Norway Central Bank Considers Developing Digital Currency

Norway’s central bank considers introducing its own cryptocurrency to “ensure confidence in money and the monetary system.”

Norway’s central bank, Norges Bank, is considering developing its own digital currency as a supplement to cash to “ensure confidence in money and the monetary system”, according to a working paper May 18.

The report, prepared by a Norges Bank working group, investigates aspects they believe should be considered when assessing the issuance of a central bank digital currency (CBDC). The authors emphasize at least three possible CDBC applications: the introduction of a reliable alternative to deposits in private banks, a suitable legal tender as a supplement to cash, and an independent backup solution for electronic payment systems. Norges Bank Governor Øystein Olsen wrote:

“A decline in cash usage has prompted us to think about whether at some future date a number of new attributes that are important for ensuring an efficient and robust payment system and confidence in the monetary system will be needed.”

The report states that a CBDC could provide customers with an alternative means to store assets. According to Norges bank, the foundation of a CBDC must also not interfere with the ability of the bank and other financial institutions to provide credit. Norges Bank will reportedly continue to issue cash as long as there is demand for it. The working group has only completed the initial phase of studying a potential CBDC, stating:

“It is too early to conclude whether Norges Bank should take the initiative in introducing a CBDC. The impacts of a CBDC – and the socio-economic cost-benefit analysis – will depend on the specific design. The design, in turn, will depend on the purpose of introducing a CBDC.”

Other countries in Europe have also begun to consider issuing a digital currency through their central bank. Similar to Norway, Sweden’s Riksbank is considering an e-krona as a result of declining cash circulation.

Yesterday, Cointelegraph reported that the Swiss Federal Council has requested a study on a state-backed digital currency examining the risks and opportunities of its introduction. Now, the lower house of the Swiss parliament has to decide whether to support the Federal Council’s request for research. Should the proposal be approved, the Swiss Finance Ministry will conduct the study.

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New Steps of Adoption: Dutch National Blockchain Research Agenda

The Dutch government’s foray into blockchain enterprise could represent a third prong to mainstream adoption following banks and major corporations.

On May 8, 2018 it was reported that the Dutch Ministry of Economic Affairs and Climate Policy had created a unit tasked with researching the further development of blockchain across technology.

This could represent a major step forward for the adoption and application of blockchain technology as governments are not only taking the new technology seriously with their regulatory work on the cryptocurrency side of things, but now they are actively looking into the benefits of the technology.

Blockchain technology is now on the cusp of a new wave of adoption that is running concurrently, but separately from cryptocurrencies.

The banks are looking as to how blockchain can aid their advancement, racing to be the first-to-market in blockchain and cryptocurrency. Major corporations ar also following suit with their own blockchain products as their own race rages with the likes of Amazon, Microsoft, IBM, and Oracle all trying to outdo one another.

The Dutch blockchain research agenda

The Dutch government’s move into blockchain and viewing its potential was delivered by Rob van Gijzel, ambassador of the Dutch Blockchain Coalition, who presented the national research agenda which was commissioned by the Dutch ministry.

The research agenda will look at three key areas in order to address whether blockchain can be adapted nationwide for the benefit of the country with its potential.

Firstly, they are looking to determine if the trust-less nature of blockchain can be trusted. They want to know if blockchain technology can truly replace legal and social institutions which require trust in individuals and organizations.

Secondly, the government is looking for sustainability. They will be analyzing energy consumption costs, scalability, and resilience against power concentration or hostile takeovers.

Finally, it needs to be determined how the blockchain will be managed and governed.

Because blockchain technology has potentially far reaching implications in its application, governments could use it to streamline and cut costs in varying aspects of society’s needs.

However, like all sectors currently delving into blockchain’s potential, there needs to be a level of experimentation to see if it is indeed suitable and successful enough to do what it says it can.

It follows that if governments can find a path towards using blockchain successfully, they could well be a large sector that could speed up adoption of the revolutionary technology.

Following banks and businesses

While there are less corporate pressures and capitalist competition at the government level, there is still an obligation and a focus to conduct government business efficiently as part of their mandate towards their citizens. That is why it is understandable that the Dutch government, among others, are looking into new competitive technologies as blockchain.

However, their drive to expand the possibilities of the technology could be considered the latest push in adoption, making it the third prong, following from banks and businesses who are in an ‘arms race’ to be first-to-market with blockchain products.

Looking at the private sector, Banks are not only rushing to try and get crypto trading desks out to their customers, they are also looking at what blockchain technology can do internally for their own processes. Strong banking rivals Morgan Stanley and Goldman Sachs are building and experimenting with blockchain to get a working product out to market first – a long way from when the likes of Jamie Dimon and others were calling it a fraud.

Even Microsoft, Amazon, and other major corporations – who are traditionally centralized powerhouses – are looking to branch out into the decentralized world and offer products that go strongly against the corporate mandate of capitalization and monopoly. There is building evidence from the banking sector and corporations that blockchain can be the next wave of technology so it is important to be ahead of the curve, hence the competition between these other sectors.

Government interest

When governments begin looking at new ways in which to conduct business, they do not have the same corporate competition as these organizations in the private sector, but the push and drive from those sectors must be noticed. Governments, such as the Dutch, with their research agenda, show that even these leaders of countries are also looking at the potential blockchain can bring with its promises of transparency, efficiency and cost-effectiveness.

The Dutch, however, are not the only ones that have started looking into what the blockchain can do at this level. There are a lot of driving forces in different nations wanting their governments to take note of the future.

For example, the UK government has heard British MPs raising the question of the role nation states have in setting frameworks for decentralized, cross-border systems that blockchains enable. Furthermore, and more directed at the cryptocurrency side of things, the UK also set up a cryptocurrency task force in order to determine the best route for regulation.

Even China, with its hard-line approach to Bitcoin, is still noticing that blockchain technology can have an important role to play in the future. On May 10, the Chinese government released ‘blockchain standards’ in order to advance nationwide development of the blockchain industry by the end of 2019.

South Africa has set up a ‘sandbox’ through its central bank in which certain companies and businesses can operate with less stringent regulations in order to grow the blockchain environment in the African country with the government keeping a close eye on what emerges from it.

Another avenue of adoption

Considering that Bitcoin, cryptocurrencies, and even blockchain technology were being scoffed at no more than a year ago as ‘rat poison’, and ‘pixie-dust’, the way in which it is being viewed a few months down the line is a staggering turnaround.

Banks, once seen as Bitcoin’s biggest enemy, are now hiring blockchain experts by the dozens; corporations that have always traditionally been at the top of their game are now looking to breakdown and decentralize because they know that is where the next wave of industry will be.

Now it is governments who are legitimizing the power of blockchain as their best and brightest explore this latest technology, and implement its uses to make society more efficient, streamlined, and advanced.

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Swiss Government Requests Study on State-Backed Digital Currency

The Swiss Federal Council has called for a study to examine the associated risks and opportunities of a government-issued cryptocurrency, the e-franc.

The Federal Council of the Government of Switzerland has requested a report on the risks and opportunities of introducing its own state-backed digital currency, or so called “e-franc”, Reuters reported May 17.

The Federal Council moved to investigate the subject at the prompt of Swiss lawmaker and vice-president of the Social Democratic Party, Cedric Wermuth. Now, the lower house of the Swiss parliament has to decide whether to support the Federal Council’s request for research. Should the proposal be approved, the Swiss Finance Ministry will conduct a study on the subject. No time frame has been published regarding the process. The Council stated:

“The Federal Council is aware of the major challenges, both legal and monetary, which would be accompanied by the use of an e-franc… It asks that the proposal be adopted to examine the risks and opportunities of an e-franc and to clarify the legal, economic and financial aspects of the e-franc.”

The idea to develop a national cryptocurrency was put forward in February by Romeo Lacher, chairman of the Swiss stock exchange SIX. He said, “An e-franc under the control of the central bank would create a lot of synergies – so it would be good for the economy.”

Other traditional financial institutions in the country have remained wary of the introduction of cryptocurrencies. Board Member of the Swiss National Bank Andréa Maechler said last month, that private-sector digital currencies are better and less risky than nationally-issued versions, as a government-issued cryptocurrency could increase the risk of so-called “bank runs.”

Earlier this month, Switzerland’s largest bank UBS declined to offer trading in Bitcoin and other digital currencies. The bank’s chairman Axel Weber called for stricter controls on cryptocurrencies, stating “[cryptocurrencies] are often not transparent and, therefore, open to being abused.”

Other countries have also begun considering the possibility of a national digital currency. Sweden’s Riksbank is investigating whether they should issue an e-krona, as the use of physical banknotes in the country continue to decline.

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Tel Aviv Stock Exchange Develops ‘First Of A Kind’ Blockchain Lending Platform

The Tel Aviv Stock Exchange has developed a blockchain platform for securities lending in partnership with Intel, Accenture, and fintech firm The Floor.

The Tel Aviv Stock Exchange (TASE) has developed a “first of a kind” blockchain-based securities lending platform, according to a press release May 16. The new platform was completed in partnership with Israeli fintech firm The Floor, global professional services company Accenture, and Intel.

The exchange will reportedly create one central platform called Blockchain Securities Lending (BSL), which aims to revolutionize the securities lending market in Israel “by enabling direct lending among all the major financial instruments.” The platform will be designed as a “one-stop-shop” for all operations with securities lending and provide access to larger securities volumes in shorter terms.

By employing blockchain, the TASE intends to profit from its advantages such as direct peer-to-peer transactions, smart contracts, and enhanced security.

The platform will be built on Hyperledger Sawtooth that utilizes Intel Software Guard Extensions (Intel® SGX) technology to encrypt transaction data. Accenture will be working on the development of smart contracts on the platform, which is one of Hyperledger Sawtooth’s major business attributes.

Rick Echevarria, Vice President of Software and Services Group at Intel, noted the significance of blockchain for the financial services market, saying that Intel “believes blockchain can transform business processes”, while Accenture is working on a solution that “accelerates blockchain adoption.”

The project will be deployed in a production environment after a successful implementation of initial Proof of Concept (PoC).

Major indices that trade on TASE are the T-35, the T-125, and the TA BlueTech Index. The exchange has a market capitalization of $212 bln.

Traditional financial institutions have begun to see the advantages blockchain can add to their business processes. Last month, Banco Bilbao Vizcaya Argentaria (BBVA) became the first global bank to issue a loan using blockchain technology. The bank conducted the entire loan process, from the negotiation of terms to the signing, on a mutually distributed ledger, claiming that it cut the negotiation time for the €75 mln loan from “days to hours”.

Recently, Sberbank CIB, the corporate and investment banking business of Russia’s largest bank Sberbank, conducted the first blockchain-based commercial bond transaction in Russia. Sberbank CIB organized the issue corporate bonds using smart contracts, while the transaction was carried out on the Hyperledger Fabric 1.1-based blockchain platform.

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Two Healthcare Tech Firms Establish New Field Of Data Economics Using Blockchain

Two blockchain groups initiate a research collaboration to develop a platform for the storage, management, and exchange of genomic data.

Nebula Genomics and Longenisis, two leading firms in artificial intelligence and blockchain technology for healthcare, are developing a platform for the storage and exchange of genomic data, according to an announcement May 15. According to the release, they also aim to establish a new research field of “life data economics.”

Nebula Genomics is a San Francisco-based biotechnical company that uses blockchain to “build a marketplace” for clinical data. Longenesis is a Hong Kong-based partnership between Insilico Medicine and the Bitfury Group, which makes blockchain platforms for the exchange of health data.

The companies will reportedly apply artificial intelligence and blockchain technology to develop a platform for individuals and large data providers to store, manage, exchange, and profit from genomic and other types of clinical data. In order to automate data acquisition, the project will utilize smart contracts. Professor George Church, co-founder of Nebula Genomics said:

“By allowing individuals and large data providers such as biobanks to maintain ownership of their genomic data on our platform and profit from it, Nebula Genomics seeks to incentivize generation of genomic data. In doing so, we will gather the data on a single network where it can be conveniently and securely accessed by researchers. In other words, we will make a marketplace that will create an equitable and efficient economy for genomic data.”

Longenesis is developing a blockchain-based platform to store and exchange health-related data like lab test results. “Longenesis has built a similar platform that instead focuses on longitudinal health data, so our platforms complement one another very well,” said Church.

Nebula Genomics and Longenesis say that their work will establish two new fields. The first, “microdataeconomics,” is “the study of the value of life data that is used for drug discovery such as proteomics or data regarding the structure and activity of specific molecules, both in vitro and in vivo.” The second, “macrodataeconomics,” is “ the study of the value of life data that is used to determine human health such as electronic health records and genomics.”

Earlier this month, a US-based life science research marketplace Scientist.com revealed a new blockchain platform called DataSmart. The blockchain-powered platform is reportedly designed to track and protect pharmaceutical data.

In April, US healthcare giant UnitedHealth Group announced a blockchain deployment to keep records up to date. The initiative aims to examine “how  sharing data across health care organizations on blockchain technology can improve data accuracy, streamline administration and improve access to care.”

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US: Seminole County Florida To Accept Crypto For Tax Payment

Seminole County to accept BTC and BCH for payment for taxes to remove risks connected with credit card usage, such as fraud and identity theft.

The Seminole County, Florida, tax collector Joel M. Greenberg announced May 14 that the county will begin accepting cryptocurrency for payment for various services this summer in order to eliminate heavy fees and improve payment accuracy and efficiency.

According to a press release, the county will begin accepting Bitcoin (BTC) and Bitcoin Cash (BCH) to pay for services, including property taxes, driver license and ID card fees, as well as tags and titles. The Seminole County Tax Collector will reportedly employ blockchain payments company BitPay, which will allow the county to receive settlement the next business day directly to its bank account in US dollars. Greenberg commented on the initiative:

“We live in a world where technology has made access to services on demand, with same-day delivery and the expectation of highly efficient customer service and we should expect the same from our government. The aim of my tenure in office is to make our customer experience faster, smarter, and more efficient, and to bring government services from the 18th century into the 21st century and one way is the addition of cryptocurrency to our payment options.”

With this move, the county reportedly aims to remove risks connected to credit card usage, such as fraud and identity theft. According to BitPay, Seminole county is the first government agency to use the company’s services.

Earlier this month in the state of Arizona, a bill that would have allowed state residents to pay taxes using crypto was amended, removing the provisions which obligated the state to accept crypto. Instead, the bill merely obliges the Department of Revenue to “study” whether a taxpayer may “pay the taxpayer’s income tax liability by using a payment gateway, such as Bitcoin, Litecoin or any other cryptocurrency.”

Also this month, the city of Berkeley, California moved forward with an initiative to apply blockchain technology to public financing for community projects. The pilot project also aims to decrease the minimum price of a municipal bond from $5,000 to $10-25, which would allow more people to invest in municipal projects they support. Vice Mayor Ben Barlett added that, should the political process allow it, the city could consider issuing a type of token which would function much like a municipal bond in providing city funding.

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