, the Sand dollar has been in the works since 2018 and came about as one solution to onboard more of the Island’s population into a ‘bank-like’ ecosystem. The latest development, therefore, marks a significant milestone for the prospectus Bahamian digital dollar, which might ultimately boost financial inclusion. The announcement noted,

“Although average measures of financial development and access in The Bahamas are high by international standards, pockets of the population are excluded because of the remoteness of some communities outside of the cost-effective reach of physical banking services.”

Sand Dollar Stakeholders

The Central Bank of Bahama will roll out Sand dollar in collaboration with Authorized Financial Institutions (AFI’s); these include Credit Unions, Money Transmission Business (MTB), Payment Service Providers (PSPs), and Commercial banks. They will act as the intermediaries between the regulator and retail market by providing services such as digital wallets and transactional operations.

The Sand dollar gradual national release will happen in two phases, with the first one being KYC and due diligence readiness amongst the AFI’s. This will cover all account tiers, including digital wallets that will be launched as part of the Sand dollar ecosystem. The Central Bank added that it would continuously increase engagement with the private sector stakeholders.

As for the second phase, emphasis will be on government services and public utilities; this stage is expected to kick off in 2021 between the first and second quarters. Likewise, the AFI’s are also in preparation mood with three PSPs, once a commercial bank and four MTBs already authorized to operate as Sand Dollar AFI’s.

“These AFIs are enabled to offer Sand Dollar services to stakeholders either through their custom apps (after successful completion of a cybersecurity assessment) or through the generic Sand Dollar app.”

Notably, the Sand dollar network has undergone an intensive cybersecurity assessment, which is, in turn, complemented by similar testing procedures by AFI’s before being integrated with this CBDC. Also, the Sand dollar wallets are embedded with 2FA features. The Central Bank, however, highlighted that Bahamians would enjoy confidentiality but not the anonymity of fiat.

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Author: Edwin Munyui

Low Financial Literacy Investors Twice As Likely to Own Crypto vs Market Gurus: Bank of Canada

A new study released by the Bank of Canada has revealed that folks with lower financial literacy are more likely to own Bitcoin than those with higher literacy levels. The paper’s main point of the research was the use of ‘Cash Alternatives’ in Canada throughout 2019; some of the points highlighted include the adoption of cryptocurrencies and the possibility of a Central Bank Digital Currency (CBDC).

According to the report, cash payments in Canada decreased from 54% to 33% between 2017 and 2019 as more people opted for credit or debit cards instead. It highlights that this trend was mainly fueled by the rise of e-commerce, hence ease of making digital payments. Nonetheless, most Canadians are still using cash within the local Point-of-Sales (PoS).

Crypto Ownership Demographics

With cryptocurrencies getting more hype by the day, the survey revealed that at least 89% of Canadians have heard of Bitcoin. Out of these, 5% percent own BTC while another 1.6% have portfolios in other crypto assets such as Ether and Litecoin. As for the gender and age demographics, the groups which were mostly aware or own Bitcoin fall under young, male, university-educated, or high-income Canadians.

While those demographics may seem to favor financial literate folks, the research revealed that BTC ownership is more correlated to the less financially aware Canadians, ranking the sample into three where 47% had high financial literacy followed by the medium at 35% and finally low at 18%. Interestingly, 8% of the latter group said they own crypto assets compared to 4% of the highly financially aware.

However, awareness is still high among the more financially literate, with around 93% having heard of crypto assets instead of only 72% at the lower financial literacy group. While the digital payments space may be booming, the researchers noted that at least 86% of Canadians have no plans of shifting from cash.

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Author: Edwin Munyui

Fed Reveals Details About Digital Cash ‘Without The Anonymity Of Physical Currency’

Federal Reserve Bank of Cleveland President Loretta Mester revealed that each American would receive digital dollars directly. She said,

“Legislation has proposed that each American have an account at the Fed in which digital dollars could be deposited, as liabilities of the Federal Reserve Banks, which could be used for emergency payments.”

This was revealed on Wednesday when Mester delivered a speech to the Chicago Payment Symposium titled “Payments and the Pandemic,” in which she talked about “Central Bank Digital Currencies.”

Here she wrote about how during the pandemic, CBDCs have gained traction around the world (China, Bahamas, Brazil, Bermuda, South Korea, Russia, UK, France, Thailand, Japan, and many more).

Fed Digital Cash

Other proposals include creating digital cash — which is just like the physical currency issued by central banks but in digital form and “potentially, without the anonymity of physical currency.”

Digital cash wouldn’t require the involvement of commercial banks as they would be directly issued to the users’ digital wallets with central-bank-facilitated transfer and redemption services.

However, the demand for and use of such instruments is to be further considered, she said, adding the potential risks and policy issues surrounding CBDC also needs to be better understood and costs and benefits evaluated.

Mester also said that the Fed has been researching about issuing CBDC for some time, and already the technology lab of the Board of Governors has been testing the benefits and tradeoffs of distributed ledger platforms.

While the Federal Reserve Bank of Boston is working with MIT on different technologies for the CBDC, the New York Fed has collaborated with BIS to understand the relevance of fintech for central banks.

Although the authorities have been doing all the research, she said it “does not signal any decision” by the Fed to adopt such currency as they need to first better understand the issues related to financial stability, market structure, security, privacy, and monetary policy.

Metser concluded her speech by saying that the payment system, which is a critical part of the US infrastructure, must remain modern, resilient, and able to adapt to changing customer needs as they evolve.

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Author: AnTy

BoE Explores Negative Rates; Bitcoin Is A ‘Must’ Because Fiat is a ‘Giant Ponzi Scheme’

The Bank of England (BoE) is exploring negative interest rates now and in response Sterling weakened sharply.

The pound dropped 0.7% against the dollar after the central bank’s plans “to explore how a negative Bank Rate could be implemented effectively, should the outlook for inflation and output warrant it at some point,” were revealed.

While the negative rates are being considered, the key interest rate at 0.1% and the QE program remained unchanged on Thursday. Petr Krpata, a currency strategist at ING said,

“There was some expectation that one or two dovish members would vote for an increase in QE, but instead the BoE surprised people by revealing that they’ve been discussing negative rates.”

The UK is currently grappling with a resurgence in virus infections and fresh social restrictions to counter them. There are also fears that unemployment could spike when the government withdraws support for wages next month. Adding to this is Prime Minister Boris Johnson’s threats to redraw his Brexit deal with the EU.

The same day, the Bank of Japan and the Federal Reserve also kept the rates unchanged at -0.1% and 0%-0.25% respectively.

This path to sub-zero rates has been already taken by some European peers and of course the BOJ, which means customers are charged for their deposits in banks.

Source: Gemini’s Tyler Winklevoss

In response to BoE contemplating negative rates, Jeff Booth, the author of the book “Price of Tomorrow,” called fiat currencies and economies “a giant Ponzi scheme.” He also said we should expect more banks to announce sub-zero rates.

Earlier this week, he had called Bitcoin “a “must” Not just for your wealth but as a lifeboat.”

Booth fired up his Twitter by explaining how central banks are exponentially adding more debt to escape the massive debt problem. Before the COVID-19 pandemic, the debt was $250 trillion on a global economy of $80 trillion, out of which $185 trillion has been added in the last 20 years only.

“The unwind in whatever form it takes is going to be brutal,” and in that case, the world has only two choices either default through hyperinflation or default though a deflationary depression and the latter one will include the collapse of the banking system, he said.

And all of it because “an economic system (is) trying to fight gravity and catching all of us in its vortex,” said Booth.

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Author: AnTy

Reserve Bank of Australia Sees No Rush in Launching A CBDC; Aussie Banknotes Are Working

As other nations are rushing to launch central bank backed digital currency dubbed CBDC, Australia is not joining the bandwagon.

As per the Australian local news platforms, the Reserve Bank of Australia recent payments paper indicates that the bank is taking a cautious stand when it comes to CBDCs and privately issued stablecoins.

According to the australian central bank, there is no urgent case or need to introduce a CBDC in the country. The regulator argues that the country has an efficient, real-time payment platform which eliminates the need of a CBDC.

In addition, the regulator notes that the use of cash for transactions is decreasing in the country as Australian citizens are getting rid of banknotes just like in other countries like Sweden.

According to the central bank, despite the COVID-19 crisis in the country, the demand for cash has gone up. In this regard, RBA has committed to continue making it easy for Australians to access banknotes “for as long as Australians wish to keep using them.”

The Reserves Bank’s paper also explored the projects being carried in China, Sweden and Canada – some of the countries which have taken the CBDC initiatives proactively.

When it comes to Sweden, the RBA says that the country has witnessed a significant decrease in the use of cash for a number of years hence the need for Riksbank to come up and test the use of e-krona.

In Canada’s case, the country’s central bank has been preparing itself to provide CBDC when the opportune time comes. The Canadian central bank has envisioned two scenarios when CBDC can be beneficial – a collapse in use of fiat money for normal transactions as well as a threat to the country’s monetary policy as a result of growth and development of privately issued digital money.

The RBA’s report also touches on Facebook’s Libra stating that it still remains a dream and is following closely on whether it be granted regulatory approval to operate in various jurisdictions.

The Australian central bank also opined that the Chinese CBDC project which is at an advanced stage is largely informed by the popularity of private-sector e-money wallets like WeChat and Alipay.

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Author: Joseph Kibe

Bermuda-Based Digital Asset Bank, Jewel, Partners With Crypto Custodian Anchorage

Jewel, a proposed digital asset bank in Bermuda, has been added as one of the clients to Anchorage’s digital asset custodial services. The yet to be approved digital asset bank announced on September 16, noting that the move will be beneficial to crypto companies based on the island.

Anchorage, licensed in the U.S, significantly increases the value proposition of Jewel digital asset bank as a prospectus entity in the Bermuda crypto banking space. Jewel’s chairman and founder, Chance Barnett said,

“Our relationship with Anchorage enables us to serve our clients with the rigorous security and product standards needed for bank-level safety, service, and compliance.”

Leveraging Anchorage as its crypto custodian will help Jewel run operations smoothly; the target functions include the provision of checking accounts and other crypto banking services to firms in this niche. Consequently, Anchorage is set to play a fundamental role in the custody of digital assets entrusted to Jewel by its clients.

It is quite noteworthy that Anchorage’s custodial services are relatively liquid, given that the firm does not use cold storage. Jewel is optimistic that this position will further facilitate its product scaling to feature lending services for crypto-oriented entities. The company’s Chief Revenue Officer, Jill Richmond, added that they intend to increase operations to other jurisdictions as well,

“We are at the forefront of being able to service global markets … We have existing letters of intent at the moment with a number of the top Tier I, Tier II digital asset exchanges.”

Bermuda’s Progressive Blockchain and Crypto Approach

While Jewel will probably be the first approved digital asset bank in Bermuda, the island has been a leader in the blockchain adoption and regulatory space. Some notable milestones include developing a blockchain identification system in collaboration with the Shyft network and Perseid. The small island is also becoming a crypto business hub with exchanges shifting operations from stiff regulatory jurisdictions like the U.S.

Interestingly, Bermuda’s government is also one of the few authorities that accept tax payments in crypto, the USDC coin, to be specific. If Jewel is given the go-ahead, the crypto payment options will probably scale based on this digital asset bank’s ability to spur integration by acting ‘as the banking bridge between digital assets and traditional fiat currency (USD) held in banking accounts.’

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Author: Edwin Munyui

Eurosystem to Make a Decision on Digital Euro in the Coming Weeks, ECB President

European Central Bank President Christine Lagarde says a panel of eurozone central bank officials is exploring the pros and cons of a digital euro and will soon reveal whether or not the region needs to create their very own central bank digital currency.

The initiative of a CBDC may be critical to ensure they don’t get left behind in the move to digital currencies and global changes in payments, said Lagarde, in a virtual event with Germany’s Bundesbank. Thursday evening she said,

“The Eurosystem has so far not made a decision on whether to introduce a digital euro. But, like many other central banks around the world, we are exploring the benefits, risks, and operational challenges of doing so.”

“The findings of a Eurosystem task force are expected to be presented to the public in the coming weeks, followed by the launch of a public consultation.”

While the fact that Europe is dominated by foreign payment service providers isn’t necessarily a concern, the ECB president said the “global context” and “increase in protectionist policies” do present new risks.

“We have a responsibility to ensure that our citizens have choice and cannot be excluded from the payments ecosystem due to the unilateral actions of others.”

A digital euro would be useful for retail users that are increasingly ditching banknotes in favor of digital payments. Still, it also poses the danger of crowding out private sector solutions and hollowing out the banking sector.

In the meantime, Sweden’s Riksbank has been testing its e-krona for months now. However, cash remains prevalent in eurozone countries, including Germany.

The Bank of England and the Federal Reserve have taken a cautious approach to introduce a CBDC. People’s Bank of China, meanwhile, is already running a trial for its DC/EP while the Bank of Japan is currently at the research phase of a digital yen.

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Author: AnTy

Brazil Fast Tracks CBDC Launch; Central Bank President Calls for Roll Out In Next Two Years

  • Brazil’s central bank president, Roberto Campos Neto, announced the country’s plan to launch its own central bank digital currency (CBDC) by the end of 2022.

Speaking at a Bloomberg-sponsored event, Roberto Campos Neto, president of the Banco Central, praised digital currency payment systems as the future of financial systems claiming the country is in the pipeline of launching their CBDC in the coming two years.

Despite starting their research on its digital payments systems and CBDC recently, Brazil aims to accelerate its efforts in the field to provide a stable and working platform by 2023. According to Neto, Brazil’s CBDC will be built on an instant payment system allowing efficient, open, and interoperable transactions across similar systems in a bid to improve the financial system.

Neto stated Brazil is ready to launch its CBDC given it has “all the ingredients” to start its CBDC project and complete it by 2022. He said,

“To have a digital currency, you need an instant payment system that is efficient and interoperable; an open system, where you can create competition; and a currency that has credibility, is convertible and international. After that, I think you have all the ingredients to have digital currency. We think we will have it in 2022.”

Additionally, the central bank has been working on its banking infrastructure in a bit to provide instantaneous banking settlements between peer banks. The new infrastructure, PIX, will be launched in November, allowing peer-to-peer open banking transactions that can be settled in a matter of seconds.

Neto, however, did not mention the role that the CBDC will play in its new PIX infrastructure. It is expected to be complementary to the latter. He further clarified the role of a CBDC as:

“A CBDC distinguishes itself from cryptocurrencies without national trust, like Bitcoin, because it is just a new form of representation of the currency already issued by the national monetary authority, that is, it is part of the monetary policy of the issuing country.”

With the launch of its own CBDC project, Brazil joins several countries already working on CBDC’s, including China, Japan, and Canada.

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Author: Lujan Odera

China Construction Bank Disables Chinese DCEP Wallet After Users Notice Feature in Bank App

China Construction Bank, one of the central state-owned banks in China, recently realized that the official wallet for the national CBDC is open for public use within its official banking app. The users could navigate to the wallet by merely entering the national digital currency, which would take the users to the wallet feature where they can register and activate the wallet by subscribing with the mobile number associated with their bank accounts.

Soon, the bank came to discover about the activation of the official wallet from the amount of community’s buzz that the activation caused among the crypto community in the country. Many customers went on to make small transactions in the yet to be released CBDC.

As soon as the news was brought to the attention of the state-owned bank, they swiftly disabled the feature. After disabling the official wallet feature, people searching for the CBDC wallet were shown a message which roughly translated to, “This feature is currently unavailable for the public, kindly wait patiently.”

How Does the Official Wallet Look and Function

The official wallet app was online for a brief period, but in today’s day and time, anything which makes it to the internet ones hardly disappear, and that has been the case with the ongoing official digital Yuan wallet launch by mistake. People were quick to post the layout of the wallet app on the internet, which showed that the users who managed to register with the new wallet app were given an official wallet ID, which could be used for the transfer of funds between the official wallet app and the user’s account.

The wallet would not just allow transactions between the bank and the app a user can send their digital yuan to another wallet by adding the unique wallet ID.

China is going to become the first country to launch its official digital currency issued by the People’s Bank of China. The big-four state-owned banks have been tasked to develop their respective wallet app to facilitate transactions using the CBDC.

China started its research on Central Bank Issued Digital Currency almost five years ago, and rumor mills were rife that the launch of the digital yuan would take place by the end of last year. However, the Chinese government mostly discarded these rumors without offering any official stance on the date of the launch. However, by the first quarter of 2020, the PBOC launched the testnet, and last week the mainnet for the digital yuan was established as well.

During the trial run, the government used digital yuan as a form of a travel subsidy for government employees in selected areas. The testing phase was later expanded to more cities and even included restaurants and fast-food chains.

With the official launch of the digital yuan just round the corner, many countries are actively observing China’s progress in the digital currency domain.

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Author: Hank Klinger

Brazilian Central Bank Task Force To Study CBDC Issuance and Impact

The Central Bank of Brazil on 21st August announced that it will be setting up a world-wide study group to research the issuance of central bank digital currencies (CBDC). The central bank, in its official statement, noted the growing impact and adoption of digital assets, especially CBDCs.

The new study group will look into various aspects of digital assets and how it can help in the economic uplifting of citizens while ensuring to mitigate all risks associated with digital assets.

The main intention of the study will be to improve commercial transactions between public and private entities, along with improving international or cross-border remittance services. Some of the critical areas of this worldwide CBDC Study include,

  • Scope
  • Societal benefits
  • National challenges

The study group tasked at looking into different aspects of CBDC will also study the security vulnerabilities involved with these digital assets like data protection and regulatory compliance risks involved.

CBDCs have been a priority for many countries, especially after China’s aggressive approach towards blockchain and the launch of its native CBDC. Most of the countries are quite receptive to blockchain technology despite being critical of cryptocurrencies. This is the reason most of the countries are looking for ways to launch their own CBDC.

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Author: Rebecca Asseh