Australia and Canada abandon retail CBDCs, as a new Atlantic Council report shows 44 countries are now piloting one. Meanwhile, HSBC buys and sells tokenized gold with the help of quantum-secure technology.
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.
First this week, IMF issued a reference paper for the CBDC adoption strategies. Based on the successes and failures of the countries in the organization's research sample, the authors grouped four key categories of actions: regulatory preparation, communication initiatives, design choices, and incentive mechanisms. For each category, the paper quotes actual examples from the CBDC projects around the world.
Some countries have abandoned their CBDC projects before considering the IMF's recommendations.
Australia has concluded that the potential benefits of digitized currency for consumers appears "modest or uncertain" at the moment. Because of this, the Reserve Bank is going to focus on wholesale CBDCs instead— arguing that the economic benefits here are easier to see.
The Bank of Canada's issued a similar statement, and announced it's also "scaling down its work" on a retail CBDC. Damning research released last year showed that 92% of consumers would prefer to continue using existing payment methods.
Nonetheless, a new study from the Atlantic Council CBDC tracker reveals that 134 countries representing 98% of the global economy are now exploring CBDCs.
That includes every single nation in the G20, with 44 countries now in the pilot stage, compared with 36 a year ago.
Researchers at the council say that, after disappointing levels of adoption, there are signs that demand for CBDCs is slowly rising in the three countries that have fully launched one: Jamaica, Nigeria and The Bahamas.
Pointing to why certain nations are so keen to develop a CBDC, the Atlantic Council noted:
"All original BRICS member states—Brazil, Russia, India, China, and South Africa—are piloting a CBDC. Since last year, BRICS has actively promoted developing an alternate payments system to the dollar."
They went on to predict that China may be prepared to fully rollout the digital yuan in 12 months' time, with over $1 trillion in transactions processed to date.
India is following the practices of China, where the retail CBDC was promoted by distributing government grants with the new digital money. On September 17, Prime Minister Narendra Modi launched the first government support program to be distributed in digital rupees. Around 12,000 women in the Odisha region will receive 10,000 rupees ($120) annual support for a duration of five years.
"The money will go directly into your bank accounts, there are no middlemen. It is linked to RBI digital currency pilot. This digital currency can be spent whenever you want," Modi announced during the speech.
In Indonesia, the National Coordination Meeting for the Acceleration and Expansion of Regional Digitalization, held on September 17th, hosted representatives of the Central Bank, Minister of Finance, Minister of Home Affairs, and other concerned government institutions. The participants presented the country's digitalization plans, focusing on the financial and payment infrastructure; however, the CBDC topic was discussed.
It's also been a busy week in the tokenization space.
Eleven members from the UK Finance association—including Barclays, HSBC, Mastercard and Visa—have completed what's known as a "Regulated Liability Network (RLN) experimentation phase."
In plainer English? "A new type of financial market infrastructure that can deliver new capabilities for payments and settlement, including tokenization and programmability."
They concluded that RLN provides a viable platform, and the next step is to engage with regulators. Potential use cases include cutting down on fraud and streamlining the home buying process, which currently takes months, reducing the cost of failed payments and others.
UK Finance director Jana Mackintosh says the private sector "wants to invest in the future of commercial bank money," adding:
"Every year, over £11 trillion worth of payments are processed in the UK, powering the economy. The success of the RLN experiment shows the potential of technology to transform the customer experience and deliver economic value and benefits for society."
In other developments, Hedera has also created a new Asset Tokenization Studio—an open-source toolkit that allows tokenized bonds and equities to be configured, issued and managed on its network.
Executives hope this will lower technical barriers to entry while allowing greater volumes of real-world assets to migrate on-chain in a compliant way.
Following in BlackRock's footsteps, WisdomTree has launched a new Connect platform that's designed to allow a broader range of users to gain access to tokenized real-world assets.
In time, the service will mean digital funds can be accessed by retail users who have their own self-hosted wallets. WisdomTree's head of digital assets, Will Peck, explained:
"With increasing interest in tokenized real world assets, WisdomTree Connect opens up additional business-to-business (B2B) and business-to-business-to-consumer (B2B2C) opportunities for WisdomTree to provide access to digital funds to on-chain firms without leaving the ecosystem."
Finally, HSBC's revealed that it has successfully bought and sold tokenized physical gold using quantum-secure technology.
This builds upon the launch of the HSBC Gold Token in Hong Kong earlier this year, meaning retail investors could gain fractional ownership of the precious metal—opening the door to "cutting-edge cybersecurity protection."