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Anti-Bitcoin Bank of England Head Reveals Bank is Reviewing CBDC Creation

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Central Banks around the world are starting to come in terms with the possibility of an imminent introduction of digital currency. The Bank of England(BOE) has been one of the most active in the space after it had released a discussion paper on the issuance of a central bank digital currency (CBDC) in March.

Now, according to Bloomberg, in a recent student webinar, Andrew Bailey, BOE has suggested that the Central Bank is currently considering the eventual launch of virtual currency. Indicative to the CBDC for BOE, Bailey said,

“We are looking at the question of, should we create a Bank of England digital currency. We’ll go on looking at it, as it does have huge implications on the nature of payments and society. I think in a few years time, we will be heading toward some sort of digital currency.”

However, recent developments are not new to the Central Bank. The BOE is currently part of an alliance with the Bank of Japan, the European Central Bank ( ECB), the Sveriges Riksbank, the Bank of Canada, the Swiss National Bank and the Bank for International Settlements (BIS).

These organizations have decided to pool their resources in order to deduce constructive research on CBDC, and Sir Jon Cunliffe, Deputy Governor of BoE, is supposedly co-chair of the group, along with Benoît Cœuré, a former member of the ECB.

The collaboration took place after the rise of the private sector Facebook Libra made headlines around the world in 2019 and early 2020.

Andrew Bailey is against Bitcoin

Despite having an open mind on the development of digital currencies, Bailey believed that Bitcoin had little or no value in the financial sector. Since 2017, Bailey has maintained its stance against the largest digital asset, and recently, on 4 March 2020, Bailey has again conveyed its opinion on Bitcoin to the members of the U.K. Parliament on the Treasury Board. Bailey said that,

“If you want to buy Bitcoin, be prepared to lose all your money…(Bitcoin) it has no intrinsic value.”

Despite its popularity and growth, members of the Central Banks department continue to hold a strong opinion against Bitcoin but discussions of the development of a Central Bank Digital Currency(CBDC) continue to improve over time.

Lithuania Set to Issue Own Central Bank Digital Token

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The first digital token backed by the central bank will soon be launched in the eurozone. According to the Reuters report on 2 July, Lithuania will be the first eurozone nation to issue a digital central bank token. The report notes that 24,000 digital tokens, dubbed LBCOIN, based on the blockchain, will be issued within a week.

Facebook Libra sparking CBDC activity globally

Crypto-friendly Baltic nation will issue LBCOINs as part of its plan to test central bank digital currencies and blockchain technology in day-to-day applications. The news of the launch of the central bank’s digital tokens follows the release of the Libra Whitepaper on Facebook. The development of the new Facebook Libra has forced central banks to accelerate their CBDC plans.

Moreover, the deputy governor of the Bank of Lithuania, Marius Jurgilas, while talking to Reuters on the new digital tokens said:

“No one in the central bank community was thinking about digital currency seriously before we realized that there is a legitimate threat that someone else will take our space… We need to provide society with what it wants.”

Central bank digital token to be exchanged for physical coins

In addition, the Deputy Governor noted that LBCOIN is identical to the central bank digital currency, which is fiat in digital version, issued and administered by the central bank. In particular, the digital tokens of the central bank will be distributed at €99 ($111.28) in a bunch of six. And the bands will have an attached image of one of the 20 individuals who signed the declaration of independence of Lithuania in 1918.

The Bank of Lithuania expects residents to trade a digital token with orders to create a specific set that can be exchanged for a physical silver con the size of a regular credit card. As stated in the report, the physical coin will have a nominal value of €19.18 ($21.55). The holders of LBCOIN may immediately exchange the digital asset with the Bank of Lithuania and the private blockchain infrastructure, as stated in the report.

 

Coronavirus Pandemic to Trigger CBDC Development Globally

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The Bank of International Settlements (BIS) anticipates the effect of the coronavirus pandemic on retail payments to trigger positive development of CBDC globally. BIS is a Swiss-based international organization comprised of 60 central banks. The organization has released several reports centered on decentralization, cryptocurrencies, and central bank digital currencies (CBDC). CBDCs refer to state-issued cryptocurrencies, whose legal tender depends on the regulatory structure of a government.

Coronavirus impact on global payments

BIS ‘latest June 24 report suggests that the coronavirus pandemic has inflicted extreme changes in retail settlements. In addition, the report outlines the advantages and disadvantages of the current payment systems.

The report, for starters, highlights the rapid deterioration of fiat payments due to the risk of transmitting the virus between traders and consumers. And the economic uncertainty has caused “precautionary holdings” in fiat, leading to a decline in daily cash transactions.

Around the same time, restrictions levied by national governments, such as closing down tangible shops, have contributed to a steady decline in payment settlement on e-commerce. Besides, the fall in travel has led to a decrease in international visa transactions, and a substantial decline in remittances from migrants.

BIS says both of these changes show the benefits and limitations of the current payment system. Digital payment systems, on the other hand, have made it possible for many commercial operations to operate given the great disruption to daily activities.

“The crisis has amplified calls for greater access to digital payments by vulnerable groups and for more inclusive, lower-cost payment services going forward.”

Opportunity for CBDC development globally

In this regard, the BIS report outlines that CBDC development is globally at the frontier of policy opportunities “for central financial authorities;” could amount to a sea change. ” It notes that a successful CBDC could provide” a new, secure, trusted, and widely accessible digital payment method.

The BIS also noted that it would continue to offer its assistance to central banks worldwide in CBDC research and design. The organization has demanded global cooperation to ensure that post-COVID-19, future changes in international payments will be less split, more comprehensive, and more productive.

Italian Banks Express Desire to Test Digital Euro

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According to the recent report, Italian banks have expressed their desire to explore the European Central Bank Digital Currency. The Italian Banking Association (ABI), composed of 700 financial institutions, wants to accelerate the general implementation of the CBDC, which is backed by the European Central Bank ( ECB).

In regards, ABI has also handed out ten recommendations for a European digital currency during its Thursday announcement. The initial advice, which is the most important, suggests comprehensive complaisance with the appropriate European regulatory structure. On top of this, ABI also suggested financial sustainability as another crucial area.

Digital currencies are beneficial

The association also highlighted some advantages of a CBDC. It noted:

“A programmable digital currency represents an innovation in the financial field, capable of profoundly revolutionizing money and exchange. This is a transformation capable of bringing significant potential added value, particularly in terms of the efficiency of the operating and management processes”.

The development of a central bank cryptocurrency can aid in positioning Italy at a favorable spot to have proper administration of the country’s digital landscape. The features of the digital Euro can offer additional security to the financial system, on top of eliminating the inconveniences related to critical financial transactions like transferring of funds.

Furthermore, digital currencies can help a country achieve a completely cashless economy. This is particularly cost-effective since the cost of developing fiat currencies will be slashed or wholly abolished.

Italian banks dawn of innovation

The announcement highlighted the fact that digital currencies are programmable positions them as crucial innovations in the finance sector. ABI stated that Italian banks believe that the development of digital currencies will immensely revolutionize money and the financial system altogether.

Italy has joined several other countries that have expressed the desire to deploy a central bank digital currency. Early this year, the Bank of France asked the public to submit proposals for the possible experimentation of a CBDC. Furthermore, South Korea also established a panel early this month to research digital currencies. 

Singapore Central Bank Confirms its Readiness to Explore Digital Currency

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Singapore’s central bank is looking to join forces with the People’s Bank of China (PBoC) to explore Central Bank Digital Currencies, according to Ravi Menon, Managing Director of the Singapore Monetary Authority (MAS).

During a finance conference in Shanghai, Menon stated the new plan. He outlined the progress China has made in creating its own CBDC, and said Singapore was looking to share information and experience in this field with China. Singapore is conscientiously looking to build a central bank digital currency.

Menon stated the new plan during a financial conference in Shanghai. Additionally, he outlined China’s digital Yuan development progress. Singapore is conscientiously looking to build a cryptocurrency central bank and is looking forward to exchanging skills and expertise with China, as reported by Sina Finance on 18 June.

Singapore exploring Central Bank Digital Currency

Menon allegedly stated that the state-issued cryptocurrencies were a hot topic, outlining that Singapore and China are deliberating on various CBDC development scenarios.  He also noted that the reasons for developing a Digital Currency Central Bank differ on a country-by-country basis.

However, he stated that Singapore ‘s reason for developing a CBDC is to cut the cost of cross-border payments and settlements, protect transactions through blockchain, and reduce payment processing time.

Facebook Libra project challenge to central banks

Menon also mentioned that the embattled Facebook Libra stablecoinn is facing and said that Libra is a major challenge to the global central bank system. He also asserted that the Libra stablecoin has “great flexibility” and that the team behind its development is committed to working closely with international regulators.

The Singapore Monetary Authority has been developing its interbank blockchain-based payment system since 2016. The Ubin Project, which was officially launched in 2018, is a partnership to explore the application of blockchain technology to clear and settle payments and securities.

China’s plan to counter Facebook Libra project and USD

Back in June 2019, PBoC was in a rush to launch its CBDC ahead of Facebook Libra’s stablecoin. Although the digital yuan is undergoing pilot tests in various Chinese cities, experts suggest that China might deploy it with the public, not noticing the change. Furthermore, early in June, reports broke out that China is planning to develop an East Asia digital currency to reduce the over-reliance in the United States dollar. 

Thai Central Bank Developing Payments Systems Prototype Using CBDC

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Thai central bank has become the latest financial watchdog to join the Central Bank Digital Currency (CBDC) bandwagon. The Bank of Thailand (BoT) announced its project to build a decentralized payments system prototype for commercial use.

According to the announcement, the CBDC prototype will be hosted by the Inthanon Project, the blockchain infrastructure inaugurated by the Bank of Thailand. This will be achieved through a partnership with the country ‘s eight leading financial institutions.

The entire project involves carrying out a feasibility study and creating a procedure for linking Central Bank Digital Currency to the Business Payments System, as per the Thai Central Bank. The prototype project is set to start in July and will continue until the end of the year. The findings of the scheme will then be outlined by the Thai central bank to the public.

Thai Central Bank making a step forward in driving CBDC adoption

The Bank of Thailand sees the project as a significant step forward in expanding the CBDC ‘s realm and driving its adoption to a broader audience, starting with big corporations. The payment system will be linked to the procurement and financial management systems of Siam Cement Public Company and its stockists,

The Thai central bank anticipates that the CBDC prototype will facilitate coherent and more flexible transactions or a faster and more flexible settlement between suppliers. In addition , the Bank of Thai also noted that proof of concept for local wholesale revenue; was finalized in January alongside the cross-border transfer prototype; developed in partnership with the Hong Kong Monetary Authority (HKMA).

Development of CBDC’s worldwide

Different central financial authorities are keenly exploring the development of CBDC’s around the world. For instance, the Bank of Korea (BoK) recently established a legal advisory panel for the development of digital currencies.

Furthermore, the Bank of France has partnered with local private banks to run a pilot test for state-issued cryptocurrencies in Europe.

South Korea’s Central Bank Forms Legal Panel to Research Digital Currency

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The Central Bank of South Korea appears to become more serious with its research into digital currency. As reported by the Korean Times on 15 June, the Bank of Korea (BOK) has set up a panel to advise on the possible regulatory obstacles in issuing a  central bank digital currency  (CBDC). The move by the bank does seem to be a step forward towards issuing a CBDC. The Central Bank said

“We established the advisory group to discuss legal issues surrounding a CBDC and figure out which laws need to be revised or enacted for smooth progress in the BOK’s possible issuance of digital currency,” a BoK official stated while speaking to Korea Times.

As per the report, the legal advisory panel consists of six law practitioners and law professors who will keep tabs on the legal framework of the central bank digital currency, if necessary. That being said, the country is not getting ready to issue digital currency any time soon.

The panel is another step in a rapid revaluation of the digital currency at Bank of Korea (BoK) in a 22-month period. Notably, in December the central bank set up a task force to study digital currencies. Instead of developing one, the task force was set up to keep an eye on what other countries are doing in terms of state-issued digital currencies.

South Korea ‘s Central Bank has recently stated that it may not be able to launch a digital currency any time soon, as the demand for fiat remains high. Irrespective of the sentiment, BoK launched a pilot test for the digital Won. The trial began in April and will take place until December next year to analyze the usability and regulatory provisions of the state-issued cryptocurrencies.

Bottom Line

The establishment of a legal advisory panel seems to be part of the overall pilot testing plan as it will only be in effect until 2021 for one year.

Notably, Governor Lee Ju-yeol of the central bank stressed the need to intensify research and innovation in state-issued digital currencies during the celebrations of BoK’s 70th anniversary. In addition, at times like these, when we need contactless payment systems more than ever, he urged the central bank and private sector to embrace digital innovations.

Ghana Central Bank Soon to Begin Pilot Testing Digital Currency

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According to a local media outlet report, Pulse, Ghana’s Central Bank has revealed that it is closing on conducting a pilot at its digital currency (CBDC) central bank. The West African nation is exploring the potential for future issuance of a CBDC.

The Bank of Ghana has disclosed, according to the report, that it is basically conducting a test on its central bank cryptocurrency. According to the deputy governor of the central bank, Maxwell Opoku-Afari, Ghana ‘s move to digital payment solutions has recently raised the demand for a cryptocurrency in the central bank.

Central Bank of Ghana to establish a fintech regulatory sandbox

In addition, the local media outlet also points out that regulators in the African country are setting up a digital fintech sandbox to encourage innovators in the digital payments sector. The authorities will use the fintech sandbox to experiment with the concept of digital settlements, with CBDC as a priority.

Initially, the Central Bank of Ghana announced its plan to issue a CBDC back in 2019, with the Bank’s Governor noting that it will be tested under sandbox conditions. In addition, the governor stated that the digital currency issued by the state would greatly facilitate the growth of the mobile payment space in Ghana.

Interest in developing CBDC’s on the rise

In fact, China became the first major country to develop and issue a digital currency to the central bank. The Asian nation is accelerating its development of a state-issued crypto-asset called Digital Currency Electronic Payment (DCEP) for post-COVID-19 stimulus. The digital yuan has been under development for more than five years and is now very close to being made available to the general public.

The People’s Bank of China (PBoC) is set to issue the CBDC to the public later this year. The digital asset is currently being tested in four different cities in China. Nevertheless, a number of economists and cryptocurrency leaders have argued that the digital yuan would threaten the status of the US dollar as the global reserve currency.

Blockchain-Powered Scratchcard Lottery Set to be Launched in Cambodia

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The new system described as the world’s first ‘paper-based blockchain-powered lottery‘ guarantees greater transparency in the embryonic Cambodia gambling sector. Chinese lottery solution provider Hongbo has been granted a license to partner with Cambodian lottery operator Jinxiang to develop a blockchain-powered scratchcard lottery.

The Chinese lottery solutions firm’s initial offer will be a paper scratchcard product known as Goldvalley KHR. Lottery participants will be able to confirm the legitimacy of the lottery scratchcards and the amount payable by scanning the QR code on the card pegged to the blockchain record.

In addition, the printing and distribution of lottery tickets will be monitored through a blockchain-based supply chain dubbed Scratchblock. The production of random digits determines the payoffs of the lotteries. The numbers determine the deployment of symbols that should be matched in order to win a prize on the scratch card product.

Blockchain-powered scratchcard lottery to enhance transparency

In the majority of administrations, the algorithm that decides the administration or randomness of these digits; are strictly supervised by the authority mandated with overseeing gambling in the region. Notably, lottery gambling has only been validated just recently in Cambodia. Additionally, the rush to establish the sector and set up nationwide lotteries has been met by complaints that it runs in a black box.

In addition, the blockchain-powered scratchcard lottery will be monitored using some crucial metrics provided by Scratchblock. The blockchain network will enable data comparisons, such as comparing the prize return rates and the batch numbers of the scratchcards. The metrics help exhibit that the odds are uniformly dispensed out.

Application of blockchain technology in lotteries

The new blockchain-based lottery in Cambodia is not the first time blockchain technology has been applied in the lottery system. Shenzhen’s Welfare (Charity) Lottery system conducted its initial test on the blockchain technology application back in 2019. However, the lottery is electronic and not paper-based.

In conclusion, Cambodia has made use of technology in other areas as well. The Asian nation’s central bank announced that it is creating a central bank digital currency just recently. The central bank aims to improve the liquidity of Cambodia’s legal tender, Riel.

CipherTrace to set up native CBDC with Plans to Partner with Major Central Banks

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Institutions such as central banks have always played a pivotal role in shaping the financial ecosystem around us. With the advent of new technologies, traditional banks are now considering a transition to disruptive models.

If recent reports are to be believed, popular blockchain analytics organization CipherTrace was looking to team up with central banks by launching a native central bank digital currency [CBDC] initiative.

CipherTrace also intends to launch an outreach effort along with the development of the CBDC. The company jumped into the CBDC bandwagon because of some of the evidence set out by the Bank of International Settlements [BIS].
According to the BIS, more than 80 per cent of the world ‘s banks were looking at the concept of centrally monitored virtual assets. This knowledge has caused companies like CipherTrace to rush to market products that appeal to institutions.

CipherTrace Chief Financial Analyst [CFA] John Jefferies confirmed that the company had multiple strategies underway at the same time. Jeffries has added:

“It takes a little while for people to understand that the traceability you get with digital currencies is far beyond what you can get with the traditional fiat.”

Jeffries also added that the latest CipherTrace initiative will focus on influencing the values that guide all development processes. These processes will include the establishment of anti-money laundering and security safeguards related to CBDCs.

Both Jeffries and CipherTrace CEO Dave Jevans believe in a transactional policy for citizens where governments can not control individual properties. Regions like China have become infamous in the cryptocurrency industry because of the hidden agenda behind the initial digital yuan. Blockchain technology will be applied to the CBDC architecture, which will become the next pillar for blockchain adoption.

CipherTrace also wants to bring the attention of banks to loopholes in the security framework