It has been a fine year for countries diving into the digital currency world, and many are in the line to join. While there is a lot to catch up on in the Crypto world in this past year we have compiled a list of all the major CBDC developments.
In February 2020, the Bank of Canada completed phase 4 of Project Jasper. In this phase, along with Payments Canada, The Bank has partnered with the Monetary Authority of Singapore and the Bank of England to work on a cross-border, cross-currency settlement system. This collaboration combines Project Jasper and Singapore’s Project Ubin to use DLT to make cross-border payments faster and less expensive. The Bank has pursued a contingent strategy to launch CBDC in order to create a state of sufficient policy and operational readiness.
Since August 2020, the U.S. Federal Reserve has been conducting research and experimentation related to distributed ledger technologies and the potential use cases for digital currencies to understand their potential opportunity and risk. The objective is to assess the safety and efficiency of digital currency systems.
- United Kingdom
In September 2020, the Bank of England launched a public consultation and discussion paper on a CBDC for the UK. The Bank has not yet made a decision on whether to introduce CBDC and intends to engage widely with stakeholders on the benefits, risks, and practicalities with regard to the same. A CBDC would be an innovation in both the form of money provided to the public and the infrastructure on which payments can be made.
The Central Bank of the Bahamas officially launched national digital currency, Sand Dollar, in October 2020. Sand Dollar is the first-ever nationwide CBDC in the world. The digital currency initiative has the support of the financial community, which welcomes the opportunity for financial inclusion of the unbanked and underbanked residents that Sand Dollar will provide.
- European Union
In October 2020, the European Central Bank launched a public consultation and has started experiments to decide whether to create a “digital euro” for the 19-nation currency club. A digital Euro would be an electronic form of central bank money that is equivalent to euro banknotes and accessible to all citizens and firms. The digital Euro would bring simplicity in the use as well as an understanding of transferring money.
In April 2020, the People’s Bank of China has run digital currency/electronic payment (DC/EP) trials for over 6700 use cases, processing over 1 billion RMB across different provinces in the country. DC/EP was initiated to use cryptocurrency-inspired technology in order to modernize payments by bypassing international trade networks and exerting geopolitical strength.
In January 2020, the Bank of Thailand launched Project Inthanon-LionRock with Hong Kong Monetary Authority (HKMA) and announced the outcomes of the project. They published a report on the same with the released findings from Project Inthanon-LionRock to study the application of CBDCs in cross-border payments. The design and key findings of the project have added new dimensions to central bank communities’ studies on cross-border funds transfer area.
In July 2020, the Monetary Authority of Singapore completed Phase 5 of CBDC Project Ubin which validated the use of smart contracts on the payments network prototype in cases such as Delivery-versus-Payment (DvP) settlement. Phase 5 sets out to understand the potential efficiency gains for the broader economy that could be attained through better connectivity and integration, and the provisioning of additional payment-related and other supporting functionalities that could simplify operational processes
In October 2020, the Bank of Japan will test the technical feasibility required for offline CBDC through a Proof of Concept (PoC) which will be resilient against natural calamities. The Bank’s objective is to ensure that the CDC has universal access, security, resilience, instant payment capability, and interoperability. The Bank wishes to avoid excluding some individuals, devices, or cards used for transfers and payments, and to provide ease of use and portability in their design.
- Hong Kong
In December 2020, the Hong Kong Monetary Authority and the Digital Currency Institute of People’s Bank of China launched a technical pilot testing of the use of Digital Yuan for making cross-border payments, and are making the corresponding technical preparations for the same. The status of e-CNY is the same as cash in circulation, it will bring even greater convenience to Hong Kong and Mainland tourists.
In October 2020, the National Bank of Cambodia launched Bakong Blockchain Payments System. Bakong’s launch ensures that the Cambodians have a state-sanctioned platform to conduct instant mobile payments with QR codes enabled service, and phone numbers connecting digital wallets over a blockchain.
In November 2020, the Reserve Bank of Australia launched a collaborative project with Commonwealth Bank, National Australia Bank, Perpetual, and ConsenSys Software, a blockchain technology company, to develop a proof-of-concept (POC) for a tokenized CBDC. This CBDC can be used by wholesale market participants for the funding, settlement, and repayment of a tokenized syndicated loan on an Ethereum-based DLT platform. The POC will be used to explore the implications of ‘atomic’ delivery-versus-payment settlement on a DLT platform as well as other potential programmability and automation features of tokenized CBDC and financial assets.
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