You Wouldn’t Need Crypto If You Have CBDC; ECB & Fed Selling Their Digital Fiat As Better Than Bitcoin

You Wouldn’t Need Crypto If You Have CBDC; ECB & Fed Selling Their Digital Fiat As Better Than Bitcoin

Federal Reserve Chairman Jerome Powell on Wednesday came out strongly supporting a digital dollar, saying it could undercut the need for cryptocurrencies and stablecoins.

When asked during the congressional hearing if having a digital currency issued by the central bank would be a more viable alternative than cryptos in the payments system, Powell agreed and said:

“I think that may be the case and I think that’s one of the arguments that are offered in favour of digital currency. That, in particular, you wouldn’t need stablecoins, you wouldn’t need cryptocurrencies if you had a digital US currency – I think that’s one of the stronger arguments in its favour.”

Powell said a discussion paper would be released in early September for the same, which he described as a key step in accelerating the Fed’s efforts to determine if it should issue its own central bank digital currency (CBDC).

During the hearing, Powell also shared his skepticism towards crypto assets becoming the primary payments vehicle in the US. But he does see stablecoin gaining more traction, and because of that, they need more regulation.

“We have a pretty strong regulatory framework around bank deposits,” which Powell said, “doesn’t exist currently for stablecoins.”

If stablecoins are going to be a significant part of the payments universe, which crypto assets won’t be “but stablecoins might be – then we need an appropriate regulatory framework,” Powell added.

European Central Bank (ECB) also shared similar views on the same day as it said a digital euro would be more “environmentally friendly” than the energy consumption of Bitcoin.

This comparison came as ECB announced that it had launched the investigation phase of a digital dollar project that will last 24 months. ECB President Christine Lagarde said,

“Our work aims to ensure that in the digital age, citizens and firms continue to have access to the safest form of money, central bank money.”

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Author: AnTy

Future of Digital Yen to Gain Clarity in 2022; CBDC Has Potential to Reshape Japan’s Financial Industry

Future of Digital Yen to Gain Clarity in 2022; CBDC Has Potential to Reshape Japan’s Financial Industry

Japan’s Central Bank could issue its central bank digital currency (CBDC) by the end of next year.

This was made known by Hideki Murai, who runs the Liberal Democratic Party’s panel on cryptos. Murai believes the country would have a clearer picture of what to expect concerning a digital yen by 2022, Reuters reports.

How CBDC Would Affect Financial Institutions

The lawmaker said there is no immediate decision regarding the issuance of a CBDC.

“If the BOJ were to issue CBDC, it would have a huge impact on financial institutions and Japan’s settlement system. CBDC has the potential to completely reshape changes occurring in Japan’s financial industry.”

Murai also spoke on issues concerning whether the digital yen will supersede or interfere with private business when issued.

The country’s financial industry is already facing major changes. This is because non-bank retailers are venturing into the turf of commercial banks by offering various online settlement services.

Murai said that if CBDC is designed in a way that makes banks key intermediaries, this could shift business and data away from such retailers back to the banks.

Away from internal issues, Murai noted that the Bank of Japan should ensure that the digital yen is compatible with CBDCs of other developed countries. This is to ensure it can compete with China’s digital yuan.

Bank Of Japan Trailing Behind China

Although several Central banks have hastened efforts to develop CBDCs in their various countries, China remains at the forefront.

The People’s Bank of China is currently launching trials across the country as it accelerates efforts to digitize its national currency. China expects to have its CBDC in circulation to an extent by the time the Winter Olympics in Beijing comes in February next year.

The Bank of Japan (BOJ), on the other hand, only began its CBDC project a few months ago. The bank introduced a liaison and coordination committee focused on CBDC in March. In April this year, it began the first phase of CBDC experiments with the second phase scheduled for next year.

The Bank of Japan had previously stressed its unreadiness in issuing a CBDC. However, this latest statement from a public official suggests the bank’s willingness to pursue a CBDC issuance sooner.

Murai’s comment also comes after former top Japanese financial regulator Toshihide Endo said when China launches its CBDC proper, negative perceptions around digital currencies will change.

According to him, China’s progress in issuing its digital yuan will push advanced economies into following suit.

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Author: Jimmy Aki

Monetary Authority of Singapore Partners With World Bank and IMF to Launch Global CBDC Challenge

Monetary Authority of Singapore Partners With World Bank and IMF to Launch Global CBDC Challenge

The Monetary Authority of Singapore (MAS) has launched a global challenge for financial institutions to submit ideas and solutions relating to retail Central Bank Digital Currencies (CBDCs).

The apex bank unveiled the challenge in partnership with the International Monetary Fund (IMF), World Bank, Asian Development Bank, and the Organisation for Economic Co-operation and Development.

Global Challenge To Seek Solutions For CBDC

The Global CBDC competition seeks innovative retail CBDC solutions to enhance payment efficiencies and promote financial inclusion.

Financial technology (FinTech) companies and financial establishments around the world have been invited to contest this challenge.

According to the bank, the competition would see participants submit solutions to 12 unresolved problems regarding CBDC instruments, distribution, and infrastructure.

At the end of the contest, three winners will be chosen, with each receiving S$50,000 (US$37,193) in prize money. In addition, up to 15 finalists would have the chance to receive mentorship and access to the APIX Digital Currency Sandbox.

The sandbox offers a comprehensive test and development platform, including a host of different application programming interfaces (APIs).

The chosen finalists would pitch their solutions to a global audience on Demo Day at this year’s Singapore FinTech Festival. The Singapore FinTech Festival is a global festival that will be held from 8 to 12 November 2021.

Other UN agencies which MAS partnered with on this project include the United Nations High Commission for Refugees, United Nations Development Programme, and United Nations Capital Development Fund.

The Global CBDC Challenge will also be supported by Amazon Web Services, Mastercard, payments platform Partior, blockchain software developer R3 and blockchain project Hyperledger.

Banks Around The World Working On CBDCs

Many central banks around the world are currently developing CBDCs. According to reports from Bison Trails, 80% of Central banks are studying CBDCs and making efforts to make their currencies compatible with the digital economy.

Most of these advancements are focused on wholesale CBDCs, which will promote central bank-level payments. However, some are also considering retail CBDCs, which consumers and businesses will be able to use like cash.

China still has the lead in developing and deploying CBDCs. The country is currently testing a digital Yuan version, where customers can transact payments over their mobile phones.

The US kicked off a Digital Dollar Project last month to test how a Federal Reserve-issued CBDC would operate.

The project, which consists of five pilot projects, is aimed at evaluating how the digital dollar can benefit people who are unbanked or underbanked as well as individuals who do have access to banking services and small businesses.

Meanwhile, unlike other countries, El Salvador took a more radical approach as opposed to having a CBDC. The country recently became the first to make Bitcoin a legal tender.

El Salvador is also considering mining Bitcoin using geothermal energy derived from volcanoes.

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Author: Jimmy Aki

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