Staff from the board of governors of the U.S. central bank recently published a research paper addressing central bank digital currencies (CBDCs). According to a press release, the paper “provides an overview of the literature examining how the introduction of a CBDC would affect the banking sector, financial stability, and the implementation and transmission of monetary policy in a developed economy such as the United States.” Among other things, the paper discusses the potential for a CBDC to “improve welfare by reducing financial frictions in deposit markets, by boosting financial inclusion, and by improving the transmission of monetary policy.” The paper also addresses “noteworthy risks, including the possibility of bank disintermediation and associated contraction in bank credit, as well as potential adverse effects on financial stability.”

The Bank for International Settlements (BIS) recently published two sets of materials addressing CBDCs. The first is an announcement of the launch of Project Tourbillon, a new project by the BIS Innovation Hub's Swiss Centre that aims to explore “how to improve cyber resiliency, scalability and privacy in a prototype Central Bank Digital Currency (CBDC).” The second is a paper addressing CBDCs in Africa that is based on a survey to central banks and that “analyses the development, motivations and concerns of … [CBDCs] in Africa relative to other emerging and developing regions.”

A major U.S. cryptocurrency exchange recently published its 2022 Institutional Investor Digital Assets Outlook Survey. The survey sought “to understand how decision makers at US institutions view digital assets,” and “[a] total of 140 institutional investors in the US participated in the survey, representing assets under management of about $2.6 trillion.” Among other things, the survey results indicate that (1) institutional investors increased their allocations during the crypto winter; (2) investors' top motivation for investing in crypto is differentiated performance, including innovative technology; (3) digital assets were seen as offering one of the most attractive opportunities to generate alpha; (4) regulatory compliance is a top criteria for selecting a crypto partner; and (5) regulatory clarity is an important catalyst for future growth.

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