Digital ruble pilot project will continue until end of 2024
The digital ruble launch will begin no earlier than 2025, after the completion of the retail central bank digital currency (CBDC) pilot that started on August 15, 2023. The first group of participants consists of 600 people drawn from employees of the Bank of Russia and clients of the 13 participating banks, plus 30 businesses in eleven cities. In 2024 the number of participants will expand, but will still remain limited. The pilot will continue at least until the end of 2024 and, if necessary, will be extended. The Bank of Russia also noted that, although there are no transaction fees to users, merchants pay a 0.3% commission fee for accepting payments in digital rubles. [Read more at TASS]
Reserve-backed tokens, and is it time for narrower banks?
Bank for International Settlements (BIS) staffer Tirupam Goel posted a paper discusses the pros and cons of reserve-backed tokens (RBTs) – stablecoins issued by well-regulated private entities that are solely and fully backed by central bank reserves. (The IMF calls them “synthetic CBDC”) They are safer than, and can crowd out, current stablecoins, they can adopt a more flexible design than retail CBDCs and thus foster greater competition and innovation, and compared to bank deposits, RBTs are immune to runs and unencumbered by legacy features. However, they could disintermediate commercial banks during normal times and exacerbate runs during stress periods. [Read more at SSRN]
How sustainable is payment by cash?
The European Central Bank (ECB) published an analysis of the environmental impact of euro banknotes as a means of payment based on the European Commission’s Product Environmental Footprint (PEF) methodology. It accounted for all the activities of a full cash cycle of banknotes, from raw material acquisition and manufacturing to the disposal of euro banknotes. It found that the average annual value of cash payments per euro area citizen in 2019 was 101 micropoints (µPt), equivalent to an driving a standard car for 8 km. [Read more at the ECB]
FYI here are some of my upcoming speaking engagements:
– 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
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]