IMF discussed Brazil’s wholesale CBDC initiative
The IMF discussed Banco Central do Brasil’s digital currency (CBDC) initiative in its 2023 Article IV consultation staff report. It describes the digital real (RD) as a “smart” platform for financial services based on distributed ledger technology (DLT) that leverages the digital representation of assets (tokenization) and programmability, seeking to foster innovation. At an initial stage, it will be used for deposits/accounts and other financial assets (e.g., federal government securities), while at a later stage more complex assets will be tokenized such as vehicles and real estate ownership titles, as well as rural financing solutions based on tokenized agricultural produce. The IMF report warned that a transition to a tokenized world will require changes in the legal framework that ensure a reliable bridge to reality, and additional legal provisions may be needed to ensure that holders have an actual right over a real-world asset or service. [Read more at the IMF]
ECB to start wholesale digital euro pilots in 2024
On July 18, 2023 the European Central Bank (ECB) New Technologies for Wholesale settlement Contact Group held its second meeting. The Group is exploring how to settle DLT transactions with central bank money, including a wholesale CBDC. The pilots will be open to financial institutions with access to the TARGET payment system, with the onboarding to start later in 2023 and tests to commence in Q2 2024. Three interoperability-type solutions will be tested. Deutsche Bundesbank and Banca d’Italia will test two different non-CBDC solutions that initiate payments on TARGET and use trigger chains to instruct the DLT-based securities settlement platform to transfer ownership of securities as soon as payment is confirmed. The Banque de France will test a wholesale CBDC token option based on its previous trials, in which settlement will be enabled through interoperability with multiple other DLT ledgers. [Read more at the ECB]
Central banks of Indonesia and Singapore almost ready to begin cross-border payments trial
Bank Indonesia (BI) has reportedly announced the start of a trial of cross-border QR code payments with Singapore. The project, first announced by the Monetary Authority of Singapore (MAS) in August 2022, is aimed at allowing users to make instant, secure payments by scanning the Quick Response Code Indonesian Standard (QRIS) or NETS QR codes displayed by merchants. BI deputy governor Filianingsih Hendarta reportedly has said that the project is halfway to completion with three-quarters of the beta testing completed. [Read more at Finextra]
SEC can try to appeal groundbreaking XRP ruling, judge rules
Judge Analisa Torres, of the U.S. District Court for the Southern District of New York, granted the U.S. Securities and Exchange Commission (SEC) request for leave to file a motion to file an interlocutory appeal against her ruling that Ripple didn’t violate securities laws in making XRP available to retail traders by putting it on exchanges. The SEC has until August 18, 2023 to file the motion itself, and it has announced it was filing the appeal. [Read more at CoinDesk]
Commentary on the EU’s proposal for a regulation the digital euro
The Digital Euro Association (DEA) Digital Euro Regulation Working Group has produced a commentary on the EU’s Proposal for the establishment of the digital euro. This comprehensive document delves into the proposal’s nuances, highlighting challenges, opportunities, and the broader implications for the European financial landscape. [Read more at the DEA]
*For those interested in intra-day updates, check out my searchable Diigo Fintech developments database, which is also a good place to go to query for past developments: https://www.diigo.com/user/kiffmeister/ART.
Kiffmeister’s 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 (only) if you work at a central bank, ministry of finance or international financial institution (e.g., the BIS, IMF, OECD, World Bank) and 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).
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