Apple opens NFC and SE. An association of German banks questions the value of the digital euro, while the only financial institution offering a wallet for Jamaica's CBDC claims it adds friction to the user experience.
For all the key details of new Distributed Ledger Technology (DLT) projects in the banking world, real-world asset (RWA) tokenization, stablecoins, and central bank digital currency (CBDC) updates, the Observers 'Banking and CBDC Roundup' has you covered.
A small relief for the designers of digital euro and other NFC-based CBDCs happened this week: following its commitment to address EU Commission's antitrust charges, Apple announced that it would provide access to its NFC and Secure Element with the upcoming iOS update. The payment app designers will be able to access the hardware elements that were until now reserved only for Apple's own Apple Pay system. Users can also set their own default contactless app in their iPhone settings and double-click the side button to initiate a transaction.
To use the feature, however, the application owners should pay fees to Apple. This will probably become the next frontier of discussions for the developers of CBDC that is offered normally to users as a public service, free of charge.
On the marketing side, the European Central Bank has suffered a setback after a damning report suggested that the digital euro offers limited benefits for consumers and merchants alike.
Commissioned by the Association of German Cooperative Banks—which arguably would have a vested interest in maintaining the status quo—researchers warned the planned CBDC is overly complicated... and could end up slowing settlement times down, rather than speeding them up. The report mainly focused on the possible negative scenarios on the adoption path, such as fraud cases, extra burden on retailers and banking sector for the maintenance of the accounts and dependance on mobile phone infrastructure.
Meanwhile, Bundesbank President Joachim Nagel has admitted there's work to be done in winning round consumers, but warned change is needed in an increasingly online world.
Speaking to Bloomberg, he stressed that cash will go nowhere given 51% of transactions are still settled using banknotes and coins—and such assurances are crucial to "win over" older generations. Nagel added:
"You can’t close yourself off from it. You have to adapt to such new developments."
The ECB isn't the only central bank suffering from a bit of embarrassment this week. Why? Because the only bank currently able to offer a wallet for Jamaica's CBDC, JAM-DEX, has voiced concerns about utility and trading volumes. National Commercial Bank CEO Bruce Bowen was quoted by Radio Jamaica News as saying:
"The question that certainly we’ve raised, and there is dialogue going on, is it worth putting a lot of effort into eliminating that friction to use CBDC? Or, as an industry and a society, are we better to put that investment into just building the ecosystem?"
NCB offers a digital wallet called Lynk—and while Bowen says this concept has been "successful," demand for JAM-DEX appears to have been underwhelming to say the least.
Meanwhile, the deputy governor of the Reserve Bank of India has raised fears that with introduction of CBDC the bank deposit insurers should reassess their provisions. He suggested that CBDCs like the digital rupee could be regarded as "safe havens" in times of crisis—increasing the likelihood of bank runs and amplifying the pressure on the safeguarding mechanism.
“Given the inherent links between such systems and the objectives and operations of deposit insurers, it is expected that the topic of CBDC will continue to grow in relevance for deposit insurers,” he said.
And Pierre Poilievre, the Canadian Conservative leader who has long been a vocal advocate of Bitcoin, has urged Justin Trudeau's administration to ditch plans to launch a central bank digital currency—arguing "less government control" equals "more freedom and privacy."
It's time to put an end to creating a central bank digital currency in Canada.@MPTedFalk's Bill C-400 will: Ban central bank digital currency, protect cash use, ensure businesses accept it & maintain cash infrastructure.
— Pierre Poilievre (@PierrePoilievre) August 11, 2024
Less government control = more freedom & privacy for… pic.twitter.com/i2zyln69Tj
Poilievre's party has proposed a bill that would stop development in its tracks, and said in a statement:
"Conservatives believe that any digital currency should remain exclusively with the private sector so Canadians can make their own investment choices—free from government intervention."
Boerse Stuttgart Digital has been chosen as an official infrastructure partner for a new, blockchain-based digital bond being rolled out by the German bank KfW. Explaining the significance of the move, the financial institution's head of transaction management, Gaetano Panno, said:
"We are actively driving digitalization initiatives in the issuing and settlement process. The utilization of new technologies as part of the ECB trials enables us to technically process a 'delivery vs. payment' transaction and thus supports our digital learning journey."
Robinhood's CEO Vlad Tenev has also declared that he's bullish about the future of tokenization—telling Fortune magazine that "public blockchains do a lot of the heavy lifting when it comes to settlement and transactions."
Arguing that there's an "obvious technology advantage" in relying on this infrastructure, he added:
"The cost of running a crypto business is an order of magnitude lower."
This is of particular importance to firms like Robinhood, which depend on razor-thin profit margins following a race to the bottom in terms of transaction fees charged by trading platforms.