Category Archive : CBDC

China trials digital yuan CBDC student card to track purchases – Ledger Insights

Yesterday the Chinese press reported the rollout of the digital RMB smart student ID card at the Hainan Lu Xun Middle School. This is the latest application of China’s central bank digital currency (CBDC), the digital yuan or eCNY. In January, the digital currency was widely used during the Winter Olympics, and recently pilots were extended to additional regions.

In reality the solution is a mobile SIM card rather than a payment card. Smartphones are banned from lower and middle schools in China, so the ID card is a mobile SIM in a feature phone with multiple functions beyond payments. It was developed by China’s biggest bank, ICBC, in conjunction with China Mobile. 

The phone supports NFC for payments and identity and GPS to enable the child’s location to be tracked. Additionally, up to three family numbers can be programmed for speed dialing.

For payments, the child can use the card on the school’s campus, but the school can also authorize it for use with a list of off-campus merchants. Parents get to view the child’s payments made with the digital RMB smart student ID card and they can also top up the digital currency balance.

On the one…


Cryptocurrency tax exempt for trades on approved exchanges until end of 2023

Investors who trade cryptocurrencies or digital tokens through properly registered exchanges will be entitled to a 7% VAT exemption on the transfer of the digital assets, retroactively from April 1st 2022 until December 31st 2023, according a Royal Decree published in the Royal Gazette on yesterday (Tuesday).

The objective of the VAT exemption, according the decree, is to promote trade in cryptocurrencies or digital tokens through Thailand’s approved exchanges, for proper regulation of digital asset transactions.

The VAT exemption is also extended to trade in the Retail Central Bank Digital Currency (CBDC), issued by the Bank of Thailand, for the same period, according to another Royal Decree already published in the Royal Gazette.

The central bank said in December 2021 that it expects to test its retail central bank digital currency (CBDC) for the public in late 2022, later than planned, as an alternative payment option, within a limited scale, involving transactions such as deposits, withdrawals and fund transfers by financial institutions and users.

The cryptocurrency market in Thailand has grown exponentially overt the past few years. Bitcoin is the most…


B2B FinTech FOO Expands Into Saudi Arabia

B2B FinTech provider FOO is expanding its operations with a goal of improving digital transformation in Saudi Arabia, according to a press release Tuesday (May 24).

FOO’s services assist with building in-house solutions with a modular platform of microservices, giving personalized products to help with digital transformation. That comes with digitization growing among businesses in the Middle East North Africa (MENA) region.

FOO works with banks and retailers in that region to build digital products to boost business models and customer experience, including solutions for remittances, digital wallets, tokenized transactions and buy now, pay later (BNPL).

The expansion comes as FOO has been working across sectors. The Kingdom of Saudi Arabia (KSA) is looking into digital transformation in all sectors but particularly finance. FOO will focus on digital banking, central bank digital currency (CBDC) based on blockchain, virtual cards and tokenization.

“Saudi Arabia has an extremely high market opportunity for financial disruption with 51% of the population under the age of 25,” said Ghady Rayess, managing director with FOO. “As digital transformation rapidly becomes a…


Mercado Bitcoin, Stellar Team on CBDC Project

Latin American exchange Mercado Bitcoin is teaming with the Stellar Development Foundation (SDF) on one of the nine projects in the LIFT Challenge Real Digital, a collaborative environment hosted by the Central Bank of Brazil and the National Federation of Associations of Central Bank Servers.

The projects will explore use cases for a central bank digital currency (CBDC) for the region. Joining SDF in the LIFT Challenge are CPQD and ClearSale, according to a Tuesday (May 24) press release. The Central Bank of Brazil is aiming to pick out infrastructure characteristics for Real Digital that will support the use cases presented during the event.

The Real Digital will likely be launched in the second half of 2022 and be piloted for a restricted audience in its first phase.

“We are in a consortium of companies that have the structure and ambition to build robust solutions for the financial market through blockchain technology,” said Reinaldo Rabelo, CEO of Mercado Bitcoin, in the press release. “Utilizing the Stellar network will allow us to deliver a complete case for evaluation by the Central Bank.”

SDF is a non-profit organization focused on unlocking global economic…


PBOC to Banks: Step Up Loan, Mortgage Approvals  

Regulators are telling banks in China to step up loan approvals and keep the flow of mortgages going as the world’s second-largest economy remains on shaky ground due to COVID outbreaks this year, according to media reports on Tuesday (May 24).

In a meeting with 24 financial institutions, the People’s Bank of China (PBOC) and the China Banking Regulatory Commission (CBIRC) urged lenders to “go all out to stabilize the fundamentals of the economy,” the PBOC said in a statement Tuesday.

“Major financial institutions need to shoulder their responsibilities, make use of all resources to effectively connect with credit demand and strengthen policy transmission,” according to a statement quoting the meeting, Bloomberg reported.

Related: China Experiments With CBDC Tax Payments

The statement also indicated that banks should target smaller companies, green projects, technology, energy and infrastructure.

In April, loan growth in China took a dive to its lowest point in close to five years as borrowing took a backseat to COVID lockdowns. The PBOC reduced the minimum mortgage rate for first-time homebuyers and lenders reduced the key reference rate for mortgages last week,…


CBDC would pull deposits away from banks, trade groups tell Fed

Dive Brief:

  • A U.S. digital dollar poses too great a threat to the nation’s banking system to be deployed, the American Bankers Association (ABA) and Bank Policy Institute (BPI) said in separate letters Friday.
  • A central bank digital currency (CBDC) would serve as advantaged competition for retail bank deposits, depriving banks of funding and restricting credit availability in the U.S. economy, the trade groups each argued.
  • Even if the Federal Reserve were to cap CBDC accounts at $5,000 per “end user,” the ABA estimates the deployment of digital central bank money could cause $720 billion in deposits to leave the banking system. 

Dive Insight:

Comments from the two banking trade groups came Friday, the last day they would have been accepted in relation to the Fed’s 40-page January report concerning the development of a CBDC.

As we have evaluated the likely impacts of issuing a CBDC, it has become clear that the purported benefits of a CBDC are uncertain and unlikely to be realized, while the costs are real and acute,” the ABA said in its letter.

The trade groups allege that the deployment of a CBDC would pose a…


Financial institutions respond to Federal Reserve CBDC paper – Ledger Insights

Multiple banking and finance industry bodies have responded to the U.S. Federal Reserve consultation on a potential central bank digital currency (CBDC) or digital dollar. Looking at three responses from the American Bankers Association (ABA), Bank Policy Institute (BPI), and the Institute of International Finance (IIF), none of them were particularly supportive, with the IIF being the least resistant.

All three had common themes, which included concerns that a CBDC will reduce deposits within the banking system and unclear compensation for intermediaries with a two-tier retail CBDC.

IIF concerned re costs of CBDC intermediation

The IIF asked to see a quantitive and qualitative assessment of the impact of a variety of CBDC designs. The most discussed format for issuing a CBDC is for the central bank to use intermediaries such as banks that would deal with customers. A particular concern for the IIF is that a CBDC might impose costly burdens on an intermediary, such as for anti-money laundering, with minimal or no payoff, given that CBDCs are intended to have low consumer costs, like cash.

“Without commensurate reward (it) may not attract any intermediaries…


The head of the Bank of France predicted the launch of CBDC in the next three to five years

Read Time:1 Minute, 27 Second

In the next three years, a “strong” national digital currency will appear in the world. This forecast was given by the Chairman of the Bank of France, Francois Villeroy de Galo, writes The Block.

This is how the head of the monetary authorities reacted to the question about the prospects for using CBDC for everyday operations.

“We did some experiments that brought us closer to this. They have not yet been summarized, but we can implement this in the next three years. There are fewer questions with wholesale CBDC,” the official said.

What is Central Bank Digital Currency (CBDC) )?

IMF Managing Director Kristalina Georgieva supported this position. She announced a “wide presence” of the CBDC in the next five years.

Participants in the Davos panel mentioned the digital naira, yuan and sand dollar projects of the Bahamas.

Georgieva also touched on the collapse of TerraUSD.

“When someone promises you a 20% return on something that is not backed by any assets, what would you call it? It’s a pyramid scheme for us.”, she said.

The IMF Managing Director expressed her sympathy for those who lost money in the Terra project. She advised to…


Inventing New Tech Is Fun, But Are The Old Ways Sometimes Best?

To succeed, Central Bank Digital Currencies (CBDC) need to work when the power goes down or you can’t get a phone signal. But it doesn’t need to complex. In fact, it could be embarrassingly low-tech.

One of the big questions when designing a CBDC for use in retail contexts is: how do we make it work offline?

To some, this may seem like a strange question to ask: the world is getting ever more connected, so why do we need to worry about the increasingly rare situations where you can’t get a connection? Sure, it would be nice to build a future payment system that works everywhere, in all situations. But at what price? Features such as “guaranteed receipt of funds even when you can’t get online to check with your bank” could turn out to be colossally expensive to implement. We need to be sure that the benefit is worth the cost.

This is a lesson that many highly successful technology firms have applied to great effect. Most famously, the iPhone’s success is due, in part, to Apple’s big bet that mobile networks and microprocessors…


Bitt Furthers Its Digital Currency Product Innovation

CEO of Bitt, Brian Popelka, stated, “We are pleased to welcome Baker to Bitt’s executive management. Baker’s leadership, knowledge, and experience from a decorated career at McAfee, Symantec, and GoDaddy, will be of immediate benefit to the entire Bitt team and the company’s strategic growth.”

As Chief Product Officer, Baker will lead Bitt’s product design, product management, product marketing, and customer success teams in partnership with engineering, marketing, and sales teams to drive massive adoption digital currency products and services. Baker said, “I am super excited about Bitt’s mission to provide low-cost, accessible digital currency solutions to the world. I am thrilled to join a market leader and look forward to leveraging my expertise to solidify and expand our leadership position in the global digital currency market category.”

Bitt has been on a steady growth path since early 2021 when it partnered with different central banks and stakeholders to deploy the world’s first CBDC pilot in a multinational currency union. This was closely followed by the deployment of the first live retail CBDC on the continent of Africa, and a stablecoin in Central America. “Bitt…