Kiffmeister’s #Fintech Daily Digest (07/09/2021)*

I’m on vacation next week (the first time in years) so my updates may become a bit sporadic and come at odd times and in different formats (I’m experimenting with using Diigo to automatically post the daily updates. I’ll be fully back in business on July 19.

What Is and Isn’t a Retail Central Bank Digital Currency?

Meanwhile, I’ve updated my what is retail central bank digital currency post to account for the many helpful comments received. My base definition of a retail CBDC was a broadly available general purpose digital payment instrument, denominated in the jurisdiction’s unit of account, that is a direct liability of the jurisdiction’s monetary authority. However, I put forward a few other possibly key characteristics for discussion: 

  • I’m sympathetic to the Banque de France view that retail CBDC should be usable for peer-to-peer transactions. 
  • Everest’s Bob Reid has also suggested Everest’s adding the condition that it should be subject to the same rules and regulations as imposed on the jurisdiction’s other units of account.
  • Banco Central dos Brasil’s Marcelo Prates suggests that only monetary authorities that issue their own currency can issue retail CBDC, which precludes completely dollarized country central banks (eg Ecuador, El Salvador, Panama, and Zimbabwe) from issuing CBDC. A digital currency issued by the monetary authorities of such dollarized countries would be nothing more than a stablecoin. By this logic the same would go for individual countries in other currency unions.

Any others have thoughts on this?

Central bank digital currencies for cross-border payments

This report, prepared by the Committee on Payments and Market Infrastructures, the Bank for International Settlements, the International Monetary Fund and the World Bank, analyses how central bank digital currency (CBDC) could facilitate enhanced cross-border payments, and how practical efforts are taking these considerations forward. It concludes that facilitating international payments with CBDCs can be achieved through different degrees of integration and cooperation, ranging from basic compatibility with common standards to the establishment of international payment infrastructures. The analysis highlights both the need for multilateral collaboration on macro-financial consequences as well as the importance of interoperability between CBDCs. 

*For those interested in intra-day updates and news that didn’t make the Daily Digest cut, please check out my Diigo fintech bookmarks: