The cryptocurrency market remains slightly bearish with Bitcoin (BTC) hovering around $40,000. While preparing this report, Bitcoin was trading at $39,967, up 0.60% in the past 24 hours. Ethereum (ETH) inched down 2.20% to trade at $2,213. XRP was trading at $0.5146, an increase of 0.10% in the same period.
Major cryptocurrencies, which have gained ground in the past 24 hours, are VeChain (VET, $0.0268, 1.10%), Avalanche (Avax- $30.66, 3.30%), Solana (SOL, $87.92, 4.4%), EOS (EOS – $0.6805, 1.20%), Bitcoin Cash (BCH, $235.15, 0.60%), and Polkadot (DOT, $6.45, 2.70%), IOTA (IOTA – $0.2284, 10.84%), Cardano (ADA, $0.4703, 0.90%), Shiba Inu (SHIB, $0.00008841, 0.70%),
Major cryptocurrencies, which have lost ground in the past 24 hours, are Binance Coin (BNB – $288.96, -3.30%), and ChainLink (LINK – $14.01, -0.90%).
Government Level Initiatives
ECB Examines Risks of CBDC in Economics Paper
The European Central Bank (ECB) has explored the potential risks associated with central bank digital currency (CBDC) in a published economics paper. The authors highlight a trilemma faced by central banks, stressing the challenge of balancing price stability, socially efficient allocation (interest rates), and financial stability (avoiding bank runs).
The study draws parallels between commercial bank runs and a hypothetical CBDC scenario where consumers unexpectedly withdraw funds or engage in excessive spending. In contrast to commercial banks, a central bank can print money to repay consumers but risks undermining price stability.
As an alternative, raising CBDC interest rates may discourage withdrawals but may be socially inefficient, particularly during economic rebounds. The third option, a quick sale of loans, poses the risk of sparking off a central bank run. The paper explains that its conclusions do not represent the ECB’s official stance, and the ECB recently issued a vendor call for digital euro contracts, setting aside more than 50% for an offline CBDC solution.
Private Sector Initiatives
Hitachi America Joins Hedera DLT Governing Council for Industrial Applications
Hitachi America has joined the governing council of Hedera DLT. Hitachi intends to utilize the public distributed ledger for industrial applications. Specifically, the use cases include supply chain and sustainability solutions, where it aims to operate proof of concept in a year.
Hedera’s governing council consists of 30 enterprise members. This includes IBM, abrdn, Google, Standard Bank, Boeing, FIS (Worldpay), and Nomura. The association manages the initial nodes that record on the network, avoiding any forks. They also finalize the network’s direction. Hitachi has built blockchain solutions for payment mechanisms, predictive maintenance and mining, and supply chains.
Ravigopal Vennelakanti, Vice President at Hitachi, emphasizes that Hedera effectively caters to evolving requirements in supply chain resilience, clean energy, IT/OT, and the semiconductor sectors. The distinctive Distributed Ledger Technology (DLT) offered by Hedera plays a pivotal role in establishing a singular source of truth and deploying tokenization mechanisms essential for managing distributed workflows required to tackle these industry challenges.
UDPN and Digital Pound Foundation Partner for Cross-Currency Interoperability in Blockchain
The China-based-basedrsal Digital Payments Network (UDPN), which functions as a wholesale DLT messaging system, intends to link payments spanning multiple digital currencies and blockchain ecosystems. These include deposit tokens, stablecoins, and central bank digital currencies (CBDCs). The firm has joined hands with the Digital Pound Foundation (DPF).
Notably, the UDPN was established by Red Date Technology, the cofounder of China’s blockchain-based service network. Other associates include tech-focused GFT and TOKO, a tokenization-centered firm established by the spinout of DLA Piper. The objective is to facilitate interoperability between digital currencies.
Both UDPN and DPF will jointly study regulatory changes spanning jurisdictions. As indicated, UDPN is eager to have members of the Digital Pound Foundation take part in the 12 solutions undergoing trial. One of those demonstrations was a stablecoin interoperability proof of concept conducted between Standard Charterer’s SC Ventures and Deutsche Bank last October.
Miscellaneous
BIS Innovation Hub Partners with World Bank and Swiss National Bank for ‘Promissa’ Project
The BIS Innovation Hub disclosed that it intends to tokenize promissory notes by joining hands with the World Bank and the Swiss National Bank. In this regard, the institution offered some details, including the project’s name (Promissa) and deadline (early 2024) for concluding the proof of concept.
The IMF will take part as an observer. Promissory notes are primarily paper-based, but the goal is not mainly to digitize the physical document. The use of a distributed ledger will establish a single point of truth and offer an idea about all parties involved. Therefore, countries that have committed to the IMF, World Bank, and other financial institutions can view their entire unsettled promissory note commitments in a single place. Furthermore, the World Bank can also view all the outstanding promissory notes on a single platform.
It is presumed that the World Bank maintains a database to systematically track and record all outstanding promissory notes that have not been redeemed. Nevertheless, the benefits of a distributed system are that when there are amendments, there is no requirement for emails or reconciliations. That pertains to fresh promissory notes or the encashment of prevailing ones. Even though it looks like complex back-office work, reconciliations result in a huge waste of time, and that time could rather be used for productive purposes.
Disclaimer: Any financial trading analysis offered here is our opinion and is not intended as advice or direction for investors. We cannot guarantee the success of any trades made as a consequence of this article, and we encourage traders to incorporate a strong money management strategy to limit losses when they enter the markets. Please use this article as part of your own research before formulating strategies prior to trading.
