Category: Central Banks

The World Bank Bets Big on Blockchain-Based Bonds

MIT Technology Review The Download Blog, Mike Orcutt | Aug. 10, 2018
The World Bank has hired Commonwealth Bank (CBA), one of Australia’s biggest banks, to manage its “first bond globally to be created, allocated, transferred and managed” using a blockchain—one of the clearest signs yet that the technology is going mainstream. In 2017, a company in the UK issued a bond using Ethereum’s public blockchain. The city government of Berkeley, California, is exploring the use of blockchain technology to issue municipal bonds.

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Fed Chairman Powell Addresses Cryptocurrencies, Wolf Richter | July 23, 2018
During his testimony before the House of Representatives Committee on Financial Services, Federal Reserve Chairman Jerome Powell, was asked by representatives Patrick McHenry (R-NC) and Juan Carlos Vargas (D-CA) about the Fed’s thinking on cryptocurrencies. “Instead of pussyfooting around the issues, as Fed chairs used to do, he refreshingly stepped right into it, with both boots on the ground, so to speak,” wrote Wolf Richter.

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Competition Issues in the Area of Financial Technology

European Parliament Think Tank, Fraile Carmona, A. Gonzáelez-Quel Lombardo, R. Rivera Pastor, C. Tarín Quirós, J. P. Villar Garcia, D. Ramos Muñoz, L. Castejón Martín | July 2018
This EU study focuses on analyzing potential anti-competitive factors and their impact both in the FinTech ecosystem and in the concrete services of banking, payments, digital currencies, personal finance, InsurTech and enabling technologies and infrastructures. “The arrival of permissioned cryptocurrencies promoted by banks, even by central banks, will reshape the current competition level in the cryptocurrency market, broadening the number of competitors,” cautioned the authors. “However, the market power of banks in traditional banking services might be used to limit competition in the cryptocurrency market through pre-emptive acquisitions or predatory pricing schemes.”

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Cryptocurrencies: Looking Beyond the Hype

Annual Economic Report, Bank of International Settlement | June 17, 2018
“Cryptocurrencies promise to replace trusted institutions with distributed ledger technology,” according to the Bank of International Settlements. “Yet, looking beyond the hype, it is hard to identify a specific economic problem which they currently solve. Transactions are slow and costly, prone to congestion, and cannot scale with demand. The decentralized consensus behind the technology is also fragile and consumes vast amounts of energy. Still, distributed ledger technology could have promise in other applications. Policy responses need to prevent abuses while allowing further experimentation.”

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