September 15, 2022
  • September 15, 2022

CBDC: Fed notes downsides of digital coins

By on January 28, 2022 0

This week in Central Bank Digital Currencies (CDBC), the Federal Reserve is issuing a warning about a national digital currency, as Japan and Iran show more interest. Additionally, Russia is testing the digital ruble while its finance ministry says cryptocurrency should be regulated, not banned.

Fed report notes disadvantages of CDBC

While the US financial community is increasingly supportive of adopting a CDBC, the Federal Reserve Bank has pointed out that there are risks.

“While a CBDC can provide a secure digital payment option for households and businesses as the payment system continues to evolve, and may result in faster payment options between countries, there may also be disadvantages,” the bank said in a press release. “They include how to ensure that a CBDC would preserve monetary and financial stability and complement existing means of payment.”

Bank of Japan: Nation must cooperate on CBDC standards

The head of the Bank of Japan said his country should work with the United States and Europe to develop a global standard on the technical aspects of establishing a CBDC.

As Reuters reported, the bank itself has yet to decide whether or not to issue its own CDBC, but Governor Haruhiko Kuroda has told the country’s parliament that it is experimenting with a digital currency.

Iran close to CBDC pilot project

Reports out of Iran this week suggest the country’s central bank may be moving towards a digital currency.

As reported by TechHQ, Mehran Moharamian, the vice governor of banking IT affairs, said CBDCs could help with decentralizing resources and resolving financial inconsistencies. And Abutaleb Najafi, who heads the banking information services company, said the digital currency will be tested in a pilot phase with banks, consumers and payment service companies.

Banks test CDBC settlement integration

A trio of banks – the Bank for International Settlements (BIS), the Swiss National Bank and SIX Swiss Exchange (SIX) – said they had completed the second stage of the Helvetia project – testing CBDC wholesale settlement integration with commercial banks , the Service Times of Reported Assets website.

The project imagines a future in which financial assets are increasingly tokenized, and testers of both phases of the project have said that methods of settling tokenized assets in the CBDC are feasible and legal under Swiss law.

Russia embarks on a digital test of the ruble

A dozen Russian banks have started a test trial of a CDBC across a range of payment types. Among these banks is Promsvyazbank, which said it was testing consumer-to-consumer (C2C) transactions using the digital rouble. Another bank, VTB, said it had the infrastructure to launch its own pilot project.

“Piloting includes integration with the digital ruble platform and the introduction of services, such as opening an individual’s wallet via a mobile app and digital ruble transfers between individuals,” VTB said. to the Russian news agency Tass.

44% of bank executives will offer crypto services this year

A recent American Banker survey found that nearly half of bank executives surveyed plan to offer retail customers cryptocurrency services before the end of the year, double the amount in 2021, a Fool.com reported.

Meanwhile, 60% of wealth advisors who responded to the survey said they expect their clients to start investing in cryptocurrency this year or increase their existing holdings. And while only 13% of wealth managers currently actively manage their clients’ crypto holdings, a third of respondents said they plan to start doing so this year.

Bulgaria may recognize digital currency payments

The Bulgarian Finance Minister said his country is considering offering digital currency payment options in collaboration with industry players and the central bank.

Speaking to Bloomberg, Finance Minister and Deputy Prime Minister of European Funds Assen Vassilev said the country was exploring digital currency payment mechanisms “in the short to medium term”. But Vassilev ruled out the idea of ​​Bulgaria becoming a hub for extracting block rewards like other Eastern European countries have done.

South Korea completes first phase of CDBC test

The Bank of Korea has announced that it has completed the first phase of its digital currency test. After successfully testing CBDC issuance and distribution, the bank will now move into a second phase, focusing primarily on offline payments to enable CBDC transactions even if a user’s device is not on. line.

The Korean CBDC will have secure storage known as the “secure element” to store these transactions offline. The Bank of Korea said it does not expect a CDBC to replace its fiat currency, but rather sees digital coins as a backup.

Thai regulators crack down on digital asset payments

Thailand’s three main regulators have said they plan to impose restrictions on the use of digital assets or cryptocurrencies.

The Bank of Thailand, the Securities and Exchange Commission (SEC) and the Ministry of Finance (MoF) issued a joint statement expressing concern about the impact these assets could have on financial stability, as well as threats such as as cyber theft and money laundering.

Russian Finance Ministry Official Says Crypto Needs Regulation

Comments from a Russian finance minister this week suggest the country may be softening its stance on cryptocurrency. Ivan Chebeskov, director of the Ministry of Finance, said an outright ban on crypto could cause Russia to lag behind other countries in technology.

“We need to give these technologies the opportunity to grow,” he said. “In this respect, the Ministry of Finance is actively participating in the development of legislative initiatives for the regulation of this market.”

Crackdown Shutters Singapore’s Digital Currency ATM

A recent crackdown by Singapore’s central bank led to the closure of digital currency ATMs in the country.

The Monetary Authority of Singapore has issued guidelines banning the advertising of digital assets in public areas and ruled this week that ATMs in public areas count as a form of promotion of digital currencies.

“Such convenient access may mislead the public to trade DPT impulsively, disregarding the risks involved in trading DPT,” reads the notice issued by MAS. “DPT service providers should not provide physical ATMs in public areas of Singapore to facilitate public access to their DPT services.”

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