At first glance, the Marshall Island’s SOV scheme seems like a great way to raise government revenue. However, the International Monetary Fund’s Sonja Davidovic takes a closer look that reveals that, like most things that sound too good to be true, it is.
A supermajority of El Salvador’s legislature voted in favor of President Nayib Bukele’s proposal for the nation to adopt bitcoin as legal tender. The bill will mandate all businesses to accept bitcoin for goods or services, but the government will act as a backstop for entities that aren’t willing to take on the risk of a volatile crypto-asset. The government will set up a $150 million trust fund at the Development Bank of El Salvador to instantly convert bitcoin to U.S. dollars to assume merchants’ risk. The Development Bank’s trust fund would sell some of the bitcoin it receives for dollars to replenish the fund.
This could further complicate the Central American country’s quest to seek a more than $1 billion-program with the International Monetary Fund (IMF). In May, Bukele’s party strained relations with Washington when it ousted five Supreme Court judges and the top prosecutor. President Bukele said that there is a meeting with the IMF scheduled for Thursday (June 10). And this could be just the beginning, as some speculate that other Central and Latin American countries may follow El Salvador’s example – eg Argentina, Brazil, Nicaragua, Panama, and Paraguay.
A Bank for International Settlements paper discusses the range of proposed central bank digital currency (CBDC) architectures, how they could complement existing payment options, and what they imply for the financial system and the central bank of the future. It sets out the requirements for a “minimally invasive” CBDC design – one that upgrades money to current needs without disrupting the proven two-tier architecture of the monetary system, which involves both the private and public sectors. It finds that technological developments inspired by popular cryptocurrency systems – based on anonymity and lacking a central authority – do not meet the requirements for a retail CBDC. Instead, digital banknotes that run on “intermediated” or “hybrid” CBDC architectures show promise.
The European Blockchain Observatory and Forum (EUBOF) published a report identifying and evaluating eight alternative design architectures for the digital euro against the core principles and requirements set by the ECB. It considers how the digital euro will differ based on whether it will account-based or token-based, or whether it’s implemented atop existing eurozone-wide payment rails or atop novel technological architectures, such as blockchain. The paper also explores whether a digital euro should be exclusively coordinated by the central bank or distributed and managed in collaboration with Europe’s commercial banks and other financial institutions. It addresses interoperability and programmability features, regulatory aspects and end-user experience, along with potential financial stability implications.
More than 200 vendors at and around the venues for the 2022 games in Shijingshan are now supporting payments made using e-CNY.
Concordium’s vision is to become the leading public and regulatory compliant open de-centralized world computer with Identity built-in at the Protocol level. Concordium offers secure, low-cost services for transactions, IoT data sharing, storage and more. It is a proof-of-stake-based blockchain which solves the shortcomings of classic blockchains and their non-compliant cryptocurrencies — with the introduction of protocol-level identity verification and the use of zero-knowledge proofs to replace anonymity with perfect privacy – and facilitate KYC and AML procedures for Concordium’s Global Transaction Unit (GTU) payment coin.
Central bankers can sign up here: https://www.eventbrite.com/e/the-central-bank-digital-currency-workshop-tickets-152572742179
*For those interested in intra-day updates and news that didn’t make the Daily Digest cut, please check out my Diigo fintech bookmarks: https://www.diigo.com/user/kiffmeister/Fintech