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SUERF published an article by Christian Pfister that the notion of legal tender is a "barbarous relic" that is unfit in a digital environment where there is a wide choice of payment instruments. Furthermore, making the digital euro legal tender could even undo some the expected benefits of its launch and entail risks. That is not to say that making a retail central bank digital currency (CBDC) legal tender may be more justified in a context where the wide majority of payments are made in cash and the public authorities wish to encourage the modernization of payments, i.e. in some developing and emerging economies.

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.

Société Universitaire Européenne de Recherches Financières (SUERF) published a note that draws lessons from the success of India's Unified Payments Interface (UPI). It argues that this success majorly owes to ease of development of applications, easy use and zero-transaction fees for end-users. Further success factors have been strict data protection rules, active partnership with the private sector and adept regulation. The note also discusses the organization of the Indian payment market since the launch of UPI, and the changes in digital payment market in India, with a focus on payment volumes and values. It highlights the increasing investments in the payments market and increased adoption over time, and provides insights into the implications of payment systems for financial inclusion in India, and touches upon some challenges UPI faces.

By reviewing terminologies, this SUERF policy brief by Ulrich Bindseil and colleagues clarifies the essence of new technologies in the field of payments to facilitate ongoing discussions about their eventual merits and use cases. This is a shortened version of the following paper:

This SUERF note provides an overview of the state of play regarding the development of central bank digital currencies across the world. It describes the leading central banks current initiatives and outlines the main aims and design features of their CBDC projects.

The Société Universitaire Européenne de Recherches Financières (SUERF) published a briefing paper that highlights some of the under-researched trade-offs in central bank digital currency (CBDC) design.

This SUERF Policy Brief presents the key findings of the annual BIS survey of central banks about their engagement in central bank digital currency (CBDC) and it discusses these findings in the context of cross-border payments. As in previous years, the motivations to consider issuing a CBDC differ between AE and EMDE central banks and between retail and wholesale CBDCs. Overall, the retail CBDC work in AEs is driven mainly by domestic payments efficiency, payments safety and financial stability considerations. The same reasons are also important drivers for the retail CBDC work in EMDEs, however, their CBDC engagement is, above all, driven by financial inclusion-related motivations.

SUERF published a paper that suggests that central banks and policymakers start with trigger solutions when considering wCBDC. Trigger solutions connect the distributed ledger technology (DLT) world with conventional settlement systems and enable the settlement of tokenised assets in central bank money. By connecting DLT networks with conventional payment systems, they combine the advantages of decentralised infrastructures with the reliability of the central bank. No new form of (tokenised) money needs to be introduced. The trigger solution can play a neutral role and is agnostic across three dimensions: use cases, payment systems and asset systems. Furthermore, trigger solutions are characterised by comparatively low technical and operational complexity, and are a convenient way to test the case for wCBDC and observe market adaptation.

SUERF published an abbreviated version of the 2022 BIS paper on African CBDC developments.  Like their peers, a key motivation for African central banks is achieving greater payment system efficiency, but they place more emphasis on financial inclusion and potential benefits for monetary policy. But Africans are more worried than other regions about cyber risks and cross-border spillovers and are also concerned about high operational costs.

Christian Pfister and Nicolas de Sèze provide an historical overview of the People's Bank of China's (PBOC) e-Yuan project, putting it in political perspective, then present its main features. They recall the strategic objectives put forward by the PBOC, discuss them and ask whether other objectives may not matter more. They conclude that, although its role in increasing social welfare would be unclear, especially in view of the already high-level in the quality and quantity of payment services in China, the roll-out of a digital yuan could be useful for the Chinese government, especially in pursuing objectives which are not officially put forward.

[June 2023] Digital Inverted Time-based one-time passwords (TOTP) authentication can be a practical method for buyers to prove that they made a payment to a cost-sensitive offline merchant. Using TOTP we can establish a secure channel between the payment backend and the seller operating an offline PoS. Our solution around the limitations of the CAP theorem [6] is thus to securely heal the network partition by establishing cryptographically secured communication via an untrusted buyer's device. This allows the payment system to assure consistency despite the merchant not having a connected endpoint under their control. In practice, it may suffice for sellers to only selectively check the TOTP code to still create an effective deterrent against buyers using fake payment applications. Even merchants that are generally operating online could use our design as part of an inexpensive contingency plan to continue secure operations during network outages.

This Banque de France paper documents the benefits, costs, difficulties and risks associated with potential wholesale and retail CBDC implementation. It concludes that the need for retail CBDC, which raises the thorniest issues, seems less pressing in developed economies.

Taking the example of the revised proposal for the Libra global stablecoin, this column describes how supervisors could harness information in distributed ledger based-finance via "embedded supervision." The aim is to increase the quality of data available to supervisors and reduce administrative costs for firms. The policy note concludes by discussing legislative and operational ways to promote low-cost supervision and a level playing field for small and large firms.

"SPACs are also called "blank check companies" because at the time of their IPO they are only shell companies without assets and it is usually not known with which company a merger will eventually take place. As a result, the sponsor's reputation plays a crucial role: "sponsor picking" replaces "stock picking." The IPO prospectus usually contains information about the industry the sponsor is considering for a merger and information about the remuneration for the sponsor and their management team."

"A digital euro can only be successful if it meets the needs and expectations of European citizens2. The outcome of the European Central Bank's public consultation on a digital euro, published on the ECB website3, will therefore provide valuable input for the Eurosystem's decision - this summer - on whether we should start a digital euro project. The consultation will also inform future work on the design of a digital euro, if a project is launched."

This paper provides a systemic analysis of the existing payment ecosystems in advanced and developing/emerging economies and discusses CBDC proposals from the perspective of potential unique selling propositions vis-à-vis existing subsystems.

"Bitcoin is not the money of the future and certainly not a future 'world money'. If it survives, which it may, it will probably be as a high risk asset class. As such, it may strongly increase in value in the future, but it could just as easily go the other way and end up valueless. The buyer beware."

This paper discusses how different CBDC attributes (anonymity, remuneration, value-added services or caps on the holdings) can limit the substitutability between bank deposits and CBDCs in different situations. CBDC holding caps seem the most obvious solution but this may face practical difficulties such as how to impose the limits when an individual holds CBDCs in wallets offered by different providers or what to do with payments to accounts that exceed the caps. Another possibility is to set different tiers of CBDCs holdings, with a penalizing interest rate above a certain threshold. This may function in normal times, but would probably require extremely penalizing (negative) rates in a crisis or a bank run, which may create problems from the point of view of the central bank objective of preserving the value of money. Even if the CBDC is non-interest bearing, the substitutability between deposits and CBDCs will still depend on the extent to which regulation and competition dynamics allow banks and other financial intermediaries to compete with CBDCs, and in a crisis situation their value-added services may become irrelevant as compared to the safety of central bank money.

This paper proposes a new framework for supervisors to measure the risk-adjusted performance of machine-learning (ML) credit assessment models, harnessing the process for validating internal ratings-based (IRB) systems for regulatory capital to detect ML's limitations in credit default prediction. From a supervisory standpoint, having a structured methodology for assessing ML models could increase transparency and remove an obstacle to innovation in the financial industry.

This Banque de France paper lists the main options central banks would be faced with when defining their policies regarding the remuneration of retail central bank digital currency (CBDC). It assesses qualitatively the impacts of the choices made on the likely areas of interest for central banks, showing that whether the policy rate and/or the rate on CBDC is positive or null or strictly negative matters. Eventually, the two main policies that stand out are to issue a "banknote-like" CBDC, i.e. not to remunerate it, or to do so following a rule derived from the central bank's interest rate policy for excess reserves.