Kiffmeister’s FinTech Daily Digest (06/19/2020)

Privacy in CBDC technology
This Bank of Canada note outlines what is technologically feasible for privacy in a central bank digital currency (CBDC) system. Privacy in a CBDC goes beyond binary choices of anonymity or full disclosure. System designers have a range of choices around the type of information to keep private and who to keep it private from. Because privacy is not in the sole purview of the Bank, defining it requires consultation with external parties. Our approach in this note is to: develop a framework to evaluate different privacy models, understand the technical tools to enact various privacy models, suggest a design approach for CBDC privacy, and list the key risks and trade-offs.

Should the U.S. Government Create a Token-Based Digital Dollar?
Larry White is not a big fan of CBDC! “[Although the Digital Dollar Project’s] FedCoin retail payment system is likely to be less inefficient than a FedAccount system, it still requires the Fed to step outside its expertise, and into the realm of private enterprise, to launch and maintain a retail digital wallet system. However, the Project’s [underspecified] “champion model” provides a useful framework for further discussion of the standards necessary to ensure that a CBDC system does not make the money-using public worse off. So long as its use is entirely voluntary, there is not much to object to other than the likely waste of taxpayer money to subsidize the costs of creating and operating it.”

Central Bank Digital Currencies and Asymmetric Disintermediation
Some CBDC designs could fundamentally alter the commercial banking system we know today. This Institute of International Finance paper highlights the need for effective ways to limit the potential for crowding out bank deposits, both structurally and in crisis situations. This may mean considering the particular roles that commercial banks might play in a CBDC ecosystem, and whether there is merit in a combination of bank-provided wallets and deposit insurance. There is still much to do in exploring and examining optimal designs and potential solutions for CBDCs, to ensure such innovations can help reinforce (and not undermine) system stability and economic growth.

Deribit prepares for historic $1 billion options expiry next week
Next week will be historic for the crypto-asset derivatives market with a record $1 billion worth of bitcoin and ethereum options expiring on Deribit. Bitcoin options expiring in June make up the biggest portion of Deribit’s open interest with 69% of such contracts set to expire during the course of the month, according to data pulled from Skew on Tuesday. On June 26, more than 70,000 contracts will expire. More than 290,000 ethereum options are set to expire on the same day.

Rwanda Reinstates Charges On Cashless Transactions
The National Bank of Rwanda has reinstated charges on all cashless transactions after the three months period with zero charges introduced in March this year, as part of the measures to encourage digital transactions due to the New Coronavirus outbreak, elapsed.

Posted from Diigo: