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This paper by the Bank of Canada's Scott Hendry and Yu Zhu confirms the validity of central bank concerns that wide adoption of a private digital currency and decline in the use of central bank money may undermine monetary sovereignty. The analysis is based on a theoretical model in which fiat money and the digital currency differ in the types of transactions that they can serve, with the latter dominating in online transactions. Although the central bank wants to maintain the value of the fiat money by keeping low inflation in case households want to use the fiat money for transactions, a welfare-maximizing central bank would also want to encourage households to use e-money for transactions where e-money has an advantage. This can be achieved by raising inflation of fiat money since it is a substitute for e-money, and the incentive to raise inflation would dominate if the usage of fiat money was sufficently low. However, if the use of the central bank money becomes sufficiently low, this leads to high inflation and low welfare. The paper concludes that, to defend monetary sovereignty, the central bank should maintain or expand the use of central bank money, for example, by offering a central bank digital currency (CBDC) designed to be a perfect substitute for the private e-money.

Wirecard Card Solutions is authorised and supervised by the U.K. Financial Conduct Authority (FCA) to issue e-money and provide payment services including, issuing e-money onto prepaid cards. Wirecard is authorised under the Electronic Money Regulations 2011 (the EMRs) and its activities are also subject to requirements under the Payment Services Regulations 2017 (the PSRs). The Financial Services Compensation Scheme (FSCS) is the U.K.'s statutory deposit insurance and investors compensation scheme for customers of authorised financial services firms. (https://www.fscs.org.uk/) However, FSCS protection does not apply to electronic money or payment services. Under the EMRs and PSRs, there are rules on how customers' money should be protected and these requirements are known as 'safeguarding'. The purpose of safeguarding is to protect and return customer money if a firm was to fail. Wirecard is required under the EMRs to maintain appropriate measures to safeguard customers money. It does this by holding it separate from its own money in accounts with banks (or another credit institution). Adequate safeguarding arrangements which are compliant with the regulatory requirements are a condition of Wirecard's ongoing FCA authorisation.

The IMF published a paper on the evolving prudential frameworks for nonbank issuers of electronic money (e-money). Some jurisdictions take a relatively light-touch approach to regulating e-money issuers (EMIs). Others have sought to apply more stringent requirements to protect e-money users, as the sector has grown in importance. The paper ends with recommendations for policymakers, especially in those emerging market economies and developing countries wherein EMIs have reached a scale at which they could have a significant economic impact if they were to fail.

The National Bank of Ukraine ordered electronic money (e-money) issuers to suspend the issuance of e-money and the replenishment of electronic wallets with e-money, as Russian forces lay siege across Ukraine. Other measures included suspending the foreign exchange market, limiting cash withdrawals and prohibiting the issuance of foreign currency from retail bank accounts. This has led to many Ukrainians reportedly turning to cryptocurrencies.

The IMF published a paper that uses a two-way fixed effect estimator using 2001-2019 panel data, on both monthly (covering 21 countries) and annual (covering 47 countries) frequencies, to estimate the causal effects of e-money development on monetary policy transmission. It finds that e-money development has accompanied stronger monetary policy transmission (measured by the responsiveness of interest rates to the policy rate), growth in bank deposits and credit, and efficiency gains in financial intermediation (measured by the lending-to-deposit rate spread). Evidence is more pronounced in countries where e-money development takes off in a context of limited financial inclusion.

Phase 2 of the Riksbank's e-krona central bank digital currency (CBDC) project is now complete. Proof of concept work included investigating how banks and other payment service providers could be integrated into an e-krona network (in collaboration with Handelsbanken and Tietoevry) and whether and how an e-krona might function off-line.  The tests have shown, for instance, that it is possible to integrate a potential e-krona into the internal systems the banks have today, and this would make it possible for their customers to exchange money in their bank account for e-kronor, and vice versa. The tests of the R3 Corda-based technical solution have also shown that it would be possible to transact in e-krona when temporarily offline.

"Recently, the subject of seigniorage - the revenues deriving from the monetary monopoly - has attracted the attention of academics and policy-makers. The authors discuss the reasons for this interest before undertaking a survey of the implications of a large-scale introduction of electronic money products on the seigniorage revenues and financial independence of central banks in the group of G10 countries. In countries with decreased seigniorage revenues and a high percentage of e-money the financial independence of central banks are negatively affected as a result of their inability to compensate for increasing operational expenses. Measures such as the limitation of e-money issuance and the imposition of requirements on e-money help in curtailing operational costs related to salaries, pensions, publications and banknote circulation, among others."

With 21% of adults in the region having a mobile money account, Sub-Saharan Africa is the global leader in the use of mobile money. This correlates with GSMA supply-side data on mobile money, which shows that Sub-Saharan Africa plays host to almost half of all mobile money registered accounts i.e. 396 million - of which 37% are active on a 90-day basis.

This article argues that it is important to distinguish between programmable money and programmable payments because they have different use cases. The example of the e-car is a good use case for a programmable payment. However, the programmability of money is not necessary in this case. Instead, programmable money can be used, for instance, to implement targeted aid payments during crises such as COVID-19. By giving the money paid out to citizens an inherent logic, the government could ensure that the subsidies are spent in a timely fashion and only for predefined things such as food, medicine, or clothes.

As an electronic money institution (EMI), we are issuing asset-backed e-money on blockchains. A regulated EMI provides customers with legal protections while gaining all of the advantages afforded by blockchains: sending, receiving, and storing digital money without going through a financial institution. In contrast, virtual currencies that transact on blockchains do not offer such protections, they are not subject to the same requirements of being asset-backed, redeemable, fully audited and supervised.

How do we give the general public access to a non-cash financial instrument that is as safe and liquid as cash and which provides a similar degree of privacy, finality and instantaneity? That is the key question of CBDC... Either the central bank itself issues e-money, or it merely safeguards the funds that commercial e-money issuers collect from their customers. The latter option is much easier to implement while delivering practically the same outcome. In effect, the central bank would become not just a central bank but also a kind of central e-money institution.

Coinbase has been granted an e-money license by the Central Bank of Ireland. The crypto platform was granted a UK FCA e-money license in March 2018, and earlier this month gained access to the UK's Faster Payment Scheme through ClearBank.

The pandemic has had a major impact on the issuance of E-money and Payment Institution licenses in the European Economic Area. Advapay compared the number of E-money and Payment Institution licenses issued between January-May 2019 and 2020. According to the data, PI licenses have declined 75 percent in 2020 compared to 2019. For E-money licenses, a decrease of 45 percent was recorded.

"The e₹-R would be in the form of a digital token that represents legal tender. It would be issued in the same denominations that paper currency and coins are currently issued. It would be distributed through intermediaries, i.e., banks. Users will be able to transact with e₹-R through a digital wallet offered by the participating banks and stored on mobile phones / devices. Transactions can be both Person to Person (P2P) and Person to Merchant (P2M). Payments to merchants can be made using QR codes displayed at merchant locations. The e₹-R would offer features of physical cash like trust, safety and settlement finality. As in the case of cash, it will not earn any interest and can be converted to other forms of money, like deposits with banks."

Riksbank Governor Stefan Ingves presented his views on what needs to be done to ensure the central bank can continue to carry out its tasks in the future. There shall be enough cash in case the electronic systems break down. There shall be a national, state-issued ID card with e-identification. There shall be digital state money as legal tender, an e-krona, issued by the Riksbank. It shall be possible to make instant payments in Swedish krona, using state money, and between currencies across borders, 24/7.

The U.K. Financial Conduct Authority (FCA) ordered Wirecard UK to cease all regulated activity after the parent company filed for insolvency in Germany. Wirecard Card Solutions Limited is authorised and supervised by the FCA to issue e-money and provide payment services including, issuing e-money onto prepaid cards. The FCA immediately placed requirements that it should not pay out or reduce any money it holds for its customers except on their instructions.

This column introduces the available stablecoins and discusses the possible impact of the forthcoming Markets in Crypto-assets regulation by the European Commission on e-money issuers. The authors argue that the regulation may spur regulatory arbitrage in Europe and lead commercial banks to offer tokenised deposits on the decentralised ledger of a public blockchain.

"Institute of Ghana introduced a 1.5% tax ("E-levy") on mobile money transactions in May 2022, in a country where 40% of the population aged 15 and above use mobile money platforms. It has been justified as a way to reduce aid dependence, and to capture informal economy workers. An International Centre for Tax and Development (ICTD) paper finds that the overall effect of the E-levy is highly regressive with users in the bottom income quintile paying the largest share as a proportion of their income, especially home-based informal workers. However, a 100 cedi/day (equivalent to about $10/day) taxation threshold has provided some relief.

Sweden's Riksbank provided a brief update on the e-krona pilot it is conducting in partnership with Accenture. The pilot project's technical solution is based on distributed ledger technology (DLT). It is based on a distribution model in which only the Riksbank can create e-kronas, which are then distributed to the general public via participants in the e-krona network, for example banks and payment service providers. The solution will be evaluated in a test environment that will simulate the Riksbank's internal systems, participants in the network and end users, such as consumers and merchants.

"The Riksbank is continuing to investigate the possibility of issuing a digital complement to cash, known as the e-krona. This would preserve public access to government-issued money even if cash were to be marginalised further. In addition, the e-krona could strengthen the resilience of the payments market. No decision has yet been taken to issue an e-krona.