Central bank digital currency—Initial considerations
The IMF published a summary of the first five chapters of its forthcoming central bank digital currency (CBDC) handbook. These cover a framework to guide countries’ CBDC exploration, as well as implications for monetary policy transmission, capital flow management measures, and financial inclusion. [Download the summary at the IMF]
Trust in government and anti-CBDC sentiment
In yesterday’s Daily Digest I reported on a Bank for International Settlements (BIS) survey of Koreans’ that found that privacy-preserving variations of CBDC design have significant effects on willingness to use CBDC. These effects were found to vary with respondents’ trust in public or private institutions with regard to privacy protection and their demographic characteristics. However, the BIS paper cautions about generalizing its findings across countries with different institutional settings and political climates. I’ve looked for cross-country comparisons of residents’ trust in government, and so far this OECD metric is the best I’ve found, and the range is quite significant from Switzerland at the very trusting end (84% responding “yes” to the question of confidence in the government) to 31% from Americans, which could explain their tendency to be anti-CBDC. [See the data at the OECD]
CBDCs will further fragment the global economy—and could threaten the dollar
The Atlantic Council published an article that argues that if the U.S. Federal Reserve doesn’t initiate a digital dollar strategy domestically there is a significant risk that the United States will be missing in action regarding cross-border payments interoperability. “Driving digital dollar policy through a tokenized banking system and bank-issued stablecoins will do little to address the frictions and costs discussed [in the article]. Markets and central bank reserve policies could easily shift to least-cost alternatives, leaving the Fed with oversight of a smaller universe of economic activity. Actively and publicly exploring CBDC architecture and policy options will at least ensure that U.S. priorities are part of the global conversation – if you are not at the table, you are on the menu!” [Read more at the Atlantic Council]
Philippines sells $270 million tokenized treasury bonds for the first time
The Philippines Bureau of the Treasury (BTr) sold 15 billion pesos ($270 million) one-year tokenized treasury bonds for the first time after canceling the traditional auction scheduled for November 20, 2023. The bonds, which were issued by the state-owned Development Bank of the Philippines and the Land Bank of the Philippines, were sold to institutional buyers at minimum denominations of 10 million pesos with increments of 1 million pesos. The bond auction was oversubscribed by more than three times (PHP31.426 billion), pushing the BTr to upsize the offering from the original 10 billion pesos ($179 million). [Read more at the BTr]
FYI here are some of my upcoming speaking engagements:
– Currency Research Americas Cash Cycle & Payments Seminar (Orlando Florida on November 27-30)[Register here]
– Digital Euro Conference 2024 (Frankfurt on February 29)[Register here]
*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
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