Central bank digital currencies: a new tool in the financial inclusion toolkit?
The Bank for International Settlements and World Bank published a paper on potential central bank digital currency (CBDC) impacts on financial inclusion. It concludes that a CBDC alone may not address financial inclusion challenges, but it could play a role as part of a broader suite of tools. The development of an acceptance ecosystem will be required, which will allow for the seamless exchange between digital and physical forms of currency. Significant and wide-reaching financial and digital literacy activities will also be required if a CBDC is to be afforded the same levels of trust currently enjoyed by other forms of central bank money. Also relevant are including the entry of non-banks and new business models, and applying tiered user onboarding approaches, introducing fast payment services, the use of open banking and APIs to enable efficient interfaces, and ensuring fair, transparent and risk-based access criteria for access to payment systems and financial infrastructures. [Read more]
DTCC’s Project Lithium to assess implications of CBDC on market infrastructure
The Depository Trust and Clearing Corporation (DTCC) is developing a prototype to test the ability of US clearing and settlement infrastructure to support a Fed-issued CBDC using a distributed ledger technology (DLT) platform. Project Lithium will measure the benefits of a CBDC and inform the future design of the Depository’s clearing and settlement offerings. It will also explore how a CBDC could enable atomic settlement, a conditional settlement that occurs if delivery and payment are both received at the same time. [Read more]
Central Bank of Iran Shares Details About Digital Rial Project
The Central Bank of Iran (CBI) reportedly informed banks and other credit institutions about regulations related to the minting and distribution of the crypto riyal CBDC. The distributed ledger technology based system will be maintained by authorized financial institutions and capable of implementing smart contracts. [Read more]
Upcoming events I’m affiliated with:
The CBDC Think Tank is hosting several webinars over the next month:
- On April 20 (at 08:00 EST) the Bank of Kazakhstan will present on their Digital Tenge retail CBDC project. [Register here]
- On April 27 (at 08:00 EST) the BIS and the Swiss National Bank will present on their Project Helvetia wholesale CBDC work. [Register here]
- On May 3 (at 08:00 EST) the Bank of Ukraine will present on their E-Hryvnia retail CBDC project. [Register here]
Satoshi Capital Advisors is hosting a virtual workshop on wholesale CBDC, stablecoins and digital capital markets on May 24 (starting at 08:00 EST). [Register here with the passcode: CBDC]