Central Bank Digital Currencies

Understanding and Modeling CBDCs

Over 70 countries are conducting R&D on central bank digital currencies (CBDCs) around the world. Through our organic analytical resources and cryptocurrency modeling technologies, Terranet’s CBDCs Model offers customers the unique ability not only to fully evaluate and understand the underlying technology upon which a CBDC is built, but also to generate a “digital twin” of that technology and its highly complex macroeconomic ecosystem. From that digital twin, we will be able to fully model, simulate and perform predictive analysis of a CBDC’s usage patterns, domestic and international capital flows, and pricing and money supply dynamics.

Pairing this digital currency model with real world and simulated economic data inputs and technical parameters, we are establishing a comprehensive monitoring and simulation platform, termed the Digital Twin Analytical Platform (DTAP), that will identify characteristics of CBDC ecosystems and provide a “digital proving ground” for a wide variety of global impact scenarios. We envision this simulation and analysis platform to be accessible to member organizations from the financial, regulatory and academic sectors.

We are offering membership subscriptions to our research newsletter. If you are interested in joining our research platform as a sponsoring member, please email us for an introductory free trial, which includes a subscription to our monthly newsletter and periodic updates on our research initiatives.

We are rapidly growing our team of economists, systems engineers, scientists and blockchain experts to observe, study, and model the fast-emerging CBDCs. Please email us to learn more about our platform and to meet members of the team.

CBDC News

Robert Murray 8/31/21 Robert Murray 8/31/21

August 2021

Leading state-owned Chinese banks have started exploring ways to enable e-yuan holders to buy investment funds and insurance products online. Currently, the Bank of Communications (Bocom) is exploring the idea of expanding the digital yuan’s use to fund management and insurance companies. Currently, the bank said it has opened 7.23 million digital wallets for individual users, and another 1.19 million for companies. As of June, China Construction Bank had reported a cumulative 28.5 million transactions totalling 18.9 billion yuan (US$2.9 billion) using the digital yuan. Go to Article.
The Monetary Authority of Singapore has chosen 15 firms to help develop its retail central bank digital currency. These candidates were selected from an original list of 300 firms. Of the remaining, only three will be chosen to help work on the project. The MAS will be providing the winning firms access to their APIX Digital Currency Sandbox for rapid prototyping of digital currency solutions. The three winners will be picked by mid November. Go to Article.
The United Arab Emirates (UAE) and Dubai are among the friendliest jurisdictions for the cryptocurrency industry and will likely benefit from the expanding crypto market in the Middle East as local regulators increasingly accept blockchain-related technologies. These jurisdictions provide a great place to set up a token project or run a cryptocurrency exchange, largely thanks to the region’s status as a tax haven. The UAE has been cementing its presence in the digital asset industry recently, with Minister of Economy Abdulla Bin Touq Al Marri declaring in April that cryptocurrencies and asset tokenization will be key to the country’s plans to double its economy in 10 years. Go to Article.
Despite their previous hostilities towards crypto, India’s central bank official revealed that the country was working towards a central bank digital currency [CBDC]. They plan to start a pilot program by December of 2021. Furthermore, speaking about the Indian rupee, the government officials have stated that the central bank was looking into the impact of the digital asset on the country’s financial sector. Go to Article.
According to a survey of 2,500 UK adults carried out for POLITICO by Redfield & Wilton Strategies, the British public doesn’t believe in central bank digital currencies. Whie 24% of adults surveyed believed that CBDCs would be a net positive for society, 30% believed the digital currency woud bring more harm than good to the United Kingdom. Common concerns were related to cybersecurity (73%), payment privacy (70%), and the potential for government authorities being able to seize their funds from digital wallets (66%). The British government is still on the fence when it comes to launching a CBDC. Go to Article.
Currently, 35 Chinese banks have embedded digital yuan wallets in their mobile apps, compared to the initial six. They include joint-stock companies, city banks and some rural credit cooperatives. Another 94 banks, including three foreign ones, plan to access the digital yuan via a new clearing platform built by City Bank, a private Shanghai-based clearinghouse and technology provider. Go to Article.
Despite being an advocate for alternative currencies, Governor Christopher Waller is skeptical of CBDCS and believes that they are a solution to a non-existent problem. In Waller’s views, a CBDC wouldn’t add anything of value, and instead could pose considerable risk to the US payment system. Similarly, Waller raised the issue of government surveillance, were CBDC to be issued and distributed through the Fed. Despite this, Waller recognizes that the current cross border payment systems are not ideal and take time to settle with complex correspondent banking. For this, he proposes relying on stablecoins in leu of a central bank digital currency. Go to Article.
The Bank of Thailand plans to start it’s central bank digital currency pilot program in the second quarter of 2022. The pilots will begin with cash-like activities within a limited scale. Involvement will be sought from the private sector and technology developers, with the Bank of Thailand deciding the criteria for participation. Go to Article.
Mikhail Fedorov, Ukraine’s Deputy Prime Minister and the head of the country’s Ministry of Digital Transformation, has revealed that the ministry is considering testing out their CBDC by paying staff in e-hryvnia. Fedorov made these comments while arguing the case for the initial roll-out of the e-hryvnia to focus on a small, controlled use case rather than being deployed for social payments. The National Bank of Ukraine has been working on creating and issuing a digital currency over the last few years. The Ministry of Digital Transformation also has some significant involvement in the CBDC space having partnered with the Stellar Development Foundation to develop a joint strategy for CBDCs and digital assets in general. Go to Article.
Currently, the total number of digital yuan patent applications since 2020 has surpassed the previous total between 2016 and 2019. Patent applicants have come from enterprises including big telecoms operators such as China Mobile, China Unicom and China Telecom, and from payment services such as banks and Alipay. China has seen a rise in blockchain-related patent applications over the past few years. In 2019, Chinese President Xi Jinping emphasized the development of blockchain technology, calling for more research, investment and regulation, which led to 35,000 companies expanding their business into blockchain. Go to Article.
The Bank of Korea is piloting a new CBDC on Galaxy smartphones to test whether it’s possible to make offline crypto payments between users. The first phase of the pilot will run until December and will assess the suitability of the technology. Phase two, which is expected to run from January through to next June, will assess the practicalities of the Bank of Korea expanding its banking practices to incorporate the CBDC. If the pilot is successful, South Korea will be one of the first countries to offer a CBDC alternative to services like Apple Pay and Google Pay, which enable contactless phone payments without the need for an internet connection. Go to Article.
Chinese smartphone brand Honor released the first Snapdragon-powered handset to support the digital yuan, marking a milestone in the People's Bank of China's goal to develop hardware for the digital currency. Unlike so-called soft wallets such as apps, hardware wallets come with hardware-level security. The PBoC has been pushing for new hardware applications of the digital yuan. Tech companies and banks have come up with new devices, including ATMs and a hardware wallet on a walking cane. Go to Article.
Argentina President Alberto Fernandez has indicated support for digital assets, asserting there is no reason to push back against the emerging asset class. Despite the president’s openness with exploring digital assets, the head of Argentina’s central bank, Miguel Pesce, appears to be threatening a crackdown on the industry. Pesce sees digital assets as a threat to economic stability and foreshadowing tighter regulations for the sector. Pesce also dismissed the suggestion that Argentina would explore a central bank digital currency (CBDC). Go to Article.
A new stablecoin pegged to the value of the Chilean Peso is now live on the open-source Stellar payments network. According to the public ledger on Stellar Expert, since the launch on Monday, the stablecoin has seen limited volume of just $12,689 from a total of 12,902 trades. With the stablecoin, dubbed the “CLPX” token, Chile hopes to offer international exposure to Chile’s booming copper market, which has been a critical driver of economic recovery amid the global pandemic. While the project has talked up its strong ambitions, it is unclear how well the stage is set for it to perform. Apart from the low volume, CLPX Inc is owned by a relatively unknown firm named “KB Trading,” which has no listed partnerships on its website. Go to Article.
The Bank of Ghana plans to test a central bank digital currency (CBDC) in partnership with German banknote printer Giesecke & Devrient. The CBDC will be tested with banks, payment service providers, merchants, consumers and other relevant stakeholders. Despite these tests, there is still no definitive timeline for the digital cedi’s launch. Go to Article.
This past June, Bakong, Cambodia’s CBDC, reached 200,000 customers, doubling from three months prior. At the moment, The Nationwide Financial institution of Cambodia (NBC) is exploring cross-border transactions by way of Bakong, intently working with Thailand’s central financial institution and Malaysia’s largest financial institution, Maybank. Bakong’s launch has considerably elevated using Cambodia’s nationwide foreign money riel, which is a part of the nation’s dual-currency system alongside america greenback. Go to Article.
The Central Bank of Venezuela will launch a central bank digital currency (CBDC) in October alongside a monetary redenomination that will cut six zeros from the currency due to raging inflation. This is the second time in three years that Venezuela has readjusted the bolivar after Maduro cut five zeros from the currency in 2018 as inflation hit its peak of 1.8 million percent. In 2020, the annual inflation rate was estimated to be around 2,300%. Venezuela has been dealing with a long-running economic crisis as the economy suffers from U.S. sanctions and hyperinflation. In September 2020, Maduro proposed an anti-sanctions bill that sought to use crypto as a tool to evade the sanctions imposed on the country. Go to Article.
Despite the Nigerian government’s efforts to diminish cryptocurrency usage within the country, Nigeria continues to lead in peer-to-peer trade volume for Bitcoin globally. A confluence of political and economic crises has spurred local crypto adoption, including social repression, currency controls and rampant inflation. During political protests in October of 2020, many organizations working with the protestors found their bank accounts frozen, and therefore turned to cryptocurrencies to finance the groups. To this day, Nigeria’s steadily rising P2P Bitcoin volumes suggest the country’s growing crypto user base has largely been driven underground in a bid to access crypto assets from outside of the government’s purview. Nigeria’s steadily rising P2P Bitcoin volumes suggest the country’s growing crypto user base has largely been driven underground in a bid to access crypto assets from outside of the government’s purview and will begin a pilot program in October of 2021. Go to Article.