For your Sunday reading pleasure, here are a few excellent central bank digital currency (CBDC) focused newsletters; Conrad Kraft’s Weekly CBDC Chronicles, Richard Turrin’s Weekly Cashless Newsletter, and Guneet Kaur’s Bi-Weekly CBDCs Express. If you’re on LinkedIn you can subscribe to them so you never miss an update. And below are two thoughtful CBDC-related articles from typically anti-CBDC leaning sources.

Powell’s CBDC puzzle: Deciphering where the Fed stands

The Cato Institute published an article calling for the Federal Reserve to share more information regarding where it stands with respect to central bank digital currency (CBDC). The article recommends that the Fed come clean on the specific criteria that would influence it to make an official decision on whether it would or would not recommend launching a digital dollar. The article also calls on the Fed to come clean on whether it believes it has the authority to issue an intermediated CBDC, given that the Federal Reserve Act does not authorize direct Fed accounts for individuals, but may allow for an intermediated one. Also, it would be useful to know whether the Fed believes it has the authority to issue a distributed ledger technology (DLT) based wholesale CBDC, given that it already “issues” centralized ledger technology based wholesale CBDC (e.g., commercial bank reserve accounts). [Read more at the Cato Institute]

Politics aside, what’s the plan for US central bank digital currency?

The Hill published an article that calls for leaving the politics and fearmongering designed to squelch meaningful debate around a digital dollar. Instead it calls proceeding with caution and investing in CBDC research from a technical, legal, ethical and international perspective. That would include reviewing and possibly amending country’s legislation, laws and justice system so that it better protects individual freedoms, including the freedom to transact and the right to financial and individual privacy. The article points out that designing a CBDC with privacy controls that prevent government surveillance is possible, and this kind of technical development should continue. “To outright ban research, development and experimentation on CBDCs without attempting to find technological solutions to legitimate privacy risks first is a lazy and incomplete response that borders on censorship.” [Read more at the Hill]

The external financial spillovers of CBDCs

The Journal of Economic Dynamics and Control (JEDC) published a paper that studies the macroeconomic consequences of a foreign CBDC available to residents in a small open economy using a DSGE model. It finds that a gradual and permanent increase in the domestic households’ preferences toward the foreign CBDC leads to a structural reduction in economic activity, especially if the CBDC is designed to be similar to domestic deposits. The paper suggests several policy responses that may smooth the transition, limit disruptive effects and avoid the long-run GDP loss. It also shows that an economy with a large stock of foreign CBDC is better shielded from exogenous increases in the interest rate on foreign debt, if the CBDC remuneration remains constant. [Read more at the JEDC]

DC Summit: Generative Artificial Intelligence & Finance

Don’t forget that the Washington DC Summit on Generative AI and Finance will be held on April 20 during the week of the IMF/World Bank Spring Meetings at George Washington University’s Jack Morton Auditorium. It will start with a set of lectures in the morning, and be followed by a series of panels in the afternoon. Plus there will be food and drinks, and networking opportunities. To register, go to DCSummit.org where you will also see the draft agenda, list of speakers and schedule.

*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]