Group items tagged

The BOE and HMT also published the responses to the digital pound technology working paper also published in February 2023. There was broad support for the six technology design considerations - privacy, security, resilience, performance, extensibility and energy usage. Respondents also suggested additional considerations, such as interoperability, usability, accessibility and scalability. A few respondents suggested models that the BOE judges to not be compatible with the stated policy objectives or design principles, for example models based on anonymous bearer instruments, which will not be taken forward. Most respondents agreed that government or central bank-initiated programmable money should not be pursued, but that user-initiated programmable payments and smart contract functionality would be important for a digital pound system.

Ulrich Bindseil (European Central Bank) and Omid Malekan (Columbia University Business School) posted a paper that discusses the properties of blockchain technology and how they can enable time structures and novel financial products that cannot exist in traditional financial architecture. The specific features described are streaming payments, omni-asset settlement, programmability, and financial architecture flattening (disintermediation). They provide examples of the unique products they enable, some of which might disrupt today's dominant payment and capital market solutions in the future. The authors also discuss the utility of blockchain technology in private (permissioned) networks, and the risks of public distributed ledger technology (DLT) networks and their mitigants.

US Securities and Exchange Commission will host a public forum focusing on distributed ledger technology and digital assets on May 31. The forum is being organized by the agency's Strategic Hub for Innovation and Financial Technology (FinHub).

This report offers an analytical framework that allows for more systemic assessments of distributed ledger technology (DLT) and its applications. It examines the evolution and typology of the emergent technology, its existing and projected applications, and regulatory and policy issues that they entail. This report highlights the trends, concerns, and potential opportunities of DLTs, especially for Asian markets. It also identifies the benefits and risks to using DLT and offers a functional and proportional approach to these issues.

"Curious about the potential of blockchain, our internal IT organization developed the idea to take existing paper contracts between Accenture and our clients and put them on a shared blockchain database that every party can use to securely view contracts, revise and accept changes, all captured on a blockchain ledger. We worked with other Accenture specialists, including legal, to prove out the idea, develop the platform, test and ultimately deploy a new product-Accenture Blockchain for Contracts. Built on R3 Corda technology and hosted through Microsoft Azure, Accenture Blockchain for Contracts provides a new way to draft and sign contracts with low friction, high efficiency and encrypted data."

While no decision has been made to pursue the issuance of a central bank digital currency (CBDC), this paper explores the technological approach to constructing a CBDC system for contingency planning purposes. Any design needs to be determined by policy choices about the attributes of the CBDC (e.g., privacy, resilience); the business model (considering, e.g., partners, end-user channels and the cost model); and the qualities the system supports (e.g., user experience, security). This note explores these options and describes the potential limits that the underlying technology may impose on the mix of policy objectives.

The Securities and Exchange Commission signed an MoU with the Blockchain Elite Strategic Technology (BEST) Association. "BEST will provide advice, knowledge and professional skill to SECC to develop a legal framework, a licensed activity supervision framework, legal or technical matters for the development and usage of fintech and blockchain technology in the securities sector in Cambodia, and to transform SECC to be a digitalized institution."

In Greenwich Associates' "Steampunk Settlement: Deploying Futuristic Technology to Achieve an Anachronistic Result" they discuss the medieval results that come from the expensive deployment of futuristic technology, and challenge the idea that DLT could replace today's clearance and settlement infrastructure.

"This GSMA report explores the landscape of cross-border remittances in a number of PICs. It draws on lessons from other regions to understand mobile technology's potential in promoting accessible and affordable remittances in the Pacific region, especially for the most vulnerable and isolated communities. The report also looks at whether mobile technology can help to drive down the costs associated with remittances."

The National Bank of Georgia (NBG) will launch a "limited access live pilot environment" (sounds like a proof-of-concept phase to me) to test central bank digital currency (CBDC) system technology capabilities and potential applications. At this stage, the NBG remains technologically agnostic for the Digital GEL project, and has announced a list of nine platform vendors to join the "on field" exploration. Upon selection stage completion, NBG will identify one of the vendors to move to the pilot stage to test the CBDC platform in a limited-time run live environment and evaluate the practical use cases. (There were some surprises to me in the list of vendors!)

"To keep pace with the legal and technological developments associated with digital assets, in 2022 the sponsoring organizations for the Uniform Commercial Code (UCC) - the American Law Institute and the Uniform Law Commission - approved amendments to the UCC addressing transactions involving these emerging digital technologies (collectively, the Uniform Amendments). The Uniform Amendments impact a majority of the articles of the UCC. Most notably with respect to digital assets, the Uniform Amendments include the creation of a new Article 12 and revisions to Article 9 regarding the perfection of a security interest in such assets. "

The US National Institute of Standards and Technology (NIST) published a technical paper on the ways in which stablecoins are architected and implemented. This includes a descriptive definition, commonly found properties, and distinguishing characteristics, as well as an exploration of stablecoin taxonomies, descriptions of the most common types, and examples from a list of top stablecoins by market capitalization. This document also explores related security, safety, and trust issues with an analysis conducted from a computer science and information technology security perspective as opposed to the financial analysis and economics focus of much of the stablecoin literature

The Boston Fed and the Massachusetts Institute of Technology Digital Currency Initiative released the initial findings of their Project Hamilton central bank digital currency (CBDC) technology platform research. The paper describes a theoretical high-performance, secure and resilient transaction processor for a CBDC by developing open-source research software (OpenCBDC). It's an experimental project aimed at creating a core processing engine for a hypothetical retail CBDC on two architectures. One of them is capable of handling 1.7 million transactions per second, with the vast majority reaching settlement finality in under 2 seconds. Both offer the flexibility to adjust to future policy direction

An IMF paper explores the main components and technological options that determine digital currency (DC) energy profiles. It finds that the energy consumption of non-proof-of-work (non-PoW) distributed ledger technology (DLT) platforms is orders of magnitude lower than that of PoW platforms. Also permissioned networks that exercise more control over who can join as a validator, are more energy efficient than unpermissioned networks. The paper concludes that DCs could be designed to use infrastructures that are less energy intensive than the current payment system.

In 2024, the ECB invited market participants to test how new technologies like distributed-ledger technologies (DLT) would work for central bank money settlement. The so-called ECB trials and experiments are aimed at exploring the potential of digital payments targeting a wholesale central bank digital currency (CBDC). Together with leading institutions, infrastructures and fintech businesses, Deutsche Börse Group contributes to this transformative endeavor with its Clearstream and Eurex Clearing businesses. The Deutsche Börse maintains a list of all such use-case experiments here.

IMF's DMD David Lipton: Countries facing the challenge of Fintech have legitimate concerns about competition, about the market power of technology giants, and the cyber-risks and social disruptions that may accompany rapid technological change. Many countries worry about how data is collected and used; and how IT firms are taxed. We need to ensure that our actions enable us all together to maximize the benefits of Fintech for the benefit of all our citizens.

A growth in the liquidity of crypto-assets will boost interest in and feasibility of using the underlying technology for tracking purposes. An effective use of blockchain technology would make it much harder to launder money using crypto than digital fiat currency.

The Financial Stability Board today published a report on decentralized financial technologies. It considers the financial stability, regulatory and governance implications of their use such as those involving distributed ledgers and online P2P platforms

This paper defines fintech as an innovation enabled by one or more technological 'triggers' that have potential to provide value through enablement or disruption in the financial services industry. It proposes a framework to understand fintech in terms of customer type, industry subsector and enabling technology.

A new generation of technology companies, called govtech, is using new technologies applied to public services, and designed for local and central governments. These tech-enabled solutions promise greater efficiency and transparency in the way the citizens engage with the administration, transforming the way nations distribute welfare, keep citizens safe, provide healthcare, and deliver key public services.