Friday, November 22, 2019

More Stepping Stones Towards The MOTB

Sweden's Central Bank Governor Lays Out Digital Currency Vision

Before a technological concept is introduced to the wider public, it is common for it to first undergo beta testing to iron out any deficiencies that may not be immediately obvious to the developers. An example of this in the UK is the latest instalment of the Football Manager franchise. Every year the maker Sports Interactive issues a beta version which players painstakingly test prior to the official release of the game. After feedback is analysed and acted upon, the aim then is for a smooth launch of the finished product.

Whilst on a much grander scale, beta testing will serve as an equally important aspect in how central banks plan to successfully implement their own variants of digital currency.

In one of my recent articles I discussed an appearance by Federal Reserve board member Lael Brainard at an event held in Washington D.C. called, ‘The Future of Money in the Digital Age‘. 
Present also at this event was the Governor of Sweden’s central bank (the Sveriges Riksbank) Stefan Ingves. During a panel discussion, Ingves laid out a six step criteria for the introduction of central bank digital currency. Before expanding on Sweden’s specific role pertaining to CBDC’s, here is a summary of the six steps in question:
  1. Large value and retail payments must be settled in central bank money anywhere around the world – in real time – 24 hours a day
  2. Cross currency and cross border payments must also be settled in central bank money under the same conditions
  3. A re-definition of what constitutes legal tender in the digital age
  4. A digital currency issued directly by the central bank and certified as legal tender
  5. Government sponsored digital identification as part of new regulations and a reinforcement of financial inclusion
  6. A requirement for physical money and a system to distribute banknotes in the event that the digital network goes down, to be under the control of the central bank

Out of all the six steps, number five is perhaps the most ambiguous. What it refers to is something Bank of England governor Mark Carney discussed in a speech at Mansion House in London last year. As part of the BOE’s objective to reform the UK’s RTGS payments system, they have been looking to utilise what is known as the ‘Legal Entity Identifier.’

1 comment:

frik said...

My version of "the final countdown":

We're leaving together,
But still it's farewell
And we'll come back after 7 years
To earth...
I guess there is no one to blame
We're leaving ground
Will things ever be the same again?
It's the final countdown
The final countdown
We're heading for HOME
And still we stand tall
'Cause maybe they've seen us go away
And welcome us all, yeah
With so many light years to go
And things to be found
I'm sure that they all will not miss us
It's the final countdown
The final countdown
The final countdown
The final countdown
It's the final countdown, yeah