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The European Money abd Finance Forum (SUERF) published a paper that disputes the European Central Bank (ECB) two of the three "monetary anchor" digital euro issuance rationales. First, to be an anchor for commercial bank deposits, guaranteeing their convertibility into central bank money, the ECB would have to allow unlimited access to digital euros as a store of value, whereas the ECB envisages very limited CBDC holdings as a means of payment. Second, to be an anchor for maintaining the central bank's control over the financial system, it is crucial that banks need central bank money as a means of payment and settlement. Thus, it is the holding of central bank money by banks, and not by non-banks, that is required as the ultimate monetary anchor for the financial system. Finally, the experience of several major central banks shows that the appropriate response to the declining use of cash in retail payments is not a CBDC, but the orchestration of competitive national retail payment systems.

Anchor, a savings protocol on the Terra blockchain, is due to launch on March 16, according to a countdown clock on its website. Anchor will offer a principal-protected stablecoin savings product that accepts TerraUSD (UST) deposits and pays a stable interest rate. To generate yield, Anchor lends out deposits to borrowers who put down liquid-staked proof-of-stake (PoS) assets from major blockchains as collateral. Anchor's yield is thus powered by block rewards of major PoS blockchains.

Anchor will offer a principal-protected stablecoin savings product that accepts TerraUSD (UST) deposits and pays a stable interest rate. To generate yield, Anchor lends out deposits to borrowers who put down liquid-staked proof-of-stake (PoS) assets from major blockchains as collateral. Anchor's yield is thus powered by block rewards of major PoS blockchains.

Anchor Tokens mirror global economic growth by tracking a proprietary monetary measurement unit based on the value of fiat currencies, national GDP and bond yields from more than 190 countries.

The digital euro project has just published a new progress report. Here are the Bank of Finland's Aleksi Grym's key takeaways: 1/ A key objective for the digital euro would be to preserve public money as a monetary anchor for the economy, a role now played by cash. Perhaps, in the future, cash will no longer be used, therefore a digital anchor is needed. 2/ Another key objective would be to strengthen Europe's strategic autonomy and economic efficiency when it comes to retail payments. This market is now too dependent on non-European infrastructures. 3/ Privacy is considered important, but full anonymity will not be possible. Intermediaries would have visibility on their own customers for compliance purposes. The central bank would have minimal visibility on data. 4/ Mechanics would be built in to prevent hoarding. These could be a combination of holding limits and tiered remuneration. Building these mechanics into the product does not imply how and when they would be used. That would require a separate policy decision. https://www.ecb.europa.eu/paym/digital_euro/investigation/profuse/shared/files/dedocs/ecb.dedocs220929.en.pdf

The creation of a vibrant market in SDR linked to commodity prices could create a powerful new monetary anchor, argues former IMF SDR chief Warren Coats.

Bitcoin is something you hodl. Ethereum is something you build on. At least that has long been the official narrative, with projects favoring dedicated smart contract networks over Bitcoin for spinning out dapps and second layer solutions. Like all crypto narratives, however, this one has started to shift, as projects reappraise the benefits of crafting censorship-resistant applications anchored to Bitcoin Core and Bitcoin Cash.

Blockchains may proliferate and compete across many different use cases, they would benefit from a common interoperable fiat stablecoin for major currencies that is anchored in a full reserve, transparent and compliant governance scheme.

Microsoft's Project ION (Identity Overlay Network) will allow users to mint decentralized digital identities, which aim to act as an immutable replacement for email addresses and usernames, and potentially a vault for sensitive personal data. These identities will be used to seamlessly access online applications without the need to indiscriminately surrender personal data. They could also be used in real-life applications by allowing doctors to cryptographically verify the medical details of patients, or university students to verify their qualifications. To scale to the capacity needed, Microsoft has built Project ION as a Layer 2 network, similar to Lightning but with no tokens and no signatories. Using the underlying protocol Sidetree, ION batches transactions and anchors them with a single hash, increasing efficiency and pushing fees down to what would be just a "rounding error" to Microsoft.

According to this IMF blog, if and when countries move ahead with central bank digital currencies, they should consider how to leverage the private sector. Today's dual-monetary system can be extended to the digital age. Central bank currency-along with regulation, supervision, and oversight-will continue to be essential to anchor stability and efficiency of the payment system. And privately-issued money can supplement this foundation with innovation and diversity-perhaps even more so than today. Where central banks decide to end up on the continuum between private-sector and public-sector involvement in the provision of money will vary by country, and ultimately depend on preferences, technology, and the efficiency of regulation.

ECB Executive Board member Fabio Panetta pleaded the case for a digital euro in a Financial Times op-ed, arguing that, although Eurozone residents already have access to a vast supply of private digital means of payments that make a retail CBDC redundant. He views a digital euro as important to ensure that central bank money remains the trusted anchor of the payment system, to support financial stability and trust in the currency. This is crucial to preserving the transmission of monetary policy and thus protecting the value of money.

ECB Executive Board member Fabio Panetta pushed back on the CBDC redundancy argument, pointing to the central role of public money in the economy, as the monetary anchor and by its fungibility with private money. Also, a digital euro would boost competition by making a free and easy to use digital means of payment available to everyone. In addition, the option to use CBDC would allow all European intermediaries, big and small, to offer products with a higher technological content at a competitive cost, making them better able to compete with global operators.

"A hardware security module (HSM) is a dedicated crypto processor that is specifically designed for the protection of the crypto key lifecycle. Hardware security modules act as trust anchors that protect the cryptographic infrastructure of some of the most security-conscious organizations in the world by securely managing, processing, and storing cryptographic keys inside a hardened, tamper-resistant device."

"With cash, central banks already provide a means of payment that is risk-free, widely accessible and easy to use, and that leaves no-one behind. But the rapid digitalisation of our economies requires us to complement cash with its evolution in the digital sphere: a digital euro. As a central bank, we need to be ready for future evolutions and make sure that the money we issue maintains its role as a monetary anchor in the digital era, thereby reassuring us that one euro is one euro whatever form it takes and wherever we go. And it cements people's trust in our currency.[ 3 ]"

"In the euro area, consumers have multiple payment options and a very efficient retail payments system. The currency enjoys high levels of trust and is not challenged by the emergence of private currencies, such as Bitcoin, or by the risk that cash, a monetary system's anchor, will disappear. Therefore, creating a CBDC for retail purposes in the euro area offers little obvious value added, at least for the foreseeable future. However, there is a strong case for building a CBDC that banks could use for cross-border wholesale purposes (ie with other currencies). "

"An enhanced special drawing right (SDR), valued by a basket of goods, would provide the global currency and reserve asset the global economy craves. This paper proposes linking the value of the International Monetary Fund's SDR and national currencies that fix their exchange rates to the SDR to a representative basket of widely traded goods. The new "real SDR" would be issued and redeemed passively according to "Currency Board" rules in exchange for financial assets with the same market value as the basket. National currencies and/or an international reserve currency with the same value (i.e. fixed to a common unit of account) would lower the cost of trading by reducing transaction and information costs and exchange rate risk and would thus increase world trade and improve the efficiency of international resource allocation. A system anchored to a goods basket would not have the shortcomings that afflict the gold standard-gold's fluctuating relative value. The indirect redeemability rule, issuing and redeeming real SDRs for financial assets of equivalent value would avoid the shortcoming that makes multi-good commodity standards very costly-¬the need to maintain large reserves of all of the commodities in the basket. The innovative idea of indirect redeemability, discussed by Yeager, Greenfield, and others, keeps the quantity of SDRs equal to the amount demanded when its value is given by the valuation basket, without the need for the monetary authority to warehouse the goods in the basket."

The Central Bank of the Republic of China (Taiwan) has completed a technical feasibility study for a wholesale central bank digital currency (CBDC) and is planning retail CBDC pilots to follow up on the proof-of-concept completed in 2022. Supporting tokenization is a main motivation for the wholesale CBDC work, including providing an anchor for tokenized deposits, stablecoins and a unified ledger, plus an additional payment option in a tokenized world. The retail CBDC work will include researching an offline solution. https://www.cbc.gov.tw/tw/cp-302-164924-0423d-1.html

The Monetary Authority of Singapore (MAS) announced the commencement of Project Guardian, a collaborative initiative with the financial industry that seeks to explore asset tokenization use cases. The central bank will run pilot tests in four areas to test the feasibility of applications covering blockchain, trust anchors, asset tokenization and institutional-grade decentralized finance (DeFi) protocols. The first industry pilot will explore potential DeFi applications in wholesale funding markets, involving the creation of a permissioned liquidity pool comprising tokenized bonds and deposits. The pilot aims to carry out secured borrowing and lending on a public blockchain-based network through execution of smart contracts.

According to a 42-page chapter in the Bank for International Settlements (BIS) 2022 Annual Economic Report crypto's structural flaws make it an unsuitable basis for a monetary system, and instead envisions a future where programmability and tokenization are built on top of central bank digital currencies (CBDCs). Structural flaws make the crypto universe unsuitable as the basis for a monetary system: because it lacks a stable nominal anchor, while limits to its scalability result in fragmentation. Contrary to the decentralization narrative, crypto often relies on unregulated intermediaries that pose financial risks.

Earlier this year, Hemmati announced that the CBI has already finished drafting the executive plan to issue Iranian Central Bank Digital Currency (CBDC) and it is being debated in a special expert committee. "Soon after its approval and completion, there will be a step by step implementation strategy and a pilot launch program." Hemmati continued.Describing the upcoming CBDC, Hemmati said: "Digital Rial will be in form of a stable crypto currency and its value will be anchored to existing traditional paper Rial. The main difference is that its application environment will change."