Kiffmeister’s #Fintech Daily Digest (09/21/2020)

China needs first mover advantage in digital currency race: PBOC magazine

China needs to become the first nation to issue a digital currency in its push to internationalize the yuan and reduce its dependence on the global dollar payment system, a commentary published in the People’s Bank of China (PBOC) China Finance magazine. It said the rights to issue and control a digital currency would become a “new battlefield” of competition between sovereign countries. The article also argued that the improved data feedback from a digital currency would help enhance monetary policy transmission.  The PBOC started its digital currency research in 2014 and completed the top-level design, standard formulation, function research and development, and joint debugging and testing in 2019. In April 2020 small-scale pilot work began.

Retail Central Bank Digital Currency: Design Considerations, Rationales and Implications

While CBDC technical feasibility is not yet established, this Reserve Bank of Australia paper considers some issues around its possible design, the possible rationales for issuance, and the implications of issuance. It concludes that, given the likely benefits and risks, at present there does not seem to be a strong public policy case for issuance in Australia. Nonetheless, it will be important to closely watch the experience of other jurisdictions that are considering implementing CBDC projects. [This paper also has a very nice and precise discussion of the infernal “account” versus “token currency taxonomy.]

Mastercard Launches Central Bank Digital Currency Testing Platform

Mastercard launched a virtual testing environment for central banks to evaluate CBDC use cases. The testing platform will enable central banks to simulate the digital currency’s behavior prior to deployment. It invites collaboration from other stakeholders on the project such as central banks, commercial banks, and tech and advisory firms, to assess CBDC tech designs, validate use cases and evaluate interoperability with existing payment rails available for consumers and businesses. 

Mastercard Delves Deep Into POS Financing With Fintech Jifiti

Traditional consumer credit companies are also engaging in buy-now-pay-later (BNPL) plans. Mastercard has expanded its payment options by partnering with FinTech Jifiti to allow both merchants and issuers to offer credit and consumer financing to Mastercard holders. The company had already forged alliances with Fly Now Pay Later, Splitit, Divido and Pine Labs to provide BNPL services worldwide. Per an Accenture figure cited by Mastercard, the BNPL industry boasts an astronomical market value of $1.8 trillion. 

A Dive Into Avalanche

Avalanche is an open-source platform for launching DeFi applications and enterprise blockchain deployments in one interoperable, highly scalable ecosystem. It is the first smart contracts platform that confirms transactions in under one second, supports the entirety of the Ethereum development toolkit and enables millions of independent validators to participate as full block producers. In addition to supporting sub-second finality, Avalanche is capable of throughput orders of magnitude greater than existing blockchain networks (4,500+ transactions/second), and safety thresholds well-above the 51% standards of other networks. 

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