This document discusses retail central bank digital currency (CBDC) and monetary policy implications. It begins with an agenda that focuses on monetary economics and implications of technical features of CBDC. It then provides introductions to federal reserve money supply classifications and traditional monetary policy tools and frameworks. Sections discuss retail CBDC design considerations like interest rates, quantity limits, and convertibility. It poses questions about CBDC implications for monetary policy transmission, financial stability, and payment systems. The document also discusses Hong Kong and Singapore's monetary policy models and how CBDC could fit within their frameworks and managed exchange rate systems. It raises risks and mitigation strategies related to CBDC adoption.
Central banks have a mandate for monetary and financial stability in their jurisdictions and, explicitly or
implicitly, to promote broad access to safe and efficient payments. A core instrument by which central
banks carry out their public policy objectives is providing the safest form of money to banks, businesses
and the public â central bank money.
The Digital Programmable Euro, Libra and CBDC: Implications for European BanksPhilipp Marcello Schulden
Â
On July 29, 2020 the Frankfurt School Blockchain Center has published a paper that sheds light on the perception of these payment initiatives by interviewing more than 50 senior experts. In this study, we analyze the impact of digital programmable Euro initiatives, such as the Libra stablecoin, and CBDCs, on banks. We find that both Libra and a Euro CBDC might heavily affect European banks.
Complete Guide to CBDC (Central Bank Digital Currency)OliviaJune1
Â
The CBDC is the digital currency managed by central banks, known as the digital fiat or digital base money. CBDC is a virtual digital token of money. Sinine currencies, cryptocurrency certifications and blockchain education are popular amongst the people as Blockchain technology has spread across the world.
Central banks have a mandate for monetary and financial stability in their jurisdictions and, explicitly or
implicitly, to promote broad access to safe and efficient payments. A core instrument by which central
banks carry out their public policy objectives is providing the safest form of money to banks, businesses
and the public â central bank money.
The Digital Programmable Euro, Libra and CBDC: Implications for European BanksPhilipp Marcello Schulden
Â
On July 29, 2020 the Frankfurt School Blockchain Center has published a paper that sheds light on the perception of these payment initiatives by interviewing more than 50 senior experts. In this study, we analyze the impact of digital programmable Euro initiatives, such as the Libra stablecoin, and CBDCs, on banks. We find that both Libra and a Euro CBDC might heavily affect European banks.
Complete Guide to CBDC (Central Bank Digital Currency)OliviaJune1
Â
The CBDC is the digital currency managed by central banks, known as the digital fiat or digital base money. CBDC is a virtual digital token of money. Sinine currencies, cryptocurrency certifications and blockchain education are popular amongst the people as Blockchain technology has spread across the world.
Central Bank Digital Currency in the Context of Covid-19: What the Future Hol...Selcen Ozturkcan
Â
Ozturkcan, S., "Central Bank Digital Currency in the Context of Covid-19: What the Future Holds for Marketers and Consumers?" Annual Conference of the Academy of Marketing: Reframing Marketing Priorities, July 5-7, 2021, Online.
Drivers for CBDC and implications for architectureDavid Birch
Â
A discussion of the key drivers for central bank digital currency and the implications of those drivers for the likely technical architecture of a retail implementation.
Will Digital Currencies Break The Banking System? Harsh Chitroda
Â
So, when we ask a question of how will digital currency affect banks? So, we can say that Digital currencies are likely to give central banks more insight into the movement of money in the economy. The widespread use of electronic payment systems may also aid authorities to crack down on money-laundering and terrorist-financing efforts. Or on the other hand, we can also say that the Banks are afraid because Cryptocurrency exchange is a non-banking transaction. and if the Cryptos gain favours it can disrupt the ability of banks to create money. If this disruption alarms the central banks, then they will do something about it.
IMF Fintech report - cross board paymentClement Hsieh
Â
The PPT content comes from IMF "Fintech and Financial Services - Initial Considerations" report. It gives clear overview to cross board payment, so it is used in our graduate Fintech course as case study.
Central banks and the future of digital money. A practical proposal for centr...eraser Juan JosÊ Calderón
Â
Central banks and the future of digital money
A practical proposal for central bank digital currencies on the Ethereum blockchain.
CONSENSYS WHITEÂ PAPER
Round 2 - The Future of Digital Currency - Bhupinder DulkuBhupinder Dulku
Â
Bhupinder Dulku's Round 2 submission of Project Firefly & Credit Suisse Research Institute's Academy Challenge 2018. This paper placed Top 4 (Chairman's Circle) against 150 participants from 20 different countries.
Central bank digital currencies - full reserve banks and Libra..?Simon Lelieveldt
Â
Slides prepared for the economists cafĂŠ at the Rabobank, June 26, 2019, with the goal of clarifying how full reserve banken and central bank digital currencies may be niece and nephew while Libra remains an Orphan.
We're in the digital era. New strategies enable young people to work with current trends in practically every field to replace outdated ways. The Earth is drastically modified only after the virus COVID-19 dies
From Bitcoin to Central Bank Digital Currencies: The Digitization of Money & ...David Bieri
Â
The digital revolution in money and finance is in the process of fundamentally transforming the traditional model of monetary exchange. Platform-based fintech and digital currencies enable near instantaneous peer-to-peer transfer of funds in ways that were hitherto not possible. The prospect of new digital currencies and other crypto-assets that go beyond national borders promise to redefine the way in which payment and settlement systems operate, reconstituting monetary-financial relations between users. This is likely to lead to changes in the architecture of the international monetary system and the role of government-issued money. In this presentation, I explore the digitization of money and its consequences.
Our workshop on âCentral Bank Digital Currencies â Do we need them?â is scheduled for the 29th of October. Our speakersâ panel includes business representatives, stable coin providers and representatives of central banks from Europe and beyond. Scheduled for the 29th of October, participation is open to all and the agenda as well as more details are available online!
The BRICS proposals establish two separate institutions, the Contingency Reserve Arrangement (CRA) and the New Development Bank (NDB)
The CRA is a virtual institution whereas the NDB will be an institution that will be established
The NDB will have its headquarters in Shanghai and a regional office in Johannesburg
What is the context of these proposals?
Major gap in development finance to fund long-term infrastructure and sustainable development
The departure by US from expansionary fiscal policy led to large outflows from emerging economies and significant decline in exchange rates
This experience indicated potential vulnerability of emerging economies to shocks emanating from developed countries
Central Bank Digital Currency in the Context of Covid-19: What the Future Hol...Selcen Ozturkcan
Â
Ozturkcan, S., "Central Bank Digital Currency in the Context of Covid-19: What the Future Holds for Marketers and Consumers?" Annual Conference of the Academy of Marketing: Reframing Marketing Priorities, July 5-7, 2021, Online.
Drivers for CBDC and implications for architectureDavid Birch
Â
A discussion of the key drivers for central bank digital currency and the implications of those drivers for the likely technical architecture of a retail implementation.
Will Digital Currencies Break The Banking System? Harsh Chitroda
Â
So, when we ask a question of how will digital currency affect banks? So, we can say that Digital currencies are likely to give central banks more insight into the movement of money in the economy. The widespread use of electronic payment systems may also aid authorities to crack down on money-laundering and terrorist-financing efforts. Or on the other hand, we can also say that the Banks are afraid because Cryptocurrency exchange is a non-banking transaction. and if the Cryptos gain favours it can disrupt the ability of banks to create money. If this disruption alarms the central banks, then they will do something about it.
IMF Fintech report - cross board paymentClement Hsieh
Â
The PPT content comes from IMF "Fintech and Financial Services - Initial Considerations" report. It gives clear overview to cross board payment, so it is used in our graduate Fintech course as case study.
Central banks and the future of digital money. A practical proposal for centr...eraser Juan JosÊ Calderón
Â
Central banks and the future of digital money
A practical proposal for central bank digital currencies on the Ethereum blockchain.
CONSENSYS WHITEÂ PAPER
Round 2 - The Future of Digital Currency - Bhupinder DulkuBhupinder Dulku
Â
Bhupinder Dulku's Round 2 submission of Project Firefly & Credit Suisse Research Institute's Academy Challenge 2018. This paper placed Top 4 (Chairman's Circle) against 150 participants from 20 different countries.
Central bank digital currencies - full reserve banks and Libra..?Simon Lelieveldt
Â
Slides prepared for the economists cafĂŠ at the Rabobank, June 26, 2019, with the goal of clarifying how full reserve banken and central bank digital currencies may be niece and nephew while Libra remains an Orphan.
We're in the digital era. New strategies enable young people to work with current trends in practically every field to replace outdated ways. The Earth is drastically modified only after the virus COVID-19 dies
From Bitcoin to Central Bank Digital Currencies: The Digitization of Money & ...David Bieri
Â
The digital revolution in money and finance is in the process of fundamentally transforming the traditional model of monetary exchange. Platform-based fintech and digital currencies enable near instantaneous peer-to-peer transfer of funds in ways that were hitherto not possible. The prospect of new digital currencies and other crypto-assets that go beyond national borders promise to redefine the way in which payment and settlement systems operate, reconstituting monetary-financial relations between users. This is likely to lead to changes in the architecture of the international monetary system and the role of government-issued money. In this presentation, I explore the digitization of money and its consequences.
Our workshop on âCentral Bank Digital Currencies â Do we need them?â is scheduled for the 29th of October. Our speakersâ panel includes business representatives, stable coin providers and representatives of central banks from Europe and beyond. Scheduled for the 29th of October, participation is open to all and the agenda as well as more details are available online!
The BRICS proposals establish two separate institutions, the Contingency Reserve Arrangement (CRA) and the New Development Bank (NDB)
The CRA is a virtual institution whereas the NDB will be an institution that will be established
The NDB will have its headquarters in Shanghai and a regional office in Johannesburg
What is the context of these proposals?
Major gap in development finance to fund long-term infrastructure and sustainable development
The departure by US from expansionary fiscal policy led to large outflows from emerging economies and significant decline in exchange rates
This experience indicated potential vulnerability of emerging economies to shocks emanating from developed countries
The Key factor that has resulted policy issues in equity and debt of international Finance due to the âInternational finance liberalizationâ
There are certain factors that could result policy issues in equity and debt of international finances which has furnished below.
Covering the sequence and order of financial liberalisation,
Capital controls,
exchange rate policy
asymmetric information
Data Quality in the Banking Industry: Turning Regulatory Compliance into Busi...Precisely
Â
During the last 15 years, regulatory requirements in financial services have grown substantially in order to reduce the risk of global, systemic economic failure. Quality data provided through effective data governance and data quality processes is central to achieving effective compliance reporting. Not only does data quality help ensure accurate reporting, but successful compliance significantly enhances other business decisions which rely on high quality data.
This webinar looks at the ramp up in reporting complexity, how successful compliance is linked to data governance and data quality, and how data quality helps empower financial institutions to make better decisions to increase revenue and decrease expense.
View this webinar on-demand for a discussion on:
⢠Tracing the background for regulatory reporting and key financial regulations
⢠Understanding how data quality helps institutions succeed with regulatory reporting compliance
⢠How regulatory reporting improves data for other business decisions
⢠How financial institutions leverage Trillium DQ to deliver quality data
The 2018 edition of the OECD Business and Finance Outlook addresses connectivity, both among institutions within the global financial system and among countries. Almost a decade on from the 2008 financial crisis, the Outlook examines new risks to financial stability that will put financial reforms to the test, focusing in particular on the normalisation of monetary policy, debt problems and off-balance sheet activity in China. It also examines how supply-side and demand-side policies can help ensure foreign infrastructure investment is high quality, sustainable and works for all, with particular reference to Chinaâs Belt and Road Initiative. Find out more information at https://oe.cd/2lH
New Programmable Money and the Decline of the USD as the Reserve Currency. ESS Webinar https://ess.org.sg/events/will-the-us-dollar-continue-to-be-the-dominant-reserve-currency-2/
The COVID19 has changed the corporate landscape and the priorities of the government.
How should individual respond to these changes especially the rise of China?
Professor Lee will share his experience and observations from his 30 years in the market, and the global implications of the Chinese Central Bank Digital Currency and Libra Cryptocurrency.
Presentation at Devcon4 at Prague on Scalability and Mass Adoption.
Slide 18 is modified from Bank Negara and Alliance of Financial Inclusion's e-Financial Inclusion slide.
What is the underlying philosophy of Token Economy? Why are we interested in blockchain - a very inefficient distributed ledger? Why Inclusive Blockchain and Financial Inclusion are the keys to sustainable Token Economy in a highly regulated environment? Does Fractional Tradable Consensus Trust Carrier have any economic and financial value?
Foreword by David LEE Kuo Chuen for 52 Stories of Fintech Enterepreneurs compiled by Chia Hock Lai and Varun Mittal in commemoration of Singapore's 52nd birthday.
This talk will focus on the role of blockchain in the new digital economy and the characteristics of a sustainable blockchain company. Professor Lee will talk about the 4Ds and LASIC, Hinternet and the type of deep business skill and strategy that are needed to excel in the blockchain industry. Those who are looking into fundraising by ICO/ITSâs and investing in Blockchain technology will find this talk interesting.
how to swap pi coins to foreign currency withdrawable.DOT TECH
Â
As of my last update, Pi is still in the testing phase and is not tradable on any exchanges.
However, Pi Network has announced plans to launch its Testnet and Mainnet in the future, which may include listing Pi on exchanges.
The current method for selling pi coins involves exchanging them with a pi vendor who purchases pi coins for investment reasons.
If you want to sell your pi coins, reach out to a pi vendor and sell them to anyone looking to sell pi coins from any country around the globe.
Below is the contact information for my personal pi vendor.
Telegram: @Pi_vendor_247
Empowering the Unbanked: The Vital Role of NBFCs in Promoting Financial Inclu...Vighnesh Shashtri
Â
In India, financial inclusion remains a critical challenge, with a significant portion of the population still unbanked. Non-Banking Financial Companies (NBFCs) have emerged as key players in bridging this gap by providing financial services to those often overlooked by traditional banking institutions. This article delves into how NBFCs are fostering financial inclusion and empowering the unbanked.
how to sell pi coins at high rate quickly.DOT TECH
Â
Where can I sell my pi coins at a high rate.
Pi is not launched yet on any exchange. But one can easily sell his or her pi coins to investors who want to hold pi till mainnet launch.
This means crypto whales want to hold pi. And you can get a good rate for selling pi to them. I will leave the telegram contact of my personal pi vendor below.
A vendor is someone who buys from a miner and resell it to a holder or crypto whale.
Here is the telegram contact of my vendor:
@Pi_vendor_247
how can i use my minded pi coins I need some funds.DOT TECH
Â
If you are interested in selling your pi coins, i have a verified pi merchant, who buys pi coins and resell them to exchanges looking forward to hold till mainnet launch.
Because the core team has announced that pi network will not be doing any pre-sale. The only way exchanges like huobi, bitmart and hotbit can get pi is by buying from miners.
Now a merchant stands in between these exchanges and the miners. As a link to make transactions smooth. Because right now in the enclosed mainnet you can't sell pi coins your self. You need the help of a merchant,
i will leave the telegram contact of my personal pi merchant below. đ I and my friends has traded more than 3000pi coins with him successfully.
@Pi_vendor_247
Falcon stands out as a top-tier P2P Invoice Discounting platform in India, bridging esteemed blue-chip companies and eager investors. Our goal is to transform the investment landscape in India by establishing a comprehensive destination for borrowers and investors with diverse profiles and needs, all while minimizing risk. What sets Falcon apart is the elimination of intermediaries such as commercial banks and depository institutions, allowing investors to enjoy higher yields.
If you are looking for a pi coin investor. Then look no further because I have the right one he is a pi vendor (he buy and resell to whales in China). I met him on a crypto conference and ever since I and my friends have sold more than 10k pi coins to him And he bought all and still want more. I will drop his telegram handle below just send him a message.
@Pi_vendor_247
Financial Assets: Debit vs Equity Securities.pptxWrito-Finance
Â
financial assets represent claim for future benefit or cash. Financial assets are formed by establishing contracts between participants. These financial assets are used for collection of huge amounts of money for business purposes.
Two major Types: Debt Securities and Equity Securities.
Debt Securities are Also known as fixed-income securities or instruments. The type of assets is formed by establishing contracts between investor and issuer of the asset.
⢠The first type of Debit securities is BONDS. Bonds are issued by corporations and government (both local and national government).
⢠The second important type of Debit security is NOTES. Apart from similarities associated with notes and bonds, notes have shorter term maturity.
⢠The 3rd important type of Debit security is TRESURY BILLS. These securities have short-term ranging from three months, six months, and one year. Issuer of such securities are governments.
⢠Above discussed debit securities are mostly issued by governments and corporations. CERTIFICATE OF DEPOSITS CDs are issued by Banks and Financial Institutions. Risk factor associated with CDs gets reduced when issued by reputable institutions or Banks.
Following are the risk attached with debt securities: Credit risk, interest rate risk and currency risk
There are no fixed maturity dates in such securities, and assetâs value is determined by companyâs performance. There are two major types of equity securities: common stock and preferred stock.
ď Common Stock: These are simple equity securities and bear no complexities which the preferred stock bears. Holders of such securities or instrument have the voting rights when it comes to select the companyâs board of director or the business decisions to be made.
ď Preferred Stock: Preferred stocks are sometime referred to as hybrid securities, because it contains elements of both debit security and equity security. Preferred stock confers ownership rights to security holder that is why it is equity instrument
<a href="https://www.writofinance.com/equity-securities-features-types-risk/" >Equity securities </a> as a whole is used for capital funding for companies. Companies have multiple expenses to cover. Potential growth of company is required in competitive market. So, these securities are used for capital generation, and then uses it for companyâs growth.
Concluding remarks
Both are employed in business. Businesses are often established through debit securities, then what is the need for equity securities. Companies have to cover multiple expenses and expansion of business. They can also use equity instruments for repayment of debits. So, there are multiple uses for securities. As an investor, you need tools for analysis. Investment decisions are made by carefully analyzing the market. For better analysis of the stock market, investors often employ financial analysis of companies.
Even tho Pi network is not listed on any exchange yet.
Buying/Selling or investing in pi network coins is highly possible through the help of vendors. You can buy from vendors[ buy directly from the pi network miners and resell it]. I will leave the telegram contact of my personal vendor.
@Pi_vendor_247
The European Unemployment Puzzle: implications from population agingGRAPE
Â
We study the link between the evolving age structure of the working population and unemployment. We build a large new Keynesian OLG model with a realistic age structure, labor market frictions, sticky prices, and aggregate shocks. Once calibrated to the European economy, we quantify the extent to which demographic changes over the last three decades have contributed to the decline of the unemployment rate. Our findings yield important implications for the future evolution of unemployment given the anticipated further aging of the working population in Europe. We also quantify the implications for optimal monetary policy: lowering inflation volatility becomes less costly in terms of GDP and unemployment volatility, which hints that optimal monetary policy may be more hawkish in an aging society. Finally, our results also propose a partial reversal of the European-US unemployment puzzle due to the fact that the share of young workers is expected to remain robust in the US.
What website can I sell pi coins securely.DOT TECH
Â
Currently there are no website or exchange that allow buying or selling of pi coins..
But you can still easily sell pi coins, by reselling it to exchanges/crypto whales interested in holding thousands of pi coins before the mainnet launch.
Who is a pi merchant?
A pi merchant is someone who buys pi coins from miners and resell to these crypto whales and holders of pi..
This is because pi network is not doing any pre-sale. The only way exchanges can get pi is by buying from miners and pi merchants stands in between the miners and the exchanges.
How can I sell my pi coins?
Selling pi coins is really easy, but first you need to migrate to mainnet wallet before you can do that. I will leave the telegram contact of my personal pi merchant to trade with.
Tele-gram.
@Pi_vendor_247
The Evolution of Non-Banking Financial Companies (NBFCs) in India: Challenges...beulahfernandes8
Â
Role in Financial System
NBFCs are critical in bridging the financial inclusion gap.
They provide specialized financial services that cater to segments often neglected by traditional banks.
Economic Impact
NBFCs contribute significantly to India's GDP.
They support sectors like micro, small, and medium enterprises (MSMEs), housing finance, and personal loans.
what is the best method to sell pi coins in 2024DOT TECH
Â
The best way to sell your pi coins safely is trading with an exchange..but since pi is not launched in any exchange, and second option is through a VERIFIED pi merchant.
Who is a pi merchant?
A pi merchant is someone who buys pi coins from miners and pioneers and resell them to Investors looking forward to hold massive amounts before mainnet launch in 2026.
I will leave the telegram contact of my personal pi merchant to trade pi coins with.
@Pi_vendor_247
Introduction to Indian Financial System ()Avanish Goel
Â
The financial system of a country is an important tool for economic development of the country, as it helps in creation of wealth by linking savings with investments.
It facilitates the flow of funds form the households (savers) to business firms (investors) to aid in wealth creation and development of both the parties
What price will pi network be listed on exchangesDOT TECH
Â
The rate at which pi will be listed is practically unknown. But due to speculations surrounding it the predicted rate is tends to be from 30$ â 50$.
So if you are interested in selling your pi network coins at a high rate tho. Or you can't wait till the mainnet launch in 2026. You can easily trade your pi coins with a merchant.
A merchant is someone who buys pi coins from miners and resell them to Investors looking forward to hold massive quantities till mainnet launch.
I will leave the telegram contact of my personal pi vendor to trade with.
@Pi_vendor_247
The Implications of Retail CBDCs for Monetary Policy
1.
2. Agenda
⢠There have been a lot of discussions on Wholesale CBDC,
the possible technical features and the design thinking
behind the new digital currency/electronic payment
system.
⢠There are few discussions on Retail CBDC on monetary
policy, with the exception of a number of papers by
academics, as well as white paper and technical papers
published by BIS, PBoC, HKMA and BoT.
⢠We intend to focus on the monetary economics, especially
in relation to an open economy, some recent
developments, as well as the implications of some
significant technical features.
⢠As the possibilities are aplenty, we posed certain
questions related to monetary policy with the use of
nascent technologies such as DLT, Smart Contacts and
DeFi (Decentralized Finance).
3. CONTENTS
01 02
03 04
Introduction of federal
reserve and money supply.
Introduction of Monetary Policy
Hong Kong Model What About Singapore?
Introduction of CBDC
All About CBDC
Beyond Monetary Policy
05
5. 01 Introduction of Monetary Policy
⢠Objective - Ensuring economic and
financial stability
⢠Targets - Maximum employment, and/or
low and stable inflation.
⢠Framework - Support liquidity in key
financial markets and maintain the flow of
credit.
⢠Policy tools - Money Supply, Interest Rate
(Long and Short Term), Reserve Ratio,
Open Market Operations.
Traditional Monetary Policy
6. M0
M1
M2
M1 plus savings deposits, small-
denomination time deposits (those
issued in amounts of less than
$100,000), and retail money market
mutual fund shares.
The sum of currency held by the
public and transaction deposits
at depository institutions
(which are financial institutions
that obtain their funds mainly
through deposits from the
public, such as commercial
banks, savings and loan
associations, savings banks, and
credit unions).
The sum of currency in circulation
and reserve balances (deposits held
by banks and other depository
institutions in their accounts at the
Federal Reserve).
01 Introduction of Monetary Policy
Federal Reserve:
The money supply is the total amount of money: cash, coins, and balances in bank accounts â in
circulation.
https://www.federalreserve.gov/faqs/money_12845.htm
7. 01 Introduction of Monetary Policy
Previously, the money supply has exhibited close
relationships with important economic variables such
as GDP and the price level.
Central banks have at times used measures of the
money supply as an important guide in the conduct of
monetary policy.
Since 2008, however, the relationships have been quite
unstable.
As a result, the importance of the money supply as a
tool for the conduct of monetary policy in many
countries has diminished over time.
Money Supply Alone Is Not Sufficient
https://www.federalreserve.gov/faqs/money_12845.htm
8. Liquidity Trap and
Policy Impotency
Purchase of LT
bonds resulting in
zero or negative ST
interest rates
Liquidity Crunch
and Asset Price
Inflation
Asset Price
Inflation with huge
central bank
balance sheet
Foreign
Exchange Risk
Stress in currency
and local bond
markets due to
COVID-19
Systematic
Vulnerabilities
A dedicated policy
process is needed to
operationalize new
policy function: Micro
and Macro Prudential
Challenges
01 Introduction of Monetary Policy
https://www.imf.org/en/About/Factsheets/Sheets/2016/08/01/16/20/Monetary-Policy-and-Central-Banking
9. 01 Introduction of Monetary Policy
Nominal (Policy) Rate
= LR Real Rate
+ f (LR inflation gap
and LR output gap)
10. Alter the Nominal Rates when potential output and inflation
deviate from long term rates.
Large Negative Rates! Prescriptions not working as well.
Assets Inflation is secondary but a challenge.
01 Introduction of Monetary Policy
11. 01 Introduction of Monetary Policy
⢠Simple rules for the policy rate do not explicitly recognize
that the monetary policy toolkit includes other toolsâ
notably, large-scale asset purchases and forward
guidance, which are especially relevant when the policy
rate is constrained by the Effective Lower Bound (ELB).
⢠ELB refers to the point at which further cuts in the main
monetary policy interest rate no longer provide stimulus
to aggregate demand and GDP or at which adverse
effects, such as in the financial sector, where financial
asset prices can rise.
⢠For many countries in recent years and especially in the
aftermath of the 2007-2010 Global Financial crisis and
NOW, policy interest rates have been set well below the
equilibrium interest rate to provide support to demand,
output and jobs and reduce the risks of deflation.
Effective Lower Bound
https://www.federalreserve.gov/monetarypolicy/2021-07-mpr-part2.htm
13. 01 Introduction of Monetary Policy
⢠An Overnight Reverse Repo (ON-RR) is a
short-term agreement to purchase
securities in order to sell them back at a
slightly higher price.
⢠Repos and reverse repos are used for
short-term borrowing and lending, often
overnight.
⢠Central banks use reverse repos to add
money to the money supply via open
market operations.
Temporary OMO (Open Market Operation)
https://www.investopedia.com/terms/r/reverserepurchaseagreement.asp
14. 01 Introduction of Monetary Policy
⢠The intention of the ON-RRP facility was to
expand the reach of Fed liabilities, permitting
better control of overnight interest rates.
⢠Frost et al. (2015):
an ON-RRP facility, paying a high interest
rate on overnight balances at the Fed
increases the probability of flight to safety.
⢠Greenwood et al. (2016):
argued that a large central bank balance
sheet, coupled with an active ON-RRP facility,
could promote efficiency.
⢠Flight to Safety or Promote Efficiency with
Retail CBDC?
Overnight Reverse Repo Purchase (ON-RRP)
The Introduction of CBDC has implications!
16. 02 All About CBDC
Retail CBDC
⢠Electronic
⢠Widely Available
⢠Accessible Within and Outside
the Jurisdiction: A New Global
Asset Class?
⢠Central Bank Issued
⢠Liability or Digital Payment System?
⢠Authorised, Synthetic or Quasi CBDC?
⢠Full reserved or backed by a single
or a basket of CBDCs?
⢠Bearer Instrument
17. Deeper Look into Retail CBDC:
Unbundling: A store of value, a medium of exchange, and a unit of account
⢠A store of Value
Increased demand from local and foreign investors â monetary policy (MP) may become more
pronounced especially if available 24/7, more inclusive and interest bearing
⢠A medium of Exchange
Once money becomes digital, it cannot be independent of the design of the payment and settlement
systems, as well as individual or overall quantity restrictions
⢠A unit of Account
Complementary or Substitute. Complementary (non-interest bearing and 1 to 1), Substitute (interest
rate differential, lower risk, more convenient, bypass third party control?)
02 All About CBDC
18. 02 All About CBDC
USA Singapore China Hong Kong
M0 The sum of currency in circulation
and reserve balances (deposits held
by banks and other depository
institutions in their accounts at the
Federal Reserve)
Currency in
circulation
Currency in
Circulation
**M0 is
referred to
currency in
circulation only
1. Certificates of Indebtedness,
which provide full backing to the banknotes
issued by note-issuing banks.
2. Government-issued notes and coins in
circulation
3. Aggregate Balance,
which is the sum of clearing account balances
kept with the HKMA
4. Exchange Fund Bills and Notes
Issued by the HKMA on behalf of the
Government for the account of the Exchange
Fund
19. 02 All About CBDC
⢠CIAC = Coin + Notes = Cash
⢠M0 = Narrow Money = CIAC
⢠M1 = Narrow Money = CIAC +
Demand Deposits
⢠M2 = CIAC + Demand Deposit
+ Savings & Other Deposits +
Fixed Deposits
Before CBDC After CBDC
⢠CIAC* = Coins + Notes + Retail
CBDC?
⢠M0 = Narrow Money = CIAC*?
⢠M1 = Narrow Money = CIAC* +
Demand Deposits?
⢠M2 = Broad Money = CIAC* +
Demand Deposit + Savings &
Other Deposits + Fixed Deposits?
Or CBDC is neither M0 or M1 but M0.5? An entire new classification!
20. Two Elements of rCBDC
02 All About CBDC
⢠Digital Currency:
⢠the asset and payment instrument per
se.
⢠pertains to the economic design,
concerning aspects such as access,
remuneration, quantitative limits, and
convertibility.
⢠Electronic Payments:
⢠the underlying infrastructure that
allows CBDC to be transferred and
used for payments.
⢠concerns how a CBDC is provisioned,
its functional design, the technology
to be used, and the operational
processes and rules to be
implemented.
⢠concerns with Public Private
Partnership to provide a CBDC
infrastructure.
HKMA (2021), e_HKD: A Technical Perspective
21. 02 All About CBDC
What is CBDC? More Questions
⢠Different rCBDC have different
implications and effects on MP
⢠What are the economic
consequences in adopting one-tier
and two-tier rCBDC system
respectively?
⢠Digital Instrument: a means of
payment and a financial asset
(attractive?)
⢠Liability of the central bank (or a
derivative of the liability issued by
the central bank?)
⢠Scalable and no storage cost (DLT?)
⢠Provides liquidity to the money
market?
⢠Bond-like or cash-like with expiry
date?
⢠Renumeration can be negative, zero
and/or positive?
⢠Cash-like with restrictions and
constraints?
⢠Programmable Super Asset: no
duration risk, no corporate risk, no
inflation risk?
⢠Programmable Privacy: Privacy
Protection, Full Anonymity, or
Managed Anonymity?
⢠Medium of Exchange: International
Trade, eCommerce?
⢠Borrowing in local CBDC?
⢠A dynamic programmable monetary
policy tool?
22. Even More Interesting Questions
02 All About CBDC
⢠Payment with restrictions
and conditions?
⢠An instrument for (Cross
Border) DeFi payments
and swaps?
⢠A prelude to a Regional
Currency or Bancor:
⢠The bancor was a
supranational currency
suggested by John
Maynard Keynes and E. F.
Schumacher
⢠A supranational currency
used in international trade
as a unit of account within
a multilateral clearing
system - an International
Clearing Union or simply a
Regional Sushi Swap?
23. 02 All About CBDC
⢠Unlike larger countries, small and open economies
are not necessarily in control of its own interest rate,
the flow of capital and trade, and therefore trust
level.
⢠Unlike most other countries, Singapore has adopted
the use of the exchange rate rather than the interest
rate as the instrument of monetary policy.
⢠The choice of the exchange rate is predicated on the
Singapore economy's small size and its high degree
of openness to trade and capital flows.
⢠Developing Economies and Asian countries are
suspectable to rapid flow of capital and vulnerable to
currency and debt crises, unreliable communication
and power supply, as well as exclusion from the
formal economic and financial system.
⢠The considerations for CBDC design may not
necessarily fully aligned with developed markets.
⢠Monetary policy may not necessarily be as effective
as in developed market.
Notable Exceptions to Current Discussions
25. 03 Hong Kong
Model
HK Model â Fully Backed by a Foreign Currency Plus
More than Adequate Reserves
⢠The Monetary Authority, who is the Chief Executive of the Hong Kong
Monetary Authority, is responsible for achieving the monetary policy
objectives, including determining the strategy, instruments and
operational means for doing so.
⢠The Monetary Authority is also responsible for maintaining the
stability and integrity of the monetary system of Hong Kong
⢠Main objective is to maintain a stable external exchange value of the
currency of Hong Kong, in terms of its exchange rate in the foreign
exchange market against the US dollar, at around HK$7.8 to
US$1,,through a Currency Board system.
26. 03 Hong Kong
Model
Important Technical Features as a
Monetary Policy Tool
⢠Digital Payments infrastructure
⢠Renumeration
⢠Fixed Supply or Variable Quantity
⢠Expiry Date, Automatic Conversion or
Suspension
⢠Constraints or Restrictions of what kind of
liabilities can be exchanged
⢠Flexible eWallet Design for introduction of
constraints and restrictions, privacy versus
control
⢠DLT, Smart Contracts, General State (e.g.
UTXO) or/and Local State Based (e.g
Ethereum), DeFi-ready.
Auer and Boehme (2020), The Technology of Retail Central Bank Digital Currency, BIS.
27. 03 Hong Kong
Model
More Specific Policy Questions
⢠Should central bank have the
monopoly of issuing rCBDC?
⢠HK model?
⢠E-CNY model?
⢠Should rCBDC be restricted in its
ability to swap for other assets,
primarily the debt of central
government or corporate debts
and loans?
⢠Should rCBDC has a role in
intervention in financial crises
(Universal Basic Income or
Targeted Grants)?
28. 03 Hong Kong
Model Challenges
⢠Decline in LR demand of the use of
currency for payments: The use of
physical currency has been declining
but the stock is increasing.
⢠The possibility that there is a short-run
substitution: private traditional means
of payment versus central bank means
of payment
⢠The possibility that there is a long-run
substitution:
⢠domestic fiat versus stable coins (Foreign
rCBDC, Fiat-based tokens, and other
algorithmic-based tokens etc)
30. Singapore â Managed Float and Huge Reserves
04 What About Singapore?
⢠40% of consumption is spent on imports.
⢠Trade can be as high as 300% of GDP.
⢠Price stability is maintained primary with
exchange rate policy.
⢠Small changes in interest rate differentials
can lead to large and rapid movement of
capital with its large offshore banking
sector dealing mainly with G3 (USD, EUR
and JPY) currencies.
31. Transmission of Exchange Rate
04 What About Singapore?
⢠Exchange rate as a dampeners for imported
inflation.
⢠Exchange as a moderator for the external
demand for Singapore goods and services,
and factor incomes.
32. Singapore Dollar Nominal Effective Exchange Rate
04 What About Singapore?
⢠Exchange is the target, and domestic interest rate
and money supply are a consequence
⢠SGD Interest Rates = f(foreign interest rates,
investor expectations of SGD, âŚ)
⢠SGD is managed against a basket of currencies of
our major trading partners (also known as the
Singapore dollar nominal effective exchange rate
or S$NEER).
⢠MAS will intervene in the foreign exchange market
using spot or forward transactions through primary
dealers (PDs) within the policy band.
⢠MAS announces weekly average S$NEER data on
the first Monday of each month
33. How does rCBDC fit in into Wholesale CBDC?
⢠MAS decides on the level of Singapore dollar liquidity that is
sufficient to meet the banksâ demand for reserve and settlement
balances.
⢠The instruments for the money market operations are:
⢠direct borrowing;
⢠foreign exchange swaps;
⢠repurchase agreements (repos) of Singapore Government Securities
(SGS); and
⢠MAS Bills.
⢠Collateral DeFi arrangements between Wrapped CBDC and rCBDC with
private sector participants?
04 What About Singapore?
34. Structural Factors for Singapore Exchange Rateâbased Monetary Policy
⢠High saving rates in the public sector
⢠Credibility of effective and pre-emptive policy decisions
⢠Sound and consistent policy, deep and efficient financial
market, robust corporate and prudent fiscal policy.
⢠Will rCBDC increase velocity or attract capital inflows?
⢠Will rCBDC accelerates withdrawal during a flight to
safety?
⢠How to throw sand to the gear?
⢠What features and designs can best mitigate the risks?
04 What About Singapore?
35. What are the Risks?
⢠Primary concerns associated with retail CBDC:
⢠disintermediation of financial intermediaries
⢠exacerbation of bank runs capital outflow
especially in times of financial crises
⢠maintenance of high security standards, privacy
protection and public trust in the CBDC system
⢠Digital illiteracy and exclusion, launching
strategy, public change in spending behaviour,
⢠KYC, data privacy, cross-border laundering and
accountability
⢠As is now known, these concerns can be
mitigated through the design of the CBDC itself
and other measures!
Bank of Thailand (2021), The Way Forward for Retail Central Bank Digital Currency in Thailand
04 What About Singapore?
Bank of Thailand (2021), The Way Forward for Retail Central Bank Digital Currency in Thailand
36. The Payment and Settlement Landscape
⢠Will the central bank be the super settlement agent and
crowd out clearing houses?
⢠How does a central bank balance innovation and
crowding out with rCBDC?
⢠How can rCBDC promote corporate inclusion?
⢠Digital Currency/Electronic Payment system of Cambodia?
⢠How does a central bank balance data privacy and
control via rCBDC?
⢠Two tier model of China?
⢠Multi function eWallet?
⢠Multi-tier of managed anonymity eWallet?
⢠Cryptography Technique (Project Ubin Phase 2)
04 What About Singapore?
37. Flight To Safety
⢠It depends on the nature of the central bank liabilities that market
participants might flee to.
⢠If rCBDC were to be programmed as a limited vehicle for flight, it must not
be useful in large transactions as in wholesale transactions.
⢠If rCBDC can be restricted to small transactions, it can only be hoarded as a
store of value and a safe asset.
⢠Kumhof and Noone (2019)
⢠If issued by central banks, should have features that make it inconvenient for its users.
⢠Private bank deposits and central bank reserves, should not be freely convertible into
CBDC.
⢠Throw sand in the gears of the financial system in all states of the world.
⢠Flight to safety may not then be a problem if the design is appropriate.
04 What About Singapore?
38. Earlier Discussions â Non DeFi
Source: BIS(2018), Central Bank Digital Currency
04 What About Singapore?
39. Renumeration: Interest Bearing
⢠Paying interest on CBDC potentially matters for the effects of
conventional monetary policy on the incidence of banking panics
and on economic welfare.
⢠Williamson (2021), Central bank digital currency and flight to
safety, (Working Paper)
⢠The fact that CBDC is potentially more widely-used in transactions cuts
two ways, if we take seriously the concerns voiced about flight to safety.
⢠That is, we might view CBDC as contributing to the efficiency of the
payments system, but perhaps not if this leads to greater financial
instability.
⢠Can renumeration be asymmetric and dynamic over time?
04 What About Singapore?
40. Prevention Options
⢠rCBDC interest rate relative to bank deposits:
Interest rate differential
⢠The ratio of CBDC/bank deposits
⢠Deposit insurance
⢠CBDC would indeed encourage banking panics.
⢠But the reason for this is that CBDC is potentially
more useful in transactions than is physical
currency and can potentially integrate with a
Digital ID solution.
⢠This not only mitigates the damage done by a
banking panic, but could imply that, in an ex ante
sense, economic welfare is higher in an economy
that experiences banking panics than in an
economy that does not.
04 What About Singapore?
41. rCBDC - More Benefits Than Costs?
⢠So, the model is consistent with the view
that CBDC issue would be a good thing,
even if it were to increase the likelihood
of banking panics.
⢠It can be argued that it improves in
important ways on traditional models of
financial crises and panics.
⢠While bank failures and panics are driven
by beliefs, it is essentially the potential
for bank insolvency that leads to a
banking panic.
⢠Deposit insurance can mitigate, but not
necessarily eliminate, banking panics.
04 What About Singapore?
42. Some Views
⢠Programmable Emergency OMO and Ultimate Liquidity Provider
⢠Orderly Portfolio Rebalancing of Loans
⢠Design to Benefit Funding Markets
⢠Design for Corporate Inclusion
⢠Design for Lower Cost of Transactions
Francesca Carapella (2021), Discussion of Central Bank Digital Currency and Flight to Safety
National Bank of Cambodia (2020), Project Baking: Next Generation Payment System
43. Design for Lower Cost of Transactions
⢠Constant money growth rule: Friedman, who died in 2006, proposed a
fixed monetary rule, which states that the Fed should be required to target
the growth rate of money to equal the growth rate of real GDP, leaving
the price level unchanged.
⢠This means that the nominal interest rate is zero.
⢠To achieve this, you need to have zero transaction cost and full
transparency.
⢠DeFi may be able to move the economy closer to Friedmanâs rule with
lower counter party risk, thus lowering transaction costs with transparency.
⢠It will be attained by a rate of price deflation that makes the nominal rate
of interest equal to zero.
⢠If the physical economy is not growing, then perhaps the virtual economy
or the metaverse will grow and that a full reserve system may transpire
with a nominal zero interest, as it is now, in the physical world.
04 What About Singapore?
44. From Non-DLT to Smart Contract
⢠Prior to 2018, discussions on rCBDC were mainly against
the use of DLT technology and cryptocurrency models,
especially in the non-Asian literature.
⢠However, the DCEP demonstrated the advantages of
UTXO, offline P2P hard wallet transactions, managed
anonymity, allowance for Payment Services Providers
participation, multi-layer and functional wallets, and
privacy protection technology.
⢠Sentiments are also changing towards more
human/sustainability/solidarity-centric rather than
institution-centric.
⢠Various Asian designs, led by China DCEP, is similar in the
core design features and thinking.
⢠Mark Carney (2021), The Art of Central Banking in a
Centrifugal World.
04 What About Singapore?
45. BoT Summarised the Sentiment
⢠We hypothesize that a two-tier distribution model is preferable for a Thai
Baht retail CBDC, as it preserves the role of financial intermediaries and
payment service providers, while utilizing their existing resources.
⢠To mitigate bank runs during times of crises, the CBDC could be initially
designed as non-interest bearing akin to cash, with specified limits for
holding, transacting and conversion.
⢠We should aim to harness the strengths of both centralized and
decentralized technologies. While centralized technology offers
advantages in terms of scalability and performance, decentralized
technology offers greater resiliency, and its cryptographic techniques can
help enhance security.
⢠End-users should bear zero-to-minimal transaction costs when
transacting with CBDC, and the CBDC system should be open to private
sector programmability to drive financial innovation.
04 What About Singapore?
46. Some Interesting Views from Other
Regulators and Exchanges
⢠Money Definition Agnostic
⢠Technology Agnostic
⢠New Monetary Tools from rCBDC
⢠More Efficient Way to Management Money Flow Through
eWallets
⢠Facilitating Realtime Monitoring
⢠Notable Comments: NBCâs HE Dr Serey Chea, Ken Chiu of HKEX
47. Programmable Policy Instruments with DeFi
⢠Revisiting rCBDC Definition: Liability of central bank or Full
Reserve
⢠Open Market Operation: Liquidity Provider, Set/Pair retail trading
protocol, Smart Contracts, Programmable Collaterised Debt
Position
⢠Exchange Rates: Automatic Market Maker
⢠Others:
⢠Stability Fees â interest rate/renumeration
⢠No lockup Period - Free Entry and Exit
⢠Restrictions of Use
⢠Expiry Date
04 What About Singapore?
48. Some Considerations for Forex Transactions
⢠Inevitable that with Smart Contracts, the DeFi market is a low
hanging fruit
⢠But what regulation and licensing conditions are needed beyond
Omnibus Act?
⢠Users: Automatic Market Maker, Liquidity Provider, Vault Holder
⢠Maintainers: Developers, Oracles and Keepers
⢠Governors: Liquidity Provider of the last resort (Private? Central Bank?)
⢠What are the roles of private individuals and the Virtual Assets
Service Providers?
⢠Other thoughts
⢠Constant Product Market Making
⢠Constant Function Market Making
⢠Financial Inclusion, Reducing Rent-Seeking and Market Failures
04 What About Singapore?
51. Design for the Future - Virtual Asset Service Providers
⢠While designing the rCBDC for the ecommerce or the virtual
economy, we must not forget that the metaverse is a twin
economy of the physical one as demonstrated with what NVIDIA
and BMW are doing.
⢠Whatever it is, the design for rCBDC must not only be discussed
with the old economy and old trusted third party in mind, but to
anticipate the exponential growth in the metaverse and Web3 in
mind.
05 Beyond Monetary Policy
52. Design to Accommodate Trade and Internet Economy
International Trade
⢠Whatâs the implication of retail CBDCs
on international trade policies?
⢠Will rCBDCs enable government
policies or allow people to circumvent
them?
⢠Can rCBDCs be designed to automate
the payment of tariffs and taxes?
The Internet Economy
⢠Payment Currency vs Settlement
Currency
⢠Payment for digital assets/tokens
⢠How will merchants/platforms handle
the accounting to meet each countryâs
requirements?
⢠What is the role of rCBDC in Web3?
05 Beyond Monetary Policy
53. Possible Use Cases for rCBDC
Example: Foreign Debt Crisis
Country A has been facing mounting Foreign
Debt Crisis for many years and the pandemic
has brought the situation to a critical stage.
Challenges faced by the country:
- Balance of Payments Crisis: Insufficient
foreign reserves to fund trade deficit
- Inflation has pushed prices higher for
consumer goods and construction
materials
⢠Difficulties in attracting Foreign
Investments
⢠Lack of digital payments infrastructure
to enable increase in exports?
⢠Rigid PPP policies & infrastructure
deterring investment?
⢠Can rCBDC help to ease the
countryâs financial woes?
⢠Reduce dependency on Forex?
⢠Enablement of fluid & open digital
payment infrastructure to ease liquidity
crunch?
⢠Ability to capture tax spillage from
booming internet revenue?
05 Beyond Monetary Policy
54. An Open Invitation!
⢠With a pallet that includes a new form of
public money linked to a plethora of new
dispersed private networks, central banks can
paint a new finance that will make payments
significantly cheaper and faster, open up new
forms of ownership and asset classes, power
contingent payments and distributed finance,
and integrate decentralised networks that
track and help reduce carbon emissions.
⢠By being resilient, dynamic, inclusive and
sustainable, the new art of money can serve
everyone across this new world.
05 Beyond Monetary Policy
56. References
⢠Lee, Yan and Wang (2021), A global perspective on central bank digital currency,
https://www.tandfonline.com/doi/full/10.1080/17538963.2020.1870279
⢠Lee and Teo (2021), The New Money: The Utility of Cryptocurrencies and the Need for a
New Monetary Policy, https://link.springer.com/chapter/10.1007/978-3-030-65781-9_7
⢠Lee (2021), Money and Central Banking, Tsinghua Financial Review,
http://www.thfr.com.cn/m.php?p=89586
⢠AP. (2021, July 14). Sri Lanka economy in crisis as debt mounts, reserves dwindle. The Hindu.
Retrieved October 17, 2021, from https://www.thehindu.com/news/international/sri-lanka-
economy-in-crisis-as-debt-mounts-reserves-dwindle/article35315515.ece.
⢠Hadad- Zervos, F. (n.d.). Foreign investment can help Sri Lanka build back. World Bank.
Retrieved October 17, 2021, from
https://www.worldbank.org/en/news/feature/2021/06/10/foreign-investment-can-help-sri-
lanka-build-back-better.
⢠Appreciation to individuals from various central banks and Research Assistants.
05 Beyond Monetary Policy