IMF head: CBDCs can replace cash, help financial inclusion

November 15, 2023 Coin Telegraph

BIS

International Monetary Fund managing director Kristalina Georgieva urged the public sector to “keep preparing to deploy” central bank digital currencies.

During her opening speech at the Singapore FinTech Festival, International Monetary Fund (IMF) managing director Kristalina Georgieva urged the public sector to “keep preparing to deploy” central bank digital currencies (CBDCs) and related payment platforms in the future.

Georgieva expressed her optimism about the implementation of CBDCs worldwide but said, “We have not yet reached the land,” and there is still much uncertainty:

“Adoption of CBDCs is nowhere close. But about 60 percent of countries are exploring them in some form today.”

Georgieva believes CBDCs can replace cash, offer resilience in advanced economies and improve financial inclusion in underbanked communities. According to Georgieva, CBDCs can co-exist with “private money,” being its “safe and low-cost alternative.”

Georgieva also highlighted the importance of technological infrastructure in CBDC projects, personal data protection and even the possible role of artificial intelligence (AI) in enhancing the national digital currencies. She put a particular emphasis on cross-border payment support:

“To the extent CBDCs are deployed, they must be built to facilitate cross-border payments, which are at present expensive, slow, and available to few. Again, we must start this work today so we don’t have to backpedal tomorrow.”

The IMF head presented its CBDC virtual handbook and marked the Bank for International Settlements (BIS) role in the public sector’s digital money experiments.

The IMF has recently been active in its analysis of necessary crypto regulations. On Sept. 29, it proposed a crypto-risk assessment matrix (C-RAM) for countries to spot indicators and triggers of potential risks in the sector.

The IMF’s Synthesis paper — jointly prepared with the Bank for International Settlements (BIS) — was unanimously adopted by the “G20 Finance Ministers and Central Bank Governors Communique” in October.

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APEC finance ministers to share perspectives on crypto at meeting in San Francisco

November 13, 2023 Coin Telegraph

Asia

U.S. Treasury Secretary Janet Yellen said she is looking forward to hearing from the finance ministers of some of the world’s most crypto-forward countries.

The weeklong Asia-Pacific Economic Cooperation (APEC) summit began on Nov. 11 in San Francisco. The highlight of the event will surely be on the sidelines, when United States President Joe Biden and Chinese leader Xi Ping meet on Nov. 15. But with the focus of the organization being on the regional economy, the finance ministers’ meeting is also of primary importance.

U.S. Treasury Secretary Janet Yellen said in her opening speech at the finance ministers’ meeting on Nov. 13 that they will discuss “priority areas [that] are oriented toward the long-term,” with a heavy emphasis on sustainability. They will also hold one session devoted to supply-side economics and another on digital assets. Yellen mentioned unbacked crypto assets, stablecoin and central bank digital currency specifically.

“Sharing insights and engaging with the private sector has enabled us to deepen our collective understanding of the tools that policymakers can use to facilitate the responsible development and use of digital assets,” Yellen said. She added:

“I look forward to hearing your perspectives on the long-term role that digital assets and blockchain technologies can play in our respective financial systems, as well as how your authorities plan to approach regulatory oversight of their development and use.”

Yellen met with top Chinese economic official He Lifeng on Nov. 9 and 10. While cryptocurrency trading has been effectively banned in China since 2021, the country has taken a world-leading role in the development of central bank digital currency.

The perspectives Yellen will hear at the Nov. 13 meeting may be at odds with her own position, as the Biden administration is widely seen as not strongly favorable to crypto, and many consider Asia to be taking the lead in blockchain development. Asian economies have made notable strides in the metaverse, crypto trading and adoption.

I was honored to host APEC finance ministers at the California Academy of Sciences. It’s personally meaningful to welcome them to the San Francisco Bay Area, which I consider a second home. pic.twitter.com/pBYiVhrxAd
— Secretary Janet Yellen (@SecYellen) November 13, 2023

APEC is made up of 21 Pacific-region “economies” in Asia, North America and South America. Membership is open to economies rather than countries to allow Hong Kong and Taiwan a place at the table without controversy. Ripple was a major (diamond-level) sponsor of the summit.

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BIS general manager urges central banks to “lead innovation” for CBDCs

November 8, 2023 Coin Telegraph

BIS

Agustín Carstens called CBDCs the “central element” of central bank leadership in innovation.

Central banks have a responsibility to keep pace with the digital age and lead innovation, Agustín Carstens, general manager of the Bank for International Settlements (BIS), believes.

In his opening remarks at a conference in Basel, Switzerland, on Nov. 8, Carstens called central bank digital currencies (CBDCs) the “central element” of this leadership, elaborating on the potential threats and challenges to implementing them.

One particular challenge is the variety of technological infrastructures different countries intend to develop for their CBDC projects. Carstens also mentioned cyber risks and new possibilities for “criminal activities by unscrupulous actors.”

Speaking of the priorities in adapting the CBDCs to potential threats, the official named the flexibility of its design as the number one issue, but he also mentioned privacy problems:

“Maintaining an appropriate level of privacy, for example, will be crucial to ensuring public acceptance of retail CBDCs.”

Carstens pledged BIS support for central banks in their efforts to go digital. This support comes primarily from the BIS Innovation Hub and Cyber Resilience Coordination Centre.

The former has been active recently, participating in numerous digital currency projects. It is helping the Swiss National Bank to develop a wholesale CBDC, as well as helping to build a joint platform with the central monetary authorities of China, Hong Kong, Thailand and the United Arab Emirates and developing a proof-of-concept for a transactions tracker with the European Central Bank, among numerous other projects.

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Ripple To Partner With Georgia’s Central Bank in the Eurasian Country’s CBDC Pilot

November 4, 2023 The Daily Hodl

Bitcoin Magazine claims Fed accused it of trademark violation for t-shirts

November 3, 2023 Coin Telegraph

CBDC

Crypto publication Bitcoin Magazine claims it has been threatened with legal action over “FedNow” t-shirts, hats, and other items.

The United States Federal Reserve has sent a cease-and-desist letter to crypto media publication Bitcoin Magazine, accusing it of trademark violations, according to a Nov. 3 post from the publication. Bitcoin Magazine claims it is being targeted because of its use of the word “FedNow” on “t-shirts, hats, and other wearables.” FedNow is the trademarked name of the Federal Reserve’s instant payment system.

The U.S. Federal Reserve is threatening to sue Bitcoin Magazine, alleging apparel that parodies its FedNow system is not protected speech, but copyright infringement.@markgoodw_in with Bitcoin Magazine’s response:https://t.co/PYmeZHBYWO
— Bitcoin Magazine (@BitcoinMagazine) November 3, 2023

Bitcoin Magazine carries some merchandise in its store that features the word “FedNow” printed on it, but with the “O” in the word having been replaced with an image of an eye.

*Bitcoin Magazine FedNow T-shirt. Source: Bitcoin Magazine.*

According to the post, the Fed claimed these items “mislead readers into believing a connection exists between the publication and the central bank.”

In response, Bitcoin Magazine’s legal team sent a letter to the Federal Reserve denying the allegation. The merchandise is “undeniably parodic in nature,” the letter stated, as it was created “for the purpose of parody and political criticism directed at the Federal Reserve.”

As evidence for this, the letter pointed to the image of an eye found in the designs, which it referred to as a “surveillance eye.” In a separate open letter referenced in the post, Bitcoin Magazine referred to the eye as an “all-seeing eye that symbolizes the state of total financial surveillance that [the Federal Reserve] is seeking to impose on the American financial system.”

The term “all-seeing eye” or "Eye of Providence" refers to a symbol found in Jacopo Pontormo’s 1525 painting, Supper at Emmaus, and later featured on the back side of a U.S. 1-dollar bill.

*Eye of Providence on the back of a U.S. 1-dollar bill. Source: Wikipedia.*

In its post, Bitcoin Magazine stated that it would not stop printing or selling its “FedNow” line of merchandise, as it believes the items constitute protected free speech under the First Amendment.

FedNow is an interbank payment system launched by the Federal Reserve in July. It allows banks and money transmitter services to make payments instantly, without needing to rely on the automated clearing house (ACH) system used in the past. Bitcoin Magazine has heavily criticized FedNow in its articles and videos, claiming that it is a “scam” that allows the government to “keep controlling you, your business, and everyone else’s.”

FedNow has also been criticized by presidential candidates Ron Desantis and Robert Kennedy, Jr. They claim it's paving the way for a future central bank digital currency (CBDC), which they say will violate the privacy of Americans. The Federal Reserve has denied that its service has anything to do with a CBDC.

Ripple to power Georgia’s central bank digital currency, the digital Lari

November 3, 2023 Coin Telegraph

CBDC

The National Bank of Georgia will use the CBDC platform to assess Digital Lari's benefits for the government, businesses, and retail users.

The National Bank of Georgia (NBG) has selected Ripple Labs Inc., a leading blockchain payments platform, as the official technology partner for developing Digital Lari, their central bank digital currency (CBDC) project.

Ripple said in a statement that the partnership will encompass the implementation and deployment of the Digital Lari pilot initiative through the Ripple CBDC Platform. The National Bank of Georgia will utilize this innovative CBDC platform to evaluate potential applications of the Digital Lari, determining its advantages to the government sector, enterprises, and individual retail users.

Before being designated as NBG’s technology partner, Ripple underwent a thorough and meticulous selection procedure. In September, the National Bank of Georgia disclosed its intentions to advance its CBDC project by introducing a Limited Access Live Pilot Environment. Consequently, it opted to select a sole technology collaborator for the initiative.

*Screenshot of the press release. Source: Ripple*

In the initial process stage, the National Bank of Georgia thoughtfully chose nine firms for their technological prowess, maturity, capability, relevant background, and eagerness to participate in the practical assessment. Among these, Ripple was included alongside notable entities such as AUGENTIC GmbH, Bitt Inc., Broxus Holdings Ltd., Currency Network Ltd., DCM Corp Limited, and others.

Ultimately, Ripple was the preferred protocol for the Digital Lari initiative. The selection committee considered various factors, including a profound comprehension of the project’s objectives, its potential applications, and a solid dedication to the project’s triumph, as stated in NBG’s announcement.

In July, Ripple received recognition from Currency Research for its contributions to Digital Currency Advancement and Best Sustainability Initiative, particularly for its role in fostering innovation in the realm of CBDCs.

Before the partnership with the NBG for the Digital Lari initiative, Ripple had proactively aligned itself with organizations seeking to delve into CBDC implementations. Ripple previously joined forces with Colombia’s Central Bank, Banco de la República, to investigate blockchain technology applications in its Digital Peso pilot, leveraging the Ripple CBDC Platform.

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Swiss wholesale CBDC pilot kicks off in alliance with central, commercial banks

November 2, 2023 Coin Telegraph

Banks

The Swiss wCBDC pilot project will be hosted on SDX and use the infrastructure of Swiss Interbank Clearing.

The Swiss National Bank (SNB), six commercial banks and the SIX Swiss Exchange will work together to pilot the issuance of wholesale central bank digital currencies (CBDCs) in the nation, officially known as the Swiss franc wCBDC.

The pilot project dedicated to wholesale CBDC, named Helvetia Phase III, will test the efficacy of a Swiss Franc wCBDC in settling digital securities transactions. The pilot builds on the findings of the first two phases — Helvetia Phases I and II — conducted by the BIS Innovation Hub, the SNB and SIX.

The six banks involved in the pilot — Banque Cantonale Vaudoise, Basler Kantonalbank, Commerzbank, Hypothekarbank Lenzburg, UBS and Zürcher Kantonalbank — are also existing SIX Digital Exchange (SDX) member banks.

The Swiss wCBDC pilot project will be hosted on SDX and use the infrastructure of Swiss Interbank Clearing. According to the announcement, the pilot will run from December 2023 to June 2024.

“The pilot’s objective is to test, in a live production environment, the settlement of primary and secondary market transactions in wCBDC.”

During this timeframe, participating banks will “issue digital Swiss franc bonds, which will be settled against wCBDC on a delivery-versus-payment basis.” All transactions conducted in this test environment will be collateralized by digital bonds and settled on SDX in wCBDC.

Parallel to in-house CBDC efforts, the Swiss Financial Market Supervisory Authority, along with the Financial Services Agency of Japan and the United Kingdom’s Financial Conduct Authority, partnered with the Monetary Authority of Singapore (MAS) to conduct various crypto pilot initiatives.

As previously reported by Cointelegraph, the authorities specifically seek to carry out pilots related to fixed income, foreign exchange and asset management products. “As the pilots grow in scale and sophistication, there is a need for closer cross-border collaboration among policymakers and regulators,” the MAS stated.

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New CBDC Pilot Goes Into Second Phase in Hong Kong As Government Explores Tokenization and Programmability

November 1, 2023 The Daily Hodl

Visa completes digital Hong Kong dollar pilot test with local banks

November 1, 2023 Coin Telegraph

CBDC

The e-HKD CBDC Pilot Programme will enter phase 2 following praise from the city's monetary authority.

Payment processor Visa has completed the Hong Kong Monetary Authority's central bank digital currency (CBDC) Pilot Programme with HSBC and Hang Seng Bank.

According to the November 1 announcement, the e-HKD Programme involves tokenization of deposits, where the money deposited with a bank is minted on the firm's own blockchain ledger with the backing of its balance sheet. As part of its key findings, Visa wrote:

"The time to final settlement for an interbank transfer, as confirmed through our pilot’s testing between the banks, was near real-time. Tokenized deposits were burned on the sending bank’s ledger, minted on the receiving bank’s ledger, and simultaneously settled interbank via the simulated wholesale CBDC layer."

In addition, Visa said during the pilot that its platform was able to function 24/7, besting traditional payment systems that would not operate after hours or on weekends.

"Our testing was completed using blockchain networks that were available globally and supported by teams in other time zones," the firm wrote. Meanwhile, the tokenized deposits were transacted through encryption, allowing them to be viewed on blockchain explorers but not revealing the identity of participants, balances, or transaction amounts to non-bank users.

For the next steps, the payment processor says it's exploring tokenized asset markets and programmable finance." For example, in this pilot’s “Property Payments” use case, the payment from a buyer transferring the remaining balance tokens to the property developer may be automated upon reaching the completion date of the contract, minimizing lag time in the closure of the process," Visa wrote. The e-HKD Pilot Programme will enter phase two following the successful results.

Survey: 65% of Spaniards aren’t interested in using digital euro

November 1, 2023 Coin Telegraph

CBDC

The country’s population doesn’t demonstrate as high a confidence level in the European Central Bank’s digital currency project as the government does, according to the survey.

As the Bank of Spain embraces the potential adoption of a digital euro, the country’s population doesn’t appear to have the same strong appetite for the European Central Bank’s digital currency project.

This emerges from the results of a survey published by the Bank of Spain entitled “Study on the habits in use of cash.” The survey was conducted by Ipsos on two groups, totaling 1,600 respondents: the general public and the representatives of small businesses. It also included questions on the digital euro, a potential pan-EU central bank digital currency (CBDC).

The study revealed that only 20% of the general public knows about a “digital euro.” The number among small businessmen is roughly the same, 23%. However, this question was posed in 2022.

In 2023, only 20% confirmed that they would use the digital euro to complement their regular payment methods, while 65% said they would not. A year ago, these numbers favored the CBDC more: in 2022, only 58% responded with a “No” to that question.

The age group showing the most enthusiasm for the digital euro is the youth (18-24) — 36% of this cohort said they would use the currency. This proportion gradually declines in age progression: 31% among the age 25-34, 24% among the age 35-44, 18% among the 55-64, and only 7% for those older than 65.

In October, the Bank of Spain published a text explaining the nature and uses of the digital euro. The bank claimed that the physical cash format “does not allow to exploit all the advantages offered by the growing digitalization of the economy and society.” However, the digital euro will make electronic payments a vital piece of the financial system.

Spain has recently demonstrated its firm commitment to the EU cause regarding the digital economy, and has decided to implement the Markets in Crypto Assets (MiCA), a pan-EU crypto framework, six months earlier than the general deadline demands.

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