Central bank new rule on electronic purse

You're referring to the recent development in the financial sector!

In recent times, central banks around the world have been exploring the concept of central bank digital currencies (CBDCs) or electronic purses, which are digital versions of physical cash. These digital currencies are designed to be issued and managed by central banks, rather than commercial banks.

Here are some key updates on the new rule on electronic purses:

What is an electronic purse? An electronic purse is a digital wallet that allows users to store and manage their digital currency, which is backed by a central bank. It's essentially a digital version of cash, but with added features and security measures.

New rule: In October 2020, the Bank for International Settlements (BIS) published a new rule on the use of electronic purses, which aims to provide a framework for central banks to issue and manage CBDCs. The rule is designed to ensure the stability and security of the financial system, while also promoting innovation and efficiency.

Key features of the new rule:

  1. Stability and security: The rule emphasizes the importance of ensuring the stability and security of the financial system, including the prevention of money laundering and terrorist financing.
  2. Central bank control: The rule requires central banks to maintain control over the issuance and management of CBDCs, including the setting of monetary policy and the management of the digital currency's supply.
  3. Private sector involvement: The rule allows for private sector involvement in the development and operation of CBDCs, but with strict oversight and regulation to ensure stability and security.
  4. Interoperability: The rule encourages interoperability between different CBDCs and other digital payment systems, to promote efficiency and convenience for users.
  5. Risk management: The rule requires central banks to develop and implement robust risk management frameworks to mitigate potential risks associated with CBDCs, such as cyber threats and market volatility.

Impact: The new rule on electronic purses is expected to have a significant impact on the financial sector, including:

  1. Increased adoption: The rule is likely to encourage more central banks to issue CBDCs, which could lead to increased adoption and usage.
  2. Improved stability: The rule's emphasis on stability and security is expected to reduce the risk of financial instability and promote a more stable financial system.
  3. Innovation: The rule's encouragement of private sector involvement and interoperability is expected to drive innovation and efficiency in the financial sector.

Overall, the new rule on electronic purses is an important development in the evolution of digital currencies and the financial sector as a whole.