ECB’s President ‘Hunch’ is EU Might Push Forward with CBDC Plans; Decision in January, 2021

European Central Bank (ECB) president, Christine Lagarde, said on Thursday that the EU would make its decision on whether to pursue a digital euro in January 2021. This comes as more jurisdictions pay closer attention to Central Bank Digital Currencies, given the accelerated paradigm shift to virtual payment networks amidst the COVID-19 pandemic.

Lagarde shared her sentiments during the virtual ECB Forum on Central Banking. In-attendance were other prominent monetary authority figures, including the Fed Reserve chair Jerome Powel and Andrew Bailey, Bank of England governor.

While all the three figures commented on the ongoing developments in CBDC, Lagarde hinted that the EU might decide to move forward with a CBDC, although the decision will be made collectively. She stated that,

“We might well go in that direction … My hunch is that it will come.”

Lagarde was also keen to highlight that the ECB is not in a race to be the first but rather seeks to derive value from a CBDC. She noted that if the CBDC option is fast, cheap, and highly secure, then the ECB should explore the possibilities of joining other nations that have forged ahead with CBDC plans.

“If it is going to contribute to better monetary sovereignty, a better autonomy for the euro area, I think we should explore it. If it is going to facilitate cross border payments, which are very laborious in quite a few corners of our big world, then we should explore it.”

Per Lagarde’s time-frame estimates, a digital euro will take at least 2-4 years before it is finally launched. This will allow the ECB to adequately prepare and get it right once the project is ready for mainstream adoption. Some of the ECB issues are still trying to figure out include Anti-money laundering, terror-financing, and users’ privacy.

Notably, the ECB intensified its efforts in CBDC research this year and recently published a report on the possibilities and implications of a digital euro. The central bank also applied for a trademark the name ‘digital euro’ as part of its effort to hedge, should it chose to roll out a CBDC.

The Fed Chair & Bank of England Governor’s Takes

Jerome Powel, who also shared his comments during the virtual policy panel, said that the U.S is committed to looking at the ‘potential costs and benefits of a central bank digital currency.’ However, he reiterated that it is more important to get it right than being first, especially with the U.S dollar’s position as the world’s reserve currency.

Andrew Bailey, the BoE governor, touched on private stablecoins in what seemed to be a warning to issuing authorities. According to him, the bar is very high for stablecoins, given the users’ expectation of value certainty. In fact, he went on to highlight that the bar or answer might actually be CBDCs.

“They haven’t met that bar in my view. And it may be that the answer to that bar is actually central bank digital currency.”

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Author: Edwin Munyui

BlockFi Eyes European Market in Q1 2021; Excludes the UK Due to Regulatory Uncertainty

BlockFi, a crypto lending service, is eyeing the European retail market with an expected product launch in Switzerland, Italy, and the Netherlands by the first quarter of 2021. The crypto lending firm has already begun the trials for the launch in Italy. However, to many people’s surprise, BlockFi has excluded the United Kingdom from the list despite having several London offices.

David Olsson, Blockfi’s vice president for Europe and Asia, shed some light on the launch of their retail products in the European market and said,

“They’re large enough markets that it’s worth our while to go in and put the resources to work to get traction there, and there is also the regulatory certainty that they’re more pro-crypto and it’s a stable regulatory environment.”

The crypto lending firm said that they are only focusing on institutional clients in the UK for now. The reason for excluding the UK could also be attributed to the latest crypto regulation update in October made by the Financial Conduct Authority (FCA). The October update prohibited offerings of derivative crypto products to retail investors.

While the October update does not impact BlockFi, the firm is currently observing the country’s retail market and regulatory policies surrounding it. The crypto lending firm believes it’s too complicated at present to roll out an elaborate business model in the country.

Olsson said that the October ban on derivatives offering for retail investors would hamper the future of crypto services in the country. He said that the ban looks like “it’s putting crypto on a different footing to equities,”

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Author: Silvia A

EU Draft Proposal Seeks to Access Data from End-to-end Encryption Platforms

The European Union (EU) could soon limit end-to-end encryption according to a draft leaked by the German Presidency, which seeks to increase the monitoring efficiency by Intelligence authorities and police.

This development comes in the wake of Vienna’s terrorist attack that took 4 lives and left 23 others with injuries. The news, which was initially reported by an Austrian media dubbed ‘FM4’, noted concerns on the accessibility of data from encrypted platforms like WhatsApp and Signal.

According to a draft deciphered by the Associated Press, this proposed piece will harmonize the process of accessing encrypted data,

“Competent authorities must be able to access data in a lawful and targeted manner, in full respect of fundamental rights and the data protection regime, while upholding cybersecurity.”

The draft, which is dated Nov 6, goes on to highlight those technical solutions to enable data access in encrypted platforms must be in line ‘with the principles of legality, transparency, necessity, and proportionality.’ However, it is quite noteworthy that the draft proposal does not call for total encryption; instead, it is set to initiate an exploratory phase that will guide stakeholders, including the EU, towards adopting favorable legislation in matters of end-to-end encryption.

Activists Decry the Move

As expected, the draft has already been met with opposition from rights activists who place fundamental importance on privacy and security. In fact, a German lawmaker Anke Domscheit-Berg, a left-wing politician, has voiced their concerns about the proposed draft. The lawmaker accused EU governments of masking under the extremism narrative to introduce higher surveillance within their jurisdictions.

According to Anke, the logic of accessing end-to-end encryption platforms does not make sense. He gave this example to support the argument,

“Anyone who finds an open back door into my house can enter it; the same is true for back doors in software …

The proposed EU regulation is an attack on the integrity of digital infrastructure and, therefore, hazardous.”

It appears he is not the only one who has called out the draft proposal; other stakeholders that have voiced their opinions against it include the executive director of Open Privacy Sarah Jamie Lewis and the director of Cybersecurity at Electronic Frontier Foundation, Eva Galperin. With the document set for presentation to the EU council on Nov 19, only time will tell if this draft will be adopted into law by member countries.

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Author: Edwin Munyui

Binance Boosts Visa Card Incentives with Auto Top-Up, Daily Cashback & Higher Spending Limits

Binance has added some perks to its recently launched debit card rolled out in the European Economic Area (EEA) one month ago. The crypto exchange is looking to expand its footprint in the retail market as more crypto users opt to have a good part of their portfolio stored in digital assets. Binance’s Visa-branded card is designed to facilitate a seamless conversion to fiat when making payments.

With over 60 million outlets accepting Visa payments, Binance card users can leverage this service to make online payments. The exchange is yet to integrate a prepaid function for PoS payments but is currently in the product pipeline. Notably, the crypto card service by Binance is part of a growing niche as more merchants move to accept crypto payments.

Binance has now increased the incentives for using its crypto card; the exchange introduces a ‘daily cashback’ reward program instead of the ‘one-week’ initial arrangement. This means that users will be getting their rewards daily, making it more attractive to use the Binance card more frequently.

As for cashback reward rates, Binance has bumped the figure to 8% from 7%, which was initially set as the maximum amount. Binance crypto card users whose purchases are eligible for the cashback rewards can expect an 8% cashback that could be cashed out daily. It is quite noteworthy that the cashback reward program favors BNB holders, depending on the amount they hold.

Besides the cashback incentives, Binance raised its crypto card’s spending limit to €870 per day. The crypto exchange anticipates that it will further raise this limit upon scaling the physical card mainstream use in the future. An automatic top-up feature has also been integrated to make daily deposits seamless.

The Binance crypto card touts zero maintenance, subscription, and transaction fees, apart from 3rd party charges where they apply. Users can currently deposit funds into their pre-selected Binance digital wallets to use them via the exchange’s crypto card. However, it remains scanty whether Binance will ultimately feature withdrawals, contactless payments, chip, and PIN tech within the physical card.

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Author: Edwin Munyui

European Central Bank (ECB) Must be Ready to Issue a Digital Euro, Says Board Members

ECB board member Fabio Panetta said on Friday that the European Central Banks should be preparing to issue a digital euro.

In a study published on Friday, the ECB said a digital euro could help an environment where citizens have abandoned cash, other means of payments became unavailable, or foreign forms of electronics have taken over.

“We should be ready to issue a digital euro if and when developments around us make it necessary,” said Panetta in a post accompanying the study. “This means that we already need to be preparing for it.”

Open for public consultation that will start Oct. 12; the ECB has given itself until the mid of next year to decide whether to go forward with the project, which would start with an “investigation phase.”

“Our role is to secure trust in money,” said ECB President Christine Lagarde. With this, she means making sure “the euro is fit for the digital age,” and should the need arise, be prepared to issue its digital version.

Digital euros will give holders a direct claim on the central bank and could be transferred directly between users — typically an option only for governments and commercial lenders, making them safer than any deposits.

As it has implications for financial stability and monetary policy, the ECB report urged to assess whether a digital euro should be accessible by firms and households directly or indirectly via intermediaries.

The ECB also said deposits in digital euros might be capped and subject to its interest rate on deposits, which is minus 0.5% currently. Instead of just by the ECB, they would also be offered by the private sector, it said in the study.

A digital euro “is becoming an obligation which, indeed, central banks — need to carry out,” said ECB Vice President Luis de Guindos in an online discussion on Friday.

In a sign that ECB is serious about a central bank digital currency, it applied to trademark the term “digital euro” last week.

While the People’s Bank of China is already working on the testing of its CBDC, the US Federal Reserve and the Bank of England are still discussing the possibilities around the digital version of their respective fiat currencies.

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Author: AnTy

ECB Files for a ‘Digital Euro’ Trademark as Central Banks Turn Focus to CBDCs

The European Central Bank (ECB) filed an application last week to trademark the name ‘digital euro’ as the CBDC craze gains momentum. A report by Bloomberg revealed that the ECB applied for the ‘digital euro’ trademark through its German-based legal representatives, Bock Legal. This development comes barely a week since ECB president Christine Lagarde confirmed that the regulatory body is exploring the potential benefits and downside risk of issuing a ‘digital euro.’

Speaking at the European Parliament, Lagarde highlighted that the EU is yet to make a decision on whether it will issue a digital euro. However, she was also keen to note that the bank is actively exploring the CBDC space as per its mandate in monetary oversight,

“We are exploring the benefits, risks and operational challenges of doing so … We have a duty to play an active role in balancing the risks and benefits of innovation in payments, so that money continues to serve Europeans well.”

While a practical digital euro phase may take some time, the move by ECB to trademark this name further shows the underlying potential of CBDC disruption. A newly released report by Deutsche bank estimates that around 80% of the world’s central banks have already embarked into some CBDC activity, even if its minimal research. In Europe for instance, Italy and France have already committed to participating in a digital euro-pilot.

China on the other hand is setting the pace for a tokenomics dominance, having begun the digital yuan pilot back in April. This initiative had been ‘under the hood’ for close to five years but was only piloted post-lockdown. People’s Bank of China (PBoC) is in charge of the digital yuan ‘e-RMB’ and intends to gradually replace fiat currency in circulation as part of scaling its monetary effectiveness in the age of cryptocurrencies.

Other jurisdictions that are likely to be at par or slightly behind China include the Bahamas and Thailand. The former is set to launch its CBDC ‘Sand Dollar’ this month while Thailand has partnered with Hong Kong to build a cross-border CBDC. This initiative is currently in the second phase where ConsenSys is set to lead product development, working alongside PWC and Forms HK.

Also Read: Fed Researching CBDC & Planning to Deposit ‘Digital Dollars’ Directly To the Digital Wallets of Americans

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Author: Edwin Munyui

Libra Association Hires Former HSBC Europe Managing Director, James Emmett

In an announcement on Thursday, Libra Association announced James Emmett, former European head at HSBC as the new managing director of its subsidiary, Libra Networks LLC. Emmett will start his role at the digital stablecoin firm on October 1.

According to the statement, James Emmett is a well-experienced financial services leader in “business, strategy, technology, and operations” having worked 25 years at the global financial institution. Emmett becomes the second high-profile manager from HSBC to join Libra, after Stuart Levey joined as the CEO of the Libra Association earlier this year.

Speaking on Emmett’s appointment, Levey showed his excitement saying the new appointee’s “leadership will help make Libra’s vision a reality.”

Emmett’s 25 years at HSBC saw him take on a number of roles including chief executive of HSBC Bank PLC and Europe. In his capacity as the chief executive of HSBC PLC, Emmet was responsible for the bank’s wholesale and retail operations across Continental Europe, Sub-Saharan Africa, and Bermuda. Emmett has also acted in the position of COO of HSBC overseeing overseas technology operations. Passionate in the opportunities that digital currencies offer the current financial services, Emmett said,

“I am delighted to be joining Libra Networks with a mission to enhance financial innovation and inclusion and to deliver the operationalization of the network.”

With global regulators on Libra’s neck as the Association plans to launch its stablecoin, Libra is moving to employ more legal experts to smooth the relationship with global regulators. Shortly after appointment of Stuart Levey and CEO of Libra Association, Libra appointed Ex-Goldman Sachs Executive, Sterling Daines as its global compliance lead and Stevan Bunnel, former Homeland Security general counsel to replace Robert Werner as Libra’s general counsel.

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Author: Lujan Odera

European Countries Support EU Stablecoin Regulation

European countries are in favor of regulating fiat-backed cryptos, stablecoins.

Spain, Italy, France, Germany, and the Netherlands backed the European Commission’s goal to regulate stablecoins.

Until the regulatory, legal, and oversight challenges have been addressed, the five countries said on Friday that stablecoins should not be allowed to operate in the EU.

According to European countries, the regulatory framework of the EU for these coins should address risks to monetary policy and protect customers while maintaining their monetary sovereignty.

All stablecoins should be pegged 1:1 with fiat currency and the reserved assets denominated in the euro or any other currency of EU member states deposited in an EU-approved institution, they said.

Much like the Bank of England Governor said last week, the draft joint statement from these countries seen by Reuters, also wants the entities operating these stablecoins to be registered in the EU.

Facebook’s Libra has pushed stablecoins on policymakers’ agenda. Given that its governance body Libra Association is based in Geneva, it can impact their plans to issue its stablecoin.

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Author: AnTy

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

Euro’s Dominance at Risk of Replacement by Digital Yuan in the Next Five Years: dGen Report

The Euro might be overtaken by China’s digital Yuan as soon as 2025 if the European Union will not have launched a CBDC by then, highlights the latest research report by German-domiciled think tank, dGen. This release which was published on September 9 focuses on the ramifications a major CBDC on the Eurozone as well as the potential of a digital Euro to be ahead of the pack.

As the crypto industry comes of age, regulators have found themselves at a cross-road in the creation of oversight mechanisms. Well, China which began research in this space as early as 2014 recently launched its digital yuan ‘DC/EP’, sparking a hype towards the global adoption of CBCD’s. Since then, a number of central banks including the European Union have floated the idea of piloting their own digital currencies.

The EU progress on CBDC’s has, however, been criticized by prominent contributors in Europe’s blockchain ecosystem including the Head of Frankfurt’s School Blockchain Center, Philipp Sandner,

‘[The] ECB’s reaction has been too slow. Especially, the benefits from a CBDC for the industry, e.g., based on programmable money, are currently neglected. Given Libra and the DC/EP, the ECB has to react quickly to keep its geopolitical position’.

According to the report, the launch of a digital Euro would be strategic for the region to continue its global dominance as the second most held fiat reserve; only this time a digital Euro will be used instead. Consequently, the research notes that a digital Euro has the potential to transform the global economy while acting as the fundamental pillar of a virtual monetary ecosystem in the Eurozone.

U.S Dollar Still Safe!

Unlike the Euro whose odds against the DC/EP are less favorable, dGen predicts that the digital yuan will not unseat the world’s reserve currency, at least not yet. The research highlights China’s political unrest as one of the factors that could hinder its CBDC’s global adoption at level to compete with the U.S dollar. In addition, smaller nations are more likely to adopt a digital dollar as opposed to the yuan given its already established dominance and ease of access globally. The research reads,

“In the coming decade, with the launch of a digital Dollar, digital Yuan, and digital Euro, we predict that smaller nations will take the path of least resistance, and opt for using and storing the digital Dollar.”

Global CBDC Integration Could Hit 60% in the next Decade

Other predictions made by the German think tank include the possibility of a 60% global CBDC integration by 2030. As per the dGen insights, three out of five nations will have completely replaced their fiat currencies with a central bank backed digital asset by then. On this front, China and Bahamas in the West Indies Caribbean have already set a pace based on the CBDC progress within the two jurisdictions.

Last but not least, the report predicted that CBDC’s will have to co-exist with private stablecoins which have now been in the crypto space for quite a while. This is because of their value proposition in the volatile cryptocurrency market as well as the ability to circumvent authorities through blockchain tech, regardless of their position when it comes to digital assets.

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Author: Edwin Munyui