China & UAE Central Banks Join HKMA & BoT In ‘Multiple CBDC Bridge’ For Cross-Border Payments

China & UAE Central Banks Join HKMA & BoT In ‘Multiple CBDC Bridge’ For Cross-Border Payments

To reduce cross-border payment’s pain, the Central Bank of United Arab Emirates (CBUAE) and People’s Bank of China (PBoC) have joined multiple-CBDC’s projects, announced Hong-Kong Monetary Authority (HKMA) and Bank of Thailand (BoT) on 23rd February.

The project, Central Bank of Digital Currency (CBDC), has pulled many central banks to blockchain across Asia, making regulation easier against regular currencies (fiats). Now, HKMA and BOT are on the road together with the People’s Bank of China and Central Banks of UAE to explore Blockchain Ledger Technology’s possible facilities.

In light of the announcement, the current phase of the exploration into Central Bank of Digital Currency, based on the ‘Inthanon-LionRock’ research project, is going to create a PoC (proof of concept) to,

“Facilitate real-time cross-border foreign exchange payment-versus-payment transactions in a multi-jurisdictional context and on a 24/7 basis.”

The CBDC focuses explicitly on resolving the difficulties a user faces during cross-border payments. Complex regulations and cost inefficiencies are the primary barriers to transfer funds across countries. As Mathee Supapongse, BoT’s deputy governor noted earlier,

“The model offers a cross-border corridor network where participants can transfer funds instantaneously on a peer-to-peer basis and in an atomic PvP manner. The design and key findings of the project have added new dimensions to central bank communities’ studies on cross-border funds transfer area.”

The inclusion of Asia’s significant countries’ central banks in the CBDC project would lead other financial sectors to join the track. And if it comes true, the adoptions will create a transparent and inducive environment for CBDC to integrate finance beyond Asia, too.

The growing profile of blockchain has compelled the vast number of government authorities to have a digital alternative to decentralized coins like Bitcoin and its linked currencies.

Due to the highly technical nature of the digital market, government sectors would find it hard to track and control the flow of digital assets. And this will eventually make CBDC the commonplace to come in the future. China is second to none in creating CBDC’s mechanism and trying hardware biometric ID wallets for its digital yuan.

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Author: James W

India Proposes Bill to Ban “Private” Crypto’s and Introduce a CBDC, But No Need to Panic

India Proposes Bill to Ban “Private” Crypto’s and Introduce a CBDC, But No Need to Panic

The proposed bill is yet to be presented, and WazirX CEO says they have “been preparing for this” and “pushing for regulations.”

The Indian government is now planning to introduce a bill to ban all private cryptocurrencies and launch its own central bank digital currencies (CBDC).

“To create a facilitative framework for creation of the official digital currency to be issued by the Reserve Bank of India. The Bill also seeks to prohibit all private cryptocurrencies in India, however, it allows for certain exceptions to promote the underlying technology of cryptocurrency (sic) and its uses,” reads the screenshot shared by Crypto Kanoon on Twitter.

However, this isn’t the first time that there are talks of such a bill to be proposed in India or in the crypto space.

Not to mention, the market has been seeing a lot of FUD in the ongoing bull market — China and Tether FUD has already been renewed.

“Let’s not be afraid. We’ve been preparing for this. We’ve been pushing for regulations. I believe this bill will be referred to a standing committee for further deliberations,” tweeted Nischal Shetty, founder, and CEO of Indian exchange WazirX, which is acquired by leading spot exchange Binance.

When it comes to a CBDC, central banks of several countries have taken steps towards this, and Shetty believes it a good thing, but the scary part is banning private cryptocurrencies, which he believes are expected to be in the context of crypto being used as a “currency.”

“Crypto as an asset/utility would be ok in India. It would also be ok to trade these assets. There are millions of Indians who own crypto assets. Billions of dollars of people’s money and wealth are at stake here. I’m sure the Government understands that” he said.

He further goes on to explain that there is no such thing as a “private cryptocurrency” because, by their nature, they are decentralized and public.

“Attacking digital assets by confusing them to be INR competitors wud be amateurish,” he said.

Being a large country, India has the second-largest population in the world after China; the WazirX CEO expects the government to understand the underlying terminologies before presenting any related bills and not be in a rush and destroy the general public’s value by doing it wrong.

Shetty is rather “looking forward to a healthy debate if this is presented” and expects this to be a precursor to positive crypto regulations.

“Wrong or hasty regulations will set us back by a decade. Right regulations will catapult India to the forefront of this technology,” Shetty said.

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Author: AnTy

Sweden Is Working with Corda’s DLT for the e-Krona CBDC Proof-of-Concept

Sweden Is Working with Corda’s DLT for the e-Krona CBDC Proof-of-Concept

The Swiss central bank is already working with Corda’s Distributed Ledger Technology (DLT) for its CBDC proof-of-concept in the proposed e-krona digital currency. Cecilia Skingsley, the bank’s deputy governor, confirmed this development while speaking yesterday at the CFC St. Moritz conference panel. Sweden had recently announced the commencement of e-krona’s exploratory phase.

According to Skingsley, Corda was recommended by Accenture, which began working with Riksbank as early as 2019 on the possibilities of a CBDC. This DLT provider was apparently selected because of its current fit with e-krona’s proposed criteria. Skingsley emphasized that,

“The reason we use Corda is not that we necessarily think that Corda is the best and optimal choice for an eventual future e-krona, but when we did our procurement process, the proposal from Accenture based on Corda we found was the one that fitted our criteria the best.”

With the exploratory phase kicking off, Sweden’s population, which is used to cashless money, could soon witness a transition to digital monetary policy as well. The country has been actively involved in CBDC research and development, ranking among the frontrunners in this space. Nonetheless, Skingsley noted that the developments are but an exploration into the CBDC ecosystem,

“Although we are exploring this issue, the Riksbank has not decided to issue an e-krona. We are still in the phase when we are investigating different options.”

Other prominent jurisdictions like the U.S and France have also started the year with a keen interest in the value proposition in CBDCs. The Fed Reserve Chairman Jerome Powell recently mentioned in an interview that CBDCs are of high priority in the combat against ‘bad private money.’ Meanwhile, China has continued with the digital yuan pilot, having rolled out ATMs in the Shenzhen region.

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Author: Edwin Munyui

French Central Bank Settles $2.4 Million Simulated Monetary Shares in CBDC Pilot

French Central Bank Settles $2.4 Million Simulated Monetary Shares in CBDC Pilot

Banque de France has announced that it successfully settled €2 million (US$2.43 million) worth of simulated monetary shares on a private blockchain network as part of its CBDC pilot. The central bank, which has previously expressed openness to the idea of CBDCs, said that the pilot began on Dec 17 with the support of private players in the financial market. French Central Bank Settles $2.4 Million Simulated Monetary Shares in CBDC Pilot

According to the announcement, Banque de France collaborated with a U.K blockchain startup dubbed SETL, which provided the blockchain infrastructure and CBDC stablecoin. Other notable partners include DXC, OFI AM, GROUPAMA AM, CITIGROUP, CACEIS, and IZNES.

With the conversation on CBDCs starting on a high note this year, the Central Bank of France is among the global monetary authorities moving relatively fast in research and development. The bank had requested CBDC use case proposals as early as March 2020; they are now set to continue with more pilot experiments within the course of this year. It is also quite noteworthy that France is among the countries that are willing to partake in a digital Euro pilot, should one be rolled out soon.

Meanwhile, other jurisdictions, including the U.S, are now taking a keen interest in the potential of a CBDC based monetary ecosystem. Last week, the Fed reserve Chair Jerome Powel said in an interview that developing CBDCs is of ‘high priority’ in the fight against ‘bad private-sector money.’ China is also forging ahead with its CBDC pilot and recently rolled out the pioneer digital yuan ATMs in the region of Shenzen. These developments concur with the BIS findings last year, where it noted increased activity in CBDCs.

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Author: Edwin Munyui

China’s Central Bank Successfully Completes Its Largest CBDC Pilot Program In Shenzhen

China’s Central Bank Successfully Completes Its Largest CBDC Pilot Program In Shenzhen

  • China’s central bank completes a second successful test on its digital currency project in Shenzhen.
  • Over 140,000+ transactions were completed, $3 million given away, and 100,000 residents participated in the test.

The People’s Bank of China (PBoC) completed its largest digital currency electronic payment (DC/EP) test in Shenzhen. Over $3 million of the central bank’s digital currency was given away to over 100,000 residents in Shenzhen via a red envelope lottery, a WeChat post confirmed. The 10-day long test, which began on January 7th, saw over 140,000 transactions completed at points of sale designated to accept the digital yuan.

As we reported, the first test in Shenzhen saw over $1.3 million worth of digital yuan disbursed to over 47,000 consumers in the Luohu district during the week-long trial. According to the report by PBoC, over 2 million people applied to the first lottery, with a total of 50,000 red envelopes, for a chance to win 200 digital yuan.

According to the post, 1.8 million residents applied for the ‘red envelopes’ in the latest lottery, with 95,628 winners receiving the digital yuan in their wallets. A total of 139,794 transactions were made during the 10-day trial period, totaling $2.8 million spent by the residents. Residents deposited a further 1.51 million digital yuan (approx. $232,000) to their DC/EP wallets during the trial period.

In November, local reports from China confirmed that the PBoC worked on launching trials and piloting the digital yuan project to other provinces starting with Suzhou in Xiangcheng. Suzhou trials will be carried out similarly to Shenzhen ‘red envelope’ trials but are expected to feature offline payment channels and a smartphone touch feature.

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Author: Lujan Odera

Ukraine’s CBDC, the Digital Hryvina, Will Run on Stellar’s Blockchain

Ukraine’s CBDC, the Digital Hryvina, Will Run on Stellar’s Blockchain

Besides working on a central bank digital currency, Stellar Development Foundation (SDF) will also help with the development of digital assets and regulation of stablecoins in the country.

The Ministry of Digital Transformation of Ukraine signed a Memorandum of Understanding and Cooperation with Stellar Development Foundation (SDF) on Dec. 28.

SDF announced on Monday, this week, that as per the memorandum they will work on the development of virtual assets in Ukraine.

In response, XLM recorded gains, going to nearly $0.17 XLM 20.28% Stellar / USD XLMUSD $ 0.19
$0.04 20.28%
Volume 2.57 b Change $0.04 Open $0.19 Circulating 21.95 b Market Cap 4.28 b
2 h Ukraine’s CBDC, the Digital Hryvina, Will Run on Stellar’s Blockchain 2 w Stellar Invests $3 Million in Digital Assets Settlement Network Across LATAM 3 w XLM Records Impressive Volume; Co-founder says Team Is Making Stellar ‘Useful for Real People’
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The latest efforts align with the country working on creating a legal environment for the development of digital assets in Ukraine and enhancing its status as an innovative digital country in the financial market in Eastern Europe.

“Another important aspect of this cooperation is contributing to the development of the infrastructure for a Ukrainian national digital currency,” said Oleksandr Bornyakov, Deputy Minister of Digital Transformation for IT Development.

The National Bank of Ukraine has been researching the possibility of CBDC implementation since 2017, Bornyakov said.

As per the memorandum, both will cooperate on the development of the virtual assets market in Ukraine, supporting projects related to virtual assets; implementation and regulation of stablecoin circulation in the country; and development of the digital currency of the Central Bank (CBDC) in Ukraine.

“We look forward to working with the Ministry and other stakeholders to digitize the hryvnia, to bring Stellar-based tools and services to the people and businesses of Ukraine, and to introduce new partnership opportunities in Ukraine to businesses in the Stellar ecosystem.”

Denelle Dixon CEO: Stellar Development Foundation

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Author: AnTy

China Planning to Legalize Digital Yuan; Forbids Yuan-backed Digital Tokens

China continues to lead in developing its central bank digital currency (CBDC) as it now considers giving it a legal foundation in an upcoming law revision, reported South China Morning Post.

In the past few weeks, the trial of the digital yuan in the real world took place through the giveaway of 50,000 digital “red packets”— a series of trials have been conducted in Suzhou, Shenzhen, Chengdu, and Xiongan — and now the central bank is also addressing all the problems that emerged in the pilot tests.

According to the media report, The People’s Bank of China (PBoC) published a draft law on Friday that would give the Digital Currency Electronic Payment (DCEP) system a legal status.

For the first time, it included the digital yuan, which was also defined as part of its sovereign fiat currency.

As per the draft law, issuing yuan-backed digital tokens by any party or any plans to replace the renminbi in the market would be forbidden.

DCEP, meanwhile, will be allowed to be circulated and converted like coins and physical banknotes.

“Its centralised management will be good to fight against cryptocurrencies and global stablecoins and prevent their erosion of currency-issuance rights,” Mu Changchun, head of the central bank’s digital currency research institute, said on Sunday at the Bund Summit in Shanghai.

The central government has already made clear that DECP won’t replace cash, but there are some domestic concerns related to its convertibility, privacy, and safety. Mu touched on these potential pitfalls as he said,

“The PBOC will also face anti-counterfeit issues in the digital era, and we must lower the cost.”

He further added that the central bank would be asked: “to coordinate the construction of digital currency application scenarios for the purpose of identification.”

A digital yuan product suitable for those senior citizens that don’t use smart terminals is also in development.

As for the threat the government-led project poses to private mobile tools like WeChat Pay and Alipay, Mu said they are just electronic wallets while the DCEP is the money inside them as such “not competitors.”

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Author: AnTy

Russia’s Central Bank Joins the CBDC Bandwagon; Issues Consultative Paper on Digital Ruble Consideration

Russia’s Central Bank is the latest monetary authority to issue a CBDC consultative paper amidst the ongoing craze; the bank confirmed its interest in issuing a digital ruble, noting that it can operate alongside cash or non-cash forms of money that already exist in the country. This development comes barely a week since the BIS and 7 major central banks published a report highlighting the key principles that should guide CBDCs at least for now.

According to the consultative paper released on Oct 3, a digital ruble will require Russia’s central bank to develop advanced payment ecosystems. Consequently, the bank intends this digital asset to carry along the properties of money, given its prospective fundamentals as part of the state-backed legal tender in circulation. The paper further notes that the digital ruble will be instrumental in making payments seamless based on its underlying architecture.

In terms of a macroeconomic and political outlook, the bank also plans to curb capital outflow with its prospectus digital ruble,

“The national digital currency will also limit the risk of reallocation of funds into foreign digital currencies, contributing to macroeconomic and financial stability.”

Notably, the digital ruble will be accessible to all Russian economy agents, including government agencies, businesses, financial market stakeholders, and private citizens. These digital assets will be storable on mobile devices and e-wallets, with the holders having an option to use their CBDC tokens both online and offline. The digital ruble’s main functions, as per the paper, will include a medium of exchange, a unit of account, and a store of value.

Given the ongoing CBDC momentum, Russia’s debut at the party further suggests that monetary authorities are taking more interest in the evolving digital currency space. China is currently the most progressive jurisdiction; the digital yuan pilot has been ongoing for some months with scaling recently done to prominent cities. The EU also filed for a ‘digital euro’ trademark as it gears up to join the CBDC bandwagon in preparation for the paradigm shift to digital ecosystems.

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Author: Edwin Munyui

ConsenSys to Lead Phase Two of Hong Kong and Thailand’s Cross-Border CBDC Project

ConsenSys has been awarded the contract to lead phase two of the cross-border payments ‘CBDC’ project between Hong Kong and Thailand. Dubbed project ‘Inthanon-LionRock,’ the initiative follows successful research by the central banks of both jurisdictions, which found an additional value case in building a cross-border CBDC.

According to the press release by ConsenSys, they will work alongside industry giants Forms HK and PriceWaterhouseCoopers (PWC) towards implementing the second phase. Notably, the project has been in the works since May 2019 when the Bank of Thailand (BoT) and Hong Kong Monetary Authority (HKMA) signed a memorandum of understanding to dig deeper into the value proposition CBDC’s.

With ConsenSys now in the picture, the joint CBDC between Thailand and Hong Kong will move past the research phase to a more practical era. ConsenSys has since been tasked with building a proof-of-concept (PoC) cross-border corridor to enable Hong Kong’s Lionrock and Thailand’s Inthanon networks to interact seamlessly. The press release reads,

“Using its enterprise Ethereum stack, ConsenSys will test solutions that prioritize scalability, security, and interoperability.”

This is not the first time ConsenSys works collaboratively with a particular authority towards designing and developing a CBDC. The blockchain software technology firm has, in the past, worked with the South African Reserve Bank and Monetary Authority of Singapore to create decentralized payment networks. ConsenSys Hong Kong Director, Charles d’Haussy, noted that they are thrilled to take on a new initiative in a similar line,

“ConsenSys is thrilled to lead this implementation of CBDC for cross-border payments. We are humbled to work on the development of Hong Kong’s financial infrastructure.”

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Author: Edwin Munyui

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