Digital Currency News

Central Bank Digital Currencies (CBDCs) are moving to centre stage as increasing numbers of central banks study and work on them, even launch them. The term CBDC can mean different things to different people – wholesale, retail, general, synthetic etc. And how do they fit in with cash, faster payments, Real Time Gross Settlement, private money or crypto currencies? Part of the story is about policy, the ‘business case’, part legal and governance and part technical. With the rationale behind them unique to each country, the Bahamas has not launched its Sand Dollar for the same reason as China’s e-yuan project, and with developments moving so fast, this is not an easy area to understand or to keep up with.

This Week in DCN Weekly News

The Bank for International Settlements (BIS) has issued its latest data on who is doing what on CBDCs of all types and the overall sentiment about CBDCs as reflected in published articles about them. In short, most central banks are now working on CBDCs, and sentiment has become increasingly positive about them since 2018, reaching a net positive score of 75% in 2021. The analysis looks at the architecture, infrastructure, access and interlinkages being explored. Inevitably most banks are undecided at this point but hybrid architecture, a mix of distributed ledger and conventional technology infrastructure and account based access are all just ahead. The differences are so small though, that it would be wrong to see this as a definitive indication of future CBDC designs.


Our news links also look at Project Jura, the French and Swiss wholesale CBDC cross border trial, which has now concluded and is reported as a success, and the continuing work by the Peoples’ Bank of China to ensure its e-Yuan is as accessible as possible to the population.


Finally we include a link to an article that summarises a paper by Peterson Ozili of Munich University looking at whether CBDCs can increase financial inclusion. The paper does not reach a conclusion but takes the approach of laying the case for and against. It is at pains to present the arguments against not as criticisms but an opportunity to understand them and consider mitigating actions. Given that financial inclusion is put forward so frequently as a reason to introduce retail CBDCs, this is an useful paper.

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