Kyrgyz Bank advances its digital som CBDC project
The Kyrgyz Bank Interagency Working Group (IWG) on Regulatory Impact Analysis (RIA) wrapped up its work on the implementation of a potential digital som. Their comprehensive analysis delved into ten Kyrgyz Republic legislative acts related to the introduction of the central bank digital currency (CBDC), proposing crucial amendments in the process. During a meeting of the Steering Committee on Digital Som, the IWG demonstrated a demo version of the digital som on the (blockchain) platform of one of the CBDC platform providers of CBDC. Going forward, the project team will continue further work on research, analysis of proposals, as well as negotiations with CBDC platform. [Read more at the Kyrgyz Bank and on Altynbek Kamchybek uulu’s LinkedIn post]
ECB says iPhone is currently incompatible with digital euro
The European Central Bank (ECB) is opposed to Apple’s proposed changes to the iPhone’s near-field communication (NFC) at the core of Apple Pay. The ECB argues that by not providing third parties with full access to the secure element (SE) of its NFC technology, Apple Pay maintains an unfair advantage against third-party payment apps on iPhones. Because of these limitations, contactless payments made through third-party apps on iPhone would be less user-friendly and ultimately be slower than Apple’s offering. Also, iPhones would be incompatible with the digital euro, because the current enabling legislation requires the ability to do peer-to-peer (P2P) and offline payments, the latter which requires access to the SE. [Read more at the ECB]
Stablecoins and national security: Learning the lessons of Eurodollars
The Brookings Institute published a paper by Timothy Massad, U.S. Commodity Futures Trading Commission (CFTC) , on how blockchain-based stablecoins could undermine the global financial system plumbing that has been exploited by U.S. authorities to protect national security interests (e.g., by implementing sanctions). He discusses various regulatory and legislative options, and finds them either insufficient or disrespecting reasonable privacy expectations. Mr. Massad suggests that, at minimum, stablecoin issuers should be required to engage in enhanced monitoring of blockchains for suspicious transactions and consider when the issuer must “freeze” stablecoins. [Read more at Brookings]
Interlinking fast payment systems for cross-border payments
The Reserve Bank of Australia (RBA) published a report on the benefits, design choices and challenges associated with linking fast payment systems (FPSs) across countries. It finds that connecting FPSs has the potential to considerably improve the speed and transparency of cross-border payments, benefiting both end users and service providers. Crucial to realizing these benefits are well-designed governance, scheme rules and payments processing capabilities, which help to manage risk and ensure a seamless cross-border payments experience. However, establishing an interlinking arrangement poses challenges, including dealing with differences in legal and regulatory frameworks across participating jurisdictions and agreeing on governance arrangements and scheme rules. [Read more at the RBA]
FYI I’ll be speaking at the Digital Currency Conference in London on September 23-24. The conference will bring together policymakers, regulators, and technology and innovation experts to network and discuss all aspects of digital currencies. And enter the KiffmeisterDCC code at registration to get a 20% discount! [Find out more and register here]
Kiffmeister’s central bank digital currency monthly monitor
Just a reminder that I produce a monthly digest of central bank digital currency (CBDC) developments exclusively for the official sector. So (only) if you work at a central bank, ministry of finance or international financial institution (e.g., the BIS, IMF, OECD, World Bank) and who would like to receive it by email on the first business day of every month, please DM me on LinkedIn or email me at john@kiffmeister.com.
