Valuing safety and privacy in retail central bank digital currency

The Reserve Bank of Australia (RBA) published a paper that explores the merits of introducing a retail central bank digital currency (CBDC) in Australia, focusing on the extent to which consumers would value having access to a digital form of money that is even safer and potentially more private than commercial bank deposits. The results suggest that the average consumer attaches no value to the added safety of a CBDC. This is consistent with bank deposits in Australia already being perceived as a safe form of money, and physical cash issued by the RBA continuing to be available as an alternative option. Privacy settings of a CBDC, which can take various forms, look more consequential for the CBDC value proposition. However, no clear relationship was found between safety or privacy valuations and the degree of consumers’ cash use. [Read more at the RBA]

Observations from the retail CBDCs of the Caribbean

The Kansas City Fed published an article by Franklin Noll that analyzes the underwhelming adoption of retail CBDC in the three Caribbean jurisdictions where they have been launched (Bahamas and Jamaica) or are being piloted (Eastern Caribbean Currency Union). It concludes that, to spur adoption it needs to add value relative to cash, be widely accepted, readily accessed, and easily used. Also, the new platform may need to be integrated into existing payments systems; into ways that consumers, merchants, and banks do business; and, ultimately, into people’s lives. [Read more at the Kansas City Fed]

ESMA analysis finds concentration risks in most aspects of crypto

The European Securities and Markets Authority (ESMA) published an analysis of crypto-asset market structures, secondary trading and their relevance for the European Union. It finds that crypto-asset market capitalizations and trading volumes are significantly concentrated in a few assets, with a high reliance on the US dollar and the South Korean won as market on- and off-ramps. Only around 20% to 30% of transactions involve fiat currencies and most transactions occur within the system itself. Also, trading volumes are highly concentrated in a few crypto exchanges, with the largest exchange (Binance) accounting for almost half of global trading volumes. [Read more at ESMA]

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.