Retail digital Aruba florin for inclusive resilience (CBA)

The Central Bank van Aruba (CBA) published a paper that reviews the best implementation options for a retail digital florin. It concludes that an inclusively-resilient retail digital florin must at least exhibit a three-tiered know-your-customer (KYC) approach (to balance privacy and KYC efforts), have offline features, one-to-one conversion between commercial bank deposits and CBDC, be unremunerated, and based on permissioned distributed ledger technology (DLT). Cross-border payments have been tabled for future consideration. This paper represents the first of a five-step five-year evaluation and implementation process. The paper also revealed that in 2019, the CBA conducted a feasibility study on a local wholesale CBDC, but concluded that its risks may fall outside the CBA’s risk appetite. The 2019 paper does not seem to be available online. [Read more at the CBA]

Siemens issues €300m digital bond settled in central bank money (Ledger Insights)

“Siemens has issued its second digital bond, a €300 million one year bond using the SWIAT permissioned blockchain. Settlement took just minutes and used Germany’s Trigger solution, which triggers a central bank money payment on the TARGET 2 system. Last year Siemens issued a €60 million ‘crypto security’ bond on the Polygon blockchain which still required two-day settlement. The issuance formed part of the European Central Bank’s (ECB) wholesale DLT settlement trials.” [Read more at Siemens]

SWIAT (Secure Worldwide Interbank Asset Transfer), established by DekaBank in February 2022, is a software developer for blockchain-based digital financial services platform for regulated financial market players to flexibly issue, trade and settle any type of asset – traditional or digital – on the blockchain. It was determined from the start that the platform would be open to partners to be built as a market consortium, and eventually expanded into an international network. It’s competitors include the Regulated Liability Network (RLN) and Partior. [Read more at SWIAT]

Bank of England approach to innovation in money and payments (JD Supra)

On July 30, 2024, the Bank of England (BOE) published a paper on its proposed approach to innovation in money and payments. It includes developing additional functionalities for the real-time gross settlement (RTGS) system such as extending settlement hours and a synchronization interface that would allow RTGS to connect to external ledgers, including those based on programmable platforms, and settle assets in central bank money. The bank is also planning a programme of experiments for a wholesale central bank digital currency (CBDC). Broadly these would cover, DvP securities transactions, PvP foreign exchange transactions and interoperability with other global ledger initiatives. The use of tokenized money and programmable payments is also up for discussion. [Read more at the BOE]

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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.