CBDC

ECB official calls for urgency on digital euro amid global CBDC race

Published

3 hours ago

November 21, 2024

The European Central Bank is urging faster action on the digital euro as legislative delays risk hindering progress amid growing global competition.

The digital euro project is facing delays in the European Union, with the European Central Bank urging faster action to prevent Europe from falling behind global competitors.

Evelien Witlox, the ECB’s project manager for the digital euro, told Euronews in an interview that Europe should speed up with the development to avoid falling behind, as global competitors like the U.K. and China are also exploring central bank digital currencies.

Thus far, there is no pan-European digital payment solution as 13 of the 20 countries in the eurozone lack a national card scheme, relying instead on international players like Visa and Mastercard, the report notes. Witlox noted that the European market remains fragmented, with “the ones that come closest to covering the whole of Europe are non-European.”

To address this, the ECB launched a CBDC exploration project in October 2021. However, before the digital euro can move forward, the European Parliament and Council must finalize the legal framework—a process that has yet to be completed nearly 17 months after the European Commission’s proposal. This delay has raised concerns within the ECB, Witlox noted.

Although discussions on the digital euro have made progress, Witlox reiterated the need for urgency to keep “sufficient pace in this process so that we can ensure that the digital euro will be there when we really need it.” Although there is no set timeline for the digital euro’s launch, Witlox remains optimistic, stressing that Europe is still “at the forefront of the development [of a CBDC].”

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CBDC

Stablecoins Are Not Your Friends

Published

1 day ago

November 20, 2024

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Stablecoins are often pitched as a stopgap method, or a friendly tool for people in the developing world who cannot handle the volatility of Bitcoin. They are framed as something complementary to Bitcoin, not in competition with it. Nothing could be further from the truth.

Bitcoiners have commonly used the meme of a trojan horse to justify many things over the years, rationalizing many shortcomings and compromises made over time as what is necessary to sneak Bitcoin into the legacy system to ultimately take over and win. That is exactly what stablecoins are, except in the reverse direction.

Stablecoins are the trojan horse into Bitcoin.

Bitcoin’s volatility makes using it challenging if you do not have the net worth to weather it, but there are mechanisms to handle this. Centralized schemes like Stablesats by Blink have been built to use bitcoin collateral to lock in a dollar value without needing to actually hold dollars. Discreet Log Contracts (DLCs) offer another mechanism for accomplishing the same thing in a decentralized fashion.

Instead we are propping up the US Dollar. Stablecoins are a solution to volatility, but they are a non-Bitcoin native one. They are the US Treasury’s trojan horse into the Bitcoin space. They do more to control and prop up the dollar than they do to “help” Bitcoiners handle the issue of volatility, which can be done while only holding bitcoin.

Stablecoins give the Treasury a new lifeline to sell treasury bonds. Foreign countries have lowered demand and sold existing treasuries for some years now, and stablecoin issuers have stepped up to pick up the slack. The bigger demand grows for stablecoins, the more of a drop in foreign government demand for treasury bonds the US Government can handle. At a time where BRICS is planning more and more to shift away from their dependence on the US dollar, stablecoins represent a vehicle to ameliorate this issue.

They also, unlike Bitcoin native solutions such as DLCs, present a security risk to holders. To my knowledge, aside from the Liquid Network, every network stablecoins are issued on come with a seize and freeze functionality built into the smart contract the issuer uses to create them. Almost all stablecoins support the arbitrary freezing and seizure of users balances on the different networks they circulate on.

Surveillance is another aspect of stablecoin proliferation. The more that dollar stablecoins are adopted around the world, without needing to politically convince any government to officially dollarize I might add, the more the US Government’s ability to directly surveil foreign financial activity expands. Chainalysis and other companies become a de facto government surveillance system for foreign financial activity, with no need to subpoena or gather records first. It’s all right there on the blockchain.

All the while, it propagates the idea that “blockchain” is a useful technology disconnected from Bitcoin, pushing the idea to your average person that bitcoin is simply an asset like gold to invest in. It creates a psychological narrative of “invest in Bitcoin, use your surveillance money when you need to spend.”

Overall stablecoins are going to be one of the most epic unforced errors that have occurred in this entire ecosystem. People need to wake up before it becomes embedded so deeply into their lives, and the financial world in general, that it becomes difficult to disentangle ourselves from.

People should be spreading and building on Bitcoin, a money built to enable freedom and sovereignty, not these cheap imitations called stablecoins that are nothing more than an extension of the surveillance and tyranny of the legacy financial system.

This article is a Take. Opinions expressed are entirely the author’s and do not necessarily reflect those of BTC Inc or Bitcoin Magazine.

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Blockchain

SWIFT to trial tokenized asset transactions in 2025

Published

2 months ago

October 3, 2024

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SWIFT will trial live transactions of tokenized assets and digital currencies in 2025, aiming to integrate blockchain-based tokens into the broader financial system.

Global financial messaging network SWIFT will trial live transactions of tokenized assets and digital currencies in 2025, marking a step toward broader adoption of blockchain-based finance, per a Reuters report on Oct. 3.

Banks and asset managers have long explored tokenizing assets like bonds, hoping blockchain technology can streamline trading and cut costs by eliminating middlemen. However, these efforts have struggled to gain traction in the wider market.

SWIFT has been involved in trials of central bank digital currencies and tokenized assets. The network’s latest initiative aims to connect these innovations with traditional banking, a move SWIFT says reflects rising industry demand for real-world digital asset transactions.

“To successfully trade and settle a tokenized bond transaction, you need the cash and that’s where a tokenized deposit or wholesale CBDC comes in. It’s not good enough if you just have delivery or just payment, you need both.”
SWIFT

As 90% of the world’s central banks explore digital currency options, SWIFT’s new platform — expected to launch within the next one to two years — aims to integrate CBDCs into the financial ecosystem. The organization believes that successful trading and settlement of tokenized bonds require both tokenized deposits or wholesale CBDCs, ensuring that payment and delivery are equally supported.

However, despite SWIFT’s integration efforts, not all countries are rushing to develop their digital currencies. Concerns persist regarding technological and regulatory hurdles, as highlighted by Sweden’s Riksbank, which emphasized the need for extensive technical and regulatory development to ensure secure offline payments with e-kronas.

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CBDC

India’s CBDC platform hits 5m users 20 months after pilot launch

Published

3 months ago

August 26, 2024

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Reserve Bank of India Governor Shaktikanta Das urged a cautious CBDC rollout, as the retail pilot now reaches over 5 million users.

India‘s central bank digital currency platform has surpassed the 5 million users mark as the country continues to cautiously expand its digital currency pilot program, per a Business Standard report.

Speaking at a conference in Bengaluru on Monday, Aug. 26, Reserve Bank of India Governor Shaktikanta Das emphasized the need for a measured approach to the full-scale rollout of the country’s CBDC, also known as the e-rupee, stressing the importance of understanding its impact on users, monetary policy, and the broader financial system. Das highlighted that comprehensive insights from pilot data are crucial before moving forward with a wider implementation.

“Actual introduction of CBDC can be phased in gradually. Undoubtedly, CBDC has the potential to underpin the payment systems of the future, both for domestic payments and also cross-border payments.”
Shaktikanta Das, Reserve Bank of India Governor

Launched in December 2022, the RBI’s CBDC pilot covers both retail and wholesale segments. The pilot, currently involving 16 participating banks, has expanded beyond initial payment use cases to test offline and programmability functionalities. Das pointed out that the programmability feature could play a pivotal role, saying that it could serve as a “key enabler for financial inclusion by ensuring delivery of funds to the targeted user.”

The e-rupee adoption has been sluggish, with the Reserve Bank of India reporting 1 million retail transactions by late June, a milestone reached only after local banks introduced incentives and partially paid employee salaries using the state-issued digital currency.

The RBI had previously urged banks to increase transactions to at least 1 million per day by late 2023 to test the system’s scalability. However, this push has since ceased, casting doubt on the future of the digital currency initiative due to the gap between incentivized metrics and actual user adoption.

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