Kiffmeister’s FinTech Daily Digest (06/22/2020)

You’ve Got Money: Mobile Payments Help People During the Pandemic
While scaling mobile cash transfers quickly to help alleviate the impact of the pandemic, governments should take a broad approach that goes beyond the technology and consider the whole ecosystem behind a robust and resilient mobile program. A holistic approach should be considered by policymakers and the industry to integrate all the “building blocks” of a sustainable mobile-money platform, including stakeholders and design and policy elements that help maximize benefits against risks.

PayPal, Venmo to Roll Out Crypto Buying and Selling: Sources
PayPal reportedly plans to roll out direct sales of crypto-assets to its 325 million users. Currently, PayPal can be used as an alternative means for withdrawing funds from exchanges such as Coinbase, but this would be a first in terms of offering direct sales of crypto. They are apparently going to have some sort of a built-in crypto-asset wallet functionality.

Wirecard fights for survival as fraud comes to light
German fintech Wirecard, a major provider of payment processing software and information technology, warned that €1.9 billion of cash on its balance sheet probably does “not exist” acknowledging the potential scale of a multi-year accounting fraud. It withdrew its most recent financial results and said other years’ accounts may be inaccurate. Wirecard’s payments processing business, licensed by Visa and Mastercard, is responsible for tens of billions of euros in annual transaction volume.   

Italian Banks Want to Test Digital Euro
The Italian Banking Association (ABI) published guidelines for a digital euro launch, including ten proposed essential criteria. The ABI also revealed that it is already operating a distributed ledger infrastructure under its Spunta project to speed up the transaction speed between the 700+ member banks. 

Global Demand for Basket-Backed Stablecoins
This Fed paper develops a model where persistent trade shocks create demand for a basket- backed stablecoin, such as Mark Carney’s “synthetic hegemonic currency” or Facebook’s recent proposal for Libra. In numerical simulations, it finds four main results. First, because of general equilibrium effects of the basket currency on the volatility of currency values, overall demand for that currency is small. Second, despite scant holdings of the basket, its global reach may contribute to substantial increases in welfare if the basket is widely accepted, allowing it to complement holdings of sovereign currencies. Third, it calculates the welfare maximizing composition of the basket, finding that optimal weights depend on the pattern of international acceptance, but that basket composition does not significantly affect welfare. Fourth, despite potential welfare improvements, low demand for the basket currency from buyers limits sellers’ incentives to invest in accepting it, suggesting that fears of a so-called global stablecoin replacing domestic sovereign currencies may be overstated.

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