Christine Lagarde invites public comments on eurozone CBDC
European Central Bank President Christine Lagarde invited public commentary on a potential eurozone central bank digital currency (CBDC). “We are still in the review and considerations stage, but we’ve just launched a public consultation so that consumers and Europeans can actually express their preference and tell us whether they would be happy to use a digital Euro just in the way they use a Euro coin or a Euro banknote knowing that it is central bank money that is available and that they can rely upon.” The survey can be accessed here.
U.S. Senators Kirsten Gillibrand and Bernie Sanders introduced the Postal Banking Act to better reach the 8.4 million unbanked American households via the U.S. Postal Service (USPS). But why does the U.S. Postal Service (USPS) need to be involved at all in reaching the unbanked if a brick & mortar branch network isn’t important? It doesn’t. Any government agency could probably fill the role. In fact, the U.S. Treasury is already a major provider of a limited range of banking services via its Direct Express prepaid debit card. Rather than starting a new government debit card program from scratch, building off of and improving the Direct Express card would probably make more sense. On the other hand, USPS is a well-known brand. A prepaid card with the USPS logo on it would probably better stand out on a card rack than the Treasury’s brand.
Synthetic Central Bank Digital Currency in Brazil?
According to Banco Central dos Brasil (Bacen) Circular 3,681/2013 issuers of electronic currency have to maintain liquid funds corresponding to the value of the balance of electronic currency kept in the payment account. Until the closing time established for the operation of the Reserve Transfer System (Sistema de Transferência de Reservas – STR) of Bacen, these funds must be allocated exclusively in: (i) cash, by credit transfer to a specific account in Bacen; or (ii) federal government securities, registered in the Special System for Settlement and Custody (Sistema Especial de Liquidação e de Custódia – Selic), including through repurchase agreements, held in custody in a specific account in that system. The federal government securities shall: (i) be denominated in Reais and purchased in the secondary market; (ii) have a maximum term of 540 days until maturity; and (iii) not be referenced in foreign currency.