South African Reserve Bank to continue retail CBDC exploration
The South African Reserve Bank (SARB) published its Digital Payments Roadmap, aimed at realizing the overarching goals and strategies of the National Payment System Framework and Strategy: Vision 2025, including the promotion of competition and innovation, cost-effectiveness, interoperability and financial inclusion. In the Roadmap, the SARB commits to further exploring the issuance of retail and wholesale central bank digital currency (CBDC) over a two-year timeline. The work will follow up on the work that started in May 2021 to investigate the feasibility, desirability and appropriateness of issuing retail CBDC, and on the SARB’s wholesale CBDC proof of concept work that goes back to Project Khokha 1, completed in 2018. [Read more at the SARB]
Central Bank Digital Currency and monetary policy implementation
The European Central Bank (ECB) published a paper that discusses the potential impact of retail CBDC introduction on monetary policy implementation if it leads to a decrease in commercial bank deposits. Should this happen, bank holdings of central bank reserve holdings might shrink. However, the paper argues that uncertainty as to the timing and extent of any conversions of deposits into CBDC might prompt banks to scale up their demand for central bank reserves in order to hold larger precautionary buffers. Consequently, central banks might need to adjust their reserve supply and other features of their monetary policy implementation. In any case, the paper suggests CBDC design features could mitigate the risk of negative consequences for monetary policy implementation. [Read more at the ECB]
Project FuSSE aims to modernize financial market infrastructures
The Inter-American Development Bank (IDB) provided an update on Project FuSSE (Fully Scalable Settlement Engine), a joint project with the Bank for International Settlements (BIS) Innovation Hub and Bank of Canada. It is an initiative that offers open-source technology among central banks to facilitate the implementation of payment systems and other settlement infrastructures to advance financial inclusion Latin America and the Caribbean. It will also provide technical assistance for regulatory design and institutional capacity improvement. [Read more at the IDB]
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 john@kiffmeister.com.
