TronWeekly

Crypto World News

You are here: Home / Archives for central bank

central bank

Bank of Lithuania Debuts World’s First Digital Collector Coin, LBCOIN

by

The Bank of Lithuania became the first nation in the Euro region and the world to officially issue its digital collector coin, LBCOIN, on 23 July. Each issue of LBCOIN is a hallmark of one of the signatories of the Independence Act since it was issued in honor of the 1918 Nation’s Independence Act and its 20 signatories. As reported by TWJ earlier this month, the Bank of Lithuania was set to issue the first cryptocurrency backed by a central bank in the eurozone.

Notably, the state-of-the-art digital collector coin is based on the NEM Blockchain and contains six digital tokens for each physical collector coin. Of the 4,000 LBCOINs disbursed, there are almost 24,000 virtual tokens and 4,000 silver collector coins. Although the Bank of Lithuania stipulates that LBCOIN is not a CBDC, the Bank proposed that it could lead to the realization of a digital currency issued by the State.

By buying an LBCOIN, the collector will obtain a random assortment of digital tokens that can be exchanged for a physical coin; which can be stored in the LBCOIN e-shop, sent as gifts, or even exchanged or transferred to other collectors via the NEM blockchain infrastructure.

The 4,000 silver collector coins, on the other hand, were minted at the Lithuanian Mint. The coins are similar to the standard credit card, both in shape and size. The Lithuanian flag and the national anthem are also included in the binary code. The country coat of arms (Vytis) on the other side of the card is bound by the QR code that connects the coin to the LBCOIN e-shop. The value of each LBCOIN package is 99 EUR (about $115).

Digital collector coin is not a CBDC

Although there were some rumors, the announcement shed light that the LBCOIN is not a central bank digital currency, which can serve as a digital legal tender. Alternatively, the project is geared towards luring collectors;  its goal is to demonstrate how technology can be used to digitize the world. 

The chairman of the country’s central bank board, Vitas Vasiliauska, outlined that the LBCOIN project illustrates Lithuania’s swift technological progress. In conclusion, he also noted that the project could lead the authority on a; “firm path towards financial and payment innovation.”

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

by

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.

DCEP: China’s Biggest Food Delivery App to Trial Digital Yuan

by

People’s Bank of China (PBoC) is planning to trial its digital yuan with food delivery giants backed by Tencent Holdings Ltd. According to a report published by Bloomberg on 15 July, the PBoC is set to boost its National Digital Currency Electronic Payment (DCEP) adoption by testing it on Meituan Dianping-controlled platforms, including Tencent’s food delivery application.

Digital yuan adoption

PBoC is currently testing its central bank’s digital currency in four Chinese cities and is closing its doors to the public. Meituan has been involved in a dialog with China’s Central Bank ‘s research arm on digital legal tender applications in the real world, based on sources that are close to the matter.

Indeed Meituan is now joining the Chinese ride-sharing startup Didi Chuxing, which has recently joined the trial program for researching digital yuan applications. Like Didi, Meituan is involved in billions of dollars of transactions every day in its food delivery business and online travel solutions. Its inclusion in the testing phase would certainly boost the mass adoption of state-issued digital currencies.

China to make history as the first country to issue a CBDC?

According to the Blomberg report, the PBoC is deliberating with Bilibili Inc, another online video streaming service supported by Tencent. The two companies that provide a range of online services in the form of food delivery to e-commerce; seem to be the perfect prospects to help DCEP win its share of China’s $27 trillion payment industry. In addition, digital yuan could sustain the government’s grasp of the world’s second-largest economy.

For about six years now, China’s central bank has been working on the digital yuan, and it’s closer than ever to make use of that to the public. Several other central banks are also testing and researching CBDCs around the world. In conclusion, it is assumed that the Facebook Libra project is the chief catalyst to why central banks worldwide have intensified their efforts to develop a state-issued digital currency.

Thai Central Bank Developing Payments Systems Prototype Using CBDC

by

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.

America’s New Comptroller Of The Currency is a Blockchain & Bitcoin Bull

by

The new American Comptroller Of The Currency, Brian Brooks, is currently the new top banking regulator for President Donald Trump’s administration. Formerly, Brooks served as Chief Legal Officer of Major San Francisco’s Coinbase Digital Currency Exchange Platform.

Brooks’ appointment as an acting-Comptroller Of The Currency is a clear message that Blockchain is not a drawback; according to Brooks, Blockchain is a modern-day solution to our problems. While speaking to Forbes, Brooks said:

“Blockchain has potential to connect up, in a decentralized network, all kinds of data. It has the ability to create large, friction-free, decentralized networks of people. There is huge and great promise in Blockchain and crypto.”

Brooks bullish on bitcoin

Brooks also spoke comprehensively about digital currencies, regulations, and technology in general. While discussing cryptocurrencies in general, America’s new Comptroller Of The Currency specifically cited Bitcoin, Ethereum, and Ripple as solutions to multiple setbacks faced by more than a thousand banking institutions.

Recently, on 2 June, Brooks proposed a regulation aimed at rewriting the current “Bank Digital Activities” laws. The request for comments and public opinion signed by the new Comptroller Of The Currency includes the question of how artificial intelligence and blockchain technologies could be integrated into strict banking regulations.

America’s new Comptroller Of The Currency urges FED to adopt Blockchain in money transfer

Brooks is more troubled about the outdated techniques that financial institutions use to transfer money. He says:

“It takes three days if you’re trying to send money from the US to Europe… on the SWIFT network. Your money is at risk during that period. And even when the money is transmitted, foreign exchange fees are incurred. But a digital representation of value on both sides of the transaction can eliminate that friction and those costs.”

According to Brooks, the fact that other nations are developing modern payment systems is a threat to the United States. He also aims sly dig at the Federal Reserve, claiming that it is slow in adopting modern money transfer methods such as Blockchain, which are instantaneous.

Ghana Central Bank Soon to Begin Pilot Testing Digital Currency

by

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.

Saudi Arabia Monetary Authority Injects Liquidity into Local Banks Using Blockchain Technology

by

On 8 June, the Saudi Arabia Monetary Authority (SAMA) announced that it had transferred funds to domestic banks through blockchain technology. The money was part of the central bank’s effort to inject SAR 50 billion ($13.3 billion) of liquidity into the country’s banking system announced last week.

According to the statement, the use of distributed ledger technology in the financial sector is part of the authority’s efforts to explore and experiment with various upcoming technologies. Indeed, the Saudi Arabian Monetary Authority is inclined to twiddle with any upcoming technology in order to keep pace with emerging global technology trends. The statement reads:

“SAMA is one of the pioneer central banks to experiment with blockchain technology for money transfers, this move was one of the key innovative initiatives launched by SAMA in its program to enable and develop Fintech in the Kingdom. This includes, among others: The Fintech Saudi Initiative in cooperation with the Capital Market Authority, the introduction of SAMA Regulatory Sandbox, and an array of digital banking services and payments.“

 

 

The adoption of blockchain technology in the finance sector is surging in the entire Middle-East region. Notably, earlier in the year, SAMA and the central bank of the United Arab Emirates (UAE) disclosed a joint digital currency dubbed Aber, that would be distributed in the local banks in the to Arabian nations.

Saudi Arabia Monetary Authority to explore emerging trends 

Furthermore, the latest move by the Saudi Arabia Monetary Authority is a big declaration by the authority to the growing use of blockchain technology by central banks all over the world. Blockchain technology is known for its security and transparency traits, which SAMA experienced in the banking liquidation exercise.

In conclusion, the adoption of blockchain technology has been adopted by different central banks and financial institutions across the world. Just recently, a bank in Turkey successfully completed its first trade finance transaction using blockchain technology. Moreover, nearly 40 percent of fintech firms based in Hong Kong leverage blockchain technology.

China’s Digital Renminbi in the Face of an Epidemic

by

The World Health Organization, on Wednesday, declared COVID-19 a global pandemic. Officially known as COVID-19, CNBC reported on March 11 that coronavirus has spread sufficiently worldwide to warrant classification as a pandemic. From Asia to the Middle East, Europe, and the United States, the virus has spread quickly to over 121,000 people.

Will Covid-19 Drive Inception of the Digital Yuan?

Former Chinese Central Bank president told press reporters that they are currently considering digital currency as a way to counter  the spread of Coronavirus. It came following a government ultimatum to clean cash in February, before giving it back to the public.

In fact, the government has quarantined old paper notes worth at least $85.9 billion. As a result, they also published the same amount of new money in the virus ‘ originating area-Hubei. The ultimatum required banks to issue sterilized notes only to the public. Therefore reducing the chances of spreading of coronavirus during transaction activities from person to person.

The former People’s Bank of China president Lihui Li told China Daily how a digital payment system would bring convenience during epidemics. Lihui Li currently serves as the blockchain head for National Internet Finance Association (NIFA). NIFA is a state-run fintech organization.

In addition, Lihui Li highlighted the adoption of digital stablecoins was partially dependent on retail demand. For instance, the retail market in China is presently dominated by WeChat and Alipay. Both of these are pretty excellent forms of digital payment and alternative payment means. 

In the aftermath of the coronavirus attack, both micro-and macroeconomics suffered. The effect has obviously impacted money supply, especially from high-risk sites. PBOC requires officials, for example, to seal all the money from hospitals and volatile markets and issue it to the central bank. And the central bank reissues the money back to circulation.

China’s PBOC deputy governor highlighted the nation’s focus on national health and safety. The official said: 

“After the outbreak, we paid great attention to the safety and health of the public’s use of cash,”

Some of the safety measures that the Central Bank has implemented include suspending cash transfers between provinces. As well as minimizing the movement of business and government personnel and thereby reduce the risk of transmission. Moreover, the Central bank also issued at least $4 billion worth of banknotes to Wuhan. Which is a percentage of the 600 billion new yuan notes that the bank allocated to disinfect the cash in circulation? 

Some have felt that disinfecting the monetary supply will have minimal impact in containing the disease. Muhammad Munir, a professor at England’s Lancaster University said it was difficult to remove traces of the virus from objects, including banknotes. Munir said: 

“While COVID-19 can spread through contaminated objects, the duration of coronavirus survival on currency notes is not determined”

He also added that since most of China’s daily purchases are made online, the impact of cash restriction will have a slight effect on the spread of coronavirus. 

The virologist said the only way to curb disease transmission has been through good hygiene.  Advice that many medical professionals have been communicating with the public.

 Washing hands using alcohol sanitizers could easily restrict hand to hand transmission of the infection. Since the point of transmission among most people exchanging cash is through the hands. Therefore, maintaining hand hygiene should be top of the list while curbing the spread of coronavirus.

On the other hand, a couple of people have felt the need for a central bank-issued stablecoin. This, they say, would be desirable and convenient in times of national disasters.

Dubai’s DIFC, Mashreq Bank launches KYC Blockchain Platform as Blockchain Continues to Develop in the Middle East

by

Over the last decade, Blockchain technology has become a major part of the Fintech industry, and the modern banking system is now on the verge of incorporating its innovations into its accounting systems.

Approximately 40 central banks in the financial ecosystem have already taken steps to establish a blockchain platform for their operations, some of them considering issuing digital currencies to the central bank.

Now, according to a recent press release, Dubai International Financial Centre [DIFC] and Mashreq Bank announced the middle east region’s first blockchain sharing platform, that would support licensed enterprises and allow an easy initiation of digital bank accounts. Organizations would be able to open their accounts instantly with the bank with promoting enhance transparency.

DIFC and Mashreq Banks to enable KYC protocols

One of the major focuses of DIFC and Mashreq Bank is to integrate corporate KYC information while holding high standards of customer experience when users are opening their digital accounts.

The introduction of KYC operations suggested that the central institutions were looking forward to storing user data on a decentralized network; thus, third parties may have access to it after the requested permission has been given.

A blockchain-based KYC is also an ideal step forward from the perspective of data security as it abolishes the threat of unauthorized access that often leads to data streaming. Blockchain-based KYC platforms would also enable active surveillance to keep track of day-to-day transaction activity and spot malicious transactions.

At press time, the blockchain platform was live and, according to the report all UAE-based banks and corporations had access to the platform.

After the announcement, Arif Amiri, CEO of DIFC Bank stated,

 “As the leading financial center in the MEASA region, we take great pride in continuously enhancing and evolving the DIFC ecosystem in order to provide a world-class environment for our partners and community to conduct business. As we enter a new period of growth and expansion, our core focus on FinTech and blockchain are major steps on our journey towards transforming the future of finance.”

Major Banks entering the Blockchain space

Central banks are no longer in a position to prevent the emergence of the blockchain and the resulting rise of digital assets. Although not all banks were considering the integration of blockchain in order to compete with decentralized assets, some major banks were experimenting with the technology of issuing CBDC.

Central institutions around the world have been researching and setting up a task force to understand the functionality of the digital dollar and the use of blockchain technology. The financial ecosystem is moving into a digitized space at a fast rate and Libra’s proposed announcement for a stablecoin backed with the U.S dollar turned several heads in the space.

The discussions over a CBDC picked up pace after China’s People Bank of China voiced its support for blockchain in 2019. As a result, other banks followed suit as well, as recently Bank of England, Bank of Japan, European Central Bank, Bank of Canada and Sweden’s Central Bank banded together to initiate their own research about central bank digital currencies.

The financial and technological space has risen to the benefits of blockchain in the past decade, and over the next 10 years, the development with regards to this technology will probably facilitate involvement in various industries around the globe.

Canadian Deputy Governor Says Country Is Ready To Launch Native Crypto If Needed

by

Countries around the globe have been improving their payment ecosystems to keep up with the times. This has resulted in technology developing faster than ever before, with cryptocurrencies and blockchain technology playing a critical role.

Canada has become a net country to jump into the digital currency bandwagon after China and possibly the United States, with its deputy governor recently outlining future plans.

Canada is known for its functioning financial ecosystem and plans to integrate blockchain and crypto into it, said Time Lane, Deputy Governor of Canada. Lane stated that the government had not planned to launch the CBDC soon, but had begun work to do so in the future, if necessary. He revealed this during a seminar in Montreal where he did not touch on the top of rate moves.

Lane added that at present, there was no “compelling case” to create a government-issued digital token. According to the government official, there were two financial scenarios that would put the spotlight on creating a CBDC. One is where physical fiat money is completely eliminated from the market and use cases disappear. The second scenario would be where cryptocurrencies are taking massive leaps in developments and institutions are starting to adopt it.

The concept of a CBDC is not new as several regions have gone over the topic earlier. China is one of the best examples of a major superpower planning to adopt a national digital currency.

The Red Dragon has taken the plan seriously as more than 80 patents related to blockchain technology were filed by its government. CBDC’s differ from cryptos such as Bitcoin and Ethereum because the former is run by a government while the latter is completely decentralized.

During the speech, the Deputy Governor of Canada stressed that the CBDC would only improve the existing financial ecosystem. He also pointed out that Canadian citizens have been well served by the central bank and the payment ecosystem.

The central bank plans to consult with multiple stakeholders to design the functioning of the proposed Canadian digital currency. Lane has ensured that the meetings will include federal and provincial governments, regulators, merchants and payment service providers.

At the moment, the bank is working on a prototype that will go through multiple processes before being fit for release. Even if regulation discussions and roundtable are completed soon, it will still be years before an actual official launch.