Asia Unhedged — Introducing the CryptoRuble

Sanctions-buster?

The anonymity of a cryptocurrency also provides Russia with a tremendous opportunity to circumvent sanctions. As Handelsblatt reports, the CIA has already expressed suspicion that Russia’s interest in the matter may be related to this. The Director General of the Russian e-money system, Qiwi Sergej Solonin, sees at least the possibility that the CryptoRuble could provide a replacement to the international banking transaction system Swift. The disconnection of Russia from the Swift system has been discussed as a sanctions option in the past.

Asia Times
Introducing the CryptoRuble

Asia Unhedged

See also

Sputnik International
Russia Has Enough Potential to Ensure Digital Sovereignty - Prime Minister

China Daily — PBOC inches closer to digital currency China Daily

The People's Bank of China, China's central bank, has completed trial runs on the algorithms needed for digital currency supply, taking it a step closer to addressing the technological challenges associated with digital currencies, according to a top official associated with the project.

Yao Qian, director-general of the Institute of Digital Money at the PBOC, said China's central bank has successfully designed a prototype that can regulate the supply of its future digital fiat currency.

The successful simulation of money supply paves the way for the central bank to become the future sole regulator and policymaker governing the value of digital fiat currency, said Yao.

Digital fiat currencies are the digital forms of a sovereign currency that is backed by the central bank.

Unlike Bitcoin or other digital money issued by the private sector, the digital fiat currency has the same legal status as the Chinese yuan, the only fiat currency issued by the People's Bank of China.

There is no timetable for the introduction of the currency, but once introduced, China is likely to become the first country that would deploy a digital fiat currency....

The rapid development of the electronic payment sector and thriving private digital currencies have made it imperative for China's central bank to move quickly in digital finance.

Looking ahead, deploying the digital fiat currency is expected to be smarter and more intelligent compared to the payment providers using existing currencies, such as Alipay, according to Yao.

Ecns.cn
PBOC inches closer to digital currency

China Daily

Anna Lutskova — Russian airline cuts trade operations from 14 days to 23 seconds

Blockchain is here.

Alfa-Bank:

“Implementation of the blockchain platform ethereum opens the door for optimization of business processes for both the carrier and its partners. Speed of computation has revved up from 14 days to 23 seconds. Thus, the airlines don’t delay payment to an agent which receives the money shortly after the ticket is processed.”

Agents do not have to deal anymore with the termination payment security (TPS) typically used to eliminate the risk of non-payment. Automation of the procedures speeds things up and reduces the paperwork for the airline and the agent. Before drawing a payment, the new system makes sure there is a balance in an account. 

Moreover, blockchain eliminates the human factor and boosts system reliability and transparency of trade operations....

The Duran
Russian airline cuts trade operations from 14 days to 23 seconds
Anna Lutskova

Matias Vernengo — History of Central Banks Tutorial - Before Central Banks II

Naked Keynesianism
History of Central Banks Tutorial - Before Central Banks II
Matias Vernengo | Associate Professor of Economics, Bucknell University

JP Koning — Another Fedcoin sighting

Comparison of blockchain to Fedwire.

Moneyness
Another Fedcoin sighting
JP Koning

Neil Wilson — On the Nature of Banks - Payment Clearing

A couple of comments over the last week have suggested that the nature of the payment clearing system isn't perhaps obvious to all. I hope this post will help you see how it works, and show you why banks don't really lend reserves.

3spoken
On the Nature of Banks - Payment Clearing
Neil Wilson

Houses and Holes — Bitcoin ponzi unraveling?

Neither Houses and Holes nor JPM likes Bitcoin or sees a future in it. But JPM does acknowledge that its attraction is a lower cost payments system.

MacroBusiness
Bitcoin ponzi unraveling?
Houses and Holes

Jillian D'Onfro — Bill Gates Says Digital Currencies Could Be Huge

The [Gates] foundation is involved in digital money but unlike Bitcoin it would not be anonymous digital money. In Kenya M-pesa is being used for almost half of all transactions. Digital money has low transaction costs which is great for the poor because they need to do financial transactions with small amounts of money. Over the next 5 years I think digital money will catch on in India and parts of Africa and help the poorest a lot.

Business Insider — Clusterstock
Bill Gates Says Digital Currencies Could Be Huge
Jillian D'Onfro

Matthew O'Brien — Bitcoin Is Broken—Here's a Simple Plan to Fix It

Bitcoin would be a clear step forward as a payments system if people actually used it to pay for things. But they don't. The people who have bitcoins don't use them, and the people who don't have them don't want them. Indeed, a new survey finds that 79 percent of people have never used a cryptocurrency, and never want to.

But there's an easy fix. Just ask yourself why sellers are so happy to accept Bitcoin. It's not just that there are no fees. It's that merchants can instantly turn their bitcoins into dollars thanks to startups like Bitpay. Sure, that means paying a fee, but it's lower than what they'd have to pay the credit card companies—and it means they don't have to worry about Bitcoin's incredibly volatile value.

Bitcoin needs the same thing for buyers. It needs a company that can immediately turn a buyer's dollars into bitcoins and then immediately turn a seller's bitcoins back into dollars—all for a lower fee than traditional intermediaries charge. In other words, Bitcoin needs to stop trying to be a currency and start being a financial architecture.

Atlantic Business
Bitcoin Is Broken—Here's a Simple Plan to Fix It
Matthew O'Brien

James Hamilton — Economics of Bitcoin

Hard to know where this is all going to lead. But one thing is clear– we have added a very interesting new chapter in the history of money.

Where it is going is toward a more streamlined payments system that is more efficient by reducing transaction costs. No brainer.

Econobrowser
Economics of Bitcoin
James Hamilton | Professor of Economics at the University of California, San Diego

Rana Foroohar — Bitcoin Solves a Huge Problem for the Global Economy

I think Bitcoin reflects the fact that while commerce is increasingly global and digital, money isn’t.

Time — The Curious Capitalist
Bitcoin Solves a Huge Problem for the Global Economy
Rana Foroohar

Izabella Kaminska — The time for official e-money is NOW!

A chief attraction of Bitcoin is as an alternative payments system that greatly reduced transaction costs. That is to say, it is more economically than conventional payments systems and also as secure as cash (see Bitcoin: Marc Andreessen Explains It All for You — A web visionary makes the case for virtual currency having world-changing implications by Harry McCracken). As a result, this is definitely going to happen, all the negatives notwithstanding because as long as Bitcoin is instantaneously convertible. Governments should just catch up with technological innovation. That could reduce or eliminate even the small transaction costs involved with converting Bitcoin. These transaction costs are unnecessary and unproductive economic rent. They need to go and if government won't act, then the market will.

The Financial Times | FT Alphaville (free registration required)
The time for official e-money is NOW!
Izabella Kaminska

Felix Salmon — The payments impasse

I’ll say this for bitcoin: it’s got a whole new class of people, like Matt Levine and Guan Yang, increasingly interested in one of my longstanding obsessions — payments. (You might be surprised to learn how hard it is to get people interested in payments.) Guan’s post, along with the response to it from Simple’s Shamir Karkal, provide a techie’s viewpoint into a question which many non-Americans have when they start living in this country: how on earth can can moving money from one person to another be so difficult, expensive, and time-consuming?

The simple answer, as Karkal hints at, is that we’re suffering from a particularly toxic combination: an outdated payments system combined with a seemingly powerless central bank, which is happy to let the big banks dictate the pace of change (or lack thereof). And as American Banker’s Kevin Wack explained in a great piece last November, the big banks are very good at vetoing even incremental improvements in the US payments infrastructure.

Econoblog
The payments impasse
Felix Salmon

BILL3 — How Banking Actually Works In Fiat World, Part 2

Follow on to this post which was cited at MNE here. Clear description of how reserves function in the payments system.

I hope Robert Murphy reads these posts before the debate with Warren.

Daily Paul

How Banking Actually Works In Fiat World, Part 2
BILL3

Stephan Ewald — Cash Is King

So there’s this convoluted debate between Steve Waldman and Paul Krugman about the nature of base money. Izabella Kaminska from FT Alphaville wrote today a nice summary. Waldman and Krugman label their various arguments as wonkish. I would refer to this debate as a very helpful exercise to completely obscure the subject: what is the nature of base money?

GIGO
Cash Is King
Stephan Ewald