CBDC

A two-tier model for CBDC would empower public-private partnerships and enable Digital Cash to be designed by central banks but distributed by commercial FI’s. Digital currencies, denominated in the domestic unit of account, would be privately issued and managed, although fully backed with central bank reserves and monitored centrally

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Web3, DLTs, Blockchain 3.0.
CBDCs
Sandbox
Token taxonomy
Blockchains taxonomy
LegalFinTech
SSID
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Compliance by design
KYC-AML-in-built
RegTech
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Tokenized green bonds
DAOs, BBLLC, LLAOs
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This paper will try to demonstrate that, the use of new digital technologies for the financial system with the Central Bank Digital Currencies (CBDC) initiative, should provide some protection to pre-existing laws that were built through the learning of several generations of legislators and socio-economic actors. However, looking ahead, we will see that to achieve a city of future it will be mandatory to anticipate an infrastructure composed of Law and Technology, which revises the traditional models of governance, law, and regulations, and mitigates the pertinent risks by rewriting history. The challenge arises in the face of Cryptocurrencies/Assets and Tokens, which have occupied a significant space in the digital world in the last years, and are outside the best practices implemented by OCDE, FATF regarding Know Your Customer (KYC), Anti-Money Laundering (AML), Countering the Financing of Terrorism (CFT), Tax Evasion. There are a large and diverse number of potential reasons why central banks are investigating CBDCs, among them we will see that the replacement of physical currency is one of the milestones of this century for the city of the future.

Prompted by technological advances and a decline in cash usage, many Central Banks are investigating whether it would be possible to issue a digital complement to cash, a so-called Central Bank Digital Currency (CBDC). Despite ongoing research and occasional pilots, Central Banks have shied away from introducing a CBDC for public use. Even though CBDCs would have the potential to counteract some of the problems that could arise for the payment system in the future when the use of cash is rapidly declining, they also present significant risks for financial stability.

This article contributes to the discussion by setting out a CBDC framework and formulating broad design principles for CBDC in line with the central bank´s function as Lender of last Resort (LOLR). The attributes and functionality of a CBDC are highly determinative of the architectural design and technical solution chosen, particularly in the context of LOLR. Therefore, we argue in favour of a solid coin for e-emergency liquidity assistance, available 24 hours a day and seven days per week, anonymous, interest-bearing and unlimited, to prevent bank runs and restore financial stability in times of financial distress.

The issuance of a Central Bank Digital Currency (CBDC) is a very important step towards a fully digital economic environment and the consequences of such a direction are under debate by many policymakers around the world. There is a clear interest within the space as governments around the world are exploring the viability of a digital currency and according to the latest Bank for International Settlements (2021) report: 86% of the world's central banks have begun to conceptualize and research the potential of CBDC, 60% are developing Proof-of-Concepts (PoC) and 14% are implementing pilot projects. This paper provides a comprehensive overview for finance and investment participants about the topic of Central Bank Digital Currencies. The recent international exploration into the future of Central Bank money is complex as it is interconnected with two equally dynamic entities: Digital Currencies and Blockchain/Distributed Ledger Technology.

This paper outlines a theory of dominant money, i.e. e. the means of payment that
determines the money system and monetary policy during a certain epoch. In modern times, there have been three tidal changes in the composition of the money supply with a new type of money on the rise: unregulated paper money since the 1660s, the rise of central-bank legal tender notes towards the middle of the 19th century, and the rise of bank deposit money from around 1900. An analysis of the current situation suggests we are now entering another such era in which sovereign digital currency issued by the central banks (CBDC) is set to becoming the next dominant type of money.

Central bank digital currencies (CBDCs) have grasped the interest of central banks, policy makers, regulators, industry, and the general public, especially over the past year. The number of central banks actively engaging in CBDCs in one way or another, has increased from one third in 2018, to almost 90% as of March 2021. This report aims to provide a foundational understanding of CBDCs, the factors that necessitate their issuance, and an overview of the events leading up to relevant initiatives, public tests and live implementations. We focus on a European CBDC (henceforth also referred to as the ‘digital euro’) to explore the design space of its possible future implementation.

Dopo essere usciti dal gold standard nell’agosto 1971, sancendo così la fine della convertibilità in oro del dollaro Usa, nel 1974 il presidente Nixon si accordò con l’Arabia Saudita per agganciare il dollaro agli scambi del petrolio. Con il “petrodollaro”, gli USA mantennero la propria supremazia valutaria e finanziaria, mantenendo il dollaro come divisa di riserva mondiale per eccellenza. La Cina sta sfidando gli Usa sul loro stesso terreno, agganciando la sua valuta nazionale, lo yuan, al mercato petrolifero: il petroyuan. Obiettivo lontano, ma accelera il processo di de-dollarizzazione, soprattutto se altri Paesi, come la Russia, l’India, il Brasile, il Sud-Africa, tra altri, dovessero seguire l’esempio cinese.

Central bank digital currencies (CBDCs) have grasped the interest of central banks, policy makers, regulators, industry, and the general public, especially over the past year. The number of central banks actively engaging in CBDCs in one way or another, has increased from one third in 2018, to almost 90% as of March 2021. This report aims to provide a foundational understanding of CBDCs, the factors that necessitate their issuance, and an overview of the events leading up to relevant initiatives, public tests and live implementations. We focus on a European CBDC (henceforth also referred to as the ‘digital euro’) to explore the design space of its possible future implementation.

Central bankers as well as monetary reformers are discussing the introduction of central-bank issued digital currency in coexistence and competition with bank deposits (bankmoney). Among the reasons for this are the gradual disappearance of cash and a far-reaching loss of monetary control. However, a general shift to digital currency (DC) cannot be taken for granted. The paper discusses the conditions and design principles that are tipping the scales in the competition between bankmoney and DC. Relevant issues include access to and available quantities of DC, mutual convertibility of bankmoney and DC, parity of bankmoney with DC, how to deal with bank run situations, central-bank support and government warranties for bankmoney, deposit interest on DC, and the question of negative interest on DC. JEL codes E42, E52, E58, G21 Digital currency: cryptocoin or money-on-account? People have become used to hearing about digital currencies (DC) such as Bitcoin. These currencies are based on new technology known as distributed ledger and blockchain technology and are also referred to as cryptocurrencies because of the data encryption involved. Cryptocurrencies represent a radical alternative to the current banking system, in that they bypass retail banks and defy central-bank control from the outset. 1 Against this background, central banks are now thinking about producing their own DC. Initially, such central-bank issued DC was imagined in the technical form of cryptocurrency. 2 The new technology, however, is still in its infancy. 3 In comparison, tried and tested ways of managing account balances and payments from and to accounts are well suited for implementing DC. In the foreseeable future, central-bank issued DC is thus likely to take the form of account balances (money-on-account). In this context, "digital money" and "electronic money" are interchangeable terms. First design studies of DC were put forward by Barrdear and Kumhof of the Bank of England, the Swedish Riksbank and the Basel Bank for International Settlements, and were also presented at an early stage by monetary reformers and other economists. 4 The number of * The author is professor emeritus of economic sociology. 1 See Carney, 2018. 2 Cf. Andolfatto, 2015; Danezis and Meiklejohn, 2016; Bech and Garratt, 2017. 3 Related problems include the high volatility of cryptocoins, which arises from being used as speculative casino tokens rather than a general means of payment. The transfer of cryptocoins is not yet sufficiently fast, and is much too energy-intensive and thus expensive. Crypto trading platforms are vulnerable to hacker attacks, and legal questions of liability and identifiability are not entirely settled.

CBDC, the Coming Disruption Central Bank Digital Currency (CBDC) is digital version of central bank money that families and companies may use for making transactions and retaining value. It is the national unit's digital money. So, it acts as legal tender and carries the central bank's obligation, just like actual money in circulation. Clients can effortlessly move their bank savings to CBDC accounts after the debut of digital currencies. Furthermore, nonbank companies are entering payment industry which is putting commercial banks under more market pressure. Additionally, CBDCs have the potential to wreak havoc on the global payment system. Every country, having the approval of CBDC for international payments, may significantly benefit in terms of funding costs and authority over monetary operations. Certain central banks, such as the European Central Bank, see the shift to digital money as a chance to boost their currencies' international stature. Furthermore, they see this as an opportunity to increase the proportion of cross-border transactions. Although CBDC efforts are not meant to be disruptive, they would almost certainly have unexpected consequences on the traditional monetary system. Global Insights and Trends CBDC initiatives are becoming more popular; according to reports, by 2021, 87 nations accounting for over 90% of global GDP will have started to examine a CBDC alternative. However, banks are now developing 2 key CBDC operational models: • Retail applications, in which businesses and individuals can hold CBDCs as a kind of digital currency. • Wholesale or Interbank applications, in which only banking institutions can use CBDC for financial settlement and interbank transactions.

Payment methods have changed throughout history and the communities that made it up according to the level of technology available to them (not metal-metal-paper-digital). With the arrival to the general population of the internet and the development of cryptography, after the financial crisis of 2008, a decentralized digital currency appeared that meets the classic characteristics of what should be good money with the addition of being a disruptive technology. Bitcoin allows transactions without censorship, it is unconfiscable, verifiable, registered for eternity, visible to all but anonymous, it allows transporting value through space and time without difficulty and it is a secure network thanks to its computational strength and design. In addition, it solves the problem of loss of value over time and counterparty risk. Bitcoin therefore competes with the most widely used currencies in the world such as the dollar and the euro, as well as with the longest-lasting store of value: gold. From a historical point of view of technology and what must be good money, it has already won, but to carry out contracts and set prices in Bitcoin it must lower its volatility to levels similar to its competitors. For volatility to decrease, adoption must increase or be maintained over time, on the contrary, if the community decreases, so will its value and the ultimate goal of being the currency of international trade will be unfeasible. In addition, right now Bitcoin does not meet at the highest level the three characteristics that money should have - medium of exchange, unit of account and store of value - due to the same problem of volatility, but there are reasons to believe that it will fall if certain scenarios are they end up complying. If volatility manages to decrease it will be an easily scalable method by design, and therefore it will be a threat to the current fiat system.

Sustained decline in central banks’ monetary liabilities (reserves and currency in circulation), which the emergency of cryptocurrencies may have hastened, has been enabled by technological innovations that over time have allowed financial institutions and their customers to execute transactions and settle their debts without resorting to central bank currency. Policymakers are concerned about their ability to guarantee public’s access to government-backed currency. This has implications for central banks’ balance sheet and income position, which central bank digital currency might reconstitute. But the introduction of central bank digital currency (CBDC) comes with its own risks and could be disruptive for financial markets. We believe that retaining the option to have access to government-guaranteed currency is of utmost importance, despite the sporadic demand for physical currency in the modern society, but it could be addressed within existing institutional structures without the introduction of CBDC. However, policy authorities are right in seeking oversight and regulation for cryptocurrencies to address the destabilizing potential of cryptocurrencies for financial markets, and they should continue modernizing payment infrastructures to bring retail settlement systems at par with cryptocurrencies in terms of settlement speed but without associated liquidity and credit risks. These steps would preserve the status quo and allow private sector to continue innovating while limiting central banks’ footprint in the financial markets.

The emergence of central bank digital currency (CBDC) provides an opportunity for central banks to make an important contribution to the transition to a circular economy. This paper examines the role of a central bank digital currency in the circular economy. Central banks can contribute to the transition to a circular economy in two ways: first, by making central bank digital currency accessible to circular businesses and other players in the circular economy sector; and second, by looking into how the design features of CBDC can support circular economy goals. On the role of CBDC in the circular economy, I argue that a central bank digital currency offers a better payment option for circular economy financial transactions; central bank digital currency can lead to greater financial inclusion for 'unbanked' informal workers in the circular economy; CBDC can create a gateway that allows a central bank to offer financial assistance to distressed circular businesses; using a central bank digital currency can reduce illicit activities in the circular economy; a central bank digital currency can be used to provide stimulus funding to support circular businesses during crises; and, a central bank digital currency can offer low transaction cost for circular economy financial transactions. The paper also shows the link between CBDC and the circular economy. It also offers a critical perspective on the link between CBDC and the circular economy.

Central bank digital currencies (CBDCs) have grasped the interest of central banks, policy makers, regulators, industry, and the general public, especially over the past year. The number of central banks actively engaging in CBDCs in one way or another, has increased from one third in 2018, to almost 90% as of March 2021. This report aims to provide a foundational understanding of CBDCs, the factors that necessitate their issuance, and an overview of the events leading up to relevant initiatives, public tests and live implementations. We focus on a European CBDC (henceforth also referred to as the ‘digital euro’) to explore the design space of its possible future implementation.

Da alcuni anni accademici e banchieri centrali discutono la possibilità di introdurre una nuova forma di valuta: una moneta di banca centrale digitale (central bank digital currency, CBDC) da rendere disponibile a cittadini e imprese per le loro operazioni di pagamento quotidiane. Anche la Banca centrale europea (BCE) è entrata prepotentemente nel dibattito lanciando formalmente il progetto di un euro digitale (digital euro). L'adozione di una CBDC ha implicazioni interessanti sulla politica monetaria, sull'attività delle banche commerciali e per l’intera industria dei pagamenti.
(Link pubblicazione ISPI: https://www.ispionline.it/it/pubblicazione/digital-euro-campo-anche-la-bce-27960)

The paper discusses sovereign money (cash, digital cash, central-bank digital currency CBDC) as base money in its relationship with second-tier bank money and third-tier new money surrogates such as money market fund shares, e-monies and stablecoins. The current situation of that complex system is unstable and prone to crisis. Effective monetary policy requires a much bigger share of sovereign money, also and particularly in the public money supply.

As COVID-19 crisis spreads and markets continue to drop, governments struggle to plan emergency measures to palliate the economic effects of the pandemic. The United States Democratic Party has surprised everyone with a transgressive proposal: the creation of a 'digital dollar' and the establishment of digital 'wallets' in dollars. This proposal inevitably becomes a shock wave through the cryptocurrency and blockchain industry, particularly for worldwide supporters of issuing central bank’s digital fiat currencies. Central Bank digital currencies, or CBDC, are digital fiat currencies, which unlike bitcoin and other crypto assets, are issued by a central bank and backed by a government.

En el momento de mayor incertidumbre y crispación de la crisis del COVID-19 frente a unos mercados en continuo descenso y unos estados gestionando medidas de urgencia para salvar a la economía de los impactos de la pandemia, el partido Demócrata de Estados Unidos ha sorprendido a todos con una propuesta transgresora: la creación de un 'dólar digital' y el establecimiento de 'wallets' digitales en dólares. Esta propuesta inevitablemente se convierte en un globo sonda para la industria de las criptomonedas y blockchain, especialmente para los partidarios de emitir monedas fiduciarias digitales (CBDC) desde los bancos centrales de todo el mundo.