The Bank for International Settlements (BIS) published an update on Project Tourbillon, which explores privacy, security and scalability for retail central bank digital currency (CBDC). The experiment proposes a concept of payer anonymity, providing cash-like anonymity to the payer, combining proven technologies such as blind signatures and mix networks with the latest research on cryptography and CBDC design suggested by David Chaum and Thomas Moser’s eCash 2.0 platform. Project Tourbillon explored not only current, but also quantum-safe blind signatures, an important cryptography used in both designs to guarantee privacy and future security. Tourbillon also demonstrated that implementing quantum-safe cryptography is possible, but it severely limits performance. [Read more at the BIS]
The Bank of Canada published a report on the feedback it has received to date about a potential digital Canadian dollar. It confirmed that Canadians place a high value on central bank-backed cash and want to maintain access to bank notes. Also, Canadians value their right to privacy and many expressed concerns that a digital dollar could compromise that right. In addition, they don’t want a digital dollar that will add to financial stability risks. The Bank reconfirmed that likelihood of a digital loonie being needed is still uncertain, and the ultimate decision whether to go ahead with one depends on the Parliament. [Read more at the Bank of Canada]
The BIS, IMF, World Bank, and Swiss National Bank have launched a project aimed at applying tokenization to the paper-based processes used when richer countries donate into some of the World Bank’s funds to support poorer parts of the world. The idea is to tokenize the original paper-based “promissory notes” to make it easier to transfer when required. [Read more at the BIS]
The Central Bank of Solomon Islands (CBSI) started a retail CBDC (“Bokolo Cash”) proof-of-concept (PoC) on November 1, 2023. The CBSI has been testing the Soramitsu-provided system for domestic and foreign payments, including simulated international remittances. Within the PoC, users will be able to seamlessly scan a QR code with their Bokolo Cash wallet to send instant cash payments to selected merchants or make peer-to-peer transfers. [Read more at Finextra]
The National Bank of Rwanda (NBR) reportedly has determined that a retail CBDC is needed in the country. However, the central bank is still in the early stages of its CBDC research, and it will take about two years before it would ready for launch. [Read more at allAfrica.com]
The U.S. Federal Reserve (Fed) published a review of the literature that examines the risks to the banking sector associated with retail CBDC introduction. These include the possibility of bank disintermediation and associated contraction in bank credit, as well as potential adverse effects on financial stability. The recycling of the new CBDC liability through asset purchases or lending by the central bank plays an important role in determining the economic consequences of the introduction of a CBDC. Ultimately, the effects of a CBDC depend critically on its design features, of which remuneration is the one discussed most often in the literature. [Read more at the Fed]
FYI here are some of my upcoming speaking engagements:
– Currency Research Americas Cash Cycle & Payments Seminar (Orlando Florida on November 30)[Register here]
– Digital Euro Conference 2024 (Frankfurt on February 29)[Register here]
*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 firstname.lastname@example.org
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 (email@example.com).
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]