Ripple, ConsenSys participate in Mastercard program to promote CBDC innovation

August 17, 2023 Coin Telegraph

CBDC

The payment processor has enlisted a range of market players in its quest for innovation and efficiencies in a technology that 93% of central banks are investigating.

Mastercard is forming a partnership program with seven prominent blockchain and payment technology providers to “bring a greater understanding of the benefits and limitations” of central bank digital currencies (CBDCs), it announced Aug. 17.

Mastercard did not share specific plans for the group, but it mentioned many current buzzwords in the CBDC sphere — security, privacy, interoperability, private sector, driving innovation and efficiencies, for example. Mastercard head of digital assets and blockchain Raj Dhamodharan said in the statement:

“As we look ahead toward a digitally driven future, it will be essential that the value held as a CBDC is as easy to use as other forms of money.”

The Mastercard program will bring together companies that have already contributed to CBDC development in various ways. It will include Ripple, which recently introduced a dedicated CBDC platform, software company ConsenSys, which has worked on several CBDC projects, and tokenized assets solution provider Fluency, which is involved in 23 CBDC projects.

Participant Giesecke+Devrient has its own CBDC solution and has worked with the central banks of Ghana and Thailand on CBDC projects. Idemia specializes in offline payments and has participated in a CBDC project with a Japanese payment service. Consult Hyperion also works with central banks on offline payment solutions. The group is rounded out by institutional custody platform Fireblocks.

*Countries where Mastercard is exploring CBDCs. Source: Mastercard*

Mastercard has been active in the crypto space for years but has pulled back from it recently. The company has shown strong support for CBDCs and participated in projects with the Bank for International Settlements and the New York Federal Reserve Bank, as well as with individual central banks.

MasterCard announces today the inaugural set of partners~ CBDC platform @Ripple, blockchain and Web3 software company @Consensys, multi-CBDC and tokenized assets solution provider @fluencycbdc , digital identity technology provider @IdemiaGroup , digital identity consultant… pic.twitter.com/BRuRMZG3FN
— Crypto Eri Carpe Diem (@sentosumosaba) August 17, 2023

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Colombia central bank recommends limiting CBDC holdings and spending

August 17, 2023 Coin Telegraph

Banks

Setting limits on CBDC transactions could be beneficial to issues related to user privacy and security, according to the central bank of Colombia.

The central bank of Colombia has not yet decided whether or not to issue a central bank digital currency (CBDC), but believes that setting limits on CBDC transactions could bring about a number of benefits.

In its latest CBDC study, titled “Expected Macroeconomic Effects of Issuing a Retail CBDC,” Colombia’s Banco de la República concluded the potential introduction of a retail CBDC doesn’t pose any significant macroeconomic risks.

In order to mitigate any potential threats associated with CBDC, Colombia’s central bank recommended setting holding and spending limits for the digital currency. According to the regulator, such a CBDC design would increase the security of funds as CBDC holdings limits could safeguard users from cyberattacks targeting their balances or transactions.

Setting limits on retail CBDC holdings could also allow regulators to deal with the tradeoff between privacy and transparency by offering diverse tiers of limits.

For example, the Colombian central bank could offer digital wallets with small holding limits and a high level of privacy for people that place a high valuation to their transaction data. On the other hand, those who are comfortable with disclosing more data could prefer high holding limits and lower levels of privacy.

Additionally, CBDC limits could be beneficial for commercial banks as they would reduce the demand for a retail CBDC as a store of value in competition with bank accounts, the central bank noted.

“The introduction of the CBDC could be an attractive alternative for some risk-averse holders of other cash-like instruments,” the study reads, adding that this could impact the demand for government bonds, commercial papers and term deposit certificates. The study authors stated:

“By imposing CBDC holding limits to end users, this, and other types of situations — the tradeoff between privacy and security — could be easily controlled.”

While closely monitoring and studying the global development of CBDC, the Colombian central bank is still uncertain about whether its nation needs such a digital currency.

“The decision of issuing a retail CBDC must consider the fact that it would also need to have enough desirable features to generate a core group of users sufficient to generate the network externalities needed to make it viable,” the study authors stated.

A number of other global jurisdictions and organizations have considered setting limits on CBDC holding and spending as well.

In July, major United Kingdom’s finance trade bodies like UK Finance argued that the government should limit users’ digital pound holdings between 3,000 British pounds ($3,800) and 5,000 pounds ($6,400). According to UK Finance, a higher limit on Britcoin holdings — such as 20,000 pounds ($25,600) per individual — could destabilize the traditional banking system by facilitating bank runs or deposit competition with banks.

In 2020, European Central Bank’s director general of market infrastructure and payments, Ulrich Bindseil, proposed the adoption of a digital euro holding limit of 3,000 euros ($3,271) per person.

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Zimbabwe central bank close to introducing gold-backed digital tokens into retail

August 14, 2023 Coin Telegraph

Africa

Physical and digital gold tokens have been a big success as investments and an inflation hedge in Zimbabwe, which continues to face triple-digit inflation.

The Reserve Bank of Zimbabwe (RBZ) expects to launch its gold-backed digital token (GBDT) for retail use soon, the RBZ has stated. This follows the token’s success with investors, which the bank described as “commendable” in a recent report.

The RBZ announced the introduction of the GBDT in April and had conducted 11 issuances representing 325 kg. of gold by July 21, according to a mid-term financial report the bank released on Aug. 9. The tokens are backed by physical gold held by the RBZ.

Now the GBDT “shall be scaled up to be used for transactional purposes by the public.” The RBZ said:

“The Bank is at an advanced stage in preparations for the rolling out of GBDTs for transactional purposes in Phase II of the project. […] It is envisaged that the transactional phase will see GBDTs complimenting [sic] the demand for the US dollar in domestic transactions as retailers will be offered a safer, more convenient, and value-preserving medium of exchange.”

The GBDT issuance came after the RBZ began issuing physical gold coins last year. Those were snatched up by investors and only 2% of them have been redeemed, the RBZ said. The GBDT offers the advantages of divisibility and increased security, the bank claimed.

Inflation in Zimbabwe reached 175.8% in June after the bank adopted a new benchmarking index. The RBZ set its interest rate at 150% that month. The U.S. dollar is heavily used in local trade.

*Annual inflation in Zimbabwe. Source RBZ/ZIMSTAT*

The RBZ has been pursuing a central bank digital currency (CBDC) since July 2022 and said it is making steady progress. It conducted a survey that found 71.7% of respondents would be willing to use it. The GBDT would “form the basis for the development” of a CBDC as it “exhibits most of the characteristics of a CBDC.”

Today's #Fintech Digest includes the Reserve Bank of Zimbabwe preparing to roll out its gold-backed digital tokens for transactions, and some fake news about #Ripple working with the Reserve Bank of New Zealand on #CBDC development on the #XRP Ledger. https://t.co/SFR6O90maT pic.twitter.com/aw8IeCkiSj
— John Kiff (@Kiffmeister) August 14, 2023

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Canadians have ‘weak incentives’ to use a CBDC: Bank of Canada

August 11, 2023 Coin Telegraph

Bank of Canada

A central bank discussion paper found that the majority of Canadians have little trouble accessing financial services, which gives them little reason to use a CBDC.

The typical Canadian has little reason to adopt a central bank-issued digital currency, which could cause problems with its broad acceptance, according to a new paper from the Bank of Canada.

In the staff discussion paper released on Aug. 10, the central bank looked at a hypothetical scenario where cash was virtually eliminated in order to see what role a potential CBDC could play in helping the underbanked.

It found that most consumers would have “weak incentives” to use one, as Canadians don't face meaningful barriers to financial services like bank accounts or debit and credit cards.

*Screenshot of the staff discussion paper. Source: Bank of Canada*

98% of Canadian adults have a bank account, 87% also have a credit card and 90% of rural and urban households combined can access high-quality internet, the paper said.

It however found that replacing cash with digital loonies would also mean tech-averse Canadians would have fewer payment options while cash-dependent Canadians would find themselves unable to make the most common payments.

The potentially low uptake of a CBDC would also lead to merchants unlikely to want to accept one which would further diminish its usefulness.

Our latest survey results show that 92% of merchants have no plans to go cashless.

Read more results from our survey: https://t.co/DX0lUJ90u7 #cdnecon #PaymentMethods #Survey pic.twitter.com/017UYxiIC4
— Bank of Canada (@bankofcanada) August 8, 2023

Instead, the paper floated non-CBDC-related ways that could better help the underbanked — including improving internet access, expanding low-cost bank account availability, increasing merchant collaboration with remote communities and continuing to supply cash.

The paper stressed it was not predicting how Canadians would react to a CBDC and said more could be interested in using it due to a variety of reasons.

Even if there was greater interested than it suggested, the paper added the barriers for both users and merchants to broadly adopt a CBDC “appear to be significant.”

Cash is still king

The paper also gave a strong nod to the necessity of cash, noting that without cash there would be no offline payment methods in emergency situations such as extreme weather or widespread power outages.

“This suggests the potential system-wide benefits of encouraging digital payment innovations that can function offline as well as the importance of sustaining cash,” it explained.

The paper claimed such a scenario highlighted the importance of the Bank of Canada continuing to issue cash and providing cash accessibility.

The paper noted the central bank previously stated it was committed to supplying cash as long as it was in demand and a CBDC would only be issued with the advent of a cashless society or the widespread use of foreign CBDCs or cryptocurrencies such as Bitcoin (BTC).

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Russia to being CBDC trials with 13 banks

August 9, 2023 Coin Telegraph

Bank of Russia

According to Olga Skorobogatova, First Deputy Governor of the Bank of Russia, initiating pilot operations using genuine digital rubles represents a pivotal phase within the project.

The Bank of Russia (BoR) has revealed that it will begin testing operations for Russia’s central bank digital currency (CBDC) project with real digital rubles. The test will begin on August 15.

A statement released by the Bank of Russia indicates that the pilot tests will involve the participation of 13 banks and a restricted group of their clients.

According to Olga Skorobogatova, First Deputy Governor of the Bank of Russia, initiating pilot operations using genuine digital rubles represents a pivotal phase within the project. This step facilitates the examination of the digital ruble platform's functionality within an industrial context, the refinement of essential procedures in collaboration with clients, potential process adjustments and the assurance of a user-friendly and comprehensible client experience.

Skorobogatova added that the bank’s strategy involves bringing the digital ruble into widespread use, hinging on the outcomes of gradual testing and contingent upon the successful execution of comprehensive trials encompassing all operational possibilities involving the digital ruble. According to the deputy governor, It is expected that starting from 2025, citizens and businesses will be able to actively use the national digital currency at their own request.

As per the announcement, the initial phase of the pilot program will focus on refining fundamental processes, including the establishment and funding of digital ruble accounts (digital wallets), digital ruble transactions among individuals, uncomplicated automated payments, and the utilization of a QR code for transactions involving purchases and services.

Those taking part in the pilot initiative will have the opportunity to employ digital rubles for payments at 30 retail establishments situated across 11 cities in Russia. The intention is to broaden the roster of pilot participants by the conclusion of 2023, encompassing the inclusion of both individuals and businesses.

In 2024, the array of transactions will be enhanced, featuring an additional payment scenario utilizing a dynamic QR code and facilitating transfers between legal entities. Furthermore, the scope of templates for uncomplicated automated payments will be extended.

The introduction of the digital ruble pilot had previously been postponed indefinitely due to the fact that its legislation had only advanced through the initial reading in the State Duma, which constitutes the lower chamber of the Federal Assembly. Nevertheless, Russia proceeded with the central bank digital currency initiative, as President Vladimir Putin enacted the digital ruble legislation on July 24th.

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Japanese startup to use stablecoins and CBDC to link Asian countries

August 8, 2023 Coin Telegraph

CBDC

Soramitsu is developing a cross-border payment system that uses Cambodia’s CBDCs and targets Japan, India, China and Southeast Asia.

Japanese blockchain startup Soramitsu is exploring new central bank digital currency (CBDC) applications with a new project on the cross-border payment system for Asian countries.

Soramitsu will deploy Cambodia's CBDC and fiat-pegged stablecoins as part of its new payment system targeting countries like India, China, Japan and regions like Southeast Asia.

The new project builds upon Soramitsu’s CBDC expertise, including its involvement in the Asian CBDC project Bakong in Cambodia and Laos' Lao kip, Nikkei reported on Aug. 8.

Launched in 2020, Cambodia’s Bakong is a public-private initiative allowing Cambodian residents to pay at stores or send money through a mobile app using the local currency riel or U.S. dollar. Since launch, Bakong’s adoption has expanded to countries like Malaysia, Thailand and Vietnam. By late 2022, Bakong reportedly had 8.5 million users and handled around $15 billion in payments.

“The company is working to enable similar cross-border payments for India, China and Laos, and hopes to bring Japan into this network,” the latest report notes.

As part of the project, Soramitsu plans to establish a Japanese exchange for stablecoins, which would allow conversions of currencies from diverse countries, the report says, adding:

“If a consumer in Thailand wanted to make a QR code-based payment to buy something from a Japanese e-commerce site, for example, the payment would be sent to the exchange as a dollar-denominated Bakong and converted to a yen-denominated stablecoin.”

One of the features of Soramitsu’s planned payment network is anticipated reduction in transaction fees. According to the firm, the fee reduction would be enabled through implementing stablecoins, which can be transferred without going through existing interbank payment networks.

To build the cross-border payment network, Soramitsu formed a team with Tokyo-based digital services company Vivit and the Tama University Center for Rule-making Strategies. It is looking to partner with major e-commerce sites.

The firm is also working with Japan's Mitsubishi UFJ Trust and Banking and other partners to create the necessary exchange infrastructure.

Soramitsu did not immediately respond to Cointelegraph’s request for comment. This article will be updated pending new information.

Magazine: China expands CBDC’s tentacles, Malaysia is HK’s new crypto rival: Asia Express

Brazilian CBDC gets official name and logo

August 8, 2023 Coin Telegraph

Brazil

Previously commonly referred to as “digital real”, Brazilian central bank digital currency gets its official brand name.

Brazilian central bank digital currency (CBDC), previously commonly referred to as “digital real”, gets its official brand name. It would be called Drex.

On August 7, the Central Bank of Brazil issued a press release, revealing and explaining the new brand for its CBDC. Developed by the Central Bank, the brand “Drex” is an acronym:

““D” and “r” allude to Real Digital; the “e” stands for electronic and the “x” conveys the idea of modernity and connection, the use of distributed ledger technology (DLT)”.

Along with the brand name, the Central Bank revealed Drex’s visual identity. On the CBDC logo, two arrows, including in the capital D, picture the evolution of the national currency, real, to its digital version, while the transition from blue to light green colors stands for the “transaction completed” message.

*Central Bank launches the brand of digital currency, Drex. Source: bcb.gov.br*

In July, Pedro Magalhães — a blockchain developer and founder of tech consulting firm Iora Labs, has reportedly discovered in the Drex code functions that would allow a central authority to freeze funds or reduce balances. Last year, Fabio Araujo, an economist at the Brazilian central bank, explained that the CBDC has the potential to halt bank runs in the country.

Last week the Central Bank of Russia has also revealed the visual identity of its CBDC, digital ruble. An international ruble symbol in a circle, the logo comes in four basic color combinations: red and white or black and white.

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Payments Giant Western Union Collaborates With $75,000,000,000 Bank on a US CBDC Pilot Study

August 4, 2023 The Daily Hodl

CBDC supporter likely in White House next term, crypto divide not red v. blue: Grayscale

August 4, 2023 Coin Telegraph

CBDC

The crypto asset manager took a look at the leading U.S. presidential candidates’ positions and did not see a partisan divide.

The next president of the United States is likely to be in favor of central bank digital currency (CBDC), crypto asset manager Grayscale observed in a post on its website, as the current frontrunners in both political parties have expressed their support for it. Neither seems to like Bitcoin.

Joe Biden and Donald Trump currently have healthy leads in the 2024 presidential polls among members of their respective parties. Both of them are “favorable toward exploring CBDC,” echoing conclusions drawn by Forbes earlier this year.

Trump has called Bitcoin (BTC) a “scam,” and Biden’s position was intuited from his support for a 30% tax on Bitcoin mining. Grayscale did not comment on Trump’s overall attitude toward crypto and digital assets. It can be recalled that he is at, a minimum, favorably disposed toward nonfungible tokens.

Joe Biden's got laser-eyes on his coffee cup
Someone in the White House is a #Bitcoin HODL agent
pic.twitter.com/I5q5uO8zDL
— Bitcoin Archive (@BTC_Archive) August 4, 2023

Biden’s “Executive Order on Ensuring Responsible Development of Digital Assets“ was taken as evidence of his general support. Another White House document, the 2023 Economic Report of the President, was not as complimentary toward crypto, however.

The candidates polling in second place, Democrat Robert Kennedy, Jr. and Republican Ron DeSantis, have both been vocal about their support for cryptocurrency and opposition to CBDC.

Trump and DeSantis are not the only pro-crypto candidates in the crowd of Republican contenders. Vivek Ramaswamy, to whom Grayscale ascribes 7% support (compared to Trump’s 63%), is also seen as being pro-Bitcoin and anti-CBDC.

*Ron DeSantis' economic platform. Source: Ron DeSantis for president*

Possibly the most ardent crypto supporter on either side is Republican Miami Mayor Francis Suarez, who made his love for the technology known far before campaigning began. His presidential ambitions have been called “improbable,” however.

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Bank of Russia presents digital ruble’s logo and commission fees

August 4, 2023 Coin Telegraph

Bank of Russia

From 2025 B2B transactions will cost $0,16 each, while individual customers will pay 0.3% of the total transaction sum when transferring to commercial accounts.

The central bank digital currency (CBDC) project, being developed by the Bank of Russia has now got its official logo. The Bank of Russia has also published commission fee rates, which would exceed zero points only in 2025.

Source: The Central Bank of Russia

On August 3, the Bank of Russia revealed the corporate identity of its digital currency. An international ruble symbol in a circle, the logo comes in four basic color combinations, which combine either red (or, more precisely, a Pantone Red 032C) and white or black and white.

Along with the logo, the Bank of Russia presented the commission fees for different types of operations with its CBDC. Until the end of 2024 all services will be free of charge, but starting from 2025 the B2B transactions would cost 15 rubles ($0,16) each, while individuals would pay 0.3% of the total transaction sum when transferring to commercial accounts and 0.2% when paying for civil services.

Russian President, Vladimir Putin, signed the digital ruble bill into law on July 24. The CBDC is officially scheduled to take effect from Aug. 1, 2023, starting with a pilot phase with thirteen local banks.

The Bank of Russia will be the principal operator of the digital ruble infrastructure. The currency will serve as a payment and transfer method. No one will be forced to use the CBDC, as it will operate along with cash and non-cash rubles, Bank of Russia governor Elvira Nabiullina has recently specified.

According to Bank of Russia deputy governor Olga Skorobogatova, the regulator doesn’t expect mass adoption of the digital ruble in Russia before 2025 or even 2027.

Private digital currencies remain largely unregulated in the country, as Russian lawmakers are continuing to postpone the introduction of cryptocurrency legislation. The last time State Duma official Anatoly Aksakov promised to pass four bills related to crypto mining, taxation and international settlement crypto, was in May 2023.

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CBDC

Cash is still king

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