BIS Conference Addresses Cybersecurity in Central Bank Digital Currencies (CBDC)

The BIS Innovation Hub and the Cyber Resilience Coordination Centre (CRCC) hosted a conference on November 8, 2023, focused on “Securing the future monetary system: cyber security for central bank digital currencies“. General Manager Agustín Carstens opened the event with a clear message: the advent of CBDCs is inevitable, and their security is paramount to the future financial system.

As the financial landscape is on the verge of substantial change, Carstens pointed out that central banks are tasked with not only keeping up with the digital evolution but leading the way. This leadership is embodied in the development of CBDCs, which are poised to be at the heart of the financial system. Whether they take on a wholesale or retail form, their design needs to be versatile and their legal frameworks robust to gain public trust.

The integrity of central bank money is a cornerstone of the public’s confidence in the financial system. CBDCs introduce new levels of security challenges, with cyber risks being a significant concern. Carstens cited the vulnerabilities exposed in the crypto universe as a cautionary tale for CBDCs, which carry much higher stakes. Addressing these risks is critical, necessitating a flexible design that can adapt to future technological advancements, including the potential impact of quantum computing and generative AI.

While focusing on security, Carstens didn’t overlook the importance of privacy in CBDC design, considering it essential for public acceptance, especially for retail CBDCs.

The BIS is firmly committed to aiding central banks in their journey towards a digital future. The Innovation Hub has been at the forefront, exploring solutions for secure and functional retail CBDCs, integrating quantum-resistant cryptography, and ensuring offline cyber resilience. Concurrently, the CRCC is enhancing collaboration and operational readiness among central banks through tools and exercises.

Carstens also recognized the vital role of the private sector, particularly in customer-facing services, and stressed the importance of shared cybersecurity and resilience as public goods among connected institutions.

The conference sets the stage for critical discussions on cybersecurity strategies for CBDCs, governance, risk management, and technical challenges, including the quantum computing threat. Carstens concluded with anticipation for the insights that the conference’s discussions will yield, reflecting the BIS’s readiness to guide and support central banks in securing the monetary system’s future.

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At least 70% of Global Finance Leaders Believe CBDCs Will Spur Financial Inclusion – Ripple Study

Central bank digital currencies (CBDCs) have triggered overwhelming consensus among global finance leaders, according to a survey by Ripple, a leader in enterprise crypto and blockchain solutions.

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The study called “New Value Report” interviewed 1,600 worldwide finance leaders and found a heavy inclination towards CBDCs. Ripple stated:

“More than 70% of respondents surveyed across five global regions believe CBDCs stand to deliver major social change within the next five years, with the Asia Pacific ranking the highest at 89%.”

Most finance leaders acknowledged that CBDCs would be a stepping stone toward more financial inclusion. The report highlighted:

“Four out of five regions see financial inclusion or greater access to credit as the largest potential breakthrough to be driven by CBDCs.”

Once rolled out, CBDCs are expected to drive the financial inclusion of nearly 1.7 billion people left out of the banking system, given that they are pegged to a real-world asset and backed by central banks.

 

Ripple acknowledged that CBDCs were gaining traction based on the benefits accrued. For instance, their digital nature can enhance underserved communities’ accessibility to loans and other financial services. 

 

The study stated:

“Consensus on the potential for CBDCs to bring about more inclusive financial systems is clear. While much work remains to be done, many expect the transformation to be timely and that we will begin to see the fruits of this transition before the turn of the decade.”

On the other hand, the survey highlighted that some hurdles to implementation included security protections, privacy, offline access, identity verification, and consumer education. 

 

Meanwhile, Bank Indonesia recently conducted a CBDC feasibility study by offering a white paper concerning establishing the digital Rupiah. 

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9 in 10 Central Banks are Eyeing CBDCs, BIS Study Shows

90% of apex banks have shown intentions of rolling out Central Bank Digital Currencies (CBDCs), according to a study by the Bank for International Settlements (BIS).

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Per the report:

“Nine out of 10 central banks are exploring central bank digital currencies, and more than half are now developing them or running concrete experiments.”

The study surveyed 81 central banks about their engagement in CBDCs as well as their intentions and motivations about CBDC issuance. China has already set the ball rolling with its digital yuan

 

The BIS found that the emergence of cryptocurrencies like stablecoins and the Covid-19 pandemic have accelerated the CBDC drive, especially in advanced economies. Additionally, retail CBDCs have gained more momentum because they are moving to advanced stages. The survey noted:

“Globally, more than two thirds of central banks consider that they are likely to or might possibly issue a retail CBDC in either the short or medium term.”

On the other hand, wholesale CBDCs are being fronted because they are stepping stones toward cross-border payment efficiency. 

 

The BIS had previously noted that wholesale CBDCs would face challenges like differences in jurisdictional boundaries and governance provisions amongst countries. Therefore, it was willing to help countries handle these differences while fostering the development of technical capabilities and testing at a large scale level. 

 

Per the study:

“Central banks consider CBDCs as capable of alleviating key pain points such as the limited operating hours of current payment systems and the length of current transaction chains.”

Once rolled out, CBDCs are expected to drive the financial inclusion of nearly 1.7 billion people left out of the banking system. 

 

This is because 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 the way banknotes work. Central banks will also be in full control of the supply, one of the major features that have drawn criticism across the board.

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Singapore and Cambodia to Explore CBDC to Boost Payments Ecosystem

Singapore and Cambodia are notably exploring the use of Central Bank Digital Currencies (CBDCs) and digital currencies to improve their payment ecosystem efficiency as well as bolster the growth of startups across the board.

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Both ASEAN countries are capitalizing on the growth of e-commerce on their shores to bolster efficiency in their payments ecosystem, according to a South China Morning Post (SCMP) report.

“Southeast Asia has been a very fertile ground for digital payment innovation,” Benedicte Nolens, head of the Hong Kong centre of the Bank for International Settlements (BIS) Innovation Hub, said during a panel discussion. “When you see online e-commerce growth, typically it goes fairly well with new payment mechanisms.”

Singapore is known to be particularly warming up to the growth of digital currencies with a number of startups springing forth to offer services in this regard. While regulation may be slow in comparison with other nations, the Monetary Authority of Singapore (MAS), as well as the other regulatory bodies in the country, are more focused on long term value, hence the thought out process for licensing a business with emerging technology looking to do business on its shores.

Besides the growth of private digital currency startups, Singapore is upfront in the CBDC race as is a part of BIS Project Dunbar which seeks to build a multi-CBDC platform for a variety of Central Banks developing their digital monies. Cambodia on the other hand is a relatively growing economy whose growth has been fast-paced compared with the internet’s advancement.

“There is a lot of room to grow in the internet economy in Southeast Asia. Cambodia is a small country of 16 million people, where we have about 20 million mobile phone subscriptions,” said Serey Chea, Assistant Governor of the National Bank of Cambodia, adding that “It’s like a newborn baby who immediately is given a mobile phone subscription or two or three subscriptions.”

Per the SCMP, the obvious drive by these Southeastern Asian countries to boost their payments landscape has spurred tech startups in Singapore to grow more than 10 times since 2015, a trend that is billed to continue into the near future.

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Singapore and Cambodian to Explore CBDC to Boost Payments Ecosytem

Singapore and Cambodia are notably exploring the use of Central Bank Digital Currencies (CBDCs) and digital currencies to improve their payment ecosystem efficiency as well as bolster the growth of startups across the board.

SGC2.jpg

Both ASEAN countries are capitalizing on the growth of e-commerce on their shores to bolster efficiency in their payments ecosystem, according to a South China Morning Post (SCMP) report.

“Southeast Asia has been a very fertile ground for digital payment innovation,” Benedicte Nolens, head of the Hong Kong centre of the Bank for International Settlements (BIS) Innovation Hub, said during a panel discussion. “When you see online e-commerce growth, typically it goes fairly well with new payment mechanisms.”

Singapore is known to be particularly warming up to the growth of digital currencies with a number of startups springing forth to offer services in this regard. While regulation may be slow in comparison with other nations, the Monetary Authority of Singapore (MAS), as well as the other regulatory bodies in the country, are more focused on long term value, hence the thought out process for licensing a business with emerging technology looking to do business on its shores.

Besides the growth of private digital currency startups, Singapore is upfront in the CBDC race as is a part of BIS Project Dunbar which seeks to build a multi-CBDC platform for a variety of Central Banks developing their digital monies. Cambodia on the other hand is a relatively growing economy whose growth has been fast-paced compared with the internet’s advancement.

“There is a lot of room to grow in the internet economy in Southeast Asia. Cambodia is a small country of 16 million people, where we have about 20 million mobile phone subscriptions,” said Serey Chea, Assistant Governor of the National Bank of Cambodia, adding that “It’s like a newborn baby who immediately is given a mobile phone subscription or two or three subscriptions.”

Per the SCMP, the obvious drive by these Southeastern Asian countries to boost their payments landscape has spurred tech startups in Singapore to grow more than 10 times since 2015, a trend that is billed to continue into the near future.

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Fed Delivers Highly-Anticipated CBDC Report

Key Takeaways

  • The U.S. Federal Reserve published a highly-anticipated report on CBDCs today after several delays.
  • The paper discusses the pros and cons of a central bank digital currency, as well as possible uses of crypto and blockchain.
  • The publication does not mean that the U.S. government and its bodies will necessarily create a CBDC token.




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The U.S. Federal Reserve has published a highly-anticipated review paper on central bank digital currencies, also known as CBDCs.

Federal Reserve Weighs Pros and Cons

The Fed has delivered its report on CBDCs to the public after months of anticipation and several delays.

Overall, the Federal Reserve found that a CBDC could offer a “safe, digital payment option” for individuals and businesses, as well as “faster payment options between countries.” A CBDC is a digital asset tied to the value of a fiat currency—in this case, the U.S. dollar—that is issued by a country’s central bank.

However, it also said that central bank digital currencies could have downsides, such as risks to financial stability. The creation of a CBDC would also change the financial sector’s market structure, change reserve management practices and monetary policies, and have implications for privacy and security.



The Federal Reserve’s newly published paper is largely intended to explore the pros and cons of a digital currency, not to take a position on whether such a currency should be launched.

Crypto, Blockchain Mentioned Several Times

Though a central bank digital currency would not necessarily be powered by blockchain or be considered a cryptocurrency, the paper published today mentioned each technology repeatedly.

The Federal Reserve mentioned that it is involved with experiments that use blockchain-based CBDCs, noting that the Federal Reserve Bank of Boston is working with MIT’s Digital Currency Initiative on this effort. It added that The Board’s Technology Lab is researching wholesale payments and interbank settlements powered by distributed ledger technology.

It also mentioned cryptocurrency and stablecoins as historical developments in digital payments, but noted that a full discussion of those technologies is “outside the scope of this paper.” It went on to refer readers to another report on stablecoins published by the President’s Working Group on Financial Markets, the FDIC, and the OCC in November 2021.


Paper Has Been In the Works for Months

The Federal Reserve’s paper has been eagerly anticipated since May 2021, when chairman Jerome Powell said that the paper would be published in the summer of that year.

The paper’s publication was repeatedly delayed. In July, the paper’s publication was postponed to September. In October, many expected that the paper would be published imminently based on reports from the Wall Street Journal, but its publication was delayed yet again.

This month, chairman Jerome Powell said that the paper would arrive “within weeks” before the Federal Reserve fulfilled its goal today.

The paper does not necessarily mean that the Federal Reserve will develop a stablecoin. Next, the regulator will seek comments, and it says that it will only pursue a CBDC if there is “broad public and cross-governmental support” for the technology.

Disclosure: At the time of writing, the author of this piece owned BTC, ETH, and other cryptocurrencies.



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Joe Rogan Holds High Hopes For The Cryptocurrency Industry

There have been several reactions and comment from prominent personalities about the trend of cryptocurrency from the beginning of 2022. The world’s most prominent controversial podcaster and comedian, Joe Rogan, has just expressed his ‘hope’ for digital assets. He made this confession during a recent podcast interview.

On January 8, Rogan, through the 1760th episode of his podcast ‘The Joe Rogan Experience,’ deliberated on the crypto future. This discussion was with Adam Curry, his fellow podcaster.

The estimated number of listeners for every episode of Rogan’s podcast is about 11 million. This is significantly high irrespective of the moves from Spotify in censoring some offensive episodes. Also, Rogan’s podcast bagged the top position of the most popular during 2021 on Spotify.

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The world’s most prominent podcaster stated that cryptocurrency would either entirely fall or become an opportunity for sailing to a better future for human lives.

Curry stated that several young individuals are moving out on his part. Such moves could be for developing parallel networks and systems. He confirmed his loyalty to Bitcoin by stating that he’s on the BTC train to provide more security for his funds. He lamented the broken money system, causing misery, inflation, and even wars due to its link to oil.

Related Reading | How the CFTC fine on Coinbase could affect future crypto company listing

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Curry has been the host of ‘No Agenda,’ a right-wing podcast that has received criticisms from the medical community and mainstream media. They believed that Curry has been promoting conspiracy theories.

Metaverse And Cryptocurrency Vision From Podcasters

The discussion between Rogan and Curry transcended to the potential of digital Metaverse that Silicon Valley controls. Also, they talked about NFTs and their role within the crypto space.

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The crypto total market cap stays above $2 trillion | Source: TradingView.com

Rogan composed a theory for the future where firms could devise their digital tokens. Hence, buying their products will demand that customers utilize the tokens.

He cited that Apple could achieve that with ease. Rogan explained that the process would be first to buy the digital coins you will use to buy the company’s products. He said that the process is similar to stocks.

Reacting to that, Curry expressed his disagreement by saying that Rogan’s explanation is different from the plan. Instead, Curry stated that powerful governments and institutions are expected to focus on their Central Bank Digital Currencies, CBDCs.

He mentioned that individuals would have crypto tokens and wallets allocated from the Federal Reserve. Hence, retail banking will have little or no use.

Irrespective of the positive vibes from the podcasters in appreciating cryptocurrency, lots of crypto community members are pretty skeptical.

Related Reading | Did US Regulators Began Offensive Against Crypto Platforms? CFTC Fines Kraken

The two podcasters, Rogan and Curry, stand within the crypto space as being highly controversial. Rogan is famous for his kicks against ‘political uprightness. So, he had gained past criticism for his jokes that depicts racism, sexism, and transphobia.

Rogan received payment from CashApp in July 2021 to advertise Bitcoin to his listeners. Also, in November, he got $100,000 as a BTC payment.

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Central Bank Digital Currency To Launch in This Populous Latin American Country

The government of Mexico says that it’s planning on releasing a central bank digital currency (CBDC) by 2024.

A new post from the Central American nation’s official Twitter account cites the importance of emerging financial technologies in facilitating access to banking for its population.

The Gobierno de Mexico says,

“The Banxico [Central Bank of Mexico] reports that by 2024 it will have its own digital currency in circulation, considering that these new technologies and the next-generation payment infrastructure are extremely important as options of great value to advance financial inclusion in the country.”

The announcement is a significant development toward formal cryptocurrency adoption for Mexico. Back in June, the Central Bank of Mexico issued a press release affirming the institution’s stance against cryptocurrencies.

“Virtual assets do not constitute legal tender in Mexico nor are they currencies under the current legal framework.

The country’s financial institutions are not authorized to carry out and offer to the public trading with virtual assets… in order to maintain a healthy distance between them and the financial system.”

Regarding stablecoins, the document says,

“Recently there have been announcements about the issuance of the so-called ‘stablecoins.’

It should be remembered that Mexican legislation establishes that in no case shall be understood as a virtual asset any other asset denominated in currency of legal tender or in foreign currency.

Mexican billionaire and cryptocurrency advocate Ricardo Salinas Pliego, when prompted by another Twitter user for his opinion on the forthcoming CBDC, replied with one word,

“Bitcoin.”

Pliego has previously touted Bitcoin specifically due to the BTC‘s portability and capped supply.

“It’s an asset that has international value that is traded with enormous liquidity at a global level.

The finite supply of Bitcoin, the 21 million, is the key part.

Fiat is a fraud.”

Earlier this month, U.S. Secretary of the Treasury Janet Yellen said she’s still undecided whether or not the United States will implement a CBDC.

And back in March, the Bank of Korea’s governor speculated that CBDCs could reduce the demand for digital assets not sanctioned by governments, such as Bitcoin.

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Bank of Mexico Planning to Introduce CBDC by 2024

Key Takeaways

  • The Mexican government and the Bank of Mexico have stated that the country could launch a CBDC by 2024.
  • This central bank digital currency would presumably be backed by and tied to the value of the Mexican peso.
  • Mexico is one of several countries with CBDCs underway; others include China, Sweden, and Nigeria.




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The Bank of Mexico is planning to introduce a central bank digital currency (CBDC) by 2024, according to government reports.

Government of Mexico Reports CBDC

The Government of Mexico announced via Twitter yesterday the Bank of Mexico would introduce a CBDC by 2024.

The tweet said that “The Banxico [Bank of Mexico] reports that by 2024 it will have its own digital currency in circulation.” It said that this decision was made considering that CBDCs and related technology are “extremely important as options of great value to advance financial inclusion in the country.”

The Mexican government appears to have based its report on a statement made by Bank of Mexico Deputy Governor Jonathan Heath during a recent video conference.



There, Heath said that the country’s central bank has a timeline, and added that “perhaps by the end of 2024 at the latest we should have [the CBDC] operating perfectly well.”

Though little has been said about Mexico’s CBDC, the asset would presumably be backed by and pegged to the price of the Mexican peso and handled on a digital ledger.

Other Central Banks Developing CBDCs

If the Bank of Mexico successfully introduces a CBDC in the coming years, it will be one of many central banks to do so. Other banks that have either created a CBDC or are in the process of doing so include those in China, Nigeria, and Sweden.

Other countries are investigating CDBCs prospectively. Notably, the Bank of England recently announced that the country could launch its own CBDC by 2030, while India has considered crypto restrictions that could pave the way for a digital currency.


The United States Federal Reserve additionally is in the process of reviewing the potential of central bank digital currencies, though the country is unlikely to create such an asset in the near future.

Global organizations such as the International Money Fund are also involved in researching aspects of CBDCs.

Disclosure: At the time of writing, the author of this piece owned BTC, ETH, and other cryptocurrencies. 



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Cointelegraph Editor-in-Chief Kristina Cornèr talks digital currencies with Mastercard at Global Impact Week

Global Impact Week, an industry event which features fintech, policy, climate, healthcare, and media innovations, kicked off in Valencia, Spain, and is ongoing from Dec. 14 to 18. Recent figures put attendance at 100,000, with 500 speakers and 150 live sessions. Cointelegraph’s Editor-in-Chief Kristina Cornèr has been in virtual attendance at the event, moderating the panel titled Fireside Chat: Fintech Defining the Future with Mastercard’s executive VP of market development Liza Oakes. Here’s what they had to say:

Kristina Cornèr: In November, Mastercard announced the launch of crypto-funded payments cards. How do you see this opportunity develop in the next few months or years?

Liz Oakes: We started the service in fiat money. You can start by using Mastercard to purchase crypto where allowed and cash out into fiat money again. That was the first step of the development, figuring out a gateway from fiat into crypto safely. And the second stage is the topic of clearing settlements for potentially hundreds of cryptocurrencies. Moving forward, we are looking at CBDCs, stablecoins, and how to support their developments.

KC: What other experiments is your firm developing regarding crypto, such as NFTs, payments in the Metaverse, etc.?

LO: Personally, I’m fascinated by NFTs, but I also recognize there’s an enormous security challenge. The answer to this, which is still in development, cannot be that of cashing-out to a non-connected physical location.

KC: How do you see new developments playing a role in financial inclusion?

LO: I think I read the statistics the other day that 1% to 2% of the entire [world population] has participated in crypto. So there’s a lot of money in it, but it’s a very, very low percentage demographic who feels they can actually participate. So it’s a long way to go, and we are not quite there yet.