This Week in CBDC Chronicles ???
??In a world buzzing with digital currency innovation, J. Christian Giancarlo, ex-CFTC chief, stands as a beacon beaming light on a vital issue: ensuring emerging digital money — be it CBDCs or stablecoins — champions liberty and privacy ????.
??Speaking at the FT Live Crypto Summit in London, Giancarlo hits a note of nostalgia, reminding us of the internet's early days. He urges that just as the web once mirrored free, open societies, so too must our digital currencies reflect values of financial freedom and dignity.
??As nations rush into digital currencies, with 134 countries (stacking 98% of global GDP ??) exploring CBDCs, and stablecoins booming to a $138 billion market cap, Giancarlo warns against walking blindfolded into a future of surveillance-state money ??.
?? His words are a wake-up call in the fintech world's rush for digitalization. He cautions against losing sight of liberty in this digital dash, emphasizing privacy and freedom should steer the ship , not surveillance and control ??. Giancarlo's message rings clear: Designing digital money isn’t about tech alone; it's about ensuring these tools uphold fundamental freedoms ???
???? Ghana's Vice President, Dr. Mahamudu Bawumia, recently revealed a strategic move in the financial battlefield against corruption: the E-Cedi . Fast-tracking this digital currency, the E-Cedi, conceptualized by the Bank of Ghana in 2021, aims to take down money laundering and graft ??.
??Though its release faced a stall due to economic upheavals, the E-Cedi has aced a pilot and stands ready for action. Speaking at the 14th Commonwealth Regional Anti-Corruption Conference, Bawumia highlighted the power of digital tech in tracking down financial felons ???♂?.
???The E-Cedi isn't just a digital twin to Ghana's cedi; it's decked with privacy armor and sits as the ultimate anti-corruption gadget. As a CBDC (Central Bank Digital Currency), this digital dynamo will streamline money tracking, spot shady transactions, and clamp down on tax evasion and fraud ??.
????Enhanced transparency, reduced fraud risk, and a chokehold on money laundering – that's the triple threat the E-Cedi brings to the economic crime scene ??.
By harnessing the E-Cedi's prowess, Ghana's government is aiming not just to defend public coffers; they're launching an entire identification system to fortify funds ??
?Bill HR 5403, dubbed the "CBDC Anti-Surveillance State Act," throws a legislative curveball in the realms of digital finance. This bill, if passed, would slam the brakes ?? on Federal Reserve powers relating to Central Bank Digital Currencies (CBDCs) by:
And it goes further! The Treasury can kiss goodbye to any hopes of pushing the Fed to roll out CBDCs ??.
??Here's the kicker, though: The Congressional Budget Office (CBO) crunched the numbers and sees no direct budgetary impact from HR 5403. But don't break out the champagne just yet ??— this comes with a big "BUT".
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The bill's impact on the Fed's money maneuvers and market reactions is a big question mark ?
?? A recent research paper shines a light on the path toward the potential rollout of a Rwandan CBDC with the incorporation of 'partial pseudo-anonymity.' ??????
What is 'Partial Pseudo-Anonymity'? ??
??Pseudo-anonymity in digital currencies means transactions aren’t immediately linked to user identities, offering a curtain of privacy. The term "partial" puts a twist on this, suggesting a balanced approach—ensuring user privacy up to a certain limit while allowing enough transparency for authorities to step in when necessary to comply with laws and prevent illicit activities ???♂?. This is a similar approach to what other central banks have taken (Stepped privacy).
Why Does It Matter? ??
This nuanced feature strikes at the heart ?? of a pressing concern surrounding digital currencies: maintaining privacy without opening floodgates to illegal activities. By navigating toward a model that balances anonymity with accountability, Rwanda is gearing up to create a digital financial ecosystem that's both secure and inclusive, fostering trust and participation across its user base.
The Takeaway ??
Rwanda's exploration of a CBDC model with 'partial pseudo-anonymity' is a promising step forward into the digital future, offering a glimpse into how countries can innovate while addressing privacy concerns head-on. ??
That’s a wrap on this edition of the CBDC Chronicles. Share your thoughts and drop them in the comments section below or send me a direct message.
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See you in the next edition, until then, stay engaged and keep exploring! ????