February 2021

• Moroccan Central Bank Considering CBDC (February 20, 2021)

  Morocco’s central bank, Bank-Al-Maghrib (BAM), has launched an exploratory committee to research and investigate the positives and negatives of launching a CBDC. Four years ago, Morocco banned cryptocurrencies as the government expressed concerns about the lack of regulation and significant risks to users posed by cryptocurrencies. Although it was banned, Bitcoin is still thriving in Morocco with Nigeria, South Africa, and Kenya being the only African countries to have more trading volume. Go to Article.

• Sweden Prolongs CBDC Pilot until 2022 (February 18, 2021)

  Sweden is exploring the opportunity for an e-krona and the Riksbank has partnered with Accenture to help carry out the pilot program. The bank hopes to get from the partnership ways that the e-krona could be on par with their fiat money in Sweden. Although the pilot program has been extended to the end of February 2022, the central bank has still not decided on the design or the technology the digital asset would be using or if the e-krona will be issued at all, but it certainly will not be soon. Go to Article.

• Bermuda Pilots Digital Dollar (February 18, 2021)

  Canadian fintech firm Bidali, with support from the Bermuda government, has launched a pilot program to test a digital Bermuda dollar by allowing a popular local rum company, Gosling’s Limited, to accept digital Bermuda dollars through the Stellar Network. As Bermuda does not have access to payment platforms like PayPal or Square, a digitized currency is essential but there are still hurdles. The country has a strict licensing regime which means companies must work towards meeting the standards of the country’s financial regulator and Bermuda is $3 billion dollars in debt so managing the money is difficult as well. Despite the hurdles, the Bermuda government is inviting fintech firms from around the world to help solve their digitalization problems. Go to Article.

• Modernization of Corporate Treasurers (February 18, 2021)

  As currencies are being digitalized, corporate treasurers are trying to keep up with updating technology and a volatile economy caused by the pandemic. Although new technologies such as real-time payments, cryptocurrencies, and enhanced exchanges of data are increasing efficiency in corporate finance, financiers are still using many old systems with many CFOs still using excel spreadsheets and this is holding back corporate finance. Treasurers interest for cryptocurrencies is increasing as the security behind being able to track transactions is important to their clients. Treasury departments still lack modernization as treasurers are tasked with more immediate challenges like hedging against global risk in a volatile market and managing the pains of a remote workforce but the opportunities for treasurers will continue to expand. Go to Article.

• The Riksbank Extends CBDC Pilot (February 17, 2021)

  Sweden’s central bank, the Riksbank, has recently announced that it has extended an ongoing pilot program regarding the digital Swedish krona until February 2022. The pilot program was initiated to help make an e-krona that can work as a complement to cash and to help solve problems with the marginalization of cash. Although an e-krona has not been confirmed, a brief whitepaper from 2020 details the use of R3’s Corda blockchain-a private DLT created for business and enterprise. The recent announcement says that testing of offline functionality and onboarding of external participants will be prioritized in the coming months. Go to Article.

• Chinese Bank Creates Hardware Wallet for DCEP (February 17, 2021)

  The Postal Savings Bank of China has created a biometric hardware wallet for China’s CBDC. The wallet enables easy identity verification for users via fingerprint sensors on the card and was designed to provide easier access to the CBDC and healthcare services. The wallet is especially useful for the elderly who have difficulty using smartphones. Development of the wallet began in January and other groups, like the Xiong’an branch of the Agricultural Bank of China developed a wallet back in February for the digital yuan. The Agricultural Bank of China has also launched an ATM pilot program that allows citizens to convert cash to digital yuan. Go to Article.

• Prepaid Mastercard Now Accepts Sand Dollar (February 17, 2021)

  The world’s first CBDC, The Bahamas’ Sand Dollar, used to only be accessible exclusively through a digital app at select merchants but can now be loaded onto a prepaid Mastercard and this allows the use of the Sand Dollar worldwide-wherever Mastercard is accepted. The CBDC was only available to individuals and businesses domiciled in the Bahamas and was aimed to make transactions between the Bahamas’ 700 small islands easier but now will be open to more users because of Mastercard. The Sand Dollar carries the same value as the Bahamian dollar. Go to Article.

• CBDCs Corner the Shadow Economy (February 17, 2021)

  With the digitalization of currencies on the rise, the shadow economy is struggling to remain anonymous, and this might push them to cryptocurrencies. People who transact currency and want anonymity will likely not open a traceable account at the central bank but instead, will likely resort to private online payment systems like Facebook’s Diem. Research shows that the greater use of simple electronic payments alone cuts the shadow economy significantly and economists have taken steps to counter the risks from the digital euro being a zero-yielding deposit directly with the ECB. Economists also believe that limitless and completely anonymous CBDC tokens will not exist because of anti-money laundering regulations. Go to Article.

• Russian Mobile Carriers Research Integration of Digital Ruble (February 16, 2021)

  Major Russian mobile network operators like MegaFon and Beeline are researching how the country’s digital ruble can be integrated into smart devices. It is reported that Beeline and MegaFon proposed to set up smartphone wallets for Russia’s CBDC and suggested additional services such as linking a digital wallet to a user’s phone number, allowing person to person payments without the participation of financial intermediaries, and offline use. The first deputy governor at the Russian central bank said in late 2020 that digital ruble wallets would be available through a platform by the Bank of Russia and the bank confirmed that users will be able to access the digital ruble wallets both online and offline. Go to Article.

• Increasing Digitalization of Central Bank Currencies (February 12, 2021)

  The BIS showed 86 percent of the 65 central banks were at least in early stages of developing a digital currency with 15% moving towards pilot programs. The deputy governor of the Bank of Italy said that the goal of the central banks is to make a digital currency akin to cash. When stablecoins such as Facebook’s Diem started to emerge, Central banks were threatened by them and decided to follow suit with CBDCs. Currently, China is the farthest ahead with their CBDC testing as the digital yuan has been piloted in several major cities. With China’s CBDC so far ahead, G7 members are concerned the digital yuan initiative could threaten the positions of traditional cash. U.S. Federal Reserve Chair Jerome Powell said the US does not have to rush to adopt a digital currency because the US already has first-mover advantage as the dollar is the worlds reserve currency. A U.S. digital currency will likely take at least several years. Go to Article.

• Former CFTC Chairman Advocates Digital Dollar (February 12, 2021)

  Former Commodity Futures Trading Commission Chairman J. Christopher Giancarlo stated that the U.S. should issue a digital dollar that effectively balances privacy rights and society’s best interests. Giancarlo also said how governments must remain mindful of China’s reach. He went on to say how a digital yuan would present the opportunity to bypass the global bank-based system and arrange for direct payments and this would diminish the U.S.’ ability to use sanctions. Go to Article.

• PayPal Wants to Distribute CBDCs (February 11, 2021)

  Dan Schulman, CEO of PayPal, believes that PayPal’s digital wallets can be the means to distribute central banks’ CBDCs to consumers across income levels. With the future extensiveness of digital wallets, PayPal believes they are the perfect complement to central banks and governments to distribute digital currencies. Schulman also stated how PayPal is looking into smart contracts and tokenization of other non-crypto assets. Go to Article.

• Universities Submit Potential Designs for Canada’s CBDC (February 11, 2021)

  Four Canadian Universities have submitted research to the Bank of Canada (BoC) regarding the development of a CBDC. The University of Calgary leverages a mix of DLTs and electronic cash schemes with advanced cryptographic primitives. This approach focuses on promoting universal CBDC access and ensuring strong privacy protections. McGill University in Montreal’s submission centers on asymmetric privacy between the sender and the receiver of money. This ensures privacy protection which is necessary to avoid price distortions and promote the integrity of the classical demand function of money. The University of Toronto and York University jointly submitted an approach that increases financial inclusion and safeguards economic sovereignty during the advent of disruptive technologies like the Internet of Things. The BoC is increasing CBDC research but has not confirmed that it will issue one yet. Go to Article.

• Venture Between SWIFT and PBoC Might Accelerate DCEP Issuance (February 10, 2021)

  The People’s Bank of China has set up a joint venture with the Society for Worldwide Interbank Financial Telecommunication (SWIFT). With 10 million Euros of registered capital, the venture will primarily be involved in information systems integration, data processing and technology consultancy. The venture was set up to fulfill regulatory requirements regarding cross-border data security, ensure information about transactions is stored domestically and further facilitate cross-border transactions. Most of the venture is owned and controlled by SWIFT and its services will be limited in scope and entirely focused on maintaining compliance with applicable regulations in China. The venture may be a sign that China is trying to speed up the issuance of their DCEP. Go to Article.

• China’s Technology and CBDC Hold on Africa (February 3, 2021)

  Since the mid-2000s, China has accumulated influence over Africa’s technology stack with close to 50% in the mobile handset and 70% in the mobile network layers. Once the DCEP, China’s digital currency, becomes more widespread, China will most likely launch their digital currency on mobile phones with specially designed chips embedded in popular Chinese phone brands. Most of the web services in Africa are issued by China and because of this, Western competition has diminished and companies such as Huawei and ZTE have taken over internet access in Africa. With 400 million unbanked phone subscribers in Africa, mobile chip payments have become the norm, so companies must accept many different forms of payment which has become a problem. China’s plan is to embed a hardware wallet that supports the DCEP into one of Huawei’s and Africa’s most popular phones, the Mate 40. Go to Article.

• Two Economists Believe CBDCs Could Fail (February 2, 2021)

  According to two economists in Europe, CBDCs might fail as private banks are already incorporating many aspects of a CBDC. The economists believe that CBDCs would compete with traditional payment systems. To overcome this, a CBDC must be attractive and easy to adopt. They also believe that CBDCs would probably succeed if they found a different niche that the private market does not already have. Compared to most cryptocurrencies, CBDCs are a great way to store value but they are not perfect. The economists believe the best system would have multicurrency operability while being able to utilize payment options that are not contained to a single system. Go to Article.

• Two Economists Believe CBDCs Could Flop (February 2, 2021)

  European economists, Peter Bofinger and Thomas Hass, believe CBDCs have the potential to flop as they believe CBDCs fail to differentiate the prospects of national digital currencies from what the private banks are already rendering. Because CBDCs will be introduced into the existing system, they will have to be attractive enough for users to adopt. The economists believe that CBDCs can probably succeed if they successfully differentiate themselves from private providers. They also pointed out that central banks should be entailing multicurrency operability while being open to payment objects that are not specific to a single system like what PayPal does now, but it may be hard for CBDCs to compete with established systems like PayPal. Go to Article.

• Bill Might Ban Private Crypto in India (February 1, 2021)

  India’s Parliament is considering a bill that would ban private cryptocurrencies with a few exceptions. The Cryptocurrency and Regulation of Official Digital Currency Bill 2021 would ban cryptocurrencies in India and would also help create an official currency issued by the Reserve Bank of India (RBI). Any currency that is not backed by a sovereign could be considered private and this includes bitcoin. Ray Dalio, founder, and co-chairman of Bridgewater Associates, believes that government prohibition of bitcoin is one of the last remaining concerns regarding cryptocurrency. Nischal Shetty, CEO of WazirX, a Mumbai-based cryptocurrency exchange, believes that India should be working on understanding private currencies instead of banning them and putting this bill into law would set India back a decade. Go to Article.