{"id":114940,"date":"2021-06-26T11:00:04","date_gmt":"2021-06-26T05:30:04","guid":{"rendered":"https:\/\/blog.forumias.com\/?p=114940"},"modified":"2021-06-26T11:00:04","modified_gmt":"2021-06-26T05:30:04","slug":"a-system-of-shared-ids-can-globalize-digital-currencies","status":"publish","type":"post","link":"https:\/\/forumias.com\/blog\/a-system-of-shared-ids-can-globalize-digital-currencies\/","title":{"rendered":"A system of shared IDs can globalize digital currencies"},"content":{"rendered":"\n<p><b><span data-contrast=\"none\">Relevance:\u00a0<\/span><\/b><span data-contrast=\"none\">Digital currencies are gaining global attention. Even\u00a0an\u00a0inter-ministerial committee (IMC) suggested to introduce\u00a0National Digital Currency under the RBI.\u00a0<\/span><span data-ccp-props=\"{&quot;335559739&quot;:160,&quot;335559740&quot;:259}\">\u00a0<\/span><\/p>\n<p><b><span data-contrast=\"none\">Synopsis:<\/span><\/b><span data-ccp-props=\"{&quot;335559739&quot;:160,&quot;335559740&quot;:259}\">\u00a0<\/span><\/p>\n<p><span data-contrast=\"none\">The major countries of the world are planning to issue\u00a0their\u00a0respective digital currencies whose success depends on the degree of global acceptance and transferability.\u00a0<\/span><span data-ccp-props=\"{&quot;335559739&quot;:160,&quot;335559740&quot;:259}\">\u00a0<\/span><\/p>\n<p><b><span data-contrast=\"none\">Background:<\/span><\/b><span data-ccp-props=\"{&quot;335559739&quot;:160,&quot;335559740&quot;:259}\">\u00a0<\/span><\/p>\n<ul>\n<li data-leveltext=\"\uf0b7\" data-font=\"Symbol\" data-listid=\"24\" aria-setsize=\"-1\" data-aria-posinset=\"43\" data-aria-level=\"1\"><span data-contrast=\"none\">Digital Currency is a direct claim on a central bank, like regular cash.\u00a0FedCoin, e-CNY, digital euro,\u00a0Britcoin\u00a0etc. are some of the digital currencies that would be\u00a0rolled\u00a0out in near future.\u00a0<\/span><span data-ccp-props=\"{&quot;134233279&quot;:true,&quot;335559739&quot;:160,&quot;335559740&quot;:259}\">\u00a0<\/span><\/li>\n<\/ul>\n<h5><b><span data-contrast=\"none\">Issues associated with digital currencies:<\/span><\/b><span data-ccp-props=\"{&quot;335559739&quot;:160,&quot;335559740&quot;:259}\">\u00a0<\/span><\/h5>\n<ul>\n<li data-leveltext=\"\uf0b7\" data-font=\"Symbol\" data-listid=\"25\" aria-setsize=\"-1\" data-aria-posinset=\"44\" data-aria-level=\"1\"><b><span data-contrast=\"none\">First,\u00a0<\/span><\/b><span data-contrast=\"none\">a system for ensuring seamless movement of digital currencies across global merchants is still not prepared by the monetary authorities. For\u00a0this, they will need to verify identities of 8 billion people.<\/span><span data-ccp-props=\"{&quot;134233279&quot;:true,&quot;335559739&quot;:160,&quot;335559740&quot;:259}\">\u00a0<\/span><\/li>\n<li data-leveltext=\"\uf0b7\" data-font=\"Symbol\" data-listid=\"25\" aria-setsize=\"-1\" data-aria-posinset=\"45\" data-aria-level=\"1\"><b><span data-contrast=\"none\">Second<\/span><\/b><span data-contrast=\"none\">,\u00a0unlike cash, or cryptos like Bitcoin, digital money issued by central banks won\u2019t be pure tokens. Either the issuing monetary authority or private players it tasks with the job will keep debit and credit accounts.\u00a0Thus,\u00a0persistent issue\u00a0of tackling\u00a0money laundering, terror financing, etc.\u00a0would be there.<\/span><span data-ccp-props=\"{&quot;134233279&quot;:true,&quot;335559739&quot;:160,&quot;335559740&quot;:259}\">\u00a0<\/span><\/li>\n<li data-leveltext=\"\uf0b7\" data-font=\"Symbol\" data-listid=\"25\" aria-setsize=\"-1\" data-aria-posinset=\"46\" data-aria-level=\"1\"><b><span data-contrast=\"none\">Third<\/span><\/b><span data-contrast=\"none\">, sharing identities across borders will become\u00a0a\u00a0complex\u00a0task, jeopardizing a user\u2019s privacy and\u00a0augmenting secret surveillance. This won\u2019t be accepted by countries like U.S and China who have significant trust deficit amongst them.\u00a0<\/span><span data-ccp-props=\"{&quot;134233279&quot;:true,&quot;335559739&quot;:160,&quot;335559740&quot;:259}\">\u00a0<\/span><\/li>\n<\/ul>\n<h5><b><span data-contrast=\"none\">Solutions proposed by the Bank for International Settlements (BIS):<\/span><\/b><span data-ccp-props=\"{&quot;335559739&quot;:160,&quot;335559740&quot;:259}\">\u00a0<\/span><\/h5>\n<ul>\n<li data-leveltext=\"\uf0b7\" data-font=\"Symbol\" data-listid=\"26\" aria-setsize=\"-1\" data-aria-posinset=\"47\" data-aria-level=\"1\"><span data-contrast=\"none\">First, the simplest solution may be for different payment authorities to enhance compatibility of their technical and regulatory standards.\u00a0<\/span><span data-ccp-props=\"{&quot;134233279&quot;:true,&quot;335559739&quot;:160,&quot;335559740&quot;:259}\">\u00a0<\/span><\/li>\n<li data-leveltext=\"\uf0b7\" data-font=\"Symbol\" data-listid=\"26\" aria-setsize=\"-1\" data-aria-posinset=\"48\" data-aria-level=\"1\"><span data-contrast=\"none\">Second,\u00a0they\u00a0(monetary authorities)\u00a0can interlink their systems and share some interfaces, eliminating middlemen.\u00a0<\/span><span data-ccp-props=\"{&quot;134233279&quot;:true,&quot;335559739&quot;:160,&quot;335559740&quot;:259}\">\u00a0<\/span><\/li>\n<li data-leveltext=\"\uf0b7\" data-font=\"Symbol\" data-listid=\"26\" aria-setsize=\"-1\" data-aria-posinset=\"49\" data-aria-level=\"1\"><span data-contrast=\"none\">Third,\u00a0they can get together on one platform for their independent digital currencies.<\/span><span data-ccp-props=\"{&quot;134233279&quot;:true,&quot;335559739&quot;:160,&quot;335559740&quot;:259}\">\u00a0<\/span><\/li>\n<\/ul>\n<p><span data-contrast=\"none\">Each of the three approaches \u201cwould require increasingly intertwined identification schemes, but in all cases, ID would remain at a national level.<\/span><span data-ccp-props=\"{&quot;335559739&quot;:160,&quot;335559740&quot;:259}\">\u00a0<\/span><\/p>\n<p><b><span data-contrast=\"none\">Most Promising Model<\/span><\/b><span data-contrast=\"none\">:<\/span><span data-ccp-props=\"{&quot;335559739&quot;:160,&quot;335559740&quot;:259}\">\u00a0<\/span><\/p>\n<ul>\n<li data-leveltext=\"\uf0b7\" data-font=\"Symbol\" data-listid=\"27\" aria-setsize=\"-1\" data-aria-posinset=\"50\" data-aria-level=\"1\"><span data-contrast=\"none\">The third model\u2014a jointly operated payment system supporting multiple central bank digital currencies\u2014is the most promising from a user\u2019s perspective.\u00a0<\/span><span data-ccp-props=\"{&quot;134233279&quot;:true,&quot;335559739&quot;:160,&quot;335559740&quot;:259}\">\u00a0<\/span><\/li>\n<li data-leveltext=\"\uf0b7\" data-font=\"Symbol\" data-listid=\"27\" aria-setsize=\"-1\" data-aria-posinset=\"51\" data-aria-level=\"1\"><span data-contrast=\"none\">After Hong Kong\u2019s monetary authority began experimenting with the Bank of Thailand to develop a common platform, they were joined by China\u2019s and the UAE\u2019s central banks.\u00a0<\/span><span data-ccp-props=\"{&quot;134233279&quot;:true,&quot;335559739&quot;:160,&quot;335559740&quot;:259}\">\u00a0<\/span><\/li>\n<li data-leveltext=\"\uf0b7\" data-font=\"Symbol\" data-listid=\"27\" aria-setsize=\"-1\" data-aria-posinset=\"52\" data-aria-level=\"1\"><span data-contrast=\"none\">The project is now called m-CBDC Bridge. Even in such a highly cooperative setup,\u00a0<\/span><b><span data-contrast=\"none\">a single ID system<\/span><\/b><span data-contrast=\"none\">\u00a0would not be needed.<\/span><span data-ccp-props=\"{&quot;134233279&quot;:true,&quot;335559739&quot;:160,&quot;335559740&quot;:259}\">\u00a0<\/span><\/li>\n<\/ul>\n<p><span data-contrast=\"none\">However,\u00a0it\u2019s unlikely that the US and China will agree to join their digital currencies, given their mutual distrust.\u00a0For this,\u00a0we need to rely on vaccine passport model.<\/span><span data-ccp-props=\"{&quot;335559739&quot;:160,&quot;335559740&quot;:259}\">\u00a0<\/span><\/p>\n<h5><b><span data-contrast=\"none\">Vaccine Passport Model<\/span><\/b><span data-contrast=\"none\">:<\/span><span data-ccp-props=\"{&quot;335559739&quot;:160,&quot;335559740&quot;:259}\">\u00a0<\/span><\/h5>\n<ul>\n<li data-leveltext=\"\uf0b7\" data-font=\"Symbol\" data-listid=\"28\" aria-setsize=\"-1\" data-aria-posinset=\"53\" data-aria-level=\"1\"><span data-contrast=\"none\">The vaccine passport is a digital vaccination certificate issued for cross-border travel.\u00a0It has a tamper-proof QR code, which can be read by immigration authorities.<\/span><span data-ccp-props=\"{&quot;134233279&quot;:true,&quot;335559739&quot;:160,&quot;335559740&quot;:259}\">\u00a0<\/span><\/li>\n<li data-leveltext=\"\uf0b7\" data-font=\"Symbol\" data-listid=\"28\" aria-setsize=\"-1\" data-aria-posinset=\"54\" data-aria-level=\"1\"><span data-contrast=\"none\">The certificate has an individual&#8217;s name and\u00a0partially\u00a0masked identification number.<\/span><span data-ccp-props=\"{&quot;134233279&quot;:true,&quot;335559739&quot;:160,&quot;335559740&quot;:259}\">\u00a0<\/span><\/li>\n<li data-leveltext=\"\uf0b7\" data-font=\"Symbol\" data-listid=\"28\" aria-setsize=\"-1\" data-aria-posinset=\"55\" data-aria-level=\"1\"><span data-contrast=\"none\">Upon scanning, the issuing country gives bare minimum information to immigration authorities and takes\u00a0responsibility\u00a0of the credibility of the\u00a0certificate.<\/span><span data-ccp-props=\"{&quot;134233279&quot;:true,&quot;335559739&quot;:160,&quot;335559740&quot;:259}\">\u00a0<\/span><\/li>\n<\/ul>\n<ul>\n<li data-leveltext=\"o\" data-font=\"Courier New\" data-listid=\"28\" aria-setsize=\"-1\" data-aria-posinset=\"15\" data-aria-level=\"2\"><span data-contrast=\"none\">Credibility is ensured by verifying an individual\u2019s phone number and unique ID created by the issuing authority.\u00a0\u00a0<\/span><span data-ccp-props=\"{&quot;134233279&quot;:true,&quot;335559739&quot;:160,&quot;335559740&quot;:259}\">\u00a0<\/span><\/li>\n<\/ul>\n<p><b><span data-contrast=\"none\">Usage in Global Digital Currency Transactions:<\/span><\/b><span data-ccp-props=\"{&quot;335559739&quot;:160,&quot;335559740&quot;:259}\">\u00a0<\/span><\/p>\n<ul>\n<li data-leveltext=\"\uf0b7\" data-font=\"Symbol\" data-listid=\"29\" aria-setsize=\"-1\" data-aria-posinset=\"56\" data-aria-level=\"1\"><span data-contrast=\"none\">A similar system\u00a0(like vaccine passport)\u00a0could work for international payments with digital cash.\u00a0Example:\u00a0For a cup of coffee, it should be sufficient that a national authority has verified your identity and your claim of digital currency.<\/span><span data-ccp-props=\"{&quot;134233279&quot;:true,&quot;335559739&quot;:160,&quot;335559740&quot;:259}\">\u00a0<\/span><\/li>\n<\/ul>\n<p><span data-contrast=\"none\">Without this level of coordination, e-CNY,\u00a0FedCoin,\u00a0Britcoin\u00a0and a digital euro will all remain trapped in silos, making them non-starters in a globalized world.\u00a0This\u00a0would also\u00a0pave\u00a0the way for the likes of Diem, synthetic private-sector tokens backed by reserves maintained in one or several official currencies.<\/span><span data-ccp-props=\"{&quot;335559739&quot;:160,&quot;335559740&quot;:259}\">\u00a0<\/span><\/p>\n<p><span data-contrast=\"auto\">Read more:\u00a0<\/span><span data-ccp-props=\"{&quot;335551550&quot;:6,&quot;335551620&quot;:6,&quot;335559740&quot;:276,&quot;469777462&quot;:[987],&quot;469777927&quot;:[0],&quot;469777928&quot;:[1]}\">\u00a0<\/span><\/p>\n<ul>\n<li data-leveltext=\"\uf0b7\" data-font=\"Symbol\" data-listid=\"6\" aria-setsize=\"-1\" data-aria-posinset=\"57\" data-aria-level=\"1\"><a href=\"https:\/\/forumias.com\/blog\/introducing-national-digital-currency-in-india-explained-pointwise\/\"><b><span data-contrast=\"none\">Introducing National Digital Currency in India \u2013 Explained, Pointwise<\/span><\/b><\/a><span data-ccp-props=\"{&quot;134233279&quot;:true,&quot;335551550&quot;:1,&quot;335551620&quot;:1}\">\u00a0<\/span><\/li>\n<\/ul>\n<p><b><span data-contrast=\"none\">Source:\u00a0<\/span><\/b><a href=\"https:\/\/epaper.livemint.com\/Home\/ShareArticle?OrgId=256dcb1ed31&amp;imageview=0\"><b><span data-contrast=\"none\">Livemint<\/span><\/b><\/a><b><span data-contrast=\"none\">\u00a0<\/span><\/b><span data-ccp-props=\"{&quot;335559739&quot;:160,&quot;335559740&quot;:259}\">\u00a0<\/span><\/p>\n","protected":false},"excerpt":{"rendered":"<p>Relevance:\u00a0Digital currencies are gaining global attention. Even\u00a0an\u00a0inter-ministerial committee (IMC) suggested to introduce\u00a0National Digital Currency under the RBI.\u00a0\u00a0 Synopsis:\u00a0 The major countries of the world are planning to issue\u00a0their\u00a0respective digital currencies whose success depends on the degree of global acceptance and transferability.\u00a0\u00a0 Background:\u00a0 Digital Currency is a direct claim on a central bank, like regular cash.\u00a0FedCoin,&hellip; <a class=\"more-link\" href=\"https:\/\/forumias.com\/blog\/a-system-of-shared-ids-can-globalize-digital-currencies\/\">Continue reading <span class=\"screen-reader-text\">A system of shared IDs can globalize digital currencies<\/span><\/a><\/p>\n","protected":false},"author":61,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"jetpack_post_was_ever_published":false,"footnotes":""},"categories":[1230,8043,9],"tags":[8252,4105,8251],"class_list":["post-114940","post","type-post","status-publish","format-standard","hentry","category-9-pm-daily-articles","category-current-affairs-cat","category-public","tag-bitcoin","tag-digital-currency","tag-national-digital-currency","entry"],"jetpack_featured_media_url":"","views":{"total":0,"cached_at":"","cached_date":1704941031},"jetpack_sharing_enabled":true,"_links":{"self":[{"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/posts\/114940","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/users\/61"}],"replies":[{"embeddable":true,"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/comments?post=114940"}],"version-history":[{"count":0,"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/posts\/114940\/revisions"}],"wp:attachment":[{"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/media?parent=114940"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/categories?post=114940"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/tags?post=114940"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}