ECB provides update on its digital euro work

The European Central Bank (ECB) provided a status report on its central bank digital currency (CBDC) work. It confirmed that a digital euro would incorporate individual user holding limits to slow the possible conversion of bank deposits into digital euro  (disintermediation risk). A digital euro would also bear interest calibrated to make digital holdings above a certain threshold unattractive compared to other highly liquid low-risk assets.  Offline payments will only be allowed for low value, low risk, close proximity transactions. [Read the report here] In addition, ECB board member Fabio Panetta set out a plan for a digital euro scheme involving a set of rules, practices and standards with plans to start working on a rulebook. [Read the plan here]

Digital Currency: Yuan comes with an expiry date: Spend or it will vanish

China is reportedly exploring putting expiration dates on its e-CNY retail CBDC, which could force holders to use it up by a certain date. This idea has most recently been explored in a Celo working paper that advocated using expiration dates to increase the “velocity” of money, based on an an unconventional monetary policy instrument known as a Gesell money. [Read more at the Economic Times]

Bank of England: FMI Sandbox will start with DLT securities post trade

The Bank of England announced that the U.K.’s Financial Market Infrastructure (FMI) Sandbox would initially focus on distributed ledger technology (DLT) based securities settlement systems. The Sandbox is a joint initiative between HM Treasury, the Bank of England and the Financial Conduct Authority. [Read more at the Bank of England]

ERC-20R and ERC-721R: Reversible Transactions on Ethereum

This paper proposes reversible versions of ERC-20 and ERC-721, whereby a transaction is eligible for reversal for a short period of time after it has been posted on chain. After the dispute period has elapsed, the transaction can no longer be reversed. Within the short dispute period, a sender can request to reverse a transaction by convincing a decentralized set of judges to first freeze the disputed assets, and then later convincing them to reverse the transaction. The paper provides a prototype implementation. [Read more at arxiv.org]

Tickets available for CBDC Think Tank masterclass

The CBDC Think Tank, in partnership with the IMF and George Washington University, is hosting a full-day in-person CBDC Masterclass on October 12 in Washington DC for “official sector” staff and academics active in the CBDC / digital currency space only. The sessions are designed as instructional deep dives with full presentations and Q&A components.  Tickets are $99. [Register here]

Also, the CBDC Think Tank, in partnership with Georgetown University and the DC FinTech Week, is hosting a FREE (also in-person) Digital Currency Lecture Series, a set of digital currency lightning talks delivered by subject matter experts, on October 14 in Washington DC. [Request an invite here]

Kiffmeister’s Global Central Bank Digital Currency Monthly Monitor

Just a reminder that I produce a monthly digest of central bank digital currency (CBDC) developments exclusively for the official sector. So for any of you out there who work for a central bank, ministry of finance or international financial institution who would like to receive it by email on the first business day of every month, please DM me on LinkedIn or email me at chronicles@kiffmeister.com.