Competing rails for Cross-Border Payments: Banks, Fintechs, and Stablecoins (BIS)

The BIS published a paper by Du, Huang and Scharfstein that compares the cost of sending cross-border payments across three payment rails: traditional banks operating through the correspondent banking system and SWIFT, fintech money transfer operators (MTOs) and stablecoin-based transfers. The authors find that traditional bank transfers exhibit high foreign exchange markups, reflecting significant correspondent costs and market power. In contrast, MTOs substantially compress consumer costs by utilizing internal flow netting and prefunded local liquidity. While stablecoins mitigate certain settlement frictions, they do not eliminate intermediation; rather, they shift it to crypto-asset exchanges. Although stablecoins offer competitive pricing in some emerging markets, broader scalability remains constrained by limited trading liquidity and explicit conversion fees. [BIS]

BNM Launches SSDS+: Powering Digital and Tokenized Bond and Sukuk Issuance (BNM)

Bank Negara Malaysia (BNM), building on the legacy of its Scripless Securities Depository System (SSDS) launched SSDS+, a digital platform utilizing cloud and distributed ledger technologies for the issuance, depository, and safekeeping of tokenized bonds and sukuk. SSDS+ supports both wholesale and retail markets. It integrates with the BNM Real-time Electronic Transfer of Funds and Securities Plus (RENTAS+) real-time gross settlement system (RTGS) to facilitate continuous payment and settlement in central bank money, which BNM claims will streamline transactions and broaden market access. [BNM]

Bank of Korea Strengthens Cooperation with Bank of England on Tokenization Projects (BOK)

On October 19, 2026, Bank of England officials, including Deputy Governor Sarah Breeden, met with Bank of Korea (BOK) officials to share the current status of projects being pursued or participated in by both countries, such as Project Hangang (Korea), Project Agora (both countries), and asset tokenization, and explored avenues for cooperation. The BOK also announced that it plans to actively share its experiences with tokenization projects, such as Project Hangang, with the international community and actively participate in relevant international discussions. [BOK]

BTW if you want to see a complete database of my DFC-related posts going back years, including many that didn’t make the Daily Digest cut, click here.

FYI I produce a monthly digest of digital fiat currency (DFC) developments exclusively for the official sector (e.g., central banks, ministries of finance and international financial institution (e.g., the BIS, IMF, OECD, World Bank)) plus academics and firms that are active in the DFC space (commercial banks, technology providers, consultants, etc.). (DFCs include central bank digital currency (CBDC), stablecoins and tokenized deposits.) It goes out via email on the first business day of every month, and if you’re interested in being on the mailing list, please email me at john@kiffmeister.com.

Dollar Challenger: CBDCs Complexities and Monetary Hegemony (VJIL)

The Virginia Journal of International Law (VJIL) published a paper by Heng Wang assessing the hurdles challenger central bank digital currencies (CBDCs) face in challenging U.S. dollar dominance. Heng posits these parallel systems introduce a “triple helix” of relational, technological, and legal complexities. Relational complexities emerge from multi-jurisdictional frameworks, while technological hurdles center on interoperability. Legally, novel digital networks struggle to fit with traditional regulations. These dynamics forge a “governance paradox” where specialized infrastructure demands may drive fragmented networks rather than a unified global system. Heng contends this fragmentation challenges the network effects requisite for mass adoption. Ultimately, these systemic constraints make it unlikely that challenger CBDCs will soon displace USD hegemony. [VJIL]

Electronic Money Tokens vs Tokenized Deposits: A Comparative Economic Assessment (Banca d’Italia)

Banca d’Italia published a paper by Giuseppe Ferrero and Federico Guerra that compares euro-denominated stablecoins, regulated in Europe as electronic money tokens (EMTs), with tokenized commercial bank deposits. Both are privately issued forms of tokenized money utilizing distributed ledger technology. The authors argue that monetary properties and financial stability depend on whether instruments are bearer or non-bearer and whether they settle in central bank money (CeBM), rather than on the underlying technology. Non-bearer tokenized deposits maintain the singleness of money by settling in CeBM. Conversely, stablecoins and bearer-form tokenized deposits can trade on secondary markets at prices deviating from par. Concluding that stablecoins and bearer-form tokenized deposits are economically equivalent, the authors recommend consistent regulatory treatment, noting that bearer-form tokenized deposits currently lack an instrument-specific framework. [Banca d’Italia]

BTW if you want to see a complete database of my DFC-related posts going back years, including many that didn’t make the Daily Digest cut, click here.

FYI I produce a monthly digest of digital fiat currency (DFC) developments exclusively for the official sector (e.g., central banks, ministries of finance and international financial institution (e.g., the BIS, IMF, OECD, World Bank)) plus academics and firms that are active in the DFC space (commercial banks, technology providers, consultants, etc.). (DFCs include central bank digital currency (CBDC), stablecoins and tokenized deposits.) It goes out via email on the first business day of every month, and if you’re interested in being on the mailing list, please email me at john@kiffmeister.com.

When Less is More: Behavioral Effects of CBDC Holding Limits (ECB)

The European Central Bank (ECB) published a working paper that examines how holding limits affect demand for retail central bank digital currency (CBDC). In an incentivized experiment involving 761 participants in France, Germany, Italy, and Spain, the authors distinguish the mechanical effects of limits from behavioral responses. Lower limits reduced overall holdings, whereas higher limits induced some participants to increase balances, apparently because the ceiling acted as a reference point. The experiment also found that a “reverse waterfall” mechanism, which automatically funds CBDC payments from linked bank deposits, increased adoption while reducing average holdings. The findings suggest that combining limits with automatic funding could reconcile usability and financial stability objectives in the ECB’s digital euro design. [ECB]

Composable Clearing: How Blockchain Reconciles Efficiency and Safety in Intermediated Markets (JFMI)

In a Journal of Financial Market Infrastructures (JFMI) article, Nicolas Zhang shows how blockchain could reconcile pricing efficiency with settlement safety in intermediated markets. He argues that pooled pricing mechanisms cannot fully reflect private trading information, while uncleared over-the-counter (OTC) markets offer flexible pricing but are vulnerable to coordination failures. Central counterparties (CCPs) can strengthen settlement safety, but do not, by themselves, resolve the pricing problem. His “composable” framework separates price discovery from prefunded clearing, linking them through an atomic settlement map, to ensure that all transaction legs settle together or none do, with multilateral netting reducing collateral requirements. Zhang emphasizes that blockchain facilitates this architecture rather than changing the underlying economics of clearing. He also challenges the proposition that settlement finality necessarily requires central bank money, arguing that suitably secured tokenized Treasury bills could serve as alternative settlement assets. Applications include Treasury repurchase agreements and less-liquid foreign-exchange markets. [JFMI]

BTW if you want to see a complete database of my DFC-related posts going back years, including many that didn’t make the Daily Digest cut, click here.

FYI I produce a monthly digest of digital fiat currency (DFC) developments exclusively for the official sector (e.g., central banks, ministries of finance and international financial institution (e.g., the BIS, IMF, OECD, World Bank)) plus academics and firms that are active in the DFC space (commercial banks, technology providers, consultants, etc.). (DFCs include central bank digital currency (CBDC), stablecoins and tokenized deposits.) It goes out via email on the first business day of every month, and if you’re interested in being on the mailing list, please email me at john@kiffmeister.com.

Foreign Currency Stablecoins: Initial Considerations on Policies to Manage and Enhance Macro-Financial Stability (IMF)

The IMF published a paper examines how foreign-currency foreign-issued stablecoins, most of which are denominated in U.S. dollars and issued in a small number of jurisdictions, could increasingly affect macro-financial conditions in recipient countries if their use expands beyond crypto-asset trading. Although wider adoption could facilitate cheaper cross-border payments, it introduces significant structural vulnerabilities. Extensive integration may drive de facto capital account liberalization, enable the circumvention of capital controls, and entrench currency substitution, thereby undermining domestic monetary policy transmission. To mitigate these risks, the analysis recommends implementing robust macroeconomic frameworks, stringent regulatory oversight aligned with global standards, and enhanced data collection. Furthermore, it emphasizes that international coordination remains critical to manage balance-of-payments pressures and preserve monetary sovereignty. [IMF]

BTW if you want to see a complete database of my DFC-related posts going back years, including many that didn’t make the Daily Digest cut, click here.

FYI I produce a monthly digest of digital fiat currency (DFC) developments exclusively for the official sector (e.g., central banks, ministries of finance and international financial institution (e.g., the BIS, IMF, OECD, World Bank)) plus academics and firms that are active in the DFC space (commercial banks, technology providers, consultants, etc.). (DFCs include central bank digital currency (CBDC), stablecoins and tokenized deposits.) It goes out via email on the first business day of every month, and if you’re interested in being on the mailing list, please email me at john@kiffmeister.com.

Developments that Bring the Issue of a Digital Krona Back into Focus (Sveriges Riksbank)

Sveriges Riksbank submitted an official communication to the Riksdag Committee on Finance calling for a reassessment of the e-krona retail central bank digital currency (CBDC). A 2023 Swedish Government Payments Inquiry report had concluded that there was no sufficiently strong societal need for an e-krona, which led to a pause in e-krona preparatory work. However, the Riksbank now urges renewed preparation, citing a deteriorating geopolitical environment, the advancement of the digital euro, the emergence of stablecoins, and the need to safeguard the resilience and competitiveness of the Swedish payment system. Because implementing an e-krona requires significant technological development and complex legal updates with lead times exceeding five years, the Riksbank recommends immediately appointing a public inquiry to prepare the necessary legislative framework. This proactive measure ensures regulatory readiness should the Riksdag authorize e-krona issuance. [Sveriges Riksbank]

Japanese Banks Complete Stablecoin PoC (Finextra)

Sumitomo Mitsui Banking Corporation (SMBC), Mitsubishi UFJ Financial Group (MUFG), Sumitomo ⁠Mitsui Financial Group (SMBC) and Mizuho Financial Group conducted a proof-of-concept from July 17 to July 23, 2026, in regard to joint stablecoin issuance and advanced cross-border payments. Operating with support from Japan’s Financial Services Agency, the initiative evaluated issuing stablecoins as specified trust receivable rights under the Payment Services Act. The trial assessed regulatory compliance, anti-money laundering controls, and user protection within a multi-bank framework managed by SMBC and MUFG. Additionally, the participants simulated transactions across corporate locations to verify the technical feasibility and system reliability for international settlements. [Finextra]

Russia Will Ban Peer-to-Peer Bitcoin Trading (Bank of Russia)

According to an updated Bank of Russia FAQ, direct peer-to-peer crypto-asset transfers will be prohibited effective July 1, 2027, under Federal Law No. 282-FZ. Such transactions, including transfers through licensed digital depositories, must route exclusively through approved intermediaries. The legislation also prohibits individuals from moving crypto-assets to non-custodial wallets and restricts crypto-asset lending exclusively to brokers, trustees, exchanges, and clearing houses. While domestic crypto-asset payments remain strictly banned, the framework reportedly preserves exemptions for foreign trade settlements—a carve-out reportedly described by Duma officials as a mechanism to circumvent international sanctions. [Bank of Russia]

BTW if you want to see a complete database of my DFC-related posts going back years, including many that didn’t make the Daily Digest cut, click here.

FYI I produce a monthly digest of digital fiat currency (DFC) developments exclusively for the official sector (e.g., central banks, ministries of finance and international financial institution (e.g., the BIS, IMF, OECD, World Bank)) plus academics and firms that are active in the DFC space (commercial banks, technology providers, consultants, etc.). (DFCs include central bank digital currency (CBDC), stablecoins and tokenized deposits.) It goes out via email on the first business day of every month, and if you’re interested in being on the mailing list, please email me at john@kiffmeister.com.

Money and the Architecture of Trust (BIS)

The Bank for International Settlements (BIS) published a paper by Iñaki Aldasoro that argues that money is not primarily a medium of exchange, a commodity or a technology, but a system of interlocking promises sustained by trust based on an institutional architecture featuring a monetary hierarchy anchored by central bank liabilities. The crucial price binding these layers is par, ensuring deposits convert to settlement money without discounts. Furthermore, the system balances the elastic creation of credit against the discipline of funding constraints. Because private monetary innovations ultimately require public validation and backstops during crises, instruments attempting to bypass this framework, such as gold and bitcoin, inherently reject the required social compact. Stablecoins, however, seek validation from authorities at the top of the hierarchy, although their current architectures fundamentally lack the elasticity and institutional backstops necessary to sustain par convertibility under stress. [BIS]

BTW if you want to see a complete database of my DFC-related posts going back years, including many that didn’t make the Daily Digest cut, click here.

FYI I produce a monthly digest of digital fiat currency (DFC) developments exclusively for the official sector (e.g., central banks, ministries of finance and international financial institution (e.g., the BIS, IMF, OECD, World Bank)) plus academics and firms that are active in the DFC space (commercial banks, technology providers, consultants, etc.). (DFCs include central bank digital currency (CBDC), stablecoins and tokenized deposits.) It goes out via email on the first business day of every month, and if you’re interested in being on the mailing list, please email me at john@kiffmeister.com.

Reserve Bank of New Zealand Pauses Retail CBDC Work (RBNZ)

The Reserve Bank of New Zealand (RBNZ) has paused work on “Digital Cash” (retail central bank digital currency (CBDC)) while it focuses on “modernizing New Zealand’s payments system, including real-time payments… New Zealand’s payments system works well today, but there is an opportunity to make it faster, more innovative and better prepared for the future. The announcement said that “modern payments system could support new technologies and payment options like new forms of digital money including Digital Cash issued by the Reserve Bank, alongside the money people already hold in their bank accounts”. This seems to allude to tokenized commercial bank deposits settled in wholesale CBDC, which is a route being explored by a growing number of other central banks. [RBNZ]

BOE’s Breeden in No Rush to Launch “Britcoin” (Bloomberg)

Bank of England (BOE) Deputy Governor Sarah Breeden, speaking at the IMF Annual Meeting in Bangkok, reportedly said that there’s no rush to introduce a retail central bank digital currency (CBDC) because so many other developments in digital payments are underway. “Maybe we don’t need a digital pound quite so quickly, arguing that alternatives such as commercial stablecoins or tokenized deposits developed by banks could fulfill the role just as well.” Breeden also reportedly said that the BOE is upgrading its real time gross settlement system (RTGS) so it can be used to settle tokenized asset transactions, and that U.K. firms should develop successful sterling stablecoins to offer an alternative to the dollar dominance in the market. [Bloomberg]

Are Stablecoins and Bank Deposits Substitutes? (BIS)

The Bank for International Settlements (BIS) published a paper by Ahmed and Aldasoro that investigates whether stablecoins and bank deposits function as economic substitutes. The authors use weekly 2019 to 2025 U.S. data to argue that increases in bank deposit rates cause a deceleration in stablecoin market capitalization growth. They find that these effects are stronger for USDC than for USDT, consistent with the former’s closer ties to U.S. depositors. However, the authors note that their analysis relies on a sample spanning only a single high-rate tightening cycle and uses aggregate data, which obscures the specific depositor types and bank categories driving the substitution. [BIS]

BTW if you want to see a complete database of my DFC-related posts going back years, including many that didn’t make the Daily Digest cut, click here.

FYI I produce a monthly digest of digital fiat currency (DFC) developments exclusively for the official sector (e.g., central banks, ministries of finance and international financial institution (e.g., the BIS, IMF, OECD, World Bank)) plus academics and firms that are active in the DFC space (commercial banks, technology providers, consultants, etc.). (DFCs include central bank digital currency (CBDC), stablecoins and tokenized deposits.) It goes out via email on the first business day of every month, and if you’re interested in being on the mailing list, please email me at john@kiffmeister.com.

Global Stablecoin Arrangements: Cross-Border Vulnerabilities and Financial Stability Monitoring (FSB)

The Financial Stability Board (FSB) published a summary of its ongoing monitoring work on global stablecoin arrangements. It highlights that the borderless, round-the-clock mobility of stablecoin liabilities fundamentally conflicts with the jurisdictionally anchored nature of their reserve assets and redemption frameworks, escalating run risks and potential spillover into traditional financial markets. Complex, multi-issuer structures further obscure oversight and complicate reserve rebalancing during stress events. Furthermore, the FSB notes severe structural data deficiencies; authorities currently rely on opaque private data compilers, and blockchain pseudonymity impedes accurate geographic or use-case attribution. To mitigate these regulatory blind spots, the FSB advocates for enhanced cross-border cooperation, standardized monitoring metrics, and improved industry data disclosures. [FSB]

BTW if you want to see a complete database of my DFC-related posts going back years, including many that didn’t make the Daily Digest cut, click here.

FYI I produce a monthly digest of digital fiat currency (DFC) developments exclusively for the official sector (e.g., central banks, ministries of finance and international financial institution (e.g., the BIS, IMF, OECD, World Bank)) plus academics and firms that are active in the DFC space (commercial banks, technology providers, consultants, etc.). (DFCs include central bank digital currency (CBDC), stablecoins and tokenized deposits.) It goes out via email on the first business day of every month, and if you’re interested in being on the mailing list, please email me at john@kiffmeister.com.

Stablecoin-on-Creditor Violence (Cleveland Fed)

The U.S. Federal Reserve Bank of Cleveland published a paper by Jeffery Zhang and Peter Zimmerman arguing the Guiding and Establishing National Innovation for U.S. Stablecoins (GENIUS) Act of 2025 rewrites priority and estate-property rules for failed stablecoin issuers. By removing required reserves from the bankruptcy estate and granting holders a shortfall-capped superpriority, the Act lets distressed issuers mint fully backed stablecoins to selectively repay favored creditors, structurally subordinate existing debt, and strip the estate of liquid assets necessary for resolution (“stablecoin-on-creditor violence”). If the issuer is a bank subsidiary, this shifts failure costs onto the deposit insurer and taxpayers. Because federal statutory entitlements shield this mechanism, traditional equitable remedies fail, prompting the authors to recommend countermeasures—including capital requirements, transfer restrictions, and lockups—to mitigate systemic risk. [Cleveland Fed]

Three Myths About Payment Innovation (Kansas City Fed)

[August 29, 2026] Harvard Business School’s Wenxin Du presented a paper at the 2026 U.S. Federal Reserve Bank of Kansas City Jackson Hole Economic Policy Symposium that challenges prevailing payment innovation narratives by prioritizing economic architecture over blockchain rails. First, Du questions the viability of 24/7 atomic gross settlement in wholesale markets, noting it sacrifices critical liquidity-saving benefits of multilateral netting. Second, she argues retail cross-border frictions stem from misaligned banking incentives rather than legacy technology. Finally, she remains highly skeptical that stablecoins resolve inefficiencies, highlighting prohibitive fiat conversion costs and thin foreign exchange liquidity within the “stablecoin sandwich”. Consequently, central banks should prioritize system interoperability and institutional trust over adopting novel distributed ledgers. [Kansas City Fed]

BTW if you want to see a complete database of my DFC-related posts going back years, including many that didn’t make the Daily Digest cut, click here.

FYI I produce a monthly digest of digital fiat currency (DFC) developments exclusively for the official sector (e.g., central banks, ministries of finance and international financial institution (e.g., the BIS, IMF, OECD, World Bank)) plus academics and firms that are active in the DFC space (commercial banks, technology providers, consultants, etc.). (DFCs include central bank digital currency (CBDC), stablecoins and tokenized deposits.) It goes out via email on the first business day of every month, and if you’re interested in being on the mailing list, please email me at john@kiffmeister.com.