The Group of Thirty (G30) published a report on digital currency. The report highlight the key issues that policymakers have to consider in responding to these developments. Among its recommendations are that national authorities must play an active leadership role in setting standards and providing public infrastructure for payments, which cannot be left to market forces alone. Also, because new technologies may require a sufficiently long phase-in period in order to be tested fully, multiple payment alternatives should be introduced so that the payments system gains a measure of resilience and includes adequate competition. Also, existing technologies that allow faster retail payments, which drastically increase competition and lower costs to businesses and consumers, should be implemented more widely.
Stanford University’s Future of Digital Currency Program joined forces with the International Telecommunications Union (ITU), a United Nations agency headed by China, to launch the Digital Currency Global Initiative (DGCI). The purpose is to conduct research on central bank digital currency (CBDC) and other digital currencies, aiming to identify areas for standardization to facilitate interoperability. This research will focus on technical architectures, security, technical implications and challenges in deployment caused by regulatory and policy requirements. It will also construct a set of metrics by which to evaluate the robustness of various digital currency technologies against the requirements set by various stakeholders.
More than anything else, the debate over whether to issue a so-called central bank digital currency, or CBDC, is driving the debate on payments and privacy. A privacy-friendly CBDC is a complex and ambitious project. But designing something from scratch is forcing central banks to ask themselves whether they have an obligation to provide the public with digital privacy and, if so, how private dare they make the stuff. It’s difficult to know for sure whether a central banker’s “balanced” approach to privacy will meet the bar that is being set by an emerging group of privacy consumers.
Fidelity Digital Assets published a paper explaining why Bitcoin has all the makings to become a store of value, its scarcity being one of the key factors. It claims that Bitcoin is capable of becoming an “insurance policy” that may provide protection against various consequences of contemporary monetary practices. They also argued that Bitcoin’s volatility actually has a positive impact on its adoption as it helps bring it attention, development and innovation—at least in its early years. It also claimed that a longer-term driver was the great wealth transfer to a millennial demographic that has a favorable opinion on digital assets.
Real time gross settlement (RTGS) is a critical piece of national infrastructure and the backbone of UK payments. It settles an average of £685billlion each working day. Following extensive industry engagement, the vision for the renewed RTGS service is to increase resilience and access, offer wider interoperability, improve user functionality and strengthen the end-to-end risk management of the UK high value payment system. The renewed system will start to be delivered in 2022. The Bank of England will work with Accenture to develop and build this new world class payments service.
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