Kiffmeister’s FinTech Daily Digest (08/04/2020)

Simon Potter and Julia Coronado have proposed the creation of recession insurance bonds (RIBs). RIBs would be zero-coupon bonds authorized by Congress and calibrated as a percentage of GDP sufficient to provide meaningful support in a downturn (e.g., $10,000). They would be distributed to households with payouts that are recession contingent – eg if policy rates reach the zero lower bound or there is a 0.5% increase in the unemployment rate. They propose operationalizing it as effectively a synthetic central bank digital currency (CBDC) – they would be issued by a regulated system of digital currency accounts for consumers managed by digital payment providers (DPPs) and fully backed by reserves at the Fed. Basically it’s narrow bank-type model that’s small and fit for purpose. Here are the two background papers:
  • Part 1: Securing macroeconomic and monetary stability with a Federal Reserve–backed digital currency
  • Part 2: Reviving the potency of monetary policy with recession insurance bonds
The goal of the newly-formed Swiss-based World Stablecoin Association (WSA) is to create a united front for the sector to tackle regulatory concerns and drive collaboration. A number of projects have already reportedly become members of the WSA, such as the Canadian dollar-pegged QCAD as well as decentralized finance protocol Ren, which is backed by Polychain Capital. Additionally, the Brazillian Digital Token (BRZ), Crypto BRL (CBRL), Peg Network, QCash (QC), Stably, USDK and Digitalbits (XDB) are also believed to have joined the initiative. 
Singapore-based fintech firm Grab launched a micro-investment platform (Auto Invest) and a buy-now-pay-later payment plan for select e-commerce sites, and extended its consumer loan platform to third party providers. AutoInvest funds, which are invested in fixed-income funds, can be withdrawn any time with no penalties and can also be used to spend on Grab services or at any merchant accepting the GrabPay Card. The third party loan platform will start in Singapore before expanding to other Southeast Asia countries.