Swedish Central Bank Finishes Phase One Of the e-Krona Digital Currency Test Pilot

Swedish Central Bank Finishes Phase One Of the e-Krona Digital Currency Test Pilot

  • Riksbank has revealed the finalization of the first phase of its digital currency project.

Today, the Swedes learned that they might have to wait a little longer to use an e-krona for their daily uses after the Swedish central bank realized that there are minor issues that need addressing after the first phase of a central bank digital currency (CBDC) project.

The Riksbank released a study that details the results of the first phase of its CBDC project that will run on the Corda blockchain.

The central bank tested several core issues of a future CBDC system, such as liquidity supply using its own settlement system dubbed RIX with the network membership being used as the e-kronor distributors. Other aspects tested were payment networks such as mobile apps, participants, and end-users.

The main challenge identified with the system was scalability, with the central bank saying further modifications were needed. The report says,

“The solution tested in phase one of the e-krona pilot has met the performance requirements made in the public procurement. But this has taken place in a limited test environment, and the new technology’s capacity to manage retail payments on a large scale needs to be investigated and tested further.”

The Riksbank also indicated that there were challenges in information privacy, stating a need to check if it meets the banking secrecy laws and whether the system protected personal data.

Swedish central bank had indicated that it would be ready to launch the CBDC system in 2018 but has postponed the launch date for years. The Riksbank now says the second phase of the project might not be piloted until next year and gives itself until 2026 to be fully ready.

The head of Riksbank’s unit in charge of the project insisted that it is not right to settle on the system before knowing the digital currency’s exact work. The Riksbank has also made it clear the project will not replace its fiat any time soon.

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Author: Joseph Kibe

Norway Central Bank Governor: Bitcoin is ‘Too Costly’ to be Used and Doesn’t Preserve Stability

Norway Central Bank Governor: Bitcoin is ‘Too Costly’ to be Used and Doesn’t Preserve Stability

The world’s most cashless country doesn’t want its people to use Bitcoin as an alternative.

Norway has been steadily moving towards a cashless society, but the country’s central bank governor says people shouldn’t turn to Bitcoin as an alternative.

Oystein Olsen, the governor of Norges Bank in Oslo, says it’s inconceivable that Bitcoin will replace the fiat currency controlled by central banks, adding that while people like to talk about it, Bitcoin won’t be a threat to central banks.

Bitcoin is “far too resource-intensive, far too costly, and most importantly, it doesn’t preserve stability,” Olsen said in a phone interview.

“I mean, the basic property and task for a central bank and central-bank currency is to provide stability in the value of money and in the system, and that is not done by Bitcoin.”

Recently, Kjell Inge Rokke, one of Norway’s most prominent businessmen, endorsed Bitcoin, saying it will ultimately be on the right side of monetary history. His Aker ASA also invested $58.6 million in Bitcoin and set up a new unit to establish Bitcoin mining operations and to invest throughout the Bitcoin ecosystem.

Trading above $54k, the leading cryptocurrency has become a trillion-dollar asset this year. According to Kjell, BTC price might one day even be “worth millions of dollars.”

The crypto asset hit a new ATH at nearly $62k earlier this month, surging more than 15x from its March low as institutions, hedge funds, high-net-worth individuals, pension funds, and insurance firms increasingly join the crypto market and invest in Bitcoin.

CBDC Won’t Disrupt The Private Sector

Amidst the growing interest and adoption of crypto assets, central banks from China, Sweden, Japan, and the US are developing their own digital versions of fiat currencies.

While Norway has become the world’s most cashless country, with only 4% of all payments conducted with coins and banknotes, as shared by Norges Bank Deputy Governor Ida Wolden Bache last November, the country isn’t leading in central bank digital currencies (CBDC).

Norges Bank, however, is due to publish a report on its CBDC project next month, which the officials affirm “will not change private sector credit intermediation.”

Earlier this month, Wolden Bache said the goal is that users “must be able to pay efficiently and securely in” Norwegian kroner.

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Author: AnTy

Bank of Russia to Launch Digital Ruble Pilot in 2021

Bank of Russia to Launch Digital Ruble Pilot in 2021

  • Russia in plans to launch a central bank digital currency prototype by the end of 2021.

Local reports from Russia indicate the country plans to complete its prototype for a digital ruble before the end of 2021. According to Prime, a financial news outlet, the central bank will launch pilot programs to test the CBDC in 2022 once the prototype is complete.

The report states the Deputy Chairman of the Central Bank, Alexei Zabotkin, confirmed the news during an online conference organized by NES. Zabotkin confirmed plans to launch the “prototype was underway” pending some technological developments. However, users will need to wait longer to use the digital ruble as real transactions will not be activated until the platform’s full launch. He added,

“Next year, based on this prototype, taking into account its revision, we will already be launching testing rounds.”

The latest news cement the central bank of Russia’s position in launching its CBDC, an ongoing craze across governments. In October last year, the central bank released a consultative paper on CBDCs, enhancing and advancing payment systems in the country. A week later, the bank stated it had started studying the pros and cons of launching a digital ruble kicking off its development.

Despite the barbarian crypto laws set in the country, massive developments are ongoing in the stablecoin and digital currency fields. Leading state-owned bank Sberbank also announced its plans to launch a blockchain that will host its stablecoin, Sbercoin.

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Author: Lujan Odera

A Petition Calls for the Central Bank of France to Buy Bitcoin and Other Crypto Assets

A Petition Calls for the Central Bank of France to Buy Bitcoin and Other Crypto Assets

A lawmaker signed the petition, which says, “France cannot decently remain as an observer of a race which has already started” as “not owning Bitcoin will put it in a financially weak position.”

A petition calls for an amendment to the monetary and financial code to authorize the central bank, Banque de France, to buy bitcoin and other crypto-assets.

A lawmaker in France is already in support as Jean-Michel Mis, a member of the National Assembly since 2017 who serves on the Committee of Legal Affairs, signed the petition. So, far it has received 450 signatures but requires at least 100,000 signatures within 6 months to be forwarded to the Conference of Presidents.

As such, the petition will remain active until Sept. 5, 2021.

Francois Thoorens, the co-founder of the blockchain development platform ARK Ecosystem, was the one who started the petition. It has already been sent to the Senate for validation, and only after that was, it published on its petition site.

The petition calls it “vital” for the country to adopt a strategic law that can anticipate the changes to come in the field of virtual values. It further points to companies like Tesla and MicroStrategy, who have acquired large sums of Bitcoin on the ground of a weak dollar destroying medium-term financing capacities.

Public entities like the mayor of Miami are also positioning themselves as investors of Bitcoin, the petition said, central banks are also buying with the objective to strengthen their independence. It said,

“France cannot decently remain as an observer of a race which has already started. Not owning Bitcoin will put it in a financially weak position within 5-10 years. It is urgent to take up the problem.”

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Author: AnTy

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

European Central Bank (ECB) Demands Power to Shut Down Private Stablecoins, Like Diem, in the EU

European Central Bank (ECB) Demands Power to Shut Down Private Stablecoins, Like Diem, in the EU

The European Central Bank finally tables its official opinion regarding crypto regulations to the top decision-making again, European Commission.

In their official opinion, the ECB now wants the EU members of parliament to grant its veto powers regarding the legal status of stablecoins such as Facebook-supported-Diem.

The ECB raised its concerns regarding the use of stablecoins that get their value from being pegged on one or many global currencies. The central bank is worried that stablecoins could jeopardize its control on payments, banking, and cash supply. Part of the ECB’s statement reads,

“Where an asset-reference arrangement is tantamount to a payment system or scheme, the assessment of the potential threat to the conduct of monetary policy, and to the smooth operation of payment systems, should fall within the exclusive competence of the ECB.”

The ECB also urges the lawmakers to ensure its absolute powers on stablecoins are binding and applicable to the entire national authorities within the Euro Zone.

The ECB argues that various ‘rigorous liquidity requirements’ are crucial in ensuring redemption rights are protected and clients’ direct claims towards the reserved assets that the issuers of stablecoins hold.

Firms offering tokens which are pegged on different currencies should at a minimum grant end-users a direct claim on the issuer or the reserve assets and redemption rights”, the central bank added.

Facebook had in the past laid a plan to roll out its stablecoin dubbed Libra that was pegged on different global currencies. However, the tech giant slowed down on the Libra project following many regulatory hurdles in the world. At the moment, the firm is aiming at launching the dollar-pegged stablecoin dubbed Diem.

If the EU legislators grant ECB the veto powers, Facebook and other privately issued stablecoins will likely encounter another round of regulatory backlash irrespective of the project being licensed by Swiss authorities.

It is also important to note that Christine Lagarde, the current ECB president, has criticized cryptos and stablecoins. Lagarde has in the past said central banks should never be allowed to hold Bitcoin.

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Author: Joseph Kibe

ECB President Says Central Banks Are ‘Very Unlikely’ to Add Bitcoin as a Reserve Asset

ECB President Says Central Banks Are ‘Very Unlikely’ to Add Bitcoin as a Reserve Asset

  • ECB President says central banks “are highly unlikely” to add Bitcoin (BTC) as an asset any time soon.
  • The digital euro is still in the works and could be released by 2024, she also said.

In a Business Insider report, European Central Bank (ECB) President, Christine Lagarde, repeated her skepticism on Bitcoin, stating central banks are not looking to add the digital asset as a reserve currency any time soon. During a call with The Economist, Lagarde again said BTC is not a real currency; hence central banks are “very unlikely” to add it to their balances.

“It’s very unlikely – I would say it’s out of the question,” Lagarde on whether central banks will add Bitcoin as a reserve asset.

These, however, are repetitive comments on Bitcoin from Lagarde, who has been against the coin since her appointment to the ECB. Earlier in the year, Lagarde released a statement warning against investment in Bitcoin – stating it is a highly speculative asset and could be used for “reprehensible” money laundering.

However, she believes that there’s room for digital currencies (such as the digital euro) to grow in the coming years. Due to the current global pandemic, governments across have taken a step towards digitization. Agreeing to ECB board members’ proposal, Lagarde stated the ECB is preparing a digital euro, which could be released in the coming four years.

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Author: Lujan Odera

Bank of Japan & European Central Bank Dead-Set on Pushing Asset Prices Higher

Bank of Japan & European Central Bank Dead-Set on Pushing Asset Prices Higher

Deeper negative rates for the BOJ while ECB President Christine Lagarde wants to keep fiscal spending this year and into 2022.

European Central President Christine Lagarde said on Wednesday that eurozone states must keep fiscal spending well into 2022 to protect the bloc from permanent damage caused by the COVID-19 pandemic.

Lagarde called on EU leaders to further kick start the $750 billion euro Next Generation EU spending package in an online interview.

These remarks are in line with her pledge for monetary support for the economy earlier this week when she said the recovery is to be supported by

“favorable financing conditions, expansionary fiscal policies and a recovery in demand.”

“It remains crucial that monetary and fiscal policy continue to work hand in hand. Fiscal policy -– both at the national and at the European level -– remains crucial to bolster the recovery,” she told European Parliament lawmakers on Monday.

Meanwhile, another central bank, the Bank of Japan, is considering signaling to take interest rates further into negative territory; short-term rates are currently at -0.1% and 10-year bond yields around zero. The Japan Times, citing sources familiar with the matter reported,

“In a monetary policy review in March, the central bank may make it clear that it will maintain its negative interest rate policy and that it will not hesitate to cut rates further if necessary.”

However, markets see deeper negative rates as an unlikely policy option that is already putting a strain on commercial banks’ profits. Moreover, there is no consensus within the BOJ on the final decision either.

The BOJ plans to announce its tools next month, with BOJ Deputy Governor Masazumi Wakatabe saying last week that they must

“maintain (their) commitment to achieve 2% inflation. Based on the commitment, we’ll be ready to lower nominal rates as needed.”

Governor Haruhiko Kuroda has consistently said that if the BOJ were to ease further, deepening negative rates would be among the options.

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Author: AnTy

SWIFT and China’s Central Bank, PBoC, Partner To Launch A New Digital Payments Venture

SWIFT and China’s Central Bank, PBoC, Partner To Launch A New Digital Payments Venture

  • PBoC partners with the SWIFT payments system to form a new financial payment company.
  • The full details of the partnership are yet to be released.
  • China is hastening the release of its central bank digital currency (CBDC).

In a report first published by The Block, the clearing center and the digital currency research institute at the People’s Bank of China (PBoC) and SWIFT, the global interbank settlement firm, SWIFT, have formed a partnership to launch a new financial payment service, Finance Gateway Information Service Limited, public records show.

According to the reports, the firm was registered on January 16, starting with 10 million EUR (~412 million) as the incorporation capital. No further details on the functions or scope of the funding were offered on the registration document. The PBoC and SWIFT both declined to comment on the matter.

SWIFT’s Hong Kong subsidiary largely owns the firm with 55% of the incorporation contribution and PBoC’s fully-owned domestic subsidiary, China National Clearing Center (CNCC), which will own 34%of the new entity. Other investors in the initial funding include CNCC’s subsidiary Cross-border Interbank Payments and Settlement Limited (CPIS), PBoC’s Digital Currency Research Institute, and Clearing Association of China (PCAC).

According to a person familiar with the matter, there are five board members in the new entity, including SWIFT China’s CEO, Daphne Huang; Cheng Shigang, a vice general secretary of the PCAC; three members from the global settlement firm and Mu Changchun, the head of the PBoC’s digital currency research institute.

SWIFT announced a new platform to ease account payment services and compete with Ripple, VISA, and MasterCard in April last year. Moreover, SWIFT has been at the forefront in boosting the Chinese Yuan’s use through its platform.

China’s CBDC is Around the Corner

The increasing digital payment projects cropping up in China could signal that the digital yuan is closing in on its launch. Earlier this month, the PBoC completed its largest pilot program for the CBDC in Shenzhen province, with over $3 million worth of digital yuan distributed to over 100,000 citizens in the area.

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Author: Lujan Odera

Singapore’s Central Bank Gives SDAX In-Principle Approval to Launch its Digital Asset Exchange

Singapore’s Central Bank Gives SDAX In-Principle Approval to Launch its Digital Asset Exchange

  • Singapore’s Digiassets Exchange Pte. Ltd. (SDAX) received ‘in-principle” approval from the country’s financial regulator, Monetary Authority of Singapore (MAS), to operate its digital asset exchange.

Reports from a local news website, MarketsMedia, states leading financial authority, MAS has reached an agreement “in principle” with the country’s leading digital assets service provider, SDAX, approving the launch of the latter’s exchange. This agreement allows SDAX to start its preparations to launch its digital asset exchange in the near future.

The new exchange from SDAX will provide an institutional-grade platform that “simplifies and speeds up traditional exchange processes” while offering clients “new fundraising and investment opportunities.” In principle, the agreement allows the Singapore-based exchange to attract clients, accredited investors, and institutional investors –giving them a seamless and regulated platform to trade digital and synthetic assets on a blockchain. SDAX Chairman, Mr. Khoo Boon Hui said,

“SDAX [new exchange] will contribute to Singapore’s fintech sector by offering innovative solutions to raise funds and trade fractionalized and digitized assets like real estate.”

Notwithstanding, the new exchange will also offer users digitized debt, equity, and other alternative assets with “high-quality real estate as the underlying asset class,” the report states.

Global investors will be subject to KYC compliance and AML standard measures to trade on the platform. The exchange will also build liquidity pools on Ethereum and offer high yielding investment products to its clients.

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Author: Lujan Odera