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Quick Take

• Singapore continues to build its regulatory framework for digital assets.
• Regulatory uncertainty and overregulation in some aspects may turn away potential businesses.

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Sir John Cunliffe, deputy governor of the Bank of England, says it is not the job of central banks to protect banks from the potential fallout of a proliferation in digital currencies.

“Our job is not to protect bank business models,” said Cunliffe at an online seminar hosted by Columbia University.

Cunliffe said lenders would have to adjust to such changes on their own.

His comments come just a day after European Central Bank president Christine Lagarde said she has a “hunch” Europe will proceed with the development of a digital euro, although it is not racing to do so.

At today’s seminar, Cunliffe said politicians must accelerate their effort to explore the implications of CBDCs.

“They need to go up the political agenda quite fast before the political side discovers there are developments in the private sector that actually don’t fit with policy,” he said.

© 2020 The Block Crypto, Inc. All Rights Reserved. This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.

Quick Take

• The top 10 staking networks by value participating in staking include Polkadot, Cardano, Tezos, EOS, Algorand, Cosmos, Avalanche, Tron, Band Protocol, and Synthetix
• There is roughly $12 billion in aggregate, taking part in staking on the top 10 largest staking networks by staking value

This research piece is available to
members of The Block Genesis.
You can continue reading
this Genesis research on The Block.

Central bank digital currencies (CBDCs) will replace cash in the long term, according to Deutsche Bank’s research team.

In its latest edition of the “Konzept” periodical, published Tuesday, the bank said the coronavirus pandemic has accelerated the use of digital payments over cash and the trend will eventually lead to CBDCs taking over cash.

However, many countries are behind in their progress for digital currencies, according to Marion Laboure, a macro strategist at Deutsche Bank. Laboure said countries such as China and Sweden are leading the digital currency development, but if other countries do not catch up, “they may find that their companies are forced to adopt the digital currencies and policies of other countries as payment mediums.”

The U.S. and Europe, in particular, need to catch up, according to Laboure. She said their development in the area is “too slow.” Both the countries have been studying CBDCs, but do not appear to be in a rush to issue one.

Laboure said developed nations need to overcome two key challenges for insurance and adoption of CBDCs: Low interest rates and cultural/ privacy norms.

CBDCs could help in today’s environment of negative real interest rates, according to Laboure. “That is because consumers currently have little incentive to deposit or save money. So, moving cash from under the mattress into a bank account is unlikely to happen (at scale) in the near term,” said Laboure.

“Similarly, with bank accounts paying low-interest rates, a CBDC could help disintermediate the banking system. People might choose to hold their money directly at the central bank.”

As for privacy, Laboure said perspectives on this topic vary from culture to culture. In China, for instance, only a tenth of Deutsche Bank’s survey participants reported concerns about anonymity and traceability. People in advanced economies, on the other hand, “are more worried about privacy,” said Laboure, citing the survey.

While CBDC developments will take time, countries should prioritize their digital payment systems in the meanwhile, according to Laboure. European nations, for instance, must have an independent European payment solution, similar to Sweden’s Swish, said Laboure.

“On a region-by-region basis, the penetration of the smartphone, the rollout of 5G technology, and the advance of digital ledger technology, or blockchain, could all disrupt traditional card payment systems,” said Laboure.

© 2020 The Block Crypto, Inc. All Rights Reserved. This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.