Kiffmeister’s #Fintech Daily Digest (04/19/2021)

The New Money Review published a nice summary of a podcast that we recorded last week on central bank digital currencies and the benefits and risks of new digital economy. 

Bank of England and UK Treasury Launch CBDC Taskforce

The Bank of England and the U.K. Treasury announced the creation of a Central Bank Digital Currency (CBDC) Taskforce that will (i) coordinate exploration of CBDC objectives, use cases, opportunities and risks, (ii) guide evaluation of the design features, and (iii) support a rigorous, coherent and comprehensive assessment of the overall use case. Also, the Bank of England established a CBDC Unit, and created a CBDC Engagement Forum to engage senior stakeholders and gather strategic input on all non-technology aspects of CBDC, and a CBDC Technology Forum to gather input on all technology aspects of CBDC. 

China may test its digital currency with foreign visitors at the 2022 Beijing Winter Olympics

The People’s Bank of China (PBOC) will reportedly try to make it possible for foreign athletes and visitors to use its e-CNY CBDC during the Beijing Winter Olympics in 2022. Deputy governor Li Bo also reportedly said the aim of the e-CNY is not to replace the U.S. dollar’s dominance on the international stage, although in the long term the PBOC hopes to have a cross border solution as well. 

Bank of England publishes policy for omnibus accounts in RTGS

The Bank of England unveiled a new type of omnibus account as part of its real-time gross settlement (RTGS) service. Under the new model, an operator of a payment system can hold funds in the omnibus account to fund their participants’ balances with central bank money. An omnibus account co-mingles funds from different entities for the purposes of wholesale settlement. The new type of account is not limited to wholesale transactions such as buying gilts, but can be used to settle transactions on behalf of customers, such as a small business paying a supplier. 

Bank of England omnibus account ideal for Fnality blockchain settlement tokens

Fnality sees the new Bank of England omnibus accounts as supportive of the opportunity to use tokenized cash assets on next generation payment systems, enabling on-chain wholesale exchange of value. Fnality uses an Ethereum-based permissioned blockchain developed by Clearmatics, that will run on chain payment systems in multiple currencies with a regulated subsidiary in each jurisdiction. When a bank wants to use Fnality tokens to make a payment, it transfers money from its central bank account to the Fnality omnibus account, which then tokenizes it. The bank then uses the tokens to make a payment, and the recipient bank can then opt to convert the received tokens back to central bank money and have it transferred to its own central bank account. Or it could use the tokens for further payments. 

5 thoughts on “Kiffmeister’s #Fintech Daily Digest (04/19/2021)

  1. How have you avoided writing anything #Fintech related to Shinhan bank & Standard banks announcements to pilot CBDCs for South Korea and Africa???Nothing on Hedera's adoption, new council members, use cases? Confused as to why the leading fintech company with the widest adoption has no coverage? No mention of Emtech, Newdawn, Fed, MIT exploring CBDC??

  2. You are correct, I haven't been following very long. I searched through all articles and found very little mention of what I considered essential CBDC cases. Mostly my biased opinion on Hedera Hashgraph. I stand corrected and will be following your blog closely.

  3. I think what you're pointing to is two different perspectives that could be taken to CBDC surveillance. One is mine that looks at it from the central bank policy side (which central banks are examining CBDC and how seriously). The other is a more technology platform focused view, which I think you're thinking about. For me the platform is very much secondary, and even if I viewed it as primary, very little information is available on which platforms are working with which central banks. We have a lot of information on three of the very active launches and pilots (see link below for the Bahamas Sand Dollar, ECCB DCash and Uruguay e-peso) and we know that the Riksbank is doing PoC work with R3 Corda. But, for example, we have Algorand saying that they're working with 15 or so central banks, but they can't tell us which ones. And speaking of Hedera Hashgraph, have they published anything on country-specific CBDC work? I poked around and just found some very general white paper type stuff. I think what you envisage is a tabulation with platforms (e.g., Hedera Hashgraph, R3 Corda, etc.) listed in the first column and subsequent columns listing the central banks that are working with them. Unfortunately those other columns will be very sparse until the central banks and platform managers become more transparent.

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