This week, the Digital Monetary Authority launched a new international CBDC digital currency called Unicoin (UMU). What is it and what are its implications?
Central Bank Digital Currencies (CBDCs) have been a hot topic this year. The European Central Bank is due to finish its investigation into the digital euro in October. This week, the Bank of England announce It is looking to grow CIB’s currency team for a potential “Britcoin”. Also, this week, Sweden just published its third round of beta a report own electronic krona.
While many countries are in the investigation phase, far fewer have launched one — or committed to doing so. The Bahamas sand dollar was issued by the central bank in October 2020, becoming the world’s first nationwide digital currency. Nigeria, Africa’s most populous country, launched the eNaira system last year. However, it has been plagued by a lack of adopters and dealers willing and able to accept the coin.
So the news this week is that the Digital Currency Monetary Authority (DCMA) has announce The launch of a new digital currency is surprising. Currency – called world monetary unit (UMU) or Unicoin – announced during the International Monetary Fund (IMF) Spring Meetings in Washington, D.C. (UMU is different from another project called Unicoin. Both are not related. BeInCrypto will use UMU going forward.)
The fledgling currency already has its own symbol, the ANSI letter, Ü.
Who is the monetary authority in digital currency?
DCMA is a private organization that advocates for the advancement of digital currencies in central banking and money systems. according to press releaseIts executive team has been working with governments and central banks on blockchain and cryptocurrency since 2013.
The DCMA is also a monetary authority. “UMU is our cash asset, and we back it,” Darrell Hubbard, CEO of DCMA, and chief architect of UMU, said in an interview with BeInCrypto. “Meaning, you can always get the value back from us for the amount paid to us. This is the role of the monetary authority.”
The group aims to enhance global trade by integrating international payments and settlements in digital currency. It has “50 to 75 human resources at any given time,” Hubbard continued. “Our board of directors are central banks and financial institutions.”
Her thesis, if you want to call it that, is that most cryptocurrencies do not cater to the financial sector. In fact, the Bitcoin white paper stated that it was not designed to operate within regulated financial institutions. However, as central banks explore cryptocurrency and digital assets, the DCMA believes that there must be cryptocurrency that can meet the requirements of banks.
Currently, global banking recognizes two legal forms of cash: structured electronic cash and physical cash. Bitcoin e-money has not been widely adopted in banking as it does not represent either of these two cryptocurrencies.
However, the DMCA coin UMU/Unicoin is expressly designed to work with financial and monetary institutions.
What is UMU / Unicoin CBDC?
It is important to note that UMU (or Unicoin) will not be a central bank digital currency in the traditional sense. At least not in the foreseeable future. It is supposed to work “like a CBDC”. However, legally it is a monetary good.
“UMU functions functionally as a CBDC,” Hubbard said. But it intentionally works across all national jurisdictions. Not just for the local economy.”
that it White papers He has a passage summarizing their thinking:
The International Monetary Fund assumes that all crypto assets pose a risk to the international monetary system. The IMF does not consider that there can be a class of digital currency innovations designed to enhance the integrity and stability of the international monetary system
According to the DCMA, UMU/Unicoin is designed to be suitable for central banks to create retail (for use by the public) and wholesale CBDCs (for use by financial institutions.) It also claims to solve a problem: the slow, inefficient, and complex process of international bank transfers .
According to the release, banks will be able to link UMU digital currency wallets with SWIFT tokens and bank accounts to process cross-border payments similar to SWIFT but across digital currency networks. This will be done at wholesale foreign exchange rates and with real-time settlements. This contrasts with the traditional model, where international bank transfers can take days.
However, UMU will not be a legal tender for negotiating domestic prices or international trade agreements. Instead, it will act as a store of value, cushion currency depreciation, and be used as a means of payment.
UMU has excellent exchange rates built into its portfolio and can convert any settlement currency amount into the equivalent UMU amount. Its creators hope that merchants will one day accept UMU for the equivalent market value of their goods and services priced in any national legal tender.
There is some way to go
For the UMU to take off, it would need to buy from the financial system and central banks. Something that didn’t exist yet. On the retail side, UMU will have to compete with the likes of Ripple and stablecoins. Both allow international transactions to be made at a fraction of the speed of many bank transfers.
The DCMA has also drafted a law on central bank digital currencies. The proposed global monetary union model law was developed in collaboration with central banks from developed economies and emerging markets. The legislation includes UMU/Unicoin as a complementary monetary commodity that acts as a store of value, designed to help mitigate potential depreciation of the local currency. In addition, UMU/Unicoin will act as a payment currency during settlement transactions.
There are currently no confirmed partners, and DCMA has been unable to confirm the economies it has been working with.
“The DCMA is under a non-disclosure agreement with these economies,” Hubbard said. However, our access is either central bankers or finance ministers. I can reveal our greatest commitments with the African Union, which introduces us to all governors on the continent.”
“Because of politics, we have been asked to keep the sharing economies under a non-disclosure agreement. Very soon, we will be able to disclose our partners.”
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