Central bank digital currencies (CBDCs) are becoming a popular topic among central bankers and fintech enthusiasts. Most people have heard of bitcoin, ethereum, and other cryptocurrencies.
Despite the fact that the Treasury Department's “The Future of Money and Payments” report was as objective as ever about the necessity for and desirability of a digital dollar, a lot of people paid a lot of attention to it on September 16, one of three reports focusing on the creation of a regulatory framework for cryptocurrencies and digital assets like stablecoins and non-fungible tokens, as required by President Biden's executive order on the subject.
The report identified four areas of focus: payment efficiency and innovation, U.S. global financial leadership, financial inclusion, and risk mitigation.
Digital Dollars are being backed by the Treasury, in what appears to be a tacit endorsement.
While it mentioned the disintermediation from banks’ core customers as a concern, it paid a lot of attention to existing real-time payments solutions, including The Clearing House's RTP Network and the forthcoming FedNow. CBDCs, which have been said to undermine one of the main reasons for central bank digital currencies (CBDCs), have been said to undercut one of the main reasons for CBDCs broadly.
Five digital currencies have been selected by the ECB as partners for the digital euro.
Amazon and four other organizations have been chosen to participate in a European Central Bank (ECB) “prototyping exercise” that will focus on five different applications for a digital euro.
An alliance of seven European companies has launched a programme to help companies adapt to a digital future.
The ECB is testing a digital euro as part of a two-year investigation phase. The EU has not determined if a CBDC is necessary or desirable, but Christine Lagarde, the ECB, and other vigorous proponents have been pushing for it.
Amazon, Spain’s CaixaBank, Worldline, Nexi, and the European Payments Initiative (EPI) will examine various aspects of a digital euro in front-end focused tests. 33 banks, payments institutions, and credit acquirers will be involved.
Amazon will create prototypes for eCommerce payment systems. Nexi, an Italian payments company, will test point-of-sale payments initiated by the payee, while EPI will test those initiated by the payer. Worldline will examine peer-to-peer (P2P) transactions that occur offline, and CaixaBank will test P2P online payments.
The ECB will determine whether to proceed with the digital euro in September 2020, based on the results of these five tests, due in the first quarter of 2023.
A digital Euro cap should be called for.
According to crypto news source CoinDesk, a leaked copy of a forthcoming report on the digital euro said that a “digital euro could play a vital role in bolstering European Union strategic autonomy and fostering financial sector innovation.
”Senior finance officials from France, Germany, Italy, Spain, and the Netherlands authored the paper, which called for a digital euro to be environmentally friendly, as well as respecting and protecting users' privacy.
An individual cap of $1.5 trillion for the digital euro was suggested by ECB Executive Board Member Fabio Panetta to limit holdings to 3,000 euros to 4,000 euros. This would prevent financial institutions from being disintermediated.
In June, he said that the digital euro would preserve the coexistence of central bank money and private money, supporting innovation by private intermediaries.
eNaira has been backed by Flutterwave.
On September 14, Flutterwave, a Nigerian payments technology firm, said it would support eNaira, a CBDC whose pioneering but sluggish-to-adopt nature has been criticized.
The introduction of eNaira will be welcome news for Nigeria, which is by far the largest country to have introduced a CBDC. Merchants who accept eNaira payments may provide customers with a QR code to be scanned or single-use tokens.
According to Central Bank of Nigeria Governor Godwin Emefiele, banks were holding up the roll-out of the eNaira in July because they were afraid of losing transaction fees and losing their customers.