from The Economist, a special report on digital currencies: The fight over payments systems is hotting up around the world. There may be surprising winners.
Payment is one of the most fundamental economic activities. To buy anything, you need something the seller wants. One option is barter, but that is beset by friction (what are the chances of having something your counterparty wants at any exact moment?). Early forms of money, from cowrie shells to beads to metal coins, offered a solution: they were always in demand to settle transactions.
But they came with their own problems, from counterfeiting and delay to not having enough when needed (illiquidity). The use of credit for trade, first recorded in Mesopotamia five millennia ago, changed the game. It provided immediate liquidity, boosting commerce, but it also required trust and verification, introducing a fresh set of issues.
Source: The Economist
The Federal Reserve Bank of New Yorkās New York Innovation Center (NYIC) and the Monetary Authority of Singapore (MAS) will issue a research report detailing the experiment and findings of Project Cedar Phase II x Ubin + on Thursday, May 18, 2023 at 8:00 PM EDT / Friday, May 19 8:00 AM SGT.
Project Cedar Phase II x Ubin+ is a joint experiment that examined whether distributed ledger technology (DLT) could be used to improve the efficiency of cross-border payments and settlements involving multiple currencies.
Project Cedar is a multi-phase research effort exploring opportunities to improve the efficiency of wholesale cross-border payments using DLT. Phase I of Project Cedar demonstrated the potential for DLT to improve the speed and efficiency of cross-border payments.
Source: Federal Reserve Bank of New York
Global regulators will shortly propose the first set of international rules for cryptoassets, including how existing norms could apply to the sector, a top regulator said on Tuesday.
Cryptoasset companies are calling for a globally-coordinated approach to give certainty to the sector as they face a "fire hose" of differing approaches. The European Union on Tuesday approved a first set of comprehensive rules, a step firms said would attract them to set up shop in the bloc.
"Once finalised the recommendations will deliver a first globally coordinated set of rules for crypto-assets," Jean-Paul Servais, chair of global securities regulatory body IOSCO told an event held by the Managed Funds Association in Paris.
IOSCO members, such as the U.S. Securities and Exchange Commission, Japan's Financial Services Authority and regulators in Britain, Germany and France commit to applying the body's recommendations.
Source: Reuters
Digital currencies can be used to settle debts in China, according to the countryās Supreme Peopleās Court. However, Chinaās highest court will only enforce such contracts if entered before September 2017, when the governmentĀ issued a blanket ban on ICOsĀ andĀ digital currency exchanges.
The Supreme Court made the declaration months ago in a conference focused on financial and work disputes, but theĀ detailsĀ of the conference were not revealed until recently. One of the key declarations at the meeting was that digital currenciesĀ have some attributes of virtual property.
āIf it is agreed between [two] parties that a small amount of virtual currency shall be used to compensate the debts arising from mutual exchange, labor service and other basic relations, [and] if there are no other invalid causes, the peopleās court shall recognize the contract as valid,ā the court declared.
The court also pledged to provide support in instances where one party cannot deliver the digital currency as agreed on a contract: In such a case, the court shall determine the scope of compensation depending on the value of the digital currencies agreed on the contract.
Source: COINGEEK
Representatives from the European Banking Authority have expressed their concerns over large stablecoins and their effect on public policy goals.
Specifically, EBA Chairperson JosĆ© Manuel Campa proposed that central banks should veto large stablecoins if they believe they could negatively affect monetary policy. The EBA chair will focus on setting out the detailed rules to implement the European Unionās Markets in Crypto Assets regulation (MiCA) in the following months, and he voiced his worries during a recent event hosted by think tank OMFIF.Ā
His main concerns were that stablecoins could affect public policy goals, including financial stability or monetary policy. Itās worth noting that Campa's agency will also be responsible for supervising major issuers under MiCA.Ā
According to Yahoo, the EBA chair also talked about a future where stablecoins will become more relevant as a means of payment and compared the situation with private payment systems that now complement central bank money. However, he noted that stablecoins would have to comply with relevant regulations, including anti-money laundering laws.Ā
Regarding stablecoin issuers, Campa emphasised that they should also for permission and submit their project for evaluation. Furthermore, more ambitious projects would be subjected to more scrutiny.
Source: The Paypers
Ethereum Resumes Finalizing Blocks after Second Performance Hiccup in 24 Hours. When blocks are not being finalized, it is possible that pending transactions might be re-ordered or dropped from the network. Developers haven't determined the source of the hold-ups, but they are urging for calm amidst the concern and uncertainty.
The Ethereum blockchain suffered from a technical issue on Friday that caused the network to stop finalizing blocks for over an hour, the second such outage in the past 24 hours.
The incident ā the cause of which remains a matter of speculation ā sparked major security concerns for users of the second-largest blockchain by market capitalization. According to the Ethereum Foundation, when blocks are not being finalized, it is possible that pending transactions might be re-ordered or dropped from the network.
Source: CoinDesk
House Democrats are considering their own version of a long-anticipated stablecoin bill, a person familiar with the situation told CoinDesk, but their views demonstrate a substantial rift with a parallel Republican effort.
The proposal, a successor to a version spearheaded by Reps. Maxine Waters (D-Calif.) and Patrick McHenry (R-N.C.) last year, comes weeks after Waters said lawmakers need to start from scratch on legislation addressing this corner of the crypto market.
Republicans on the House Financial Services Committee had moved ahead on a new draft of a stablecoin bill in recent weeks, but it was greeted with frustration by the panel's Democrats, including Rep. Maxine Waters (D-Calif.), the committee's senior Democrat. She'd publicly complained that the effort was done without Democratic involvement and that the lawmakers should be starting over.
Source: yahoo! finance
Representatives for the seven advanced economies signalled a commitment to following norms set by standard-setters FSB and IMF on crypto and central bank digital currencies.
The Group of Seven (G-7) intergovernmental political forum has signaled its commitment to implementing the Financial Stability Board's (FSB) forthcoming norms for regulating crypto assets and the International Monetary Fund's (IMF) recommendations on central bank digital currencies.
The group's finance ministers and central bank governors announced they had discussed crypto asset supervision at a Saturday meeting in Niigata, Japan ahead of the G-7 summit next week. Japanese Prime Minister Fumio Kishida, the summit's host this year, has said G-7 leaders are set to state their joint support for tougher crypto rules.
India, as the president of the G-20, has been pushing for globally coordinated crypto rules. In February, the group said forthcoming global crypto norms will be based on a new synthesis paper jointly produced by the IMF and the FSB. The G-7 has indicated it will follow the standards set by the FSB.
Source: CoinDesk
The Bank of Englandās director of fintech batted away concerns that a digital pound would threaten privacy as he confirmed that it would not be exchangeable with cryptocurrencies as they currently exist.
Speaking at the Financial Timesā Crypto and Digital Assets Conference, Tom Mutton ā who is responsible for leading the CBDC unit at the Bank ā said āprivacy and anonymity are used synonymously in a way they shouldnāt be.ā
Anonymity means there are no available pieces of data on an individual while privacy implies individuals have some degree of control over their data.Ā
Source: City A.M.
The Bank of Canada is wading into the fraught and controversial world of digital currencies, launchingĀ public consultations this week into how Canadians might use a digital dollar.Ā
"We've been researching a digital dollar for quite a while now," said Carolyn Rogers, the senior deputy governor of the central bank. "And we're at a point where we need help from Canadians, we need to understand what Canadians want." And yetĀ the bank maintains there is neither a need nor a plan to launch a digital loonie.
So, why bother with the public consultations at all?
Rogers says more transactions are being done digitally. Only about 20 per cent of retail transactions are done in cash. And, she says, there's been a surge in interest in various digital currencies.
When most people think of a digital dollar, they first think of cryptocurrencies like bitcoin or Ethereum. What the bank is looking at is not quite crypto, but it's not quite what we generally think of as cash either.
"The bottom line is a digital dollar [that's] backed by the Bank of Canada," Rogers told CBCĀ News.
Source: CBC News
Samsung has signed a memorandum of understanding with South Koreaās central bank to research an offline central bank digital currency (CBDC).
The two entities agreed to continue CBDC research in a signing ceremony in Suwon, South Korea. The CBDC will test offline wire transfers and payments using Samsung Galaxy devices.
While not necessarily legally binding, a memorandum of understanding helps clarify the expectations of both parties before they sign a contract.
It forms the basis for future negotiations. Electronics giant Samsung previously partnered with the Bank of Korea to pilot NFC payments between Galaxy devices.
Galaxy smartphones and watches boost payment security and reliability through an embedded Secure Element security chip. An eSE is a relatively expensive smartphone component resilient to physical and side-channel attacks.
Source: BeInCripto
Chinaās e-yuan trade push in Guangxi brings digital currency closer to Asean settlements as pilot programmes widen
A southern Chinese region has pledged to become a pioneering zone for using the e-yuan in trade with Southeast Asian countries ā the latest sign of Beijingās ambitions to internationalise its central bank digital currency.
The Guangxi Zhuang autonomous region, which borders Vietnam, will implement nine nationwide functions for the use of Chinaās digital currency, also known as the e-CNY, and will pilot eight locally unique scenarios. These include using the e-yuan at the annual China-Asean Expo in September, and in business dealings within the regionās free-trade zones and in border trade, according to the Nanning branch of the Peopleās Bank of China.