Federal Reserve Bank reveals details of digital dollar research

The President and CEO of the Federal Reserve Bank of Cleveland has revealed details of the Fed’s ongoing research into a potential digital dollar.  Speaking in a keynote address on September 23, Loretta Mester emphasized that the Federal Reserve has been exploring central bank digital currencies (CBDC) since before the pandemic, noting that its Board of Governors has been “building and testing a range of distributed ledger platforms to understand their potential benefits and tradeoffs.” She also noted initiatives from regional Federal Reserve branches, including a multi-year partnership between the…

Europe’s central bank is concerned about possible runs on stablecoins

The European Central Bank has warned the global community about the risks of so-called “stablecoin runs.” Analogous to the term “bank runs” in the traditional financial system, stablecoin runs could occur if end users lose confidence in the issuer or its network, the ECB wrote in a Sept. 22 report. In traditional finance, a bank run occurs when a large number of customers withdraw their deposits simultaneously over concerns of the bank’s solvency. As more people withdraw their funds, the probability of default increases, triggering more withdrawals. The ECB goes on…

European central bank execs explain why CBDCs don’t need blockchain

Global central bank digital currencies, or CBDCs, do not require the use of blockchain technology, according to executives at major European central banks. Thomas Moser, an alternate member of the governing board at Swiss central bank, and Deutsche Bundesbank’s Martin Diehl discussed the state of CBDCs at the European Blockchain Convention Virtual 2020 conference on Sept. 21. During the online panel discussion, both Diehl and Moser seemed to agree that global CBDC projects like China’s digital yuan do not need blockchain, citing a number of reasons. Moser said that the primary…

Philippine central bank embraces digital tokens

The Philippine central bank sees digital tokens as a means to reduce the use of fiat money and improve the delivery of financial services in the country, even as the country is still studying its own digital currency. Speaking to Bloomberg, Philippine central bank Bangko Sentral ng Pilipinas, or BSP, governor Benjamin Diokno said digital tokens “expand reach and lessen costs of financial services” as well as reduce the use of fiat money. Diokno said digital tokens improve how the central bank provides financial services to citizens. The Philippines is…

Caitlin Long and David Kinitsky on crypto’s big win with Kraken Financial bank charter

San Francisco-based crypto exchange Kraken has become the first cryptocurrency business to receive a charter to operate as a bank in the United States. When seen as part of a larger-scale shift in regulatory attitudes that may help to bring crypto into the mainstream, the repercussions could be even more significant. Kraken Financial, the firm’s new bank, is headquartered in Cheyenne and got the green light from Wyoming on Sept. 16 as a special-purpose depository institution (SPDI) — a bank that can both receive deposits and custody assets. “For Wyoming,…

Bank of England talks negative interest rates in best ‘ad’ for Bitcoin

Bitcoin (BTC) is getting its best “advertisement” once more as another major central bank floats the idea of charging people to save their money. As Bloomberg reported quoting minutes of a meeting held Thursday, the Bank of England (BoE) has become the latest central bank to discuss negative interest rates. Negative rates “would drive BTC adoption” According to the results of the meeting, the BoE will enter discussions with banking regulators over negative rates, which effectively mean lending institutions, and, hence, savers must pay to store cash. The reason is…

Geopolitical fallout of central bank digital currencies

China’s Digital Currency Electronic Payment system is at the forefront of news around central bank digital currencies, or CBDCs. As China will be the first nation to launch a CBDC, the changes a digital yuan promises for global economics and the role this plan plays in pushing for a “currency war” keeps its project in headlines. For its part, the proposed currency not only poses a threat but is intended to threaten, and potentially unseat, the U.S. dollar for the top position of global reserve currency. However, to understand how…

No need for central bank digital currency in Australia says Reserve Bank

While other countries may be placing central bank digital currencies — also known as CBDCs — at the top of their agenda, Australia could buck the trend. According to a local news report on Sept. 17, the Reserve Bank of Australia’s latest payments paper has taken a cautious and sceptical line toward CBDCs as well as private-sector stablecoins. The RBA does not believe there is currently a strong policy case for issuing a CBDC in Australia, pointing to the success of the country’s efficient, real-time New Payments Platform. Moreover, while…

Major Asian bank issues credit on SCB-backed blockchain

The Asian Development Bank (ADB), headquartered in the Philippines, has settled its first letter of credit (LC) transaction using the Standard Chartered-backed Contour blockchain network. The trade was a part of ADB’s trade and supply chain program and involved Standard Chartered and the Bank for Investment and Development of Vietnam. ADB’s trade settlement also marked the first blockchain-based cross-border LC transaction between Vietnam and Thailand.  According to a Global Trade Review report, the trade involved a $50,000 plastics shipment sent from Thailand’s SCG Plastics Co Ltd to Vietnam’s Opec Plastics…

The Bahamas will launch a digital Central Bank ‘Sand Dollar’ in October

The Bahamas is gunning to become the first country in the world to roll-out a state-backed virtual currency nationwide, and has announced it will launch a central bank-issued cryptocurrency during October. The assistant manager of eSolutions at the Central Bank of The Bahamas, Chaozhen Chen, told Bloomberg that the digital currency, dubbed ‘Sand Dollars’, is intended to drive greater financial inclusion among the remote islands within the archipelago nation. “A lot of residents in those more remote islands don’t have access to digital payment infrastructure or banking infrastructure. We really…