KPIs for the assessment of the ECB’s “wCBDC” work
The European Central Bank (ECB) published the learning strategy and key performance indicators (KPIs) proposed for its exploratory work on new technologies for central bank money settlement of wholesale financial transactions. The work is focused on three interoperability-type solutions, (i) trigger (ii) TARGET Instant Payment System (TIPS) hash link, and (iii) full distributed ledger technology (DLT) interoperability. The first two solutions involve the market platform interoperating with the existing TIPs platform. Only the last one (full-DLT) involves what the rest of the world calls wholesale central bank digital currency (wCBDC), in which the payment instrument is DLT-based central bank money (CeBM). [Read more at the ECB]
How do privacy concerns impact actual adoption of CBDC?
Quantitative Finance and Economics (QFE) published a paper that, based on a quantitative questionnaire among 682 Chinese citizens, explored the impact of privacy concerns on e-CNY central bank digital currency (CBDC) adoption. It found that several antecedents significantly influenced privacy concerns that negatively influenced e-CNY usage, particularly perceived vulnerability and self-efficacy concerns. Perceived vulnerability may arise from concerns related to the security of the technology, the potential misuse of personal information, and the risk of financial losses. Self-efficacy relates to potential e-CNY user confidence that they can securely and manage associated privacy risks. [Read more at the QFE]
CBDCs will need to work across borders. Here are the models exploring how to do it
The Atlantic Council published an article that compares three main models of CBDC interoperability across borders. The IMF “XC” three-layer platform is based on a DLT-based global centralized ledger to simplify and streamline cross-border payments. The BIS Universal Ledger model advocates for a shared application programming interface (API) based (rather than DLT-based) global ledger that supports the issuance and transaction of both CBDCs and tokenized assets. SWIFT’s New Cross-Border Project model facilitates the connection of disparate domestic CBDC networks, enabling them to communicate and transact with one another while leveraging SWIFT’s existing infrastructure and security protocols. [Read more at the Atlantic Council]
*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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