Round-Up of CBDC News

Countries announcing work on or plans for retail CBDCs

Bhutan, Chile, Hong Kong, Laos, New Zealand and Taiwan.

An announcement was made about Iran’s plans but these appear to be for a wholesale CBDC.

China Continues to have e-Yuan Ready for the Winter Olympics

With under 100 days to go to the winter Olympics, China is encouraging domestic and foreign retailers to enable payment using the e-Yuan, China’s CBDC. Although foreign visitors will not be able to travel to China for the Olympics, it continues to work towards having the e-Yuan up and running.

McDonalds is reported to be allowing consumers to use digital renminbi wallets at 270 locations in Shanghai. However, China wants the roll-out expanded. It's being reported that it also wants Olympics sponsors such as Nike and Visa to include e-Yuan in their payment systems.

Beijing is promoting the use of the e-Yuan by offering discounts on bus, subway and suburban rail service in the capital using the mobile wallet issued by the Industrial and Commercial Bank of China or using the RuubyPay app.

Digital Pound Foundation Launched in the UK

A new foundation has been launched with the aim of making sure the UK is at the forefront of issuing a CBDC. The foundation sees a digital pound as vital to maintaining the UK’s leading fintech position.

The Chair of the foundation is Jeremy Wilson, ex-Barclays Bank, and backers of the foundation include Accenture, CGI Group and Ripple. The foundation says it will carry out research and be advocates for an ‘inclusive, well-regulated, secure and transparent ecosystem that encompasses both CBDCs and privately-issued forms of digital money’.

Accenture is heavily involved in a Digital Dollar Project, a not-for-profit to encourage research and public discussion about a CBDC in the US.

ECB Seeks Input from Technology Experts

The European Central Bank (ECB) will consult with technology experts in technical talks as part of its investigations into designing a CBDC.

Four issues will be addressed.

  • How to balance protecting privacy while enabling the tracing of financial payments for retail payments. How do the technologies that do this work with user authentication solutions for payments?

  • When the payment solution is not linked to an external system, how can conducting consecutive payments be secured? How can the top-up process and the use of secure elements be made more convenient?

  • Thinking about bearer-based or account-based solutions, how can top-ups, funding and defunding be made easy either manually or automatically?

  • What is known about households’ behaviour either in normal times or during times of financial distress? What happens if the hoarding of large sums of money in wallets or accounts is directly or indirectly limited? What happens to the usability and uptake of the payment solution?

The technical talks will be online in closed session. Applications to take part close on 30 November 2021. The ECB has named 30 members of its Digital Euro Advisory group to help shape the design and distribution of the potential digital euro.

Orell Füssli Partners to Offer CBDC Solutions

Augentic GmbH and Orell Füssli Ltd. Security Printing are to work as partners to provide central banks with solutions for CBDCs. The partnership brings together a technology leader in the digital world and a banknote printer that understands currency and central banks.

The goal is for Augentic and Orell Füssli to provide Central Banks and Governments with a secure, digital and conventional currency solution as well as maximise the control of it. The press release describes a ‘Smart Banknote CBDC solution’ combining Orell Füssli’s highly secure banknotes with the Augentic CBDC Platform including Distributed Ledger Technology (DLT). This is a rather different offer from the approach of G+D and SICPA who are already active and well-established working on retail CBDCs.

The Smart Banknote CBDC solution is described as being customizable for government use as well as addressing off-line availability, anonymity, and psychological factors during the migration from physical to digital cash.

The concept is that Smart Banknotes can be exchanged like traditional banknotes. Additionally, they can be converted into digital cash at any given time. This happens by using encrypted, anti-copied 2D barcodes for authentication purposes via smartphone. All processes are secured by DLT - private, permissioned - in combination with smart contracts.

Tether Stablecoin Fined

The US Commodity Futures Trading Commission (CFTC) fined Tether $41 million in connection with misrepresenting to customers and the cryptocurrencies market that it had ‘sufficient US dollar reserves’ to back every token between June 2016 and February 2019. This was incorrect, its reserves were not fully backed for the majority of this time.

In addition, its reserves were not audited when it was telling investors that it would conduct routine audits. It had not disclosed that its reserves included unsecured receivables and non-fiat assets.

Tether is a type of digital currency known as a stablecoin. Stablecoins are backed by assets, usually by a fiat currency such as the US dollar or the Euro. The fact that they are backed means they are regards as more stable than other digital currencies.

CFTC commissioner Dawn D Stump said she was concerned that the settlement might cause confusion among investors because the CFTC ‘does not regulate stablecoins, and we do not have daily insight into the businesses’ involved with stablecoins. Stump questioned whether ‘the actions of the CFTC in entering into this settlement with the Tether respondents create a false sense of security for those investing in stablecoins?’