Banking and CBDC Weekly Roundup: 24/12/2024

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' weekly has you covered.

RBNZ Report Makes for Sobering Read

New research from the Reserve Bank of New Zealand suggests 90% of consumers are worried that a CBDC could be used to monitor or control their spending.

Other concerns include losing access to physical cash, with more than 18,000 people responding to the institution's online survey.

Director of money and cash Ian Woolford's stressed that coins and banknotes will remain in circulation as long as there's demand, with privacy a key factor in the design of any CBDC. He bluntly added:

"The Reserve Bank doesn’t care if you spend your money – physical or digital – on meat pies and lattes but does care if it is used to fund terrorism, for organised crime or money laundering."

Woolford went on to admit "we have more work to do" to convince consumers about the benefits.

RBI Governor Praises Digital Rupee

With so much concern in major economies about the potential ramifications of a CBDC, it's worth looking to a country where they have already been widely rolled out.

Outgoing Governor Shaktikanta Das says the Reserve Bank of India has been a "pioneer" with the digital rupee, adding:

"CBDC has a huge potential in the coming years, in the future. In fact, it is the future of currency."

No CBDC for Fiji

The Reserve Bank of Fiji has confirmed it is abandoning plans to launch a retail CBDC, becoming the latest country to do so.

Officials warned the digital nature of these assets carry "significant risks" — and instead, attention will turn to upgrading existing infrastructure.

However, they will continue to monitor developments on the international stage that "may influence Fiji's payment system moving forward."

'No to Digital Euro,' French MEP Says

We begin in Brussels, where a French Member of European Parliament has urged the ECB to abandon plans for a digital euro.

Sarah Knafo, who is part of the far-right Europe of Sovereign Nations Group, warned this CBDC would lead to the creation of a "dystopian world."

She accused the European Central Bank of having "totalitarian temptations" — and a digital euro could be used to control transactions, or even de-bank customers who make controversial posts on social media. Knafo added:

"It's time to bet on freedom. It's time for our states to invest in Bitcoin."

Knafo wants the EU to emulate the U.S. by establishing a strategic BTC reserve, telling her fellow lawmakers:

"It's time to change the paradigm. It's time to protect our people from inflation and the poor economic choices of our states."

Extreme wariness about CBDCs is common to the right of politics, with critics arguing such digital assets could be used to further policy objectives.

One Mexican billionaire, Ricardo Salinas Pliego, has previously claimed central banks could limit sales of everything from cigars to alcohol.

For its part, the ECB has stressed that privacy would play a key role in the digital euro — and offer anonymity that's comparable to cash. In any case, the institution is yet to make a concrete decision on whether to launch this CBDC — and isn't scheduled to do so until the end of 2025 at the earliest.

Tokenization Updates

Coinbase Predicts 'Tokenization Revolution'

Setting out its crypto market outlook for 2025, Coinbase argues that tokenization will be a dominant theme in the bull market over the coming year.

The exchange notes that the value of tokenized RWAs accelerated by 60% in the year to December 1, with analysis suggesting the market could end up being worth $30 trillion in just five years' time.

Noting that major asset managers such as Blackrock and Franklin Templeton are experimenting with this nascent technology, the report added:

"Eventually, we think tokenization can streamline the entire portfolio construction and investing process by bringing it onchain, although this may yet be a few years away."

However, Coinbase warned "unique challenges" remain — "including liquidity fragmentation across multiple chains and persistent regulatory hurdles."

Plume Lands $20M Funding Round

A startup that aims to enable users to invest in tokenized real-world assets — spanning everything from Pokémon cards to healthcare invoices — has reportedly secured $20 million in funding.

According to Fortune, Plume Network aspires to build a RWA finance ecosystem that'll initially attract crypto-native investors before attracting everyday consumers.

Executives say Plume wants to become a one-stop-shop for tokenization, and 180 projects are already building on top of its yet-to-be-launched infrastructure.

Use cases will include yield on tokenized T-bills, a blockchain-based prediction market, and trading for authenticated luxury items including watches and rare sneakers.

Sonnenshein Jumps Ship to Securitize

The former CEO of Grayscale Investments, Michael Sonnenshein, is joining Securitize as its chief operating officer.

Securitize CEO Carlos Domingo hopes the move will "empower investors to access the full potential of tokenized real-world assets," adding:

"Michael is a trailblazer whose strategic vision and ability to navigate complex regulatory landscapes have helped pave the way for establishing digital assets as a mainstream investment class."

Sonnenshein added that there is "massive demand for tokenization" — and his arrival comes at "a pivotal moment for the company and the industry."