ITU has created a new Focus Group to investigate the emerging questions of how best to standardize and regulate the interoperability and security aspects of digital fiat currency. Titled the ‘ITU-T Focus Group on Digital Currency including Digital Fiat Currency’, the group is open to participation by any interested party and will begin work in the final quarter of 2017.
Digital fiat currency authorized and issued by a country’s Central Bank is recognized as legal tender and can be viewed as the digital equivalent of banknotes and coins. The adoption of digital fiat currency is expected to drive the expansion of the digital payments ecosystem by offering a secure, interoperable payment instrument suited to our increasingly digital world.
“Digital tools are essential to the future of financial services,” said Chaesub Lee, Director of the ITU Telecommunication Standardization Bureau.
“This new Focus Group aims to describe the environment necessary to achieve the dual objective of encouraging digital transactions while ensuring that Central Banks retain control over the issuance of currency and associated protections of the stability and integrity of the financial system.”
The Focus Group will be chaired by David Wen, Co-founder and Chief Scientist of eCurrency. It will build a common understanding of the foundations of digital fiat currency and its relationship with payment ecosystems, ICT infrastructure and the latest innovations in digital currency.
“Digital fiat currency will encourage innovation in digital financial services by providing a fundamental basis for interoperability that comes with a single unit of account transferable across all payment systems,” said Jonathan Dharmapalan, founder of eCurrency. “We are enthusiastic about the participation of experts and industry leaders in the focus group. With this level of support, we hope to bring standardization and compliance to a central bank issued digital currency.”
The Focus Group aims to build a bridge between ITU’s technical expertise and the requirements of financial-services stakeholders interested in implementing secure digital fiat currency.
The group’s work will be driven in collaboration by Central Banks, ICT regulators, commercial banks, financial-service providers, network operators, security professionals, FinTech innovators, and technical and financial standards bodies.
This inclusive discussion of stakeholders’ requirements will inform the Focus Group’s elaboration of a ‘reference architecture’ describing the components and dynamics of the ecosystem to support digital fiat currency.
The group’s ecosystem view of digital fiat currency will be accompanied by analysis of its technical underpinnings. The group will investigate technical platforms capable of providing the security necessary to prevent the counterfeiting of digital fiat currency, in addition describing demands on network infrastructure and functionality. The technical requirements of digital fiat currency identified by the Focus Group are expected to be addressed by subsequent ITU standardization work.
The establishment of the Focus Group was agreed by the ITU Telecommunication Standardization Advisory Group (TSAG). TSAG will act as the Focus Group’s parent group, responsible for defining ITU’s response to the Focus Group’s findings.