Problems that a CBDC might occur based on Hong Kong Monetary Authority

It has been published by the Hong Kong Monetary Authority a technical insight paper on central bank digital currencies (CBDCs). The article proposes two viable designs, but it also highlights seven issues that must be addressed before the "e-HKD" may be effectively deployed in the real world. The HKMA does not support the establishment of a CBDC but rather seeks to encourage debate on how such a program could be implemented. Scalability, performance, and resilience, as well as the requirement to handle large numbers of users, are all important considerations.

However, these are what the HKMA discovered and highlighted seven issues that they believe must be addressed before a CBDC can be put in place.

The seven are as follows:

1. Users' anonymity must be protected while also allowing for the identification of manipulated data.

2. In interoperability, we mean the capacity to communicate between current financial market structures and new fintech constructions that utilize a variety of cryptocurrencies or blockchains;

3. Performance and scalability - Due to the possibility that security overheads may render CBDCs less effective, as well as the need to manage very high numbers of users;

4. Definition of attack vectors and standards to repel assaults in the service of both resilience and transaction security in the field of cybersecurity.

5. Compliance - To ensure that a CBDC does not make measures intended to combat money laundering more difficult to implement or evade laws prohibiting the funding of terrorism.

6. Rapid surges in demand for digital currencies must be accommodated by the system, which, like anything digital, must have fail-safes in place; operational robustness and resilience must be built-in.

7. Is it possible for CBDCs to enhance current business operations via the use of technology-enabled functional capabilities? What characteristics are required to provide the advantages that existing payment methods do not provide?

Comments

To boost trade, Africa is simplifying international payment systems

It's hard to transfer money between African countries. The Ghanaian king settled a bill with a Nigerian attorney. His experience highlights a systemic problem impeding Africa's economic growth: high transaction costs and inconvenience. 15% of all imports and exports occur between 55 African countries. 60% of Asian trade is within Asia. 70% in EU. The difficulty of international payments hinders African trade. There are also high tariffs, long border procedures, and congested roads. Proponents of AfCFTA say easing trade restrictions will boost trade, FDI, and economic growth. 50 million people will be lifted out of extreme poverty by 2035 due to the accord's positive impact on real income, which is projected to rise 9.1%. Another issue: In Africa, currency values fluctuate. From July 2021 to 2022, Ghana's currency fell from 6 to 8. Volatile currencies make financial transactions more costly and risky. To overcome these problems, PAPSS facilitates financial transactions ...

Eight countries, including China, banned to own or use cryptocurrency of any kind

There are dozens of governments and jurisdictions throughout the world that have either banned or severely regulated digital money in recent years, including China. Egypt, Iraq, Qatar, Oman, Morocco, Algeria, Tunisia, Bangladesh, and China are among the countries that have banned the use of cryptocurrency. Algeria, Bahrain, Bangladesh, and Bolivia are among the 42 countries whose governments have either restricted or outlawed the use of digital currency exchanges or restricted banks' ability to deal with crypto. The number of countries and authorities that have overtly or tacitly banned cryptocurrencies has more than doubled since the group first issued research on the subject in 2018. According to governments that have banned cryptocurrency, criminals are using it to transfer money to criminals, and the expansion of crypto might undermine their financial systems. Many governments, including the United States, are considering regulations for cryptocurrencies despite the fact that n...

This summer, the Fed will take another step toward creating a digital money

This summer, the Federal Reserve will publish a research paper that examines the possibility of a central bank digital currency. Multiple countries' initiatives in the central bank digital currency arena, most notably China's, have heightened debate about how aggressively the Fed should act. The Federal Reserve is pushing ahead with its plans to create its own digital currency, stating that a study paper will be released this summer that will go deeper into the topic. Despite the fact that the central bank did not announce any particular plans for the currency, Chairman Jerome Powell acknowledged advancements in payments technology and stated that the Fed has been "actively monitoring and responding" to those developments. In the statement, The proper operation of our economy requires that consumers have faith and confidence not only in the dollar, but also in the payment networks, banks, and other payment service providers that allow money to flow on a regular basi...

USFCX_US Foundry Exchange

Search This Blog