The Banco Central do Brasil (BCB) has formed a working group to study the possibility of issuing digital currency (CBDC). The 12-member group is tasked with investigating CBDC security risks, economic implications and societal benefits against Brazil’s existing payments landscape. It will also assess whether a CBDC can complement benefits associated with the Pix instant payment system to be launched in November. The group will also evaluate CBDC issuance and propose an issuance model for Brazil. A final report is due in in six months.
A new BIS paper sets out a database of central bank digital currency (CBDC) technical approaches and policy stances on issuance. Most projects are found in digitised economies with a high capacity for innovation. Work on retail CBDCs is more advanced where the informal economy is larger. More and more central banks are considering retail CBDC architectures in which the CBDC is a direct cash-like claim on the central bank, but where the private sector handles all customer-facing activity. It concludes with an in-depth description of three distinct CBDC approaches by the central banks of China, Sweden and Canada.
In 2019, German banknote printer Giesecke & Devrient (G&D) unveiled its Filia distributed ledger technology-based central bank digital currency (CBDC) issuance platform. Already six of G&D’s central bank clients are in negotiations about using Filia to issue CBDC. More recently, G&D led a $17 million Series A into Metaco, a Swiss startup providing crypto-asset custody services via its Silo software. Silo, is a user-interface between banks’ human operators and the distributed ledgers powering the crypto-assets for which they act as custodians.
Visa is investing in MagicCube, a payments-security fintech focused on enabling devices like smartphones to accept payments. In lieu of buying checkout hardware, merchants could use smartphones to read contactless cards while securely capturing financial PIN and other verification methods, including biometrics. The solution provides end-to-end functionality, security, and modern acceptance capabilities previously limited to hardware-based terminals. The entirely software-based solution offers a plug-and-play, fully contained module that can fit into the current flows of any modern acquiring bank or merchant acceptance solution.
Discover Financial Services, BLDS LLC, and H2O.ai issued a white paper on the use of machine learning in credit underwriting. The authors suggested that shifting to machine learning will offer a significant opportunity to improve how credit is offered. Specifically, it has the opportunity to improve accessibility by expanding access to credit for those underserved by mainstream lending practices. The white paper also dispels some of the myths related to machine learning and provides a thorough discussion of key definitions to consider when using machine learning within the lending context. Most importantly, it shows how machine learning is well-suited to combat discrimination within financial institutions by ensuring that credit decisions are based on more reliable predictive analysis.
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