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The Central Bank of France Enlists Eight Financial Firms Services In Its Digital Euro Trials

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The Central Bank of France has enlisted eight major financial sector firms to collaborate on its bid to pilot test the digital Euro. The partnership includes the digital currency testing as well as the interbank settlements of the central bank.

The financial authority named firms includes Accenture, Euroclear, HSBC, LiquidShare, ProsperUS, SEBABank, and Societte Generale. Previous reports also say that France’s central bank has already conducted tests with one of the firms, Societte Generale. The tests were carried out in a real-world form of transaction, and besides that, with the aforementioned eight companies they intend to even extend the tests further.

Digital Euro trials to focus on key areas

In a statement released on July 20, France’s central bank revealed the planned tests would focus more on the three key areas. Core areas include devising new ways of trading financial instruments for central bank funds; evaluating digital currency regulation to boost the execution of international payments by making favorable conditions for these transactions, and updating the forms in which CBDCs are made available to the public.

Monetary authorities across the world working on CBDC

Following the devastating effects of COVID-19, more and more people have moved to embrace digital currencies. This has forced central banks around the world to step up their efforts to create a digital currency as people are now actively avoiding contact fiat currency. As a result, this action has prompted Central Banks to increase their efforts on CBDC in a bid to curb the virus’ spread.

More central banks around the world are expected to launch their digital currencies, with nations like China poised to become the first nation to issue its very own digital currency. For the last 5-6 years, the Chinese central bank has been working on their digital yuan. A  recent study by the Bank of International Settlements (BIS) shows that central banks are more likely to issue CBDCs in developing nations than in developed nations.

Japan’s Central Bank Has Set Up a New CBDC Research Team

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The Government of Japan is set to include the central bank digital currency  (CBDC) in its official economic plan. The Bank of Japan (BOJ) has announced earlier that it will begin testing the digital yen to determine its viability from a technical point of view. Reuters reported today that the bank said it had set up a new team, to take a closer look at the  central bank digital currencies

As well as this announcement of a new team, it was also stated that this team will be in charge of joint research into digital currency. It will be done along with other large banks including the Bank of England and the European Central Bank.

The review of the CBDC will be included in the Honebuto Economic and Fiscal Revitalization Plan. In particular, the Honebuto Plan is the foundation of the economic and fiscal policy of the Asian countries. The earlier report points out that Japan will consider a digital yen while coordinating with other nations

Japan’s central bank digital currency

The Japanese government stepped up its CBDC efforts immediately after China started testing its digital yuan. Last July, the Japanese central bank maintained that it had no plans to issue a CBDC. However, things seem to have turned quickly. The Bank of Japan, although it maintains that it does not have immediate plans to issue them.

The Bank of Japan has been researching digital currencies for a while now. Notably, the central bank has recently embarked on the offline use of the digital yen as it seeks to satisfy the two key features of digital currencies: resilience and universal access. According to a research paper shared by the BoJ, Japan faces unique challenges such as earthquakes and blackouts that require offline use of the CBDC.

Moreover, only 20% of the country’s total payments are digital, as most people prefer fiat payments. Although Japan is a technologically advanced nation, the country’s use of smartphones stands at only 65 percent. In conclusion, all of these factors point to the need for the digital currency of Japan’s central bank to be used offline.

 

Didi Chuxing ,Conducting The First Real World Trial of Digital Yuan

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Didi Chuxing-what many consider China’s  Uber to be conducting a test on the digital Yuan. As per Wednesday’s announcement, Didi joined the list of companies and banks to test China’s digital yuan developed by the People’s Bank of China (PBOC). The new electronic exchange medium will be known as the Digital Currency Electronic Payment (DCEP).
The ride-sharing giant features at least 550 million users and appears to be an appropriate platform to test the China’s digital yuan as a form of digital cash payment. This comes just a few days ahead of an expert analysis citing that the China’s Digital Yuan was only here to compete with the US dollar, not Bitcoin.

China Digital Renminbi, The First Mover of Stablecoin Space

Apparently, the cryptocurrency community has been monitoring the central bank’s digital payment system since China announced the development of a stablecoin.

Researchers at the Bank of America,  have stated that China is the first mover in the CBDC area; and have recognized the digital renminbi as a welcome asset for regional trading partners. This, the analysts claim, is on the belief that payments are becoming more electronic and cashless. Thus, making the China’s  a candidate that would most likely disrupt the US dollar.

Nevertheless, ahead of the first real-world trial of the China’s digital yuan, the Chinese Central Bank had initially launched mini-trials across four Chinese cities. The tests were carried out through various partnerships between the Central Bank, Starbucks, McDonald’s and Subway. These tests were the first phase of the trial, and the nation is now preparing to enter the next phase.

According to the People’s Bank of China Strategy and the timeline for the DCEP (Digital Currency Electronic Payment), Didi Chuxing and the Central Bank Task Force will be strategizing, designing and piloting the payment system with strict safety, governance, regulation and security precautions.

However, PBoC focuses on testing the digital stable coin as a native token on the Ride-Sharing application. It seems that the successful DiDi real-world test will lead to the final launch of the DCEP system. In fact, an official at the People’s Bank of China suggested plans to have a China’s digital yuan in use during the Beijing Olympics in 2022.

China’s Digital Currency Project Lessons to the Entire World

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China’s digital currency may not conquer the present financial ecosystem which has already been controlled by the United States dollar, however, the central bank digital currency (CBDC) project is a good foundation for world economies to build on.

Back in March, the Peoples Bank poof China (PBoC) launched the testing phase for its state-issued digital currency. The test, which is stipulated to be conducted in the Chinese cities of  Suzhou, Shenzhen, Xiong’an, and Chengdu and will entail the transfer of remuneration to state employees in the embodiment of the new CBDC.

China’s digital currency to derange the contemporary financial order?

The PBoC is planning for the central bank digital currency to be ready for use before the 2023 Olympics which will be held in an Asian country, takes place. China’s decision to develop a digital currency created waves among the policy community. Back on April 20, China commenced on the first testing stage of the CBDC. Following the launch of China’s digital currency, a report by the state media outlet, China Daily, stated that:

“A sovereign digital currency provides a functional alternative to the dollar settlement system and blunts the impact of any sanctions or threats of exclusion both at a country and company level”.

Despite the increased fuss on China’s digital currency threatening the contemporary financial system, there are several reasons to hesitate on this quickness and extent of this rather long declaration.  Firstly, as illustrated by Kenneth Rogoff, a professor of economics at Havard, the present dollar dominion is backed by “America’s deep and liquid markets, its strong institutions, and the rule of law”.

The professor’s observation becomes evident in the September 2019 Bank of International Settlements (BIS) study. As per the survey, the United States dollar holds onto its supreme currency reputation, being on one side of 88 percent of the entire trades, the SWIFT banking network, and as the report points out, dominating the worlds’ bank-to-bank money transfers,

The Chinese renminbi is the eighth most traded currency

Chinese renminbi, which is popular as yuan, is the eighth most traded currency in the world. Basically, the reason behind this is highlighted by Professor Rogoff who states that:  “China’s burdensome capital controls, its limits on foreign holdings of bonds and equities, and the general opaqueness of its financial system leave the Yuan many decades away from supplanting the dollar in the legal global economy.”

All in all, the subject of China’s digital currency begs for additional probe and given it will not depose the current financial order should not restrain us from questioning the inherent value proposition of a cryptocurrency. Back in 2019, ex-PBoC digital currency head, Yao Qian, made a captivating case for CBDCs. His observations should hold great weight to countries seeking to create a central bank digital currency.

Digital Technology Crucial in Fight Against Coronavirus Pandemic, Says G-20

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During a video conference held on April 30, members from the Group of Twenty (G-20) member nations, emphasized that digital technology and policies are playing a crucial role in retaliation to the widespread COVID-19.

At the Extraordinary G-20 Digital Economy Ministers Meeting, Mr. S. Iswaran, Minister of Communications, who also represented Singapore, stated that coronavirus had critically deranged economies, international trade, and global supply chains.

According to Iswaran, digital technology and policies are doing extra work to improve response to the coronavirus pandemic and recovery from the epidemic. The Communications Minister pointed out three areas where digital tech and policies can reap near-and long-term benefits: intensifying public health, equipping citizens with knowledge, and reinforcing the economy.

Digital technology and policies in health sector 

In addition, he added that the COVID-19 crisis has lad to the need for digital health solutions including telemedicine, and earmarked interventions such as automated temperature screening and the pursuing of contacts.

Moreover, digital technology has made it possible for administrations to engage with the citizens; to enhance widespread trust and togetherness in order to ease effective retaliation against COVID-19.

Furthermore, Iswaran stated that it is significant for business ventures to employ digital tech and policies to enhance the durability of their entities. Adoption of digital technologies such as digital payment methods and online selling would ramp up sales especially during this period clouded with pandemic uncertainties.

Moving forward, while speaking at Saudi Arabia’s invitation, Iswaran added that the coronavirus epidemic has highlighted the significance of making substantial investments in digital connectivity networks and cybersecurity. Adding to that, he claimed that 5G is the spine of the digital economy.

Ministers to revamp business durability by promoting digitization projects

During the virtual meeting, the ministers present concurred to focus on six areas of work. These areas of work include ensuring the security and affordability of communication systems; and network security while transmitting data; and inspiring research and adoption of digital health technologies.

The ministers also concurred in the bid to reinforce business pliability by promoting digitization and offering support. Saudi Arabia’s Minister for Communication and IT,  Abdullah Amer Al-Swaha chaired the virtual meeting.

Here’s How China is Planning to Break U.S dollar’s Monetary Hegemony with Digital Yuan

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The development with regards to China’s digital Yuan hasn’t slowed down amidst global COVID-19 concern. It was revealed on April 24 last week that three of the largest American brands, McDonald’s, Starbucks, and Subway, would be among the 19 companies participating in the digital currency trial.

Although a Starbucks spokesperson told media outlets that they were not participating in any digital currency trial, the rumour mill has already begun to indicate the intent of Chiná’s Central Bank.

Now that the narrative is getting thick and fast with China’s digital currency, Zou Pingzuo, a researcher at the People’s Bank of China’s Research Bureau, recently published an article. Pingzuo emphasized how China was trying to reduce the U.S.’s global influence and domination by the dollar while giving insights into how the Central Bank might think about the project.

The report stated that China’s digital currency’s main focus is on creating an innovative monetary system and developing a digital currency based on the human value that will make a major contribution both theoretically and practically to China and the entire human race.

The report also noted that a monetary system based on the scientific study of the value of people would eventually create greater value both economically and socially, whereas the monetary-policy transmission mechanism would trigger a value-creating process. The use of a blockchain-based account has been defined as necessary to create such a monetary system and it allows the generation of big data on the value of each individual.

The report added,

“An innovative digital currency combining the idea of “blockchain + human value” makes the currency a tool to discover, manage, create and implement value, integrate the measure of value function of a currency with the currency, and enhance the value creation function of a currency, thus fundamentally eliminating inflation and deflation.”

In addition, Pingzuo compared the currency system based on human value with the current U.S. dollar-centred system and indicated that the world needed saving from U.S. dollar hegemony and a “bloodsucking situation.”

The final statement clearly indicates that China’s Central Bank was looking forward to breaking the US dollar’s threshold and grip on the world economy with the newly proposed financial system.

Interestingly, it is important to note that, despite the use of blockchain, the monetary system would not be decentralized in any way possible. last year, when initial development reports were surfaced, various analysts and crypto proponents indicated that both the US and China were inclined towards a digital fiat in order to strengthen control over the population. Crypto enthusiast Richar Heart had stated,

“Nations want more control over their citizens. Nothing new…or good.”

People’s Bank of China (PBoC) Almost Complete Sovereign Digital Currency

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Amidst the COVID-19 adverse effect across China and the world at large, there seem no setbacks in the development of China’s digital yuan.

As per the report shared by a Global Times on Tuesday, the People’s Bank of China (PBoC) is way closer to issuing digital yuan. The report was cited with the “industry insiders”, adding to that the central bank is also drafting relevant laws to roll out its national digital currency.

The news comes in a wake of China’s anti-crypto, elaborating three types of scams happening across crypto exchanges. In addition to this, the bank had also noted the crowning cryptocurrency, Bitcoin is not a safe haven and it is too volatile.
On the other side, the recent report also noted that the country’s leading payment platform, Alipay’s patent shows several functions required to circulate, issue or proceed payment for digital currency. The industry insider told the Global Times as follows;

“Judging from the patents, the first step of technological development has been basically completed,”

However, the People’s Bank of China (PBoC) early this year acknowledged that the top leave design of the sovereign digital currency has been completed. However, he quietly noted that the currency is progressing smoothly.

With the coronavirus epidemic continued, people rarely care about fiat or paper money that may likely act as a reason for more COVID-19 cases. That being said, Bitcoin and other digital currencies have been considered as a feasible solution. On the same stance, Industry Insider suggested that the country should move forward of launching this digital currency in ongoing COVID-19 crises which have also affected the financial system.

Nonetheless, Cao Yan, managing director of Digital Renaissance Foundation, stated that;

“If there is a chance China is considering lowering its interest rate into negative territory as a final option and directing such policy to commercial loans and lending, a circulated digital currency rather than M0 will be able to achieve that,”