HKMA publishes e-HKD pilot program phase 1 report
The Hong Kong Monetary Authority (HKMA) published a report on the key findings, learnings, and assessments of the 14 pilots conducted by the 16 participating firms under Phase 1 of the e-HKD pilot program. The pilots showed that the programmability, tokenization, and atomic settlement associated with an e-HKD central bank digital currency (CBDC) could add unique value to the Hong Kong payment ecosystem. An e-HKD has the potential to facilitate faster, more cost-efficient, and more inclusive transactions., and enable new types of economic transactions. The next phase of the program will explore new e-HKD use cases and delve deeper into select pilots from Phase 1. [Read more at the HKMA][See also reports by VISA and G+D on their parts in the pilot program]
RBI’s wholesale pilot of CBDC losing steam after one year, data shows
The Reserve Bank of India (RBI) wholesale CBDC pilot started in November 2022 is seen as losing steam as the number of trades and settlement volumes has constantly fallen over the last few months, according to data compiled by Moneycontrol. The settlement of trades in government securities using digital rupees was in the range of Rs 5 billion to 6 billion a day in the first month of launch, which in the later months fell to just Rs 100 million to 600 million a day. The number of trades has fallen from 45 to 60 a day in the first month to just two to six a day in the later months. [Read more at Moneycontrol]
Central Bank Digital Currency and Banking Choices
Several Bank of Canada staffers published a paper that uses a structural model where each household chooses a financial institution to deposit their digital money to estimate the extent to which a central bank digital currency (CBDC) competes with deposit-taking financial institutions. Households value the interest paid on digital money, the possibility of obtaining complementary financial products, and access to in-branch services. Introducing a counterfactual CBDC that is non-interest-bearing and does not provide complementary financial products can substantially crowd out bank deposits only if it provides a better service network. Imposing a limit on CBDC holding would effectively limit this crowding out. [The paper is posted on the ECB website]
*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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