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Digital Euro May Have Transaction Limits for Retail Users

by Blockchain NewsNovember 7, 2022

With the European Central Bank (ECB) now developing the prototype for its Central Bank Digital Currency (CBDC) otherwise known as the Digital Euro, more details are now surfacing based on its potential operational dynamics.

Speaking recently at the “Towards a legislative framework enabling a digital euro” conference hosted by the European Commission (EC), Fabio Panetta, a board member of the ECB said the bank may impose some restrictive limits on transactions for the retail individual users.

While Panetta acknowledged that the ECB has not made any final decision on what the limit will be, he said €3,000 is a good example of a limit the bank can impose on the Digital Euro as a store of value. He went on to say that the total number of transactions that can be done by individuals may also be capped at 1,000 per month.

“If we give access to a means of payment, which is relatively limited, there are no transaction costs because you only need to have a smartphone,” Panetta said, “There will be risks that people could use this possibility to move, for example, their deposits of other banks or their money out of financial intermediates.”

The ECB board member also highlighted on an important subject regarding the Digital Euro and how it will co-exist with fiat. According to him, both versions of the Euro will complement each other to make for a robust financial ecosystem within the bloc.

“Digital euro would be an additional option for retail payment — not a challenge to the function of the financial system,” he said confirming that the new money is not designed to replace cash, a position that echoes similar words from ECB President Christine Lagarde.

Other Central Banks have maintained this position, noting that their CBDC will not displace cash nor make them obsolete. This argument brings a lot of doubt considering the wide embrace of people to the digital economy and the financial evolution which has largely relegated cash in some countries.

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Digital Euro Would Not be Used for Commercial Purposes: Christine Lagarde

by Blockchain NewsSeptember 29, 2022

Christine Lagarde, the President of the European Central Bank (ECB), has given her word that the proposed Central Bank Digital Currency (CBDC) for the region dubbed the Digital Euro will not be used for commercial purposes.

Speaking at an event in Frankfurt on Wednesday, Lagarde reiterated that the ECB is not designing the Digital Euro in a way that will make it easy for users’ data to be collected and commercialized. Lagarde said the ECB is not in the business of commercializing users’ data, assuring stakeholders that privacy will be a frontline focus for the bank.

The ECB boss cited the data from a survey conducted by the bank back in 2021 in which respondents cited privacy as a major feature they would like to see in a Digital Euro.

With the Digital Euro billed to make a complementary cushion to cash as a payment tool within the EU, Lagarde noted that the ECB is offering “the guarantee that those payments will not be exploited for commercial purposes” and that commercializing a CBDC is typically note “..the business of a central bank.”

With the promise that the Digital Euro, which is currently slated for pilot tests next year, will protect citizens, Lagarde noted that it will be another banknote with a little less anonymity. Most central banks, including the United States Federal Reserve, have highlighted the fact that their CBDCs will be designed with a visible focus on privacy.

The race to develop a CBDC is one that is now frontline for central bankers who are pushing to stem the dominance of crypto, including Bitcoin and stablecoins as payments. According to the International Monetary Fund (IMF), as many as 100 countries are currently well invested in launching a CBDC.

The race to control central banks’ financial and payment landscape through the launch of a CBDC gained momentum over the past few years, a time within which the Bahamas and Nigeria have both launched a functional digital fiat currency.

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Tagged : CBDC / CBDC:Europe / Christine Lagarde / Digital Euro / Ecb

Jeff Bezos Amazon Among 5 Partners to Design Digital Euro Prototype

by Blockchain NewsSeptember 17, 2022

The European Central Bank (ECB), has confirmed Jeff Bezos’s tech company AMAZON, as part of the five partners to design a digital euro prototype.

ECB said via a post on its website, that the selected organizations will perform different functions in developing the interface of the virtual euro prototype.

Notably, ECB began to look into the digital euro back in July 2021, however, it made no guarantees that it will eventually issue the virtual currency. While stating that only a digital euro that is generally recognized by European users could be deemed an achievement.

Based on recent developments, ECB has planned for the prototype exercise to commence in September and reach an end in December.

Similarly, this exercise will form part of a continuous two years study phase, to analyze the prototypes designed and to assess the effectiveness of the partnership. ECB forecasts completing this cycle by March 2023.

ECB sets Responsibility Based on Unique Capabilities

European Central Bank directors revealed that the five organizations will prioritize specific roles unique to their capabilities. Leading e-commerce firm, Amazon will be assigned the duty of designing the eCommerce payment system for the project.

While other organizations were chosen from 54 applicants that met the requirements required to design the features of the currency. Spain’s CaixaBank, will design the online peer-to-peer payment for the App, and French global payment service, Worldline will design the offline payment system.

Recall that ECB announced a call for partners back in April and received 54 applications from both international banks and Multinational Technology Companies.

Therefore, the five applicants that were selected were based on their adherence to “specific capabilities” necessary to carry out the demands of the project. Again, the ECB applauds the 54 Applicants across the globe that showed interest in designing the prototype.

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Tagged : Amazon / CBDC / CBDC:Europe / Digital Euro / Ecb

Introducing Digital Euro to Protect Monetary Sovereignty amid Cashless Tendency: Lagarde

by Blockchain NewsJuly 15, 2022

Christine Lagarde, the President of the European Central Bank, and Fabio Panetta, a member of the ECB’s Executive Board, have shared their thoughts on the need for the digital Euro amidst the waning influence of fiat cash.

In a blog post, Lagarde and Panetta identified three major avenues through which the Euro as paper money is no longer in vogue, noting that if left unaddressed, it could affect the overall relevance of the financial landscape of the European Union. As a part of the disruptive financial landscape identified, paper money is now being used relatively less with digital payments offered by the private sector taking centre stage.

Lagarde and Panetta noted that the dependence on private digital payments outfits is risky as private institutions cannot effectively replicate the roles of the central bank. While discrediting traditional private money service firms that their roles will bring in confusion, they noted that stablecoins on the other hand are “vulnerable to runs.”

Another fear the two pointed out is the fact that permitting private payments to dominate can invite non-European solutions and technologies to dominate the EU payment landscape.

Presenting the Digital Euro as the Solution

Lagarde and Panetta, in their submission, posited that only the Digital Euro, a complement to Fiat Euro, can wade off the current threats that are described above.

They pointed out that while the ECB is still working on the design concepts for the Digital Euro – projected to be completed in 2023 – there is a consensus to build the new legal tender, bearing in mind what consumers cherish the most, including “wide acceptance, ease of use, low costs, high speed, security, and consumer protection.”

“Introducing a digital euro would ensure that citizens can continue to trust in the monetary anchor behind their digital payments. It would protect the strategic autonomy of European payments and monetary sovereignty, providing a fall-back solution if geopolitical tensions intensify,” the blog post reads.

The EU is ahead of the curve when it comes to providing a detailed regulatory framework for its emerging crypto and virtual assets industry. While it is looking to promote innovation, it is also not sitting on its oars as it looks to present its CBDC as the dominant payment model in the near future.

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Tagged : CBDC / CBDC:Europe / Christine Lagarde / DIGITALEURO / Ecb / Fabio Panetta

France & Switzerland Central Banks Succeed Pilot CBDC Trials in Conjunction with BIS

by Blockchain NewsDecember 9, 2021

The trio of the Central Banks of France, Switzerland, and the Bank of International Settlements (BIS) has successfully conducted a wholesale Central Bank Digital Currency (wCBDC) trial involving both country’s fiat notes.

The BIS revealed the “experiment programme launched by the Banque de France (BdF) in 2020 has been completed”. It also involved third-party technology service providers, including Accenture, Credit Suisse, Natixis, R3, SDX, and UBS.

The trial dubbed project Jura featured the direct transfer of Euro and Swiss Franc wCBDCs between French and Swiss commercial banks on a single DLT platform operated by a third party. The funds were transferred in strict adherence to each country’s extant laws. Project Jura also featured tokenised asset and foreign exchange trades that were settled safely and efficiently using payment versus payment (PvP) and delivery versus payment (DvP) mechanisms.

All the experiments were conducted in a near‑real setting, and it also utilised real‑value transactions, all of which met current regulatory requirements.

“Jura demonstrates how wholesale CBDC can optimise cross‑currency and cross‑border settlements, which are a key facet of international transactions.” Sylvie Goulard, Deputy Governor, Banque de France.

Despite the dogged race to float government-backed digital money and the success of project Jura, it gives no guarantee that either of the participating countries will be launching digital fiat notes of their respective currencies. Project Jura exposes some important factors that Central Banks looking to design a CBDC must adhere to. Some of these include staying abreast of technological innovations that can be fast-paced in distributed ledger technologies.

“Broadening the use of central bank money through wider access or increased cross‑border settlement could catalyse these changes, as could deeper integration of currencies with other digital assets and securities,” the report concludes.

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Tagged : Banque De France / BIS / CBDC / CBDC:Europe / PROJECT JURA

France & Switzerland Central Banks Succeed Pilots CBDC Trials in Conjunction with BIS

by Blockchain NewsDecember 9, 2021

All the experiments were conducted in a near‑real setting, and it also utilised real‑value transactions, all of which met current regulatory requirements.

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Tagged : Banque De France / BIS / CBDC / CBDC:Europe / PROJECT JURA

PayPal, Visa, Amazon Named as Core Members to Help Bank of England Work on Developing UK’s CBDC

by Blockchain NewsSeptember 30, 2021

The Bank of England has named the representatives from companies such as Spotify, PayPal, and Asos, Visa, and Amazon among stakeholders participating in two advisory groups that are examining a possible UK’s CBDC (Central Bank Digital Currency).

On Wednesday, September 29, the Bank of England announced the members of the technology and engagement forums.

The technology forum will assist the Bank of England (BoE) in understanding the technical challenges of designing, operating, and implementing a CBDC.

Among the 26 members of the technology, the forum is James Whittle, director of standards and architecture for payments giant PayPal; Mark Shaw, director of global payments strategy for music streaming provider Spotify; Simon Brayshaw, head of technology for online fashion retailer Asos; David MacKeith, principal technology advisor at Amazon Web Services; Edwin Aoki, PayPal’s chief technology officer for blockchain, cryptocurrency and digital currencies.

On the other hand, the engagement forum will assist the BoE in understanding the practicalities of designing, rolling out, and operating a CBDC.

Representatives from Visa, Standard Chartered, Morgan Stanley, Mastercard, and HSBC are all included in the engagement forum. Christian Catalini, chief economist for the Facebook-backed Diem Association, and Anne Boden, founder and CEO of digital bank Starling.

While the technology forum conducted its first meeting earlier this month, the engagement forum plans to hold its first meeting later this year.

Central Banks Leading the Way In CBDC

In April, the Bank of England announced the formation of the two forums to examine a potential UK’s CBDC.

During that time, the BoE stated that the central bank and the government had not yet decided whether to launch a CBDC and planned to use the task force to examine the practicalities. The BoE also clarified that a CBDC would not replace cash and bank deposits but exist alongside them.

Despite marked progress in countries like the Bahamas, Jamaica, Sweden, and China, the announcement by the BoE’s approach and status to develop a framework for a digital fiat currency is still at an earlier stage.

In July, the BoE discussed the potential opportunities that a CBDC might bring, including promoting more efficient cross-border and domestic payments, financial inclusion, and financial stability.

The latest announcement signals that the BoE is becoming more serious about its CBDC exploration.

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Tagged : Amazon / ASOS / CBDC / CBDC:Europe / PayPal / Spotify / THE BANK OF ENGLAND / Visa

Ukraine Plans to Pilot CBDC Digital Hryvnia for Salary Payments

by Blockchain NewsAugust 19, 2021

Ukraine’s Ministry of Digital Transformation has announced plans to pay the national digital currency, central bank digital currency (CBDC), for its employees’ salaries.

In a recent interview with Ukraine media outlet TSN, Mykhailo Fedorov, minister of Digital Transformation, said his ministry plans to test out Ukraine’s CBDC, the digital hryvnia, implementing the electronic currency in employees’ salary payments.

Fedorov stated: “Frankly, as one of the first pilots, we have on the table the question of paying salaries to employees of the Ministry of Digital Transformation in electronic hryvnia.”

The minister stated that the effort to compensate its employees with CBDC would be possible once the sovereign digital currency is ready for testing.

Fedorov explained a need to test the CBDC to enhance its application and efficiency and therefore termed employee’s salary payments as a viable pilot scheme for the national digital currency.

Apart from compensating employees within the digital ministry with the digital hryvnia, the minister said that the pilot program would use the CBDC as a medium of payment for social benefits and government subsidies. However, Fedorov suggests that the initial rollout for the CBDC will focus on a small, controlled use case instead of being deployed for social payments.

The minister urges authorities to test the technology to collect user experience data and understand how it functions before applying the digital currency in the social sphere. Fedorov stated: “We are studying the experience of other countries that have launched pilots or are trying to introduce similar electronic currencies.”

Besides efforts to issue a CBDC, the Ukrainian government also plans to integrate smart contracts to limit the misuse of government grants.

The Rise Of CBDC

Using national digital currency to pay salaries of government employees is a popular pilot implementation strategy for national digital currency projects.

Some countries (such as Bahamas, Cambodia) that have already launched their CBDCs implemented the strategy of paying state workers in the digital currency during the pilot implementation phase.

In June, China, the pioneer in the CBDC space, tested its digital yuan in paying some of the government workers.

The Ukrainian government is moving forward with its CBDC plans. Early this year, the Ukrainian government tapped the Stellar Blockchain Network as a platform to build the national CBDC.

In January, Ukraine’s Ministry of Digital Transformation signed a memorandum of understanding with the Stellar Development Foundation to cooperate on several digital asset-related initiatives. Such projects involved helping Ukraine’s Central Bank in its CBDC efforts and assisting the country in developing infrastructure for modern virtual assets.

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Tagged : CBDC / CBDC:Europe / DIGITAL HRYVNIA / Payments / PILOT PROGRAM / Salary / Ukraine

French Central Bank Succeeds in CBDC Experiment in the Issuance of a Government Bond

by Blockchain NewsJune 25, 2021

The Banque de France or Bank of France, the central bank of France, has prospered in undertaking an experiment on using a central bank digital currency (CBDC) to issue a French government bond.

As per the announcement:

“The experiment consisted in the simulation on a permissioned blockchain of Government bonds’ (OAT) issuance by Agence France Trésor, followed by several secondary market operations performed on these bonds.”

Cash settlements were simulated using the blockchain-powered CBDC. The Bank of France experimented on the 21st and 24th of this month in collaboration with a group of economic players led by Euroclear. The program launched in March last year.

CBDCs are digital assets pegged to a real-world asset and backed by the central banks, meaning that they represent a claim against the bank exactly how banknotes work. Furthermore, they are blockchain-enabled, representing a new technology for issuing central bank money at the wholesale and retail level.

The interoperability between legacy and distributed architectures

Nathalie Aufauvre, the general director of financial stability and operations at Bank of France, noted:

“As a new achievement such as to explore wholesale CBDC potential, this experiment allowed testing for the first time financial optimisation on a blockchain with REPO operations, as well as the synchronisation of collateral operations between the blockchain and the European platform for securities settlement Target 2 Securities.”

He added:

“This provides a very good illustration of interoperability between legacy and distributed architectures.”

The experiment also entailed creating and deploying smart contracts so that the French central bank could issue and control the circulation of CBDC tokens, triggering their simultaneous transfer as a result.

Meanwhile, The Bank for International Settlements (BIS) recently disclosed its full backing for the development of CBDCs by central banks to pursue financial and monetary stability through international cooperation.

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Tagged : BANK OF FRANCE / Banque De France / Blockchain / CBDC / CBDC:Europe / DIGITAL ASSETS / France

Bank of France Conducts CBDC Test to Settle Listed Securities

by Blockchain NewsJune 22, 2021

The French Central Bank, Banque de France, has completed one of its series of experiments using a central bank digital money (MNBC).

According to the official publication, the experiment targeted settling listed securities and drew SEBA Bank as a partner in the experiment.

Through the experiments, MNBCs were used to simulate the settlement of listed securities and thus trigger their delivery in TARGET2-Securities (T2S). The settlement was based on existing conditional delivery of securities functionality ( T2S Conditional Securities Delivery – CoSD ).

From a technological point of view, the entire experiment to the Bank of France simulates the issuance of MNBC on a public blockchain. This was done to maintain adherence to preserving the control and confidentiality of transactions based on the development and deployment of a dedicated smart contract.

“This experiment has made it possible to demonstrate the possibilities of interactions between conventional infrastructures and distributed infrastructures, and paves the way for other alliances to take advantage of the opportunities offered by financial assets in a blockchain environment,” said Nathalie Aufauvre, Director General of Financial Stability and Operations of the Banque de France.

The pursuit of CBDCs and the associated testing has become commonplace amongst the majority of central banks today. With China taking the lead in developing and testing its Digital Yuan, other major economies, including the United States and Great Britain, are also actively exploring government-backed digital currencies.

Besides SEBA bank, the French Central Bank conducted the latest experiment in line with other partners, including Banque Internationale à Luxembourg and LuxCSD. According to the bank, the discoveries made in these experiments will help the European Central Bank in the broader pursuit of the digital euro.

As Central Banks accelerate development and research into CBDCs, there are growing expectations that new regulations may be introduced to prevent competition from privately issued stablecoins.

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Tagged : Banque De France / CBDC / CBDC:Europe / MNBC