The BIS Innovation Hub, the Bank of Israel and the Hong Kong Monetary Authority will join forces to test the feasibility of a cyber secure two-tier retail central bank digital currency (CBDC) in which intermediaries are “exposure-less”. Intermediaries in “Project Sela” will have technological access to the CBDC system, conduct the know your customer (KYC) processes, and provide consumer services, but are not financially exposed, at any point of the processes of obtaining, transferring, or redeeming CBDC. This architecture is assumed to have several benefits: less financial risk for customers, more liquidity, lower costs, increased competition, and wider access, plus enhanced resilience to sophisticated cyber attacks. [Read more]
Circle’s Euro Coin (EUROC) is coming on June 30th
Circle, the issuer of the USD Coin (USDC) dollar-pegged stablecoin, is launching a EUR-backed stablecoin (EUROC) on June 30. EUROC will be 100% backed by euros held in euro-denominated banking accounts so that it’s always redeemable 1:1 for euros. Businesses will be able to mint EUROC straight from the source by depositing euros into their Circle Account using Silvergate’s Euro SEN network, after which it will be available to non-Circle Account users via digital asset exchanges and DeFi protocols. Additional deposit options are expected to be available later this year. EUROC will be issued as an ERC-20 token on the Ethereum blockchain, with support for additional blockchains expected later this year. [Read more]
Missing Key: The challenge of cybersecurity and central bank digital currency
The Atlantic Council published a report on cybersecurity issues related to CBDC. It analyzes the intertwined questions of policy, design, and security to focus policy makers on how to build secure CBDCs that protect users’ data and maintain financial stability. The analysis shows that privacy-preserving CBDC designs are not only possible, but also come with inherent security advantages, compared to current payment systems, that may reduce the risk of cyberattacks. [Read more]
Seven lessons from the e-Peso pilot plan: The possibility of a central bank digital currency
The Banco Central del Uruguay’s Adolfo Sarmiento writes about seven lessons from the 2017-18 e-Peso CBDC pilot, highlighting that CBDC choices are based not only on technical considerations but also on money use culture. This implies a holistic assessment of the payment environment and a clear understanding of the cultural implications of a change that will be incremental but not reversible. This implies that research on CBDC must concern idiosyncratic aspects: economy organization, historical aspects, and even social implications of money. [Read more]
Upcoming events I’m affiliated with:
The CBDC Think Tank is hosting a CBDC Papers Lecture Series on June 17 and 24 starting at 7am EST and running for 4 hours each day. [View list of papers and register here]
