I’ve written up a summary of recent thinking on retail central bank digital currency (CBDC) operating models (single- vs multi-tier) based largely on the work of Raphael Auer and his BIS colleagues, and the Bank of England CBDC team.
I’ve also updated my tabulation of retail central bank digital currency (#CBDC) explorers, updating a few links (Madagascar and Nigeria) and adding Peru.
The Central Bank of Nigeria (CBN) is partnering with Bitt to roll out its eNaira retail CBDC later this year. Project Giant, as the Nigerian CBDC pilot is known, has been a long process that started with the Bank’s decision to digitize the Naira in 2017. Bitt was previously key to the development and launch of the CBDC pilot of the Eastern Caribbean Central Bank (ECCB) in April 2021.
“Whether a stablecoin needs dollar reserves depends on its actual or potential use in the conventional payments system. A stablecoin used only within the crypto ecosystem wouldn’t need 100% dollar reserves. It would only need sufficient dollar liquidity to maintain its peg – and if exchanges are compliant and redemptions restricted, that might not be very much. However, stablecoins could replace conventional rails for international payments, potentially making them faster, cheaper and available 24/7. Stablecoins used for this purpose would need to be fully exchangeable for U.S. dollars or other fiat currencies on demand 24/7, and would therefore either need 100% dollar reserves or access to central bank liquidity. [Hence,] rather than wasting time and energy trying to regulate crypto-only stablecoins as if they are banks or money market funds, regulators should concentrate on ensuring that stablecoins that are, or show signs of becoming, payment media within the conventional financial system have 100% reserves and/or are licensed banks.”