Kiffmeister’s #Fintech Daily Digest (09/11/2020)

 Lagarde Says Euro Zone Will Reveal View on Digital Currency Soon

According to European Central Bank President Christine Lagarde, “the Eurosystem has so far not made a decision on whether to introduce a digital euro. But, like many other central banks around the world, we are exploring the benefits, risks and operational challenges of doing so… The findings of a Eurosystem task force are expected to be presented to the public in the coming weeks, followed by the launch of a public consultation.”  

Bank of France: stablecoins could impact EU financial sovereignty ‘for decades

Banque de France Governor Villeroy de Galhau warned that Big Techs, capitalizing on their global market penetration, will build private financial infrastructures and monetary systems, competing with the public monetary sovereignty since they will position themselves as issuers and managers of a universal currency. Prospective central bank digital currency (CBDC) could then end up being issued at the ‘backend of a future Big Tech stablecoin. Individual jurisdictions could then respond to the overwhelming pressure of private payments assets by issuing their own CBDCs, both domestically and globally — but without sufficient coordination in the global financial community. The articulation of these multiple CBDCs with private sector initiatives would risk sidelining input from other central banks. He stressed that the European Central Bank (ECB) and the Eurosystem as a whole cannot allow itself to lag behind on a CBDC.  

Emirates Digital Wallet debuts digital cash platform

Emirates Digital Wallet, along with First Abu Dhabi Bank, FAB, Mashreq Bank, National Bank of Fujairah and Mastercard launched the klip Digital Cash Platform. Klip offers a simple way for users to transfer money to others via a mobile number and allows users to seamlessly pay for goods in-store using the existing merchant reach offered by its partner banks. It further enables small businesses to start accepting digital payments via mobile phones, meaning more businesses can tap into the digital economy. It is available whether or not the user has a bank account – there is no minimum requirement, other than being a resident of the UAE and having a SIM card. klip is instant, and when a klip transaction is made no personal financial data is transferred.  

Pay later’ products take off this year as PayPal, Microsoft allow customers to delay the bill

“Buy now, pay later” is no longer for big-ticket items like furniture. It’s becoming increasingly popular for smaller items online, and is being quickly adopted by merchants and payment companies. Point-of-sale loans lets consumers buy something in increments, often without interest. Companies may eventually charge interest down the road, as well as late fees or processing fees. Similar to a credit card issuer, they may also get a percentage of the transaction price. Microsoft will let consumers finance the new $499 XBox in monthly payments, and PayPal launched its Pay-in-4 installment product.  

USDC Stablecoin Supply Is up 250% in 2020. Here’s Why

The total supply of USDC has topped $1.8 billion, rising more than 250% since the beginning of 2020, likely spurred on by the explosion in DeFi’s yield farming popularity (where liquidity providers are rewarded for staking stablecoins and other digital assets in DeFi protocols for use in loan issuance and other financial activities.) The acceleration in USDC issuance also may be powered in part by the August 27 release of USDC version 2.0, an upgrade that improved security by transitioning some administrative USDC-related tasks to on-chain processes and allowed integrated projects to pay gas fees for users when transacting with USDC. Also, it’s supported by and easily obtained on Coinbase. 

Bank of Thailand launches DLT-based bond issue platform

Under its DLT Scripless Bond Project, the Bank of Thailand (BOT) has successfully launched a new blockchain-based platform for government savings bond issuance. It aims to enhance investors’ buying experience, improve operational efficiency and reduce overall cost. It is a collaborative effort among eight institutions, which are BOT, Public Debt Management Office, Thailand Securities Depository Co., Ltd, Thai Bond Market Association and selling-agent banks, including Bangkok Bank, Krungthai Bank, Kasikorn Bank, and Siam Commercial Bank. In the next phase, the infrastructure will expand to support all government bonds, both retail and wholesale. 

Blockchain may break EU privacy law—and it could get messy

Blockchain technology may offer greater levels of security than the internet at large, but a new research paper claims its approach to privacy may be in violation of European “right to be forgotten” laws. Once someone’s details are embedded in a blockchain, the system never forgets. Those details might be encrypted, but they are also part of an irreversible ledger, and one that’s on the cloud. As long as a blockchain is in existence, it clashes with the European ruling that people have the right to retract data. All of this leaves the blockchain industry in a massive quandary, because the technology’s transparency and immutability is one of its biggest selling points.  

Liquidity Usage and Payment Delay Estimates of the New Canadian High Value Payments System

As part of modernizing its core payments infrastructure, Canada will replace the Large Value Transfer System (LVTS) with a new Real-Time Gross Settlement (RTGS) system called Lynx. An important question for policy-makers is how Lynx should be designed. This paper presents simulation results to aid in the design of Lynx. The main interest of policy-makers is to measure the liquidity demands of the system and the corresponding amount of time it takes to settle the value and volume of transactions typically observed in LVTS. To assess this, we developed a simulation environment of the Lynx system using the description of its vendor. We evaluated a variety of configurations of Lynx under several payment demand scenarios. With an initial liquidity comparable to one pledged in LVTS today, Lynx with a first in, first out (FIFO) bypass configuration would require a higher level of liquidity than LVTS or a plain-vanilla RTGS with pooled liquidity. This suggests Lynx could be made significantly more efficient, warranting further research. 

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