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Five Highlights From Our “Deep Dive In To CBDCs” Conf. Call on 9/9/20

We hosted a special “Stablecoins Are Killing It” on September 9th with Ryan Todd and Mike Rogers, CPA with The Block. During the call Ryan and Mike discussed highlights from their 92 page August report “”. You can watch the whole show below (it’s an hour well spent):

Or you can from the call and read the five highlights below:

1. CBDCs Are Universally Accessible Electric Central Bank Issued Money

While that simple definition helps put CBDCs in to context, it belies the fact that there are expanding gray zones driven by the rise of stablecoins and new payment innovations, such that it’s hard to place CBDCs in one clean box.

The latest IMF matrix below differentiates different “money types”, and signals how programmability is really the defining feature of CBDCs.

2. While 2020 Has Seen An Explosion Of Interest In CBDCs, It’s Still Not A Top Priority For Most Central Banks

The impetus behind the report was the explosion of interest, research, and public announcements by Central Banks. While Libra and China’s CBDC has stoked further interest in CBDCs, this is a process that many Central Banks have been engaged in for years. That said, it is still not a Top 5 priority for most Central Banks:

Source: BIS, Google Scholar, Central Banking

3. There Are Various Drivers Of Interest For Central Banks To Engage With CBDCs

Emerging markets have the most motivation to explore CBDCs, with their need for financial inclusion and increased payment efficiency.

The Fed has stated that it’s most focused on financial stability, so programability is not an early priority. The Fed announced a multi year partnership with MIT to research CBDCs and potentially develop an internal prototype.

4. With 80% Of Central Banks Indicating They Are Working On CBDCs, Progress Is Being Made Around The World

As money becomes increasingly borderless, we’ll likely see higher competition and substitution, which brings risks and concerns for central banks. has tried to focus the risk to the U.S. of lagging behind in developing a CBDC which could put it’s status as the global currency reserve at risk.

There have been over 20 papers written on the Bank of Canada’s CBDC project, which included a wholesale pilot () that engaged with Singapore’s . They proved the ability of a wholesale CBDC to effectively make cross border payments.

With over 700 islands, , and plans a national roll out in Q4 2020.

There are five islands prepping for .

The tech is not the problem. Many central banks are not even considering blockchain. It’s about balancing the needs of the different stakeholders.

5. There Has Been Nothing Officially Released From China’s CBDC During It’s Pilot Phase, But It’s The Elephant In The Room

China is trialing it’s DC/EP (Digital Currency/Electronic Payment) program in four cities today (a Shenzhen, Xiongan, Chengdu, and Suzhou), where it’s being used for transportation, education, healthcare, and other consumer goods and services. The DCEP purposely looks like other electronic payment solutions, so it should be easy for Chinese consumers to transition from and , the dominant electronic payment providers in China today. Once DCEP has enough traction internally, many expect China to “internationalize” their currency. Which should be a wake up call to the Fed and other central banks around the world.

Libra was barely mentioned on the call, even though they’re still making major hires as they pivot to a “payment network.” But the major takeaway from the call was that there’s a growing amount of activity around the world by central banks, and it’s viewed as being highly positive for the cryptocurrency landscape broadly.

If you thought this was worth at least .000001 Bitcoin, please clap below (up to 50 times). Thx!

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Lou Kerner

Believe Crypto is the biggest thing to happen in the history of mankind. Focused on community (founded the CryptoOracle Collective &CryptoMondays)