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What Is The World Economic Forum Cooking? – Summary of the Digital Currency Governance Consortium January 2021

“The DCGC attempts to provide a neutral, objective and analytical perspective on the pertinent issues.”- World Economic Forum

The World Economic Forum is the ‘international Organization for Public-Private cooperation.’ It is a non-profit organisation, which was established in 1971. The World Economic Forum holds its headquarters in Geneva, Switzerland.

Set up in early 2020, the Digital Currency governance Consortium (DCGC) ‘brings together more than 80 organizations from the public and private sectors to provide global perspectives in addressing key policy and governance issues.’ The January 2021 document for the DCGC outlined eight different concepts that are being developed in the rest of 2021. This article is going to summarise the report, stating the key points we took from the document, and what you should look out for further into 2021. 

The eight concepts mentioned fall which fall under three categories:

  1. Stablecoins’ value proposition for under-served populations
  2. Regulatory choices
  3. Technology infrastructure and opportunities

These are highlighted with the subcategories in the chart below, sourced from the document itself.

Source: WEF_Digital_Currency_Governance_Consortium_2021.pdf (weforum.org)

 

What are the quoted objectives of each category?

Value proposition for the under-served

  • Investigating the value proposition of stablecoins for financial inclusion
  • Help policy-makers and stakeholders understand how stablecoins can stimulate financial inclusion (if at all) and provide benefits to the financially under-served, relative to pre-existing forms of money. 
  • Identify the instances where stablecoins do not clearly solve challenges with pre-existing forms of money
  • Investigating the value proposition of stablecoins for aid disbursement
  • Identification and exploration of the value proposition of stablecoins for aid delivery and disbursement, with a focus on risk-mitigation aspects and traceability.

Regulatory choices

  • The role of the public sector and public-private cooperation in digital currency growth
  • Provide an option set for policy-makers and public-sector institutions to understand the actions they could take with respect to CBDC and stablecoin development, growth and innovation.
  • Indicate high-potential areas for public-private collaboration.
  • Indicate high-potential areas for cooperation between public-sector institutions in different countries
  • Identify where further research or experience are needed to inform decisions around the roles of public and private sectors or intergovernmental cooperation.
  • Help the public sector to keep up technological innovation and competition
  • Regulatory and policy gaps of CBDCs and stablecoins
  • Suggest measures to mitigate the risks to economies and users arising from incompatibilities and regulatory gaps associated with CBDCs and stablecoins.
  • Accelerate the creation of regulatory guidance that could provide much-needed clarity on technical choices (for issuers)
  • Accelerate global coordination of the regulation and supervision of CBDCs and stablecoins
  • Provide tools for policy-makers to make the right decisions more quickly and to identify areas of risk and opportunity
  • Consumer protection risk mapping
  • Promote awareness of the importance of consumer protection within the industry
  • Educate readers on varying types and levels of risk associated with different digital currencies
  • Guide the design of a balanced approach towards consumer protections for digital currencies.

Technology infrastructure and opportunities

  • CBDC technology decision framework
  • Create a clear, navigable framework that helps central banks assess the CBDC technology solutions
  • Map some of the main technology solutions for each CBDC functionality, including privacy, scalability, recoverability
  • Describe the major issues that central banks should consider related to technology platforms, features or functionalities, such as cybersecurity, risks with tech choices, and trade off between tech choices etc. 
  • The spectrum of privacy and confidentiality options
  • Clearly outline for policy-makers and stakeholders the spectrum of privacy and confidentiality options and approaches that are technically feasible and available for central banks
  • Explore current central banks’ concerns about privacy for the financial ecosystem, outline the development trend of key principles of privacy regulations/frameworks
  • Convey the privacy capabilities available today
  • Describe recommendations for future-proofing CBDC architectures
  • Defining interoperability
  • Define what interoperability means in the context of CBDCs and stablecoins.
  • Identify the goals, benefits, trade-offs and design principles for interoperability for CBDCs and stablecoins.
  • Provide an overview of the areas where standards for interoperability for CBDCs and stablecoins are beneficial.
  • Compare different contexts where interoperability is relevant
  • Identify some players building interoperability for CBDC and stablecoins,
  • Indicate where central banks, commercial banks and other financial institutions can contribute to the issue.
  • Identify the main barriers to interoperability for CBDCs and stablecoins.

The World economic Forum plans to put these plans into fruition in 2021. It will be exciting for us and all crypto-enthusiasts to see how these are executed throughout the year. This article has summarised the document, stating the main talking points in brief. If you wish to read the full document including explanations, reasoning and how the projects shall be delivered then click on the link below:

WEF_Digital_Currency_Governance_Consortium_2021.pdf (weforum.org)

 

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