Jonas Gross and I take a deep dive into the leading retail central bank digital currency (rCBDC) efforts. While much attention is focused on the ruminations of China, Europe and the United States, aside from China, smaller jurisdictions are actually leading the way. Although the People’s Bank of China launched their rCBDC pilot in April 2020, Banco Central del Uruguay completed its first pilot already in April 2018, the Central Bank of the Bahamas fully launched their Sand Dollar in October 2020, and the Eastern Caribbean Central Bank launched a pilot in March 2021.
“Amazon has come out and flatly denied a British newspaper’s report that the e-commerce colossus was planning to accept bitcoin payments by the end of the year. ‘Notwithstanding our interest in the space, the speculation that has ensued around our specific plans for cryptocurrencies is not true,’ a spokesperson for Amazon told CoinDesk by email. “We remain focused on exploring what this could look like for customers shopping on Amazon.”
The International Monetary Fund (IMF) is warning of the dire consequences of a jurisdiction adopting a crypto-asset as a national currency. For example, government revenues would be exposed to exchange rate risk if taxes were quoted in advance in a crypto-asset while expenditures remained mostly in the local currency, or vice versa. Also, most jurisdictions considering such a move have adopted a major foreign currency as their own, thereby “importing” the credibility of the foreign monetary policy. Neither of these is possible in the case of widespread crypto-asset adoption. Hence, for example, if all prices were quoted in Bitcoin, the prices of imported goods and services could fluctuate massively. In addition, banks and other financial institutions could be exposed to the massive fluctuations in crypto-asset prices. Also, legal tender status requires that a means of payment be widely accessible. However, internet access and technology needed to transfer crypto-assets remains scarce in many countries, raising issues about fairness and financial inclusion.
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