Berlin Group adopts working paper on digital central bank money

The International Working Group on Data Protection in Technology (the “Berlin Group”), chaired by the German Federal Commissioner for Data Protection and Freedom of Information (BfDI), published a working paper on central bank digital currency (CBDC) privacy-related risk factors. For example, the paper points out that the ECB must take a privacy and data protection by design and by default approach. In addition, it argues that a distributed ledger technology (DLT) architecture does not necessary entail a more privacy friendly solution, because data is immediately visible to all nodes in the network and immutability means that data can never be deleted or rectified (a right that is guaranteed in Europe’s General Data Protection Regulation (GDPR). Also, some programmable features imply privacy and civil rights risks that may outweigh the potential benefits, due to legal and ethical concerns (for example automated decision-making without possibility of appeal and/or risk of censorship). [Read more at BfDI]

The ASX CHESS blockchain: seven years of sunk cost fallacy

In 2016 the Australian Stock Exchange (ASX) engaged Digital Asset Holdings to replace its aging (launched in 1994) Clearing House Electronic Sub-register System (CHESS) securities settlement system. The replacement was to run with smart contract functionality written in DAML (Digital Assets Modeling Language). The whole project turned out to be a fiasco (check out David Gerard’s timeline here) and it was shutdown in 2022 with ASX writing off AUD$250 million. Plus ASX users effectively wrote off the tens of millions of dollars spent on building interfaces to the failed system. In April 2024, a parliamentary enquiry concluded that the ASX and its regulators should have identified and monitored strategic technical risks such as scalability for the CHESS replacement project more carefully, and enhance their technology skills and experience at the most senior levels, and place less reliance on outsourcing their responsibility to contractors and consultants. [Read more on the Attack of the 50 Foot Blockchain]

Upcoming Speaking Engagements:

• CBDC Conference, Istanbul, September 10-12. The conference will offer representatives of central banks, commercial banks, technology providers, policy makers and academics the perfect platform to learn about the latest CBDC developments, exchange ideas with experts and peers. [Find out more and register here][Central bank delegates may be eligible for free registration (email registration@cbdc-conference.com to find out more)]

• Digital Currency Conference, London, September 23-24. The conference will bring together policymakers, regulators, and technology and innovation experts to network and discuss all aspects of digital currencies. And enter the KiffmeisterDCC code at registration to get a 20% discount! [Find out more and register here]

And 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.