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 Robert Murray

March 2022

  • US Senator Elizabeth Warren has encouraged the US to create a CBDC, stating that many (once hypothetical) goals could be achieved in a digital world. Warren views cryptocurrencies as this decade’s real estate bubble and has moved to block cryptocurrencies from conducting business with sanctioned companies. Go to Article.

  • China’s financial authorization service UnionPay plans to launch a digital yuan platform. The network will allow customers to make purchases with the CBDC from their own apps and supports digital yuan wallets. The People’s Bank of China (PBoC) is continuing their retail testing of the digital yuan with efforts like these. Go to Article.

  • Several US representatives have announced a bill that would direct the Treasury Secretary to develop a CBDC. The proposed electronic dollar would be token-based and could be held on a phone or a physical card. It would also protect consumers’ privacy with fully anonymous transactions, and support peer-to-peer transactions: all attributes that make it functionally identical to a physical dollar. Go to Article.

  • The Reserve Bank of India has released its Innovation Hub (RBIH), a program that will collaborate with various institutions and industries to develop financial innovations. This initiative reflects India’s commitment to develop their financial systems and to be open to technological advances. Go to Article.

  • The Central Bank of Jamaica will launch its CBDC, the Jamaican Digital Exchange (Jam-Dex) in the first quarter of 2022, hoping that over 70% of the population will adopt the digital currency within the next five years. Jamaica’s current lack of regulated financial institutions has caused economic strain, but the Jam-Dex will hopefully encourage better monetary policies. Go to Article.

  • According to Federal Reserve Chair Jerome Powell, a US CBDC would need to do four things: ensure privacy, be verifiable and intermediated, and be accepted as a means of payment. Powell also noted the need for regulations on cryptocurrencies, as well as caution when adopting a potentially unstable CBDC. Go to Article.

  • The Bank for International Settlements (BIS) partnered with four central banks have completed Project Dunbar, a research initiative into two permissioned protocols that an international CBDC standard could be based on. One protocol was built by R3’s Corda, the other by JP Morgan. The report on Project Dunbar detailed many findings essential to the adaptation of a multinational CBDC. Go to Article.

  • The Arab Regional FinTech Working Group has published a guide for Arab central banks that recommends using RippleNet as an alternative to SWIFT. Ripple’s XRP as well as the Ripple company in general is praised by the guide, proving that current industry leaders like SWIFT could be unseated by underdogs like Ripple. Go to Article.

  • The central banks of Australia, South Africa, Singapore, and Malaysia have released a report that their prototype platform for settling state-backed virtual assets is “technically viable.” If the prototype is made legitimate, it would mean commercial banks could pay each other in another country’s virtual currency, although questions remain about regulation and governance. Go to Article.

  • US and UK regulators have proposed an international cooperation to help oversee DeFi and the crypto industry. The Federal Reserve is also committed to global cooperation in CBDC development, sharing their CBDC analysis with six other central banks at the BIS. Go to Article.

  • Securities clearing firm Euroclear announced their partnership with Fnality, a consortium of financial institutions aiming to achieve the regulated adoption of tokenized assets. Fnality intends to encourage more efficient central banks, and Euroclear hopes the partnership will benefit both the technological and financial industries. Go to Article.

  • The Qatar Central Bank (QCB) is considering launching a CBDC and issuing digital bank licenses. Three payment firms are testing CBDC solutions with the QCB. Meanwhile, Private Qatari bank Dukhan Bank is also exploring creating a digital bank but won’t commit to its release without an accurate understanding of its economics. Go to Article.

  • The Bank of Canada has partnered with the MA Institute of Technology (MIT) to initiate a 12-month CBDC design research project. While Canada hasn’t yet decided on whether to release a CBDC, the country has been making efforts like this to understand how digital currencies could benefit Canada. MIT has also already researched CBDCs with their “Project Hamilton.” Go to Article.

  • Yao Qian, director of the Science and Technology Supervision Bureau of China’s Securities Regulatory Commission, predicts that Web3 will reconstruct the organization and business model of the internet economy. Qian says that Web3 will solve monopolies, privacy issues, and malicious algorithms, creating a safer and more accessible internet. Go to Article.

  • Despite China’s digital yuan trials alongside Russia and China’s friendship, it’s unlikely that Russia will be able to circumvent US sanctions. China’s economic relations are far more developed with the US than with Russia, and the digital and the regular yuan have not yet achieved internationalization. Go to Article.

  • The central bank of the Philippines (BSP) plans to initiate a CBDC research project called “Project CBDC-Ph.” The initiative will explore CBDC design, technology, and policies, aiming to gain hands-on knowledge about digital currencies. The BSP has no current plans to release a CBDC. Go to Article.

  • The Bank of Israel’s (BOI) CBDC analysis has concluded that a digital shekel’s impact wouldn’t be very significant, though still holds some benefits. The BOI plans to investigate risks a digital shekel may pose and hasn’t yet decided whether to release a CBDC. Go to Article.

  • The US, EU, UK, and Canada have excluded 10 major Russian banks from the SWIFT financial messaging system. This move will likely accelerate expansion of China’s Cross-Border Interbank Payment System (CIPS), created to boost international use of the yuan and now used by many overseas banks. CIPS is far smaller than SWIFT but still seen as a viable alternative. Go to Article.

  • China plans to approve a third collection of localities to trial the digital yuan in. The CBDC has yet to attain mass adoption, with Alipay and WeChat pay still the preferred payment services. During the digital yuan’s international trial at the Beijing Winter Olympics, the CBDC was one of three accepted payment methods and had a daily transaction volume of two million yuan ($317,000). Go to Article.

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