Month: October 2020

Kiffmeister’s #Fintech Daily Digest (10/22/2020)

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BSP says more groundwork needed before it can issue digital currency

Bangko Sentral ng Pilipinas (BSP) Governor Benjamin Diokno reportedly said that the central bank recently completed its study on issuing central bank digital currency (CBDC). It recommended continuing research, capacity-building, and the establishment of networks with central banks and institutions that are also conducting research on this scheme. The Governor said it is unlikely than one will be introduced in the near term. The study is exploratory in nature, and is in line with BSP’s Digital Payments Transformation Roadmap which aims to convert at least 50% of retail payments into digital form and that at least 70% of adult Filipinos should have a bank account by 2023. 

Unpopular Opinion: Why PayPal Enabling Bitcoin Purchases Isn’t All Positive

PayPal supporting major crypto-assets undoubtedly buoy the image of the sector and the asset class. It further strengthens the perception of Bitcoin as an established store of value and crypto-assets as recognized assets. But this comes with a catch. At least in the near term, it would not allow users that buy crypto on PayPal to transfer outside of their accounts. In the words of Ripple CEO Brad Garlinghouse, “2 steps forward, 1 step back… Great to see a payment pioneer leaning in, BUT disappointing some fundamental tenets / benefits of crypto are spurned. I suspect PayPal is concerned about the regulatory uncertainty, impacting its roll-out on a number of levels”. 

Accelerating the BitMEX User Verification Programme

Bitmex is fast-tracking its user verification program in order to comply with regulatory requirements. Users must now be fully verified by November 5, 2020 to continue trading on the platform. The original deadline was February 21, 2021. Unverified users will not be able to open new positions after this date. They will also“not be able to withdraw funds from their Bitmex account without completing verification beginning December 4, 2020. 

Sales soar at Klarna rival Laybuy as buy-now-pay-later sector hots up

New Zealand-based buy-now-pay-later (BNPL) platform Laybuy has seen a 162 per cent increase in the total amount spent through its platform over the past year. Laybuy’s customers have spent over NZ$508m (~£238m) through its platform and the BNPL fintech has also seen a 48 per cent increase in the number of active merchants using its financing options since the end of September last year. 

HSBC installs contactless poppy boxes across Canadian branch network

Another chapter in the death of physical cash… “HSBC is to install contactless donation boxes in all of its 250 bank branches across Canada to honour veterans in the run up to Remembrance Day. The Pay Tribute Poppy Box enables HSBC customers to tap their card of phone against a glowing poppy motif to make a $2 donation and take a badge to pin to their lapel.” 

On the edge of a new frontier: European payments in the digital age

The Eurosystem is pursuing a new strategy to respond to the rapid digitalisation of the eurozone’s payments market, partly in response to the Covid-19 pandemic. Fabio Panetta, of the European Central Bank’s executive board, said the strategy would increase the provision of cash and instant payments. It would also include new supervisory methods and work on the digital euro. He said that European authorities must ensure that digital payments are underpinned by a competitive and innovative market capable of meeting consumer demand, while preserving European sovereignty. 

Kiffmeister’s #Fintech Daily Digest (10/21/2020)

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The Bahamas Launches Its Central Bank Digital Currency

The Bahamas Sand Dollar central bank digital currency (CBDC) became available to all residents of The Bahamas on October 20. This makes The Bahamas the first country in the world to officially roll out a CBDC. Residents of The Bahamas can use the blockchain-based digital currency at any merchant with a central bank approved e-Wallet on their mobile device and transaction fees are negligible. The central bank has authorized six financial institutions for the project: Omni Financial, Kanoo, SunCash, Cash N Go, Mobile Assist, and Money Maxx.   

See here for my updated tabulation of retail central bank digital currency (CBDC) explorers.

PayPal Granted New York’s First ‘Conditional BitLicense’ to Offer Crypto Services

The New York State Department of Financial Services (NYDFS) granted the first “conditional BitLicense” to PayPal for a partnership with Paxos Trust Company enabling customers to buy and sell crypto-assets. Now New York State-chartered Paxos will be able to provide trading and custodial services to PayPal to allow the latter’s 325-plus million customers to buy, sell, and hold crypto-assets. Four NYDFS-approved digital assets will be initially available: bitcoin, bitcoin cash, ether and litecoin. PayPal customers will also be able to use crypto-assets to shop at the 26 million merchants on its network starting in early 2021. The payments will be settled through fiat currencies, similar to many existing crypto merchant solutions like BitPay. This means that the merchants will be receiving fiat, as PayPal will take care of the conversion.   

ISDA Launches New Legal Papers on Smart Contracts and DLT

The International Swaps and Derivatives Association (ISDA) published four new whitepapers that analyze the legal issues associated with using smart derivatives contracts on distributed ledger technology (DLT). The four papers consider these issues from a French, Irish, Japanese and New York law perspective. An earlier paper published in January explored the topic from the perspective of English and Singaporean law. The analysis concludes that it is unlikely a local court would reject an express choice of law by the contracting parties, whether under ISDA documentation or in any other agreement between the parties and a platform provider. The papers also highlight potential challenges in identifying the precise location of digital assets, which could lead to uncertainty over which jurisdiction’s laws would apply. 

Tether Still Dominates Stablecoins, but USDC and Dai Are Winning DeFi

Tether (USDT), with a market cap surpassing $16 billion, continues to hold the lion’s share of stablecoins in circulation, but two smaller rivals are trouncing it in crypto’s hottest market this year, decentralized finance (DeFi). Measured by the total value locked in six of the most popular DeFi protocols – Compound, Maker, Uniswap, Curve, Aave and Balancer – USD coin (USDC) is in the lead among stablecoins followed by dai (DAI), the native stablecoin to MakerDAO. USDC and DAI have market caps of $2.74 billion and $608 million, respectively. 

Centre Consortium Announces Solana as Official Chain for USDC

The Solana blockchain has become an Official Chain for USDC, continuing the expansion of USDC as an open standard and protocol for fiat digital currency on blockchains. Solana offers significant scalability and speed, delivering upwards of 50,000tps, with block production and settlement finality in 400ms, while operating with extremely low cost transaction fees at a tiny fraction of a cent.  

Working group of U.S. crypto firms unveil their data-sharing solution to FATF ‘travel rule’ compliance

Twenty-five U.S.-based virtual asset providers (VASPs) have come together to publish a white paper on an industry-wide solution to travel rule compliance. The solution takes a centralized approach, setting up a “bulletin board” to locate counterparty information and point-to-point information transmission for the required data. In essence, the U.S. Travel Rule Working Group (USTRWG) is proposing a kind of hub through which they can identify customer information and use point-to-point communication channels to transmit that data. 

Kiffmeister’s #Fintech Daily Digest (10/20/2020)

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China digital currency: Shenzhen consumers spend 8.8 million yuan in largest trial of digital yuan

The digital yuan is entering an already very crowded payments market in China, with smartphone apps WeChat Pay and Alipay already dominating the electronic payments sector. Businesses reported minimal differences in processing payments with the e-yuan compared to existing mobile payment products, although they did note that it does not cost them an additional service free unlike both WeChat Pay and Alipay. Also, payments via the digital yuan can be made without connecting to the internet. 

DCEP Adoption: How to use the Digital Yuan

To use the digital yuan for payments, the holder has to scan a merchant’s code using their digital yuan mobile application. The app has an identical user interface as that of Alipay. When scanning, the app supports either a barcode or a QR code. The merchant can scan the code from their customers, or the customers can scan their merchant’s code to activate payment. The app has a feature called “touch” that eliminates the need for a connecting network, provided that the consumer’s and merchant’s mobile devices touch each other when initiating a payment. 

Working together to be ‘on the money’

According to Assistant Governor Christian Hawkesby, New Zealand’s central bank is actively researching central bank digital currency (CBDC) but has no immediate plans to launch one. They are, however, following developments very carefully, and are among the 80 percent of central banks that are actively researching CBDCs identified in a recent Bank for International Settlements (BIS) survey.  

What the OCC Interpretive Letter on Stablecoins Means for Banks, Issuers, or Users

The U.S. Office of the Comptroller of the Currency (OCC) stablecoin letter only address the permissibility of managing reserves for hosted wallets, which requires client onboarding and know-your-customer (KYC), and therefore limits its discussion to private stablecoin networks, and argues that this activity “would not contribute to the global and systemic nature noted” by the FSB. In contrast, the OCC may be suggesting that a public stablecoin’s network design, once launched, could not be walked back, and (absent controls) could provide new avenues for illicit activity at a speed and global scale not currently available. 

Kiffmeister’s #Fintech Daily Digest (10/19/2020)

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Digital Money Across Borders: Macro-Financial Implications

A new IMF paper explores the complex interactions between the incentives to adopt and use central bank digital currency (CBDC) and global stablecoins (GSCs) across borders and discusses the potential macro-financial effects. Overall, the paper finds that CBDCs do not qualitatively change the economic forces that lead to the international use of currencies, as they are only digital forms of existing fiat currencies but quantitatively, they could reinforce the incentives behind currency substitution and currency internationalization. A CBDC is not a one-size-fits-all solution for lackluster economies, and it won’t save nations with high inflation or similar domestic issues. 

The paper speculated that Bigtechs could essentially bait-and-switch their stablecoins by linking them to fiat reserves at launch, only to de-peg them later on. These unbacked GSCs would then become something akin to a stateless currency unto their own. Their value could be preserved through Bigtech’s pledge to follow a credible set of rules and principles acting much like a central bank themselves. At some stage, once adoption reaches some critical mass, the peg to existing reserve currencies may no longer be needed to generate trust in the value of the GSC, and the GSC could become a fiat currency. 

Fed’s Powell warming to U.S. digital currency?

U.S. Federal Reserve Chairman Jerome Powell spoke about central banks digital currencies and said… go slow. “I actually do think this is one of those issues where it’s more important for the United States to get it right than it is to be first, given the dollar’s important role globally,” Powell said on an International Monetary Fund (IMF) panel on October 19. “Getting it right means that we not only look at the potential benefits of a CBDC, but also the potential risks and also recognize the important trade-offs.” He said that the Fed is open to collaborating with the private sector on a possible digital U.S. dollar, but reiterated that the central bank has not committed to actually launching one.

China’s $1.5 million digital currency giveaway impressed analysts. Shoppers, not so much

China’s experimental $1.5 million giveaway of digital yuan to Shenzhen citizens ended on Sunday with acclaim from currency analysts. Under the week-long programme, the People’s Bank of China (PBOC) gave 200 yuan to each of 50,000 consumers selected in a lottery in digital “red envelopes”. The online wallet was accessible via an app, without need for an existing bank account, with payments accepted via smartphone scans in downtown outlets in China’s fourth-biggest city, from luxury goods retailers to snack stores. However, skeptical reactions among some Shenzhen recipients of the giveaway – long used to scanning phones to pay for goods with other systems – showed the PBOC has work to do in convincing consumers of the benefits of a central bank-backed digital yuan. 

What CBDC Is (Not) About: The low-impact scenario

And speaking of potential CBDC flops… Absent stricter banking regulation, the central bank is subject to the same competitive forces as everyone else in the market: it needs to compete. Public money on its own is not a sufficient differentiator, particularly in ‘normal’ times (i.e. no acute financial crisis) where most people wouldn’t really know the difference, anyway. Instead, users first and foremost value convenience, speed, and ease of use – features which public sector services are not necessarily most renowned for. In the very competitive payments market, it is thus plausible that CBDC lacks a sufficiently compelling value proposition for warranting users to switch from well-established private solutions. The resulting low-impact scenario will have, as the name suggests, little implications for the structure of our monetary and financial systems.  

Peer-to-peer lending: ‘I’m 19,050th in the queue to get my savings back’

Billions of pounds are tied up in the U.K.’s peer-to-peer (P2P) lending platforms, which put savers looking for a better return on their cash in touch with individuals or small businesses looking for a loan. This year, when the Covid-19 outbreak started escalating, many of the P2P sites experienced a surge in the numbers of customers wanting to liquidate their investments and withdraw their cash, and such customers are facing long waits. For example, pre-crisis, Ratesetter generally took only one day to return cash to investors seeking their money back, but it is currently still processing customer withdrawal requests that were made as far back as mid-March, when withdrawal requests peaked. 

Decentralized Finance (DeFi) –The Future of Finance?

DeFi potentially offers much higher returns to savers than high-street institutions. Compound, for example, has been offering an annualized interest rate of 6.75% for those who save with stablecoin Tether. Not only does a user gain interest, but it also receives Comp tokens, an added attraction. With two-thirds of people without bank accounts in possession of a smartphone, DeFi also has the potential to open up finance to them. 

Kiffmeister’s #Fintech Daily Digest (10/18/2020)

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Stablecoin supply has surged past $20 billion, driven by derivatives market

The total outstanding stablecoin supply stablecoin has surged from $5 billion at the beginning of 2020 to around $20.2 billion today. Tether’s USDT comprises approximately 79% of the market. Part of the growth has been driven by the surge in the decentralized finance (DeFi) market. Also important has been the growth of crypto derivatives markets, with most derivatives platforms requiring traders to put up collateral in the form of stablecoin. 

Stablecoins race ahead: Fiat-backed crypto booming amid uncertainty

From conception of the first stablecoin in 2012 with the proposal of the Mastercoin project as a way of tying cryptocurrencies to traditional assets to mitigate price volatility, developers have grown accustomed to using the U.S. dollar as a go-to stable asset. Currently, however, developers are experimenting with other stable assets such as gold, other fiat currencies and even cryptocurrencies. This article provides an updated look on the current state of stablecoin adoption as a list of the top performing stablecoins in the market.

USDC Continues Move Away From Ethereum, Heads to Stellar

US dollar-pegged stablecoin Circle will add USDC support to Stellar’s array of products, among them payments tools, infrastructure APIs and business accounts products, by the first quarter of next year. Circle has long sought to end its dependence on the Ethereum blockchain. In June, it announced support for the Algorand blockchain. 

Kiffmeister’s #Fintech Daily Digest (10/17/2020)

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Cross-Border Payments—A New Beginning

On Monday, October 19, starting at 8:00am ET, the IMF will convene a panel of high-level policymakers will discuss the advent of new digital currencies and the future of cross-border payments. The focus will be on macro-financial effects on monetary policy, financial stability, capital flows, financial inclusion, and the international monetary system. To what extent, and how, should policymakers collaborate to maximize social benefits and limit costs and risks? It will be followed by two sessions devoted to private and public sector perspectives on the topic, and will wrap up with a presentation by the co-chairs of the Financial Stability Board Cross-border Payments Coordination Group (CPC) on its roadmap to improve cross-border payments. 

Xfers launched a Singapore dollar-pegged XSGD stablecoin

Xfers launched a Singapore dollar-pegged XSGD stablecoin. Xfers has a Monetary Authority of Singapore (MAS) Major Payment Institution (MPI) e-money issuance license. All XSGD tokens are backed 1:1 with Singapore Dollars held in Xfers’ reserve held in segregated accounts with a fully regulated MAS-approved bank. Xfers claims that XSGD is the world’s first stablecoin to be be compliant with the Financial Action Task Force’s travel rule, so financial institutions can use it for cross-border money transfers as well. 

Money and legislation need to be adapted to digitalisation

Riksbank Governor Stefan Ingves presented his views on what needs to be done to ensure the central bank can continue to carry out its tasks in the future. There shall be enough cash in case the electronic systems break down. There shall be a national, state-issued ID card with e-identification. There shall be digital state money as legal tender, an e-krona, issued by the Riksbank. It shall be possible to make instant payments in Swedish krona, using state money, and between currencies across borders, 24/7. 

Spain’s Central Bank Prioritizes Digital Currency Research

Banco de España, in its strategic plan from 2020 to 2021, is prioritizing research into the implications for the financial system and the economy as a whole of the introduction of a central bank digital currency, considering various design proposals and including aspects relating to digital identification. 

Programmable Money and Programmable Payments

This article argues that it is important to distinguish between programmable money and programmable payments because they have different use cases. The example of the e-car is a good use case for a programmable payment. However, the programmability of money is not necessary in this case. Instead, programmable money can be used, for instance, to implement targeted aid payments during crises such as COVID-19. By giving the money paid out to citizens an inherent logic, the government could ensure that the subsidies are spent in a timely fashion and only for predefined things such as food, medicine, or clothes. 

Five mega exchanges hold 10% of Bitcoin’s entire supply

Roughly 10.6% of Bitcoin’s (BTC) circulating supply is currently held on just five centralized exchanges, according to data published by Chain.info. More than 1.96 million BTC is currently held between the major exchanges Coinbase, Huobi, Binance, OKEx, and Kraken. Likely owing to its custody services, Coinbase holds by far the most, with 944,904 BTC currently spread across approximately 4.39 million different wallet addresses. Huobi ranks second with 323,665 BTC held in roughly 901,600 unique wallets, followed by Binance with 289,961 BTC across nearly 2.7 million addresses. OKEx has 276,184 BTC in 339,000 wallets, while Kraken holds 126,510 Bitcoin among 672,000 addresses. 

Kiffmeister’s #Fintech Daily Digest (10/16/2020)

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The flipside of Chinas central bank digital currency

This Australian Strategic Policy Institute policy brief aims improve baseline understanding of the Peoples’ Bank of China’s e-yuan’s structural mechanics and place the project in its political and bureaucratic context. The e-yuan is being developed and implemented domestically first, but could allow China to shape global standards for emerging financial technologies. It also creates opportunities for China to bypass the U.S.-led financial system, which it perceives as a threat to its security interests, potentially disrupting existing systems of global financial governance. Through e-yuan, Beijing could over time move away from the SWIFT system and bypass international sanctions.

A proposal for an Asian digital common currency

This column advocates the introduction of an Asian digital common currency as a multilateral synthetic currency comparable to the euro. It argues that the benefits it would bring – such as a deepening cooperation within multilateral frameworks and the protection of the rights of small and medium-sized countries – are greater than the disadvantages of inefficiencies in multilateral frameworks. See also the following papers by the same authors:

OKEx Suspends Withdrawals, Says Key Holder Not Available Due to Cooperation With Investigation

OKEx, one of the world’s biggest cryptocurrency exchanges, halted withdrawals after revealing it has lost contact with one of the exchange’s key holders who was “co-operating” in a Chinese government investigation. Meanwhile, one of OKEx’s founders, Mingxing “Star” Xu, had reportedly been taken by police at least a week ago and hasn’t been seen since. OKEx CEO Jay Hao claimed the key holder’s cooperation with officials was due to a “personal issue” and the investigation would not affect the business. OKEx said that the security of its customers’ assets “will not be affected” by the events. 

OECD Encourages Regulators To Form Uniform Crypto Tax Regulations

Prepared with the participation of over 50 jurisdictions, the OECD Taxing Virtual Currencies report is the first comprehensive analysis of the approaches and policy gaps across the main tax types (income, consumption and property taxes) for such a large group of countries. This report also considers the tax implications of a number of emerging issues, including the growing interest in stablecoins and ‘central bank digital currencies’; as well the evolution of the consensus mechanisms used to maintain blockchain networks and the dawn of decentralised finance. 

Legal and Regulatory Considerations for Digital Assets

A University of Cambridge Centre for Alternative Finance report examined legal and regulatory challenges arising from the emergence of digital assets. The aim is to frame future legal and regulatory discussions around digital assets, as well as to identify general trends and concepts across jurisdictions rather than to provide granular analysis of any given jurisdiction’s legal position. It found that existing taxonomies of digital assets have failed to fully capture the relevant features of digital assets and the true novelty introduced by crypto-assets. Also, digital assets, for the most part, pertain to existing and well-known legal concepts: they effectively represent a set of rights embodied in a new digital form. Consequently, the regulatory perimeter for regulating digital assets and associated activities should be determined by identifying the legal concept(s) behind a given digital asset. However, digital assets may warrant adjustment or revisions to existing legislation, in particular whether digital assets are fitting objects of property rights. 

NYDFS invites digital asset firms to ‘techsprint’ aimed at digitizing financial reporting

The New York State Department of Financial Services announced a techsprint initiative to convene regulators and industry stakeholders to work towards a common goal of Digital Regulatory Reporting, which aims to give regulators instant access to data provided by firms under their supervision. The techsprint’s first area of focus is virtual currency companies due to their advanced digital capabilities operating in this space. This techsprint will be the first of its kind in the virtual currency space. 

U.S. NSC Calls Distributed Ledgers ‘Critical’ in US-China Tech Arms Race

Distributed ledger technology (DLT) is one of 20 focus areas on the U.S. National Security Council (NSC) shortlist of critical and emerging technologies. The NSC’s strategy calls for investing in, developing, adopting and promoting the priority technologies. Also on the shortlist: AI, data science, quantum computing and “space technologies,” weapons of mass destruction mitigation technologies, and others.  

Kiffmeister’s #Fintech Daily Digest (10/15/2020)

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Marshall Islands readies to make waves in digital currency

The Marshall Islands SOV Foundation is set to start selling SOV subscription rights to international investors by auction over a period of 18 months, to give the government time to judge how the SOV works within the current market and also assess demand for the instrument. It will give the government an indication of how strong is international interest, the liquidity on the exchanges and if the instrument will be volatile. The pilot will allow them time to make up their mind about whether to push forward with a full-scale launch and put in place the relevant institutions and regulations. 

Covid-19 may survive 28 days on banknotes and payment cards

Researchers at Commonwealth Scientific and Industrial Research Organisation, Australia’s national science agency, have found that SARS-CoV-2, the virus responsible for COVID-19, can survive for up to 28 days on common surfaces including banknotes, glass – such as that found on mobile phone screens – and stainless steel. However, the virus tends to survive longer on paper banknotes rather than polymer ones. 

Technology And Innovation Guide – Seychelles

An international business company carrying out its business outside Seychelles may conduct a virtual asset sale without a physical presence in Seychelles. There is no separate legislative or regulatory frame work with respect to virtual assets in Seychelles. The primary legislation which governs securities and investment products in Seychelles is the Securities Act, 2007 (Securities Act). The Securities Act specifically lists the financial products that are considered securities under the Act and does not include virtual assets/ cryptocurrencies under the list. 

Kiffmeister’s #Fintech Daily Digest (10/14/2020)

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Retail Central Bank Digital Currency: Design Considerations and Rationales

The Reserve Bank of Australia’s view is that the public policy case for issuing a general purpose or retail central bank digital currency (CBDC) in Australia is still to be made. However, consistent with the Bank’s mandate to promote competition and efficiency in the payments system and contribute to the stability of the financial system, it will be continuing to consider the case for a CBDC, including how it might be designed, the potential benefits and policy implications, and the conditions in which significant demand for a CBDC might emerge.  

32% of Transferwise remittances are now instant

32% of Transferwise cross-border payments now take less than 20 seconds, and half of all payments arrive within an hour. They significantly sped up Automated Clearing House (ACH) payments from the U.S. by starting ACH transfers immediately after user authorisation, and now 17% of ACH transfers from the U.S. are instant. They also completed an integration with the Malaysiaon Financial Process Exchange which speeds up payments from Malaysia. They also integrated directly with Magyar Nemzeti Bank, the second such central bank integration. The average price for using TransferWise decreased this quarter from 0.75% to 0.74%. 

Brainwallets: The Bitcoin Wallet You Probably Shouldn’t Use (Unless You Have To)

A brainwallet is a private key that is stored in the user’s memory either in the form of a seed phrase or a password. Once you have the private key memorized, the user can access her crypto wallet from anywhere in the world, as long as she has internet access. As an experiment eight Bitcoin private keys were created, using passphrases from popular works of fiction and other media. All the funds were swept away in a short amount of time and in one case, remarkably, the funds were taken in around 0.67 seconds. The report concludes by arguing that brainwallets may not be a safe way to store coins, certainly not by using popular phrases in published works.  

Afterpay introduces instore BNPL in the US

Shoppers can use Afterpay to buy items in select U.S. retail stores using their Afterpay card, a virtual, contactless card stored in their digital wallet. Just like using Afterpay online, customers can pay for their in-store purchases in four installment payments, without the need to take out a traditional loan or pay upfront fees or interest. Afterpay first introduced its in-store solution in 2016 in Australia and New Zealand (ANZ) and became one of the only online payment companies to successfully offer its buy-now-pay-later (BNPL) service in physical stores. 

Around 100 Italian Banks Are Officially on a Blockchain

According to the Italian Banking Association (ABI) about 100 Italian banks are operating on the country’s Spunta banking blockchain network, built on R3’s Corda. Spunta is a project created by ABI Labs, which began trialing interbank transfers on Corda as early as 2018. 

Kiffmeister’s #Fintech Daily Digest (10/13/2020)

~ kiffmeister

Bank of Russia Considers Issuing Digital Ruble, Starts Public Consultations

The Bank of Russia is exploring the possibilities of issuing the central bank digital currency (CBDC), a digital ruble. It doesn’t see the digital ruble as a replacement for cash or non-cash rubles, but as a supplement. The central bank said it hasn’t yet decided whether to issue a CBDC but will hold a public consultation period on the matter. The bank said it considers it vital to discuss key aspects, advantages, possible risks, stages and timing of a digital ruble project with the financial sector, the expert community as well as with all stakeholders.  

FSB delivers a roadmap to enhance cross-border payments

The Financial Stability Board (FSB) published a roadmap to enhance cross-border payments. It addresses the key challenges often faced by cross-border payments and the frictions in existing processes that contribute to these challenges. The roadmap provides a high-level plan, which sets ambitious but achievable goals and milestones, and is designed to allow for flexibility and adaptation in the path to get there as the work progresses, while ensuring that the safeguards in terms of secure processing and legal compliance are observed. It encompasses a variety of approaches and time horizons, in order to achieve practical improvements in the shorter term while acknowledging that other initiatives will need to be implemented over longer time periods. 

One of the components (Building Block 19) factors an international dimension into CBDC design that will be led by the Bank for International Settlements (BIS) Innovation Hub (BISIH), Committee for Payments and Market Infrastructure (CPMI), International Monetary Fund (IMF) and World Bank (WB):

  • The CPMI with the BISIH, IMF, and WB is to take stock of provisional domestic CBDC designs and central bank experimentation with multi-CBDC arrangements. (November 2020 – July 2021)
  • The IMF, in cooperation with other relevant stakeholders, will analyse international macro-financial implications of cross-border CBDC use. (November 2020 – July 2021)
  • The CPMI with the BISIH, IMF, and WB to identify and analyse options for access to and interlinking of CBDCs that could improve cross-border payments. (August 2021 – July 2022)
  • The BISIH is to assess practical and technological complexities of implementing multi-CBDC arrangement designs and interoperability types; experiments with arrangements that enable access and interlinking and facilitate efficient cross-currency CBDC payments. (January 2022 – December 2022)
  • The BIS, with the IMF and WB, to organise a conference to share information exchange/encourage collaboration on cross-border payments across (planned) CBDC implementations. (January 2022 – December 2022)
  • The IMF and WB to provide technical assistance to facilitate cross-border use of CBDC if requested. (From July 2022 onwards)

Regulation, Supervision and Oversight of “Global Stablecoin” Arrangements

The Financial Stability Board (FSB) published a report that sets out ten high-level recommendations for the regulation, supervision and oversight of “global stablecoin” (GSC) arrangements, both at the domestic and international level, that are proportionate to the risks. They support responsible innovation and provide sufficient flexibility for jurisdictions to implement domestic approaches. GSC arrangements are expected to adhere to all applicable regulatory standards and to address risks to financial stability before commencing operation, and to adapt to new regulatory requirements as necessary. Some of the regulatory requirement standard setting is part of Building Block 4 of the FSB’s cross-border payments roadmap discussed above, which stretches out into 2023, which implies that Libra’s launch could be delayed for years.

BSP Unveils Digital Payments Transformation Roadmap

The Bangko Sentral ng Pilipinas’s (BSP’s) Digital Payments Transformation Roadmap 2020-2023 was approved by its Monetary Board. The goal is to convert 50% of the total volume of retail payments into digital form and expand the number of the financially included to 70% of Filipino adults. The second goal is to expand the availability of more innovative digital financial products and services, enabled by the Philippine Identification System, and supported by the availability of a real-time payment and settlement system. http://www.bsp.gov.ph/publications/media.asp?id=5537

An Advisor to a Cryptocurrency Project Just Won a Nobel Prize

Algorand, the proof-of-stake blockchain platform on which the Marshall Islands SOV will run boasts a team of advisors that includes MIT economics researchers, game theory experts, several Turing Award winners, and now a Nobel Laureate (Paul Milgrom).  

Mobile Internet Connectivity 2020: Sub-Saharan Africa Factsheet 

There are now more than 3.8 billion mobile internet subscribers globally, representing 49% of the world’s population. However, adoption has not been equitable, with mobile internet adoption standing at 26% in Sub-Saharan Africa at the end of 2019. The region accounts for almost half of the global population not covered by a mobile broadband network.