Thursday, Oct 3, 2024

retail euro CBDC, Thailand's tokenization update

"There will come a time when it isn't 'They're spying on me through my phone' anymore. Eventually, it will be 'My phone is spying on me'." – Philip K. Dick ||  

Hi everyone, I hope you’re all doing well!

Today’s email is CBDC-heavy, with a puzzling but also alarming paper from the ECB, and an update on Thailand’s token distribution (not technically a CBDC but close). Both are making me feel uneasy.

IN THIS NEWSLETTER:

• Retail CBDCs: the ECB has the secret

• Thailand’s tokenized distribution is popular

If you’re not a premium subscriber, I hope you’ll consider becoming one! It’s the price of a couple of New York coffees a month, and you get ~daily commentary on how macro moods are influencing crypto markets, and also on how crypto is impacting the macro economy.

WHAT I’M WATCHING:

Retail CBDCs: the ECB has the secret

I finally got around to looking at a paper from the European Central Bank (ECB) published a couple of weeks ago, on how to make a retail CBDC appealing to users. None of the current issuers (Nigeria, China, India, Bahamas) have managed this yet, but that’s probably because they weren’t “doing it right”. But the ECB has done some research on this, and it is here to help.

Never mind that over the past few weeks, Canada and Australia both announced the end of their retail CBDC exploration, given the lack of a “clear public interest case”. Is the European market really that different? The ECB seems to think so.

The study dove into payment preferences, and found that people prefer to stay with the familiar if it works well (you don’t say). So, the trick to getting people to use a CBDC would be to make it as similar to current systems as possible. In other words, it’s a design issue, and combining the advantages of cards (speed and convenience) with those of cash (privacy and expense tracking) should boost the appeal.

But that still doesn’t lay out a convincing path for adoption – if current systems satisfy consumer needs, why would they incur the effort cost of understanding the new system and setting up new processes?

No worries, surely good communication can help? Of course: