This Bank of Canada staff discussion paper discusses the competition and innovation arguments for issuing a central bank digital currency (CBDC). A CBDC could be an effective competition policy tool for payments. On innovation, it argues that a CBDC could be necessary to support the vibrancy of the digital economy by helping solve market failures and fostering competition and innovation in new digital payments markets. Overall, the paper finds that competition and innovation are valid supporting arguments for issuing a CBDC.
The People’s Bank of China e-CNY is reportedly being piloted with Pingan Property Insurance, a subsidiary of China’s leading insurer, Ping An. The project involves a new insurance policy tailored to medical workers in Shenzhen’s Nanshan district, offering them various levels of compensation for diagnosis of or death due to COVID-19. Applicants are eligible for exclusive preferential allowance if they use the digital yuan wallet to make payments.
This note summarizes the themes and highlighted issues discussed at a January 26, 2021 webinar on the legal aspects of digital currencies, hosted by the Bank for International Settlements Innovation Hub and the Financial Stability Institute. Jurisdictions are devoting a great deal of attention to their legal frameworks to address the specific features of different types of digital currencies. While progress is being made, there is more work to be done. The legal design choices that can be made in response to the issues highlighted in the webinar would have consequences for the way in which digital currencies are treated in relevant jurisdictions.
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