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The Monetary Authority of Singapore (MAS) released a report detailing potential uses of a purpose-bound digital Singapore dollar (SGD) and the supporting infrastructure required, marking the successful completion of Phase 1 of Project Orchid. While MAS has assessed that the case for a retail CBDC in Singapore is not compelling for now, Project Orchid aims to build the technical capabilities and competencies necessary for MAS to issue a retail CBDC, should the need arise. Phase 1 explored the concept of purpose-bound digital SGD that enables senders to specify conditions, such as validity period and types of shops, when making transfers in digital SGD. Some of its use cases will be tested through trials with the public and private sector in 2022 and 2023. The next phase of Project Orchid will look at what the best ledger technology is and how this can be integrated with the existing infrastructure. https://www.mas.gov.sg/publications/monographs-or-information-paper/2022/project-orchid-whitepaper

The Committee on Payments and Market Infrastructures (CPMI), the BIS Innovation Hub (BISIH), the International Monetary Fund (IMF) and the World Bank published a paper on challenges to addressing and approaching the establishment of a multilateral cross-border payments platform. Such a platform could reduce the need for intermediaries and allow payment service providers in different jurisdictions to transact directly with each other. Two paths are examined - the growth approach that involves expanding existing multilateral platforms to additional jurisdictions, currencies and participants, and the greenfield approach that involves building a new, potentially global, infrastructure for cross-border payments.

The Monetary Authority of Singapore (MAS) launched Ubin+, an expanded collaboration with international partners on cross-border foreign exchange (FX) settlement using wholesale central bank digital currency (CBDC).  Ubin+ will develop technical standards and infrastructure to support cross-border connectivity, interoperability and atomic settlement of digital currency transactions across platforms using distributed ledger technology (DLT), and non-DLT based financial market infrastructures. It will also evaluate the efficiency and risk implications of such platforms, and establish the related policy frameworks. (The BIS Innovation Hub led Project Mariana that is investigating the use of decentralized finance (DeFi) protocols and automated market makers (AMMs) to automate FX trading and settlement, is part of Ubin+.)

The Asian Development Bank (ADB) completed its Project Tridecagon proof-of-concept (PoC) probing into the viability of cross-border delivery-versus-payment (DVP) bond settlements using blockchain technology. It connected key market infrastructures: central banks' real-time gross settlement systems (RTGS) and central securities depositories' (CSD) book-entry systems, but did not use central bank digital currency (CBDC). The settlement of cross-border securities transactions was proven in principle and across different vendor solutions, but full application may depend on necessary changes to legal and regulatory prescriptions which could take years.

The Leibniz Institute for Financial Research Sustainable Architecture for Finance in Europe (SAFE) published a paper that concludes that the risks and imponderables do not favor the launch of a digital euro if that decision had to be made now.  However, there may be future circumstances in which having a CBDC ready for use may be useful. For example, there could be an unexpected collapse in the availability of banknotes or sudden switches in consumer preferences towards payment instruments which current infrastructures cannot easily handle with the available technologies. Or we could experience phases of financial instability requiring the central bank to back up the private sector in order to preserve the functionality of the payment system. Or, there could be strategic security conditions necessitating more state-driven payment infrastructures. All these are unlikely scenarios, but not impossible ones, which would lead to the need for central banks to step in, perhaps in a short time. Therefore, preparing is a good thing, even if the odds of its usefulness in normal conditions are slim. https://safe-frankfurt.de/publications/pub-details-startseite/publicationname/the-digital-euro-a-precautionary-device-not-a-deus-ex-machina.html

The Central Bank of Eswatini (CBE) has published a consultative paper that sets out the design characteristics of a potential retail digital lilangeni. The Bank has partnered with Giesecke+Devrient (G+D) to advance its research and exploration of CBDCs and is now entering the experimentation phase of its CBDC project. It will be based on a two-tiered operating model, where the CBE operates the core infrastructure and intermediaries are in charge of distributing CBDC to end users, once obtained from the CBE, and handle all customer-facing activities. It will be unremunerated, transactions will be free of charge to consumers, and it will enable true and full interoperability with the existing payment methods and wholesale and retail infrastructures. Offline functionality will ensure continued usage even in the absence of an internet connection, during power outages, or simply in certain rural areas. Some payments with - and wallets that store - digital lilangeni will be equipped with programmability features for value-added and innovative use case scenarios.

This Asian Development Bank (ADB) report ascertains the current status of technology adoption, including wholesale CBDC applications, by its Cross-Border Settlement Infrastructure Forum member organizations. They include central securities depositories and central banks in the Association of Southeast Asian Nations (ASEAN) plus the People's Republic of China, Japan, and the Republic of Korea (collectively known as ASEAN+3) region.

The Swiss National Bank (SNB) and six commercial banks will launch a wholesale central bank digital currency (CBDC) pilot project on December 1, 2023. Project Helvetia Phase III will test the settlement of tokenized bonds against SNB-issued wholesale CBDC on a delivery-versus-payment (DVP) basis on a distributed ledger technology (DLT) based platform run by the SIX Digital Exchange (SDX). The pilot, which will run until June 2024, will use the SNB's Swiss Interbank Clearing (SIC) payment infrastructure for the tokenization of central bank money and that of the SIX SIS central securities depository (CSD) for integration with the traditional bond settlement infrastructure. This follows up on the Phase I and II proof-of-concept (POC) work conducted with the BIS Innovation Hub between 2020 and 2022.

The Bank for International Settlements published a paper on digital platform economics. It found that digital platforms can dramatically lower costs and thereby aid financial inclusion - but these same features can give rise to digital monopolies and oligopolies. Digital platforms operate in multi-sided markets, and rely crucially on big data. This leads to specific network effects, returns to scale and scope, and policy trade-offs. To reap the benefits of platforms while mitigating risks, policy makers can: (i) apply existing financial, antitrust and privacy regulations, (ii) adapt old and adopt new regulations, combining an activity and entity-based approach, and/or (iii) provide new public infrastructures. The latter include digital identity, retail fast payment systems and CBDCs. These public infrastructures, as well as ex ante competition rules and data portability, are particularly promising. Yet to achieve their policy goals, the paper concludes that central banks and financial regulators need to coordinate with competition and data protection authorities.

The Central Bank of the United Arab Emirates (UAE) is planning to issue a central bank digital currency (CBDC) for domestic and cross-border payments in order to help drive innovation for domestic payments, and address the problems and inefficiency of cross-border payments and respectively. The issuance of a digital dirham is one of nine initiatives of the central bank's Financial Infrastructure Transformation Program. https://www.centralbank.ae/media/mdupathy/cbuae-launches-a-financial-infrastructure-transformation-programme-to-accelerate-the-digital-transformation-of-the-financial-services-sector-en.pdf

Satoshi Capital Advisors CEO Josiah Hernandez and I have written a paper that explores the application of national and sub-national government bond issuances and corresponding trade and asset lifecycle activity on blockchain-based market infrastructures. It considers existing and pending projects, how governments can carry out future projects, the various use cases corresponding to such projects, the broader market opportunity for government debt issued into blockchain-based market infrastructures, the hurdles to overcome with regards to implementing such projects, and the next steps with regards to further exploration.

The Inter-American Development Bank (IDB) provided an update on Project FuSSE (Fully Scalable Settlement Engine), a joint project with the Bank for International Settlements (BIS) Innovation Hub and Bank of Canada. It is an initiative that offers open-source technology among central banks to facilitate the implementation of payment systems and other settlement infrastructures to advance financial inclusion Latin America and the Caribbean. It will also provide technical assistance for regulatory design and institutional capacity improvement.

The Reserve Bank of Australia (RBA) and the Australian Treasury published a report summarizing their research to date on central bank digital currency (CBDC) and their current assessment of CBDC issues in Australia. It concludes that a clear public interest case to issue a retail CBDC has yet to emerge, as Australians are generally well served by the capabilities and resilience of the current retail payments system. However, the report highlights the role that wholesale CBDC, alongside other forms of digital money and infrastructure upgrades, could play in enhancing the functioning of wholesale markets. Hence, the report also sets out a three-year roadmap for future work on digital money in Australia, including Project Acacia, which will explore opportunities to uplift the efficiency, transparency and resilience of wholesale markets through tokenization and new settlement infrastructure.

Anisa Plepi and Peter Schendner posted a paper that proposes a framework for aggregating and categorizing viewpoints on fundamental issues concerning tokenization and assessing the causal effects of tokenization on market outcomes, using bonds as an example. The framework starts with a taxonomy of bond tokenization use cases according to the tokenization model, which is fed into a causal model to assess how would the outcomes, characterizing its lifecycle processes change if a bond had been tokenized instead of using the traditional infrastructure. Or alternatively, how would the outcomes of interest change if a bond had been exchanged in the traditional infrastructure instead of being tokenized? The paper then proposes an outcomes matrix to estimate the effects of tokenization on particular outcomes for which there are 25 metrics. The framework then conceptualizes the Swiss National Bank (SNB) Project Helvetia tokenization approach and evaluate its effects on efficiency and liquidity.

Sveriges Riksbank published an independent assessment of the Swedish payments system, aiming to gaps in available services and to suggest some possible directions/opportunities for the system's evolution. It concluded that enabling a wider range of instant (or real-time) account-to-account payments should be a high priority for banks and the payments industry, in addition to the work underway to modernize Swedish bulk/batch payments. Also, the report recommends that, "although the case for a retail central bank digital currency (CBDC) is probably stronger in Sweden than in most other advanced economies", the best strategy for the Riksbank is to step back but be ready to be a "fast follower" of a digital euro launch, "possibly either using the European Central Bank's infrastructure or borrowing heavily from its design".

The Bank for International Settlements (BIS) published a Committee on Payments and Market Infrastructures (CPMI) report that sets out the concepts related to digital tokens and programmable platforms. Tokenization arrangements can change existing market structures by providing platform-based intermediation across the end-to-end life cycle of financial assets. While this could decrease transaction costs and enable innovative use cases, the potential of token arrangements to improve the safety and efficiency of the financial system will require sound governance and risk management. The risks typically associated with financial market infrastructures also apply to token arrangements, but they may materialise differently. Developments in tokenisation offer an opportunity for central banks to reflect on the role of central bank money in the digitalising financial system.

The Association for Financial Markets in Europe (AFME) published a response to a call for submissions from the European Commission (EC) Directorate-General for Financial Stability, Financial Services and Capital Markets Union (DG FISMA) on any issues and opportunities relating to the deployment of DLT based infrastructure and services in the European Union (EU) that may merit the EC's attention. AFME's overarching view is that a transformative potential of DLT is that can enable companies and individuals to access a shared, peer-validated database as a single-source-of-truth, without the need to centralize data and transaction processing with a single actor. This increases accessibility by participants, data security and immutability, and data transparency in the real economy. Innovation in finance plays a key role in this vision, which will only begin in earnest with the updating of capital markets infrastructure.

The Reserve Bank of Australia (RBA) and the Digital Finance Cooperative Research Centre (DFCRC) published a consultation paper which seeks industry feedback on a new research initiative, Project Acacia. This project will explore how different forms of digital money and associated infrastructure could support the development of wholesale tokenized asset markets in Australia. The consultation paper seeks expressions of interest from industry in participating in an experimental research phase for Project Acacia, and in joining an Industry Advisory Group for the project. Input is also sought on the technical and functional capabilities of new forms of settlement infrastructure and digital money, including wholesale central bank digital currency (#CBDC) and tokenized bank deposits, that could promote well-functioning tokenized asset markets and stability in the financial system.

The Banque de France (BdF) and the Hong Kong Monetary Authority (HKMA) have launched a collaboration relating to wholesale central bank digital currency (CBDC). They will delve into the study of interoperability between their wholesale CBDC infrastructure, i.e. the BDF's DL3S and the HKMA's Project Ensemble Sandbox, with the main focus on real-time cross-border and cross-currency payments. The cross-border experiment aims to explore how to optimize settlement efficiency of cross-border transactions, and facilitate interoperability between financial market infrastructures in different jurisdictions.

The Securities Industry and Financial Markets Association (SIFMA) published the results of Regulated Settlement Network (RSN) proof-of-concept that explored the possibilities for shared ledger-based digital settlement using U.S. Treasury securities and tokenized cash. It found that multi-asset and cross-network settlement could be enhanced through a shared-ledger financial market infrastructure (FMI) that contains tokenized securities, central bank deposits, and commercial bank deposits where each institution operates its own partition. The network enabled a common settlement infrastructure that is 24/7, programmable, and offered precise settlement capabilities to allow financial institutions to optimize their collateral and liquidity positions. At the same time, the network alleviated challenges such as market fragmentation and uncertainty throughout the settlement process.