Archive for March 20th, 2019

Eastern Carribean central bank to launch blockchain-based digital currency..

March 20, 2019

ECCB conducts monetary policy for eight island economies:

 Anguilla, Antigua and Barbuda, Commonwealth of Dominica, Grenada, Montserrat, St Kitts and Nevis, Saint Lucia, and St Vincent and the Grenadines.

Apart from Sweden, ECCB is now looking to issue its own digital currency:

The Eastern Caribbean Central Bank (ECCB) and the Barbados-based fintech company, Bitt Inc. (Bitt) have signed a contract to conduct a blockchain-issued Central Bank Digital Currency (CBDC) pilot within the Eastern Caribbean Currency Union (ECCU).

The watershed contract was signed on 21 February at the ECCB’s Headquarters in Basseterre, St Kitts and Nevis.

This ECCB CBDC pilot is the first of its kind and will involve a securely minted and issued digital version of the EC dollar (DXCD). The digital EC dollar will be distributed and used by Licensed Financial Institutions and Non-Bank Financial Institutions in the ECCU. The DXCD will be used for financial transactions between consumers and merchants, including peer-to-peer transactions, all using smart devices. For example, an individual in St Kitts and Nevis will be able to send DXCD securely from his/her smartphone to a friend in Grenada in seconds – and at no cost to either party.

The Governor of the ECCB, Timothy N. J. Antoine, emphasised that in contrast to previous CBDC research and experimentsthe ECCB is going a step further.

“This is not an academic exercise. Not only will the digital EC Dollar be the world’s first digital legal tender currency to be issued by a central bank on blockchain but this pilot is also a live CBDC deployment with a view to an eventual phased public rollout. The pilot is part of the ECCB’s Strategic Plan 2017-2021 which aims to help reduce cash usage within the ECCU by 50 per cent, promote greater financial sector stability, and expedite the growth and development of our member countries. It would be a game-changer for the way we do business”.

CEO of Bitt Inc., Rawdon Adams, said, “I thank the ECCB for choosing Bitt. Our mission is the practical application of cutting edge technology to solve persistent financial problems. It is about a successful currency union building on its impressive record of financial stability, development and integration to deliver a quantum improvement to the lives of all its 630,000 citizens. Enhancing economic growth and the quality of life of ordinary people is the aim.”

The ECCB is now poised to embark on the DXCD pilot from March 2019. The pilot will be executed in two phases: development and testing, for about twelve months, followed by rollout and implementation in pilot countries for about six months. As part of pilot implementation, the ECCB will ramp up its sensitisation and education initiatives to facilitate active public engagement throughout all member countries.

The ECCB is being technically supported on this Project by Pinaka Consulting Ltd. 

The Governor in a later speech explained the motivation:

(more…)

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Brazil central bank seeks formal autonomy to do its job…

March 20, 2019

Brazil’s new right-wing President Jair Bolsonaro had promised central bank autonomy in 100 days, if elected. Now after being elected, the talks are on to give the central bank formal autonomy. They have also appointed a new Governor – Campos Neto.

Appointed by Economy Minister Paulo Guedes in November, Campos Neto did not take office until late in February because he had to be questioned by the Senate in order to have his appointment approved. In the ceremony of transfer of position, he said he is proud to work with Guedes. “The meetings in Leblon [during the electoral campaign] will not be forgotten. We are really in a well-tuned orchestra being led by conductor Paulo Guedes,” he said.

Campos Neto pointed out he will work to have the Central Bank fulfill its two main missions: to preserve the purchasing power of the country’s currency through low inflation and solidity in the financial system. Next week, the president of the Central Bank will chair the first meeting of the Monetary Policy Committee (Copom), the agency that sets the Selic, Brazil’s benchmark interest rate, currently fixed at 6.5 percent a year.

In the first address, Campos Neto also said that the government will seek to expand the funds raised by major projects in the private enterprise, increase the access to the financial system, improve the population’s financial education, stimulate everybody’s participation in the market, and boost savings.

The autonomy of the Brazilian Central Bank is currently being considered by Congress. The idea is to prevent the president from interfering in the monetary policy, with the institution free to make decisions on interest and take the measures as it sees fit.

Hmm..


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