Bank of England roadmap for the RTGS service beyond 2024
The Bank of England (BoE) published its roadmap for the real-time gross settlement (RTGS) service beyond 2024 that was informed by public responses to the consultation paper published in April 2022. The objective of modernizing the RTGS service is to offer a more accessible, functional and resilient platform for digital settlement in central bank money. The roadmap pushes back on the idea of putting wholesale payments on distributed ledger technology (DLT) (e.g., via “wholesale central bank digital currency (CBDC)”) rails. It points out that the RTGS Renewal Programme will realize a number of benefits commonly associated with such platforms more quickly than it would be possible to launch an entirely new wholesale settlement platform and achieve scale in its usage. [Read more at the BoE]
I particularly liked the fact that the report debunked the idea that wholesale CBDC is something new:
The Bank has been actively exploring the case for issuing a new form of money in the form of a retail CBDC… Some market participants have called for a wholesale version (wCBDC), which would not be a new form of digital money (at present, the Bank enables digital wholesale settlement through CHAPS and its RTGS service) but instead would represent the application of new technologies to improve wholesale settlement in central bank money…
Reserve Bank of India’s global hackathon targets CBDC, blockchain scalability
The Reserve Bank of India (RBI) launched the HaRBInger 2023 hackathon that includes retail CBDC use cases. These include the disbursal of social benefits, and offline usage where the wallets must be able to independently verify the authenticity of transactions without communicating with the server during the transactions, while mitigating the risk of double spending. Registration runs from February 22, with proposals due by March 24. The first prize is Rupees 4 million ($48,000), with winners to be announced mid-August. [Read more here]
Crypto-assets: a new standard for banks
The European Central Bank (ECB) published a summary of its thinking on the regulatory aspects of commercial bank holdings of crypto-assets. It supports the recently finalized Basel Committee on Banking Supervision’s (BCBS) standard on the prudential treatment of banks’ crypto-asset exposures as a complement to the forthcoming regulation of the crypto-asset sector through the Markets in Crypto-Asset (MICA) regulation. The next step is for the European Union to transpose the Basel standard into its legislation by the January 1, 2025 deadline. [Read more at the ECB]
European Commission launches European Regulatory Sandbox for Blockchain
The European Commission (EC) launched the European Regulatory Sandbox for Blockchain to provide legal certainty for decentralized technology solutions including blockchain by identifying obstacles to their deployment from a legal and regulatory perspective and providing legal advice, regulatory experience and guidance in a safe and confidential environment. It should also allow regulators and supervisors to enhance their knowledge of cutting-edge blockchain technologies and share best practices through dialogues. [Read more at the EC]
Stablecoins and the financing of the real economy
The Banque de France (BdF) published a paper that examines the impact of stablecoin issuer investment practices on the financing of the real economy. The largest stablecoins manage their peg with the US dollar (USD) by holding short-term safe assets, including USD-denominated commercial paper (CP). The analysis shows that CP issuers catered to the additional demand from stablecoins by issuing more, illustrating the implications of stablecoins for financial stability and the financing of the real economy. [Read more at the BdF]
Upcoming conferences, webinars and speaking engagements:
- I’ll be moderating a panel on “what happens when the lights go out…different schemes for offline functionality” at the in-person Digital Currency Conference (DCC) in Mexico City on May 18. [Register 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.
The Sovereign Official Digital Association (SODA) is a technology-agnostic firm offering advisory services at the intersection of central banking, digital finance and the web3 industry, aiming to make public digital money a reality. SODA believes institutions in the existing financial ecosystem should have access to the tools and resources they need to move from discussion to action. SODA offers ‘real life’ use cases to help test digital money and drive adoption as central banks and other public institutions explore the future of a more financially inclusive world powered by interoperable blockchain-based networks. SODA would love you to join us on this journey – please get in touch (chris@sodapublicmoney.org).
Satoshi Capital Advisors is a New York-based, global advisory firm that works with central banks, governments, and the private sector to architect, implement, and operate varying initiatives. Satoshi Capital Advisors’ central bank work revolves around CBDC architecture and implementation, providing advisory services from research phase through to growth phase. Utilizing a product-market fit and technology agnostic approach to CBDC architecture and implementation enables Satoshi Capital Advisors to build tailored solutions, bespoke to local financial system nuances. Satoshi Capital Advisors welcomes requests from central bank officials for virtual and in-person CBDC workshops. [Click here for more information]
WhisperCash offers the first fully offline digital currency platform that has the same properties as physical cash. It can perform secure consecutive offline payments without compromising on security, privacy or accessibility. WhisperCash allows direct person to person offline payments without any server infrastructure or internet connectivity. It comes in various form factors including the self-contained credit card-sized “Pro” that sports an eInk screen and capacitive keyboard, and lasts for two weeks between recharges assuming a few transactions per day. [Click here for more information]
