The Federal Reserve’s ongoing research into central bank digital currencies, or CBDCs, has broadened to include stablecoins and whether they can be effectively regulated. In their paper, which was published in SSRN’s eLibrary on July 17, Gorton and Zhang argue that “privately produced monies” such as stablecoins are “not an effective medium of exchange because they are not always accepted at par and are subject to runs.” The authors then go on to propose solutions to address what they consider to be “systemic risks created by stablecoins.” After taking a deep dive into the history of private money, beginning with …

Much attention has been paid to the global, geopolitical implications of China’s rapid and pioneering development of its digital yuan, also provisionally known as e-CNY. Yet in a new white paper published by the Working Group on E-CNY Research and Development of the People’s Bank of China (PBoC), the institution gave a more domestic-focused and technologically-driven vision of the new currency’s background and key objectives. Recapping the currency’s research and development timeline, the paper notes that the PBoC first set up a task force to study digital fiat currency back in 2014. By 2016, it had established a Digital Currency …

Since the start of the summer, a series of measures from Chinese authorities to curb cryptocurrency trading and mining have dominated the crypto news cycle. From urging financial service providers to throttle cryptocurrency-related transactions to ordering a crypto trading software provider shut down, the initiatives coming out of Beijing and their repercussions are widely believed to have contributed considerably to the recent market downturn. What motivates this new round of hostile actions, and how will they affect the cryptocurrency space of the nation that had once accounted for some two-thirds of the global digital asset supply? Furthermore, it seems that …

Jerome Powell, chairman of the Federal Reserve of the United States (Fed) told the House of Representatives today that stablecoins should face stricter regulations similar to money market funds or bank deposits. Powell was asked specifically about Tether (USDT), currently the most valuable stablecoin, by Representative Anthony Gonzalez (R-OH). Tether claimed that each coin was backed by a dollar, but that has been proven false. Rather, it is backed mostly by commercial paper or debts. Powell said most of the time those assets are very liquid, but during the recent financial crisis that wasn’t the case. He explained: "The market …

Affiliates of South Korean internet giants Naver and Kakao are among the top contenders to work on the country’s first central bank digital currency (CBDC) pilots. On Monday, the Bank of Korea (BoK) announced the preliminary bid results for participating digital won pilots, local news agency Yonhap reported. Kakao’s blockchain subsidiary Ground X, Naver-affiliated Line Plus and conglomerate SK Group were the top three companies that submitted applications for a 10-month CBDC pilot contract. The BoK now plans to select an operator to run a blockchain-based simulation project for the digital won. The bank expects to reach a decision next …

Research from European blockchain company Guardtime suggests that the current pandemic may have accelerated the launch of a major central bank digital currency by up to five years. According to Guardtime, the company said the growth of many technology companies, improved use of networking and telecommunications platforms, and digitalization of the world in general could mean the first central bank digital currency, or CBDC, from a major economy could be rolled out within three years. The firm works with several central banks around the world in exploring the development of a CBDC. “There is an increasing sense of a ‘race …

In a joint report, the International Monetary Fund (IMF), the World Bank and the Bank of International Settlements (BIS) have proposed to the G20 that a cross-border network of central bank digital currencies (CBDC), underpinned by efficient technological integration and proactive international cooperation, could be of significant benefit to the world economy. The report focuses on broadening the horizon beyond central banks’ individual studies of CBDCs for domestic needs, emphasizing that it is crucial to coordinate work at a global scale and to find common ground between various national efforts to reap the full benefits of digital currency. If tackled …

With each passing day, the list of nations actively exploring the idea of central bank digital currencies (CBDCs) is continuing to grow at a rapid pace. While China’s digital yuan project may be the one that everyone talks about the most, in recent months, countries like The United Kingdom, Sweden and Japan have forged ahead with their own CBDC research and/or testing. That said, the digital yuan project is head-and-shoulders ahead of any of its contemporaries at this point, owing to the simple fact that Chinese authorities have already completed many beta-testing rounds of the currency across a number of …

Financial authorities in France and Singapore are actively exploring the cross-border applications of central bank digital currencies (CBDCs). In a joint announcement on Thursday, the Bank of France and the Monetary Authority of Singapore (MAS) said that they successfully completed a whole cross-border payment and settlement experiment using CBDCs and blockchain technology. The CBDC experiment was conducted with support and expertise from JPMorgan's digital currency-focused Onyx division on a permissioned, privacy-enabled blockchain based on the investment bank's Quorum blockchain infrastructure. As part of the experiment, the Bank of France and MAS simulated cross-border and cross-currency transactions for a Singapore dollar-based …

The Chinese central bank is “quite worried” about the global financial risks associated with digital currencies, particularly stablecoins, according to a senior official. Fan Yifei, a deputy governor of the People’s Bank of China (PBoC), expressed concerns over the reportedly serious threat stablecoins, such as Tether (USDT), pose to global financial and settlement systems, CNBC reported on Thursday. The official emphasized that the speed of development in private payments systems is “very alarming,” and the PBoC is working against monopolies and the “disorderly expansion of capital,” adding: “Some commercial organizations’ so-called stablecoins, especially global stablecoins, may bring risks and challenges …

The Reserve Bank of New Zealand says a central bank digital currency might be a “solution” to the ongoing reduction in the use of cash and that it will look more closely at the use of cryptocurrencies. The bank will open up public consultations regarding a CBDC and the emergence of new digital forms of money including stablecoins. We'll be consulting extensively over the remainder of 2021 on issues key to the future of how New Zealanders pay and save, driven by our new stewardship mandate for cash and a broader currency system https://t.co/vniv2aULCZ #rbnz pic.twitter.com/OHdsuIhpGd — Reserve Bank of …

Jamaica’s central bank will reportedly commence the initial roll-out of its central bank digital currency (CBDC) project in August. According to a report by the Jamaica Observer on Wednesday, Bank of Jamaica (BOJ) Governor Richard Byles made this known during a Rotary Club event earlier in July. Detailing plans to begin the pilot phase in August, Byles revealed that the BOJ was currently working on the technical aspects of the CBDC within a sandbox environment. As previously reported by Cointelegraph, the BOJ chose Irish technology firm eCurrency Mint as the tech provider for its national digital currency project back in …