Kiffmeister’s #Fintech Daily Digest (20260318)

March 18, 2026March 18, 2026 ~ kiffmeister ~ Leave a comment

Which is the Fairest of all Tokenized Monies? (OMFIF)

OMFIF published an article in which Ousmène Mandeng pitches tokenized money market fund (MMF) shares as an alternative tokenized settlement asset. They offer bankruptcy‑remote, interest‑bearing claims on sovereign or high‑quality assets rather than bank balance sheets. By enabling instant delivery‑versus‑delivery transfer and collateralization without title transfer, tokenized MMFs could shift institutional liquidity management from episodic subscription/redemption to continuous circulation, potentially easing run dynamics and unlocking high‑quality collateral for intraday liquidity and cross‑border settlement. Constant net asset value MMFs invested in government securities could function as par settlement instruments with favorable prudential treatment, positioning them as strong competitors to tokenized deposits and stablecoins in wholesale use cases. Key uncertainties concern the robustness of distributed ledger technology, the status of the on‑chain versus off‑chain legal register and the prudential and regulatory classification of these instruments, which will determine their scalability and systemic role. [OMFIF]

How Canada Can Shape the Future of Stablecoins and Digital Payments [CD Howe Institute)

The CD Howe Institute published an article in which Peter MacKenzie and Mark Zelmer argue that Canada must rapidly operationalize its Stablecoin Act and consider a central bank digital currency (CBDC) to avoid ceding payment-system sovereignty to U.S. dollar-linked stablecoins enabled by the GENIUS Act. They note that GENIUS-backed U.S. stablecoins and foreign exchanges could become core Canadian payment rails, undermining monetary sovereignty, domestic oversight, and data access, while Canada’s high-level Stablecoin Act leaves key issues on reserves, operations, and foreign platforms unresolved. The authors propose a function-based, two-track regime that treats pure payment stablecoins as fully backed payment instruments under Bank of Canada oversight and keeps tokenized deposits in the banking framework, complemented by Bank of Canada liquidity lines and a CBDC settlement layer to preserve singleness of money and cross-platform interoperability. They stress that the open question is whether Canada will implement detailed, “comparable” rules fast enough to shape international arrangements rather than import foreign standards. [CD Howe Institute]

Upcoming Speaking Engagements:

The Crypto Assets Conference (Frankfurt, March 25) will focus on the growing importance of digital assets for capital markets and the competitiveness of the European economy. I will be speaking on the uncertain future of CBDC projects. [Register here and get 15% off the regular ticket price.]

The Digital Euro Conference 2026 (Frankfurt, March 26) will explore the future of money with a focus on CBDCs, stablecoins, and commercial bank tokens. This hybrid event offers the perfect platform to understand the future of digital money! [Register here and get 20% off the regular ticket price by using the Kiffmeister20 code!]

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.

Kiffmeister’s #Fintech Daily Digest (20260317)

March 17, 2026March 17, 2026 ~ kiffmeister ~ Leave a comment

The Curious Case of the Stablecoin Sandwich (LinkedIn)

G+D’s Lars Hupel posted an article on LinkedIn that argues that the “stablecoin sandwich” model for cross‑border payments—converting local currency to a (mostly USD) stablecoin, sending it on‑chain, then converting back—largely replicates traditional correspondent banking rather than solving its hardest problems, because liquidity is concentrated in a few USD‑denominated stablecoins and most currencies lack deep stablecoin markets, so efficiency gains are modest and partly driven by regulatory arbitrage rather than technology; meanwhile, central banks are pursuing more promising alternatives like interlinking instant payment systems, broadening access to real-time gross settlement systems (RTGSs) to non‑banks, and building multilateral central bank digital currency (CBDC) platforms such as mBridge and Project Agorá, which more directly tackle fragmentation and access in cross‑border payments. [LinkedIn]

Stablecoins Are Coming for FX Markets (Delphi Digital)

Delphi Digital argues that dollar stablecoins are rapidly gaining share in FX, especially in long‑tail emerging market corridors where legacy correspondent banking makes cross‑border payments slow and expensive, with most costs driven by infrastructure rather than FX risk. In corridors like Argentina or Nigeria, fees and spreads are largely compensation for pre‑funded nostro/vostro accounts, delayed settlement, credit risk, and multiple intermediaries, so stablecoin rails that offer atomic, near‑instant settlement in tokenized dollars can undercut banks and keep corridors viable. The piece highlights that new infrastructures show how on‑chain FX could settle in seconds instead of days. However, it stresses that fiat on/off‑ramps remain the main bottleneck, since bank wires still run on legacy batch rails and regulatory frictions, implying that stablecoins will not displace major FX pairs soon but are already rebuilding broken payment rails in under‑served corridors. [Delphi Digital]

Upcoming Speaking Engagements:

Kiffmeister’s #Fintech Daily Digest (20260314)

March 14, 2026March 14, 2026 ~ kiffmeister ~ Leave a comment

Federal Court Ends Custodia Bank’s Legal Bid for a Master Account (CoinTelegraph)

The US Court of Appeals for the Tenth Circuit has rejected Custodia Bank’s last attempt to force the Federal Reserve to grant it a master account, effectively ending the Wyoming crypto-focused bank’s five‑year effort to gain direct access to Fed payment rails and reserve accounts. Custodia had argued that the Monetary Control Act entitled it, as a state‑chartered institution, to such access, but multiple courts have now affirmed that the Fed retains discretion over master account approvals. The Tenth Circuit, in a 7–3 decision, declined to rehear Custodia’s appeal, though a dissenting judge warned that a master account is “indispensable” to a bank’s operations and that denial is “akin to a death sentence.” The ruling comes shortly after Kraken secured a limited master account from the Federal Reserve Bank of Kansas City, raising broader questions about how and on what terms crypto firms can obtain direct connections to systems like Fedwire. [CoinTelegraph]

Public vs. Private Payment Platforms: Market Impacts and Optimal Policy (Bank of Canada)

The Bank of Canada published a paper that studies competition between a welfare-maximizing public payment platform (e.g., fast payment system) and a profit-maximizing private platform. It finds that the public system should not simply aim to be as cheap as possible, because if it undercuts the private one too aggressively it can actually reduce the overall benefits from having both systems in the market. When a public system enters, more people and businesses use electronic payments and consumers are generally better off, but private providers tend to respond by putting more of their fees onto merchants. The authors also argue that if the public platform is required to cover its costs but forbids fees on consumers, it must load more of those costs onto merchants via fees, which could then reduce merchant participation, which in turn weakens the value of the platform to consumers and erodes the potential welfare gains from having the public system in the first place. [Bank of Canada]

Emerging Capabilities in Fast Payments: NFC and Offline Payments (World Bank)

The World Bank published a technical note outlining how fast payment systems (FPS) can incorporate near-field communication (NFC) and offline payment capabilities as “extended” channels and instruments, largely implemented at the payment service provider (PSP) level rather than in central infrastructure. The paper argues that NFC can shift consumer-initiated payments from cards and QR codes toward FPS by providing tap-based, tokenized, real-time credit transfers across payer‑ and payee‑initiated models, while raising device, scheme-rule, and fraud‑management questions. Offline models—deferred, temporary person‑to‑person, and person‑to‑merchant wallets—are positioned as critical for transit, low‑connectivity regions, and inclusion, but they introduce double‑spend, liability, and supervision challenges that require tight limits, secure elements, and explicit policy stances on where offline FPS should remain an exception versus a mainstream channel. [World Bank]

Upcoming Speaking Engagements:

Kiffmeister’s #Fintech Daily Digest (20260311)

March 11, 2026March 11, 2026 ~ kiffmeister ~ Leave a comment

National Bank of Kazakhstan Digital Tenge Annual Review (NBK)

The National Bank of Kazakhstan (NBK) published its annual review of the Digital Tenge project, which has shifted from research (2021) to limited production (2023) and scaled pilots in state-related payments (2025) within a broader National Digital Financial Infrastructure strategy. Programmable applications are focused on government spending, tax administration (“Digital VAT”), and targeted subsidies, rather than large-scale retail distribution. It operationalizes central bank digital currency (CBDC) as fiscal and public-finance infrastructure, tightening traceability, automating conditionality, and integrating with identification, anti-fraud, and open banking rails, rather than as a standalone payments product. The open question is how far Kazakhstan will extend CBDC use beyond state-linked flows and cross-border experiments once the 2026 roadmap and full-scale production decisions are implemented. [NBK]

Appia Roadmap for European Tokenized Finance (ECB)

The European Central Bank (ECB) published the Appia roadmap, a strategic workplan to design a tokenized wholesale financial ecosystem in Europe in which central bank money remains the settlement anchor. It will complement its Pontes distributed ledger technology (DLT) settlement solution due to launch in late 2026. Appia will, through structured engagement with market participants and public bodies, generate by 2028 a blueprint for tokenized market infrastructures, including choices between shared versus interconnected DLT networks and associated governance and standard-setting. It seeks to preserve effective monetary policy transmission, safeguard financial stability and payment system functioning, and reduce market fragmentation while enabling smart-contract based innovation in securities and payments. It also has a strategic autonomy dimension, aiming to keep euro-denominated financial market infrastructures competitive and interoperable in a tokenized world. The key open questions concern optimal network configuration, European governance arrangements and how far private infrastructures should rely on central bank money in tokenized form. [ECB]

Stablecoin Shocks (IMF)

The IMF published a paper that constructs narrative, high-frequency measures of “stablecoin shocks” based on USDT/USDC market-cap changes around stablecoin-specific news to identify their causal effects on U.S. financial markets. A 1 percent stablecoin demand shock persistently lowers short-term Treasury yields (about 1.9 bps at the 1‑month tenor), with limited effects on longer maturities. The broad dollar index modestly depreciates and crypto prices rise, with a small, economically minor increase in the S&P 500. Equity effects are heterogeneous: payment providers and crypto platforms benefiting from stablecoin infrastructure see gains, while large and community banks and major retailers show no significant response, implying markets do not yet price material disintermediation risk. Results are robust across identification strategies, event definitions, and econometric specifications. [IMF]

Tokenomics and Blockchain Fragmentation (BIS)

The BIS published a Hyun Song Shin paper that develops a global-games model of distributed technology technology (DLT) network validator coordination to show that higher decentralization requires disproportionately higher validator rents funded by user fees. This implies that capacity must be endogenously constrained and congestion is structurally necessary rather than incidental. This tokenomic structure induces entry of lower-security, lower-fee chains that attract users priced out of incumbent ledgers, generating persistent fragmentation across base layers and layer‑2s and eroding the network effects that normally drive convergence on a single medium of exchange. As a result, for example, nominally identical stablecoins on different chains are non‑fungible, bridged rather than natively interoperable, so liquidity and acceptance remain chain‑specific despite common issuers and regulatory regimes. The paper argues that a central‑bank‑anchored trust and settlement layer is required to deliver monetary integration, rather than relying on fully decentralized consensus. [BIS]

Stablecoins and the Missing Infrastructure Layer (LinkedIn)

Tord Coucheron posted a paper that argues that stablecoin growth reflects a structural response to cross‑border payment frictions in correspondent banking, not a fundamental demand for new private money. It shows that liquidity fragmentation, prefunding costs, and opaque, sequential settlement make traditional cross‑border transfers slow and capital‑intensive, making privately issued tokenized settlement claims economically attractive despite reserve and governance risks. It then introduces a real‑time multi‑currency financial market infrastructure (FMI) in central bank money, where banks hold multiple currencies and settle via payment‑versus‑payment (PvP), driving settlement costs toward zero and preserving the deposit‑funded banking model, monetary policy transmission, and monetary sovereignty. [LinkedIn]

Upcoming Speaking Engagements:

The Crypto Assets Conference (Frankfurt, March 25) I will be speaking on the uncertain future of CBDC projects. [Register here and get 15% off the regular ticket price.]

Kiffmeister’s #Fintech Daily Digest (20260306)

March 6, 2026March 6, 2026 ~ kiffmeister ~ Leave a comment

Bank of Canada Completes DLT-Based Bond Issuance Experiment (BOC)

The Bank of Canada (BOC) published a paper on the Project Samara live experiment where Export Development Corporation (EDC) issued a Canadian dollar (CAD) bond on a permissioned distributed ledger technology (DLT) platform and settled it in wholesale central bank digital money (W‑CAD), to test end‑to‑end tokenized issuance, T+0 atomic delivery-versus-settlement (DvP) settlement, secondary trading, and lifecycle management on a shared infrastructure. Built on Hyperledger Fabric with separate bond and cash ledgers linked by Hyperledger Weaver hash time lock contracts (HTLCs), the platform consolidates workflows that in traditional CAD markets span multiple intermediaries and systems. The project confirms technical feasibility and shows meaningful efficiency and risk‑management gains from automation, reduced reconciliation, real‑time positions, and atomic settlement. However, it finds higher liquidity costs, added operational and governance complexity, new key‑management and cyber risks, and significant legal/regulatory frictions. [BOC]

Upcoming Speaking Engagements:

Kiffmeister’s #Fintech Daily Digest (20260305)

March 5, 2026March 5, 2026 ~ kiffmeister ~ Leave a comment

Call for Payment Service Providers to Participate in Digital Euro Pilot (ECB)

The European Central Bank (ECB) has opened applications for euro area licensed payment service providers (PSPs) to join a twelve‑month digital euro pilot in the second half of 2027. It will use a non‑legal‑tender “beta” digital euro in a controlled environment to test technical, operational and user experience (UX) aspects of P2P (online/offline) and P2B payments at physical and online points of sale. PSPs will onboard users and merchants without remuneration, be selected based on eligibility plus weighted criteria (compliance status, technical capacity, market presence, geographic/segment coverage, delivery track record), and then work directly with national central banks and Eurosystem teams. The ECB has published technical and procedural documentation and PSPs must apply by May 14, 2026, with the whole exercise framed as preparatory and conditional on future EU legislation and a separate decision to issue a digital euro. [ECB]

Towards a Consistent Regulatory Approach to Illicit Payments (BIS)

The Bank for International Settlements (BIS) published a paper that develops a framework for how illicit payment rules, centered on whether payment instruments rely on intermediaries, shape both illicit and legitimate users’ choice among payment instruments. Because detection probabilities differ by design and by whether instruments fall inside or outside anti-money laundering (AML) scope, actors shift activity toward instruments with the lowest expected detection and sanctioning, undermining overall effectiveness and prompting iterative regulatory expansion. Illicit payment measures also constrain informational privacy and freedom of choice for legitimate users, creating a privacy–integrity trade off moderated by data protection regimes and trust in public authorities. The paper argues for a forward looking architecture that applies uniform, risk based lex generalis AML/CFT and data protection requirements across all intermediated instruments, while using lex specialis tools such as transaction/holding limits, reliance on touch points, and additional duties on issuers or platforms for instruments without intermediaries, to reduce regulatory driven substitution across payment instruments while preserving both integrity and user privacy. [BIS]

Targeted Report on Stablecoin and Unhosted Wallet P2P Transactions (FATF)

The Financial Action Task Force (FATF) published a report that concludes that stablecoins, now a major share of on‑chain and illicit virtual‑asset activity, create elevated money laundering/ terrorist financing/ proliferation financing (ML/TF/PF) risks, especially via P2P transfers through unhosted wallets outside direct anti-money laundering/ countering the financing of terrorism/ counter proliferation financing (AML/CFT) controls. FATF affirms that stablecoins are virtual assets and that issuers, intermediaries and relevant DeFi actors must be regulated as virtual asset service providers (VASPs) or financial institutions under Recommendation 15, with licensing, supervision, Travel Rule compliance and sanctions screening. Jurisdictions are encouraged to build stablecoin‑specific regimes, require issuers to embed technical controls (freeze, burn, allow/deny‑lists) and strengthen cross‑border supervisory cooperation and data collection on P2P use. The report stresses expanded use of blockchain analytics, targeted controls on transfers to unhosted wallets, structured public‑private partnerships, and detailed red‑flag indicators to guide monitoring and investigations. [FATF]

New Recommendations for Public Payment Preparedness (Riksbank)

Sveriges Riksbank issued new recommendations on “public payment preparedness,” urging households to see themselves as part of Sweden’s total defence and to maintain multiple means of payment so essential purchases can continue during disruptions, crises or war in an increasingly digitalized environment. It advises adults to hold at least SEK 1,000 in cash at home (in mixed denominations) for roughly a week’s essential spending and to use cash periodically so cash infrastructure remains robust, to have at least two payment cards linked to different card networks (e.g. Visa and Mastercard), to ensure access to a mobile payment service such as Swish that relies on different infrastructure than cards, and to keep physical payment cards and PINs accessible even if mobile wallets are normally used. The recommendations feed into the Riksbank’s broader work on national payment contingency and will also feature in the Payments Report 2026, due on March 12, 2026. [Riksbank]

Upcoming Speaking Engagements:

Kiffmeister’s #Fintech Daily Digest (20260304)

March 4, 2026March 5, 2026 ~ kiffmeister ~ Leave a comment

The New Financial Ecosystem and the Role of Central Banks (BOJ)

Bank of Japan (BOJ) Governor Ueda Kazuo provided updates to the central bank’s digital payments projects. The BOJ is still investigating retail central bank digital currency (CBDC) with an eye towards providing a “digital form of cash” if needed, and has set up (and now plans to reorganize) a CBDC Forum to draw on private‑sector expertise and consider the future of payments more broadly. Internationally, the BOJ is participating in Project Agorá, exploring tokenized deposits and smart‑contract‑based cross‑border interbank payments on blockchains, and domestically it has launched a sandbox to test settlement in central bank current account balances on blockchain‑based systems, including links to existing infrastructures and use cases such as interbank and securities settlement. [BOJ]

Digital Pound Design Phase Progress Update (BOE)

The Bank of England (BOE) published a progress update on the digital pound design phase, which is focusing on four workstreams: a joint assessment of need, policy and public‑interest impacts, commercial viability, and operational feasibility; a detailed blueprint covering product design, roles of intermediaries, interoperability in a multi‑money ecosystem, product roadmap, alias services and offline functionality; targeted experiments and proofs of concept (including a prototype ledger architecture and the Digital Pound Lab, where firms test use cases such as POS payments, conditional B2B payments, tourist wallets and programmable features via allowances and locks); and extensive engagement with industry, academia and civil society to refine requirements, privacy protections and user safeguards. This work is tightly linked to the UK National Payments Vision and the new Retail Payments Infrastructure Board, with an emphasis on interoperability between bank deposits, tokenized deposits, stablecoins and a potential digital pound, and on preserving access to cash, prohibiting “programmable money”, and embedding strong privacy and data‑protection guarantees in both law and system architecture. The design phase runs to 2026, and the Bank and HM Treasury plan to publish the blueprint assessment and a decision on whether to proceed with building a digital pound later in 2026. [BOE]

Kraken Becomes First Crypto Company to Secure a Fed Master Account (CoinDesk)

Kraken has become the first crypto firm to obtain a Federal Reserve master account, granted to its banking subsidiary Kraken Financial under a Wyoming special-purpose bank charter, with oversight by the Federal Reserve Bank of Kansas City. The account gives Kraken direct access to Fedwire, the Fed’s core interbank payment network, eliminating its previous reliance on partner banks to handle U.S. dollar settlements and enabling faster deposits and withdrawals for large traders and institutional clients. The approval is limited in scope, however, as Kraken will not earn interest on reserves nor have access to the Fed’s emergency lending facilities, unlike traditional banks. [CoinDesk]

Stablecoins and Monetary Policy Transmission (ECB)

The European Central Bank (ECB) published a paper on rising stablecoin adoption’s impact on monetary policy by reshaping banks’ funding structures and, in turn, the strength and composition of transmission channels. As stablecoins alter banks’ liability mix towards wholesale funding, the traditional bank lending channel is strengthened (through tighter funding constraints) but the deposit channel is weakened (by changing how deposit rates and quantities react to policy rates), thereby undermining the predictability of the overall pass‑through from policy rates to financial conditions. If foreign‑currency (especially USD‑pegged) stablecoins became widely used in the euro area, they would increase banks’ reliance on foreign‑currency wholesale funding and “import” foreign monetary and risk conditions into domestic liquidity and spending, eroding monetary sovereignty and making it harder for the central bank to stabilize inflation and output, particularly in stress episodes. [ECB]

Upcoming Speaking Engagements:

Kiffmeister’s #Fintech Daily Digest (20260303)

March 3, 2026March 3, 2026 ~ kiffmeister ~ Leave a comment

Bank of Korea Calls for Banks-Only Issuance of Won-Denominated Stablecoins (EToday)

The Bank of Korea has reportedly submitted a report to South Korea’s National Assembly Strategy and Finance Committee that urged that only licensed commercial banks be allowed to issue won-denominated stablecoins at the outset, citing money‑laundering, financial stability, and FX‑regulation circumvention risks. The Bank of Korea suggests non‑bank issuers could be considered later once their risk‑absorbing capacity is assessed. South Korean lawmakers are currently debating the next phase of digital-asset legislation, which includes provisions on stablecoins. [EToday]

Stablecoin Disintermediation (FRBNY)

The New York Federal Reserve Bank (FRBNY) published a paper that develops a theory and provides empirical evidence that payment stablecoins disintermediate banks not only by drawing deposits away from traditional institutions but also by transmitting significant liquidity stress to the banks that service stablecoin issuers. Using matched data between on‑chain issuance/redemption activity of a large U.S. dollar stablecoin and Fedwire interbank payments, the authors identify “partner banks” that hold stablecoin deposits and process flows for the issuer. They show that after new partnerships form following the 2023 crypto‑bank failures, these banks experience large, persistent increases in interbank payment volume (about 67%) and in intraday reserve balance volatility tightly linked to daily primary market stablecoin activity, implying that stablecoin-related payments act as frequent liquidity shocks. To manage these shocks, partner banks operate “narrowly,” holding substantially higher reserve balances—roughly 1.5 billion dollars more on average and a much larger reserves‑to‑assets ratio—while their loan share of assets falls by about 14 percentage points relative to similar banks, indicating a crowding‑out of lending capacity. The authors argue that this liquidity channel of disintermediation broadens the ways stablecoins can weaken bank deposit franchises, concentrate reserves in a few institutions, complicate the central bank’s task of gauging system‑wide reserve demand, and potentially propagate or amplify run dynamics from stablecoins to banks during stress events. [FRBNY]

Upcoming Speaking Engagements:

Protected: Kiffmeister’s Digital Currency Monitor, February 2026

March 1, 2026March 10, 2026 ~ kiffmeister

Kiffmeister’s #Fintech Daily Digest (20260228)

February 28, 2026February 28, 2026 ~ kiffmeister ~ Leave a comment

Rwandan CBDC Project to Move to Pilot Phase (BNR)

The National Bank of Rwanda (BNR) published the results of its five‑month central bank digital currency (CBDC) proof of concept (PoC) with BNR staff that tested a retail e‑FRW across online, offline (dual‑offline smartcards), and USSD channels, confirming technical feasibility and the potential to enhance payment resilience, inclusion, and innovation. User research showed strong interest in using e-FRW if it is secure, easy to use, and widely accepted, with offline functionality viewed as essential for continuity in low‑connectivity areas. The PoC also explored wallet‑level programmability, ran a national ideathon to gauge ecosystem readiness, and simulated cross‑border atomic settlement, all within a two‑tier model that preserves the roles of financial institutions. Key lessons concern device diversity, onboarding, support processes, privacy and cybersecurity requirements, and the need for strong legal underpinnings, leading to a planned 12‑month pilot in Kigali, a secondary city, and rural sites to test real‑world use cases, integration, and cross‑border corridors under clearly defined key performance indicators (KPIs) and risk controls. Giesecke+Devrient (G+D) was the central bank’s technology partner on the project. [BNR]

Upcoming Speaking Engagements: