Tag: central bank digital currency

NBG Georgia Shortlists Ripple Among Tech Firms for CBDC Pilot

The National Bank of Georgia (NBG) is propelling forward with its Central Bank Digital Currency (CBDC) venture, dubbed the Digital GEL Pilot Project. The bank is now in the phase of scouting for a singular technology ally to facilitate the Limited Access Live Pilot Environment. This environment aims to scrutinize the technological prowess and possible applicative spheres of the CBDC system through an array of use cases.

Post an extensive research tenure and meticulous deliberation, NBG has culled a list of nine enterprises deemed fit for this exploratory journey. These firms have showcased ample technological potential, maturity, capacity, pertinent experience, and enthusiasm for on-field examination. The notable list comprises Augentic GmbH, Bitt Inc., Broxus Holdings Ltd., Currency Network Ltd., DCM Corp Limited, eCurrency Mint Inc., FARI Solutions Ltd., Ripple Labs, Inc., and Sovereign Wallet Co., Ltd. At the current juncture, NBG maintains a technology-neutral stance, weighing the varied technological solutions these shortlisted companies can contribute to the Digital GEL project.

A Central Bank Digital Currency (CBDC) is essentially a digital form of a country’s existing currency, which is issued by the country’s central bank. Unlike decentralized cryptocurrencies like Bitcoin, a CBDC is centralized and enjoys the same legal status as physical banknotes and coins. It’s an endeavor to modernize the financial infrastructure and respond to the digital economy’s exigencies.

Among the shortlisted entities, Ripple Labs, Inc. holds a unique position with its Ripple CBDC solution. This solution aims to provide a neutral bridge between different currencies, allowing for frictionless value transfer, which can be particularly beneficial in the realm of cross-border transactions. The Ripple CBDC platform could potentially offer a robust foundation for the Digital GEL project, aligning with the objectives of fostering a seamless and inclusive financial ecosystem.

Upon concluding the selection phase, NBG aspires to earmark a single technology partner to transition into the pilot phase. This phase will test the CBDC platform in a restricted-duration live setting, evaluating the pragmatic use cases therein. The anticipation surrounding this pivotal pilot project is palpable, signifying a significant stride towards modernizing Georgia’s monetary landscape and embracing the digital currency epoch.

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Riksbank's Final Report on e-Krona Explores Offline Payment Solutions

Amid the global race to digitize national currencies, the Riksbank, Sweden’s central bank, has concluded its e-Krona pilot project, releasing a comprehensive report detailing its findings on offline functionality and how it could enhance the end-user experience. This exploration into digital currency represents a significant step in modernizing the financial system and addresses a critical aspect of digital currency — the ability to transact without an internet connection.

The digital krona pilot project, which the Riksbank has been conducting to evaluate the feasibility and practicality of a central bank digital currency (CBDC), has now examined the potential for offline transactions. The concept of a “shadow wallet” was introduced, which would allow users to store a certain amount of e-Krona on a payment card or a mobile phone application to enable transactions even when connectivity is unavailable. This idea addresses concerns about accessibility in cases of network failures or for users in remote areas where internet service might be unreliable.

The “shadow wallet” functions by maintaining a copy of the user’s balance that can be used for transactions without the need for real-time communication with the central database. However, while the offline mode offers added convenience and redundancy in the payment system, it also presents challenges concerning security and fraud prevention. The Riksbank’s report indicated mixed results, suggesting that while the technology to facilitate such transactions exists, further work is needed to ensure robust security measures are in place.

The findings of the pilot are particularly relevant as countries look to CBDCs as a means of simplifying and securing digital transactions. With Sweden being one of the most cashless societies in the world, the move towards a CBDC fits naturally with the country’s progressive approach to financial technology. The Riksbank’s exploration of offline transaction capability is a reflection of a broader trend as central banks worldwide consider the implications and logistics of introducing digital currencies.

As the Riksbank continues to refine the e-Krona’s functionality, it must address key issues such as scalability, interoperability with existing payment systems, and user privacy. The central bank will also need to navigate regulatory frameworks and ensure that the introduction of a CBDC does not destabilize the existing financial system.

The digital krona project stands as a testament to the ongoing evolution of money in the digital age. The Riksbank’s commitment to developing a CBDC that meets the needs of its citizens while maintaining a high level of security and efficiency will continue to guide their research and development efforts. As Sweden moves closer to potentially issuing a CBDC, the world watches with keen interest in how these innovations might reshape the landscape of banking and commerce.

As the Riksbank moves forward, the international financial community will be closely monitoring the outcomes and insights gained from Sweden’s digital currency experiments. The success of the e-Krona could serve as a blueprint for other nations considering the implementation of their own CBDCs, marking a significant shift in how we understand and utilize money in an increasingly interconnected world.

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