Kiffmeister’s #Fintech Daily Digest (10/31/2021)

Interoperability of stablecoins

According to this (pay-walled) article by Manmohan Singh, Caitlin Long and Charles Kahn, without access to central bank payment rails, non-bank stablecoins will be perceived (however large the high-quality liquid asset (HQLA) buffers they may propose) to be less safe than bank stablecoins. As most stablecoins are in US dollars, the US has an opportunity to exploit its (relatively) late entry into the stablecoins discussion. Allowing stablecoins from banks and non-banks chartered as banks to interoperate – not just by enabling both to have access to central bank payment systems, but also by enabling the use of public, open-source technology protocols that already interoperate with each other – will make a difference in the payments/settlements landscape. [Read more]

Three Attacks on Proof-of-Stake Ethereum

The Ethereum network currently has a proof-of-work (PoW) consensus mechanism and in time, the protocol plans to fully transition into a proof-of-stake (PoS) network. The authors of this paper combine techniques from two recently presented PoS Ethereum attacks: one where short-range reorganizations of the underlying consensus chain are used to increase individual validators’ profits and delay consensus decisions, and one where adversarial network delay is leveraged to stall consensus decisions indefinitely. This combined vector considerably relaxes the requirements on adversarial stake and network timing, and thus renders the attacks more severe. It allows an adversary with vanishingly small fraction of stake and no control over network message propagation to cause even long-range consensus chain reorganizations. Honest-but-rational or ideologically motivated validators could use this attack to increase their profits or stall the protocol, threatening incentive alignment and security of PoS Ethereum. The attack can also lead to destabilization of consensus from congestion in vote processing. [Read more]

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Kiffmeister’s #Fintech Daily Digest (10/30/2021)

Bitcoin Accounting Zaps Millions From MicroStrategy’s Income

“MicroStrategy massive Bitcoin bet increased in value by more than $1.3 billion during the third quarter. But accounting rules require MicroStrategy to take a writedown if the tokens it buys fall — even only temporarily — below the price it paid for them. So, for the third quarter, MicroStrategy booked a $65 million writedown, leading to an unprofitable quarter.” [Read more] Tesla’s income statement was similarly dinged – it took an an impairment charge of $51 million in the third quarter on its Bitcoin holdings, even though the crypto-asset gained roughly 30% during the period. 

DeFi Protocol Cream Finance Loses $130 Million in Latest Crypto Hack

DeFi protocol Cream Finance suffered yet another hack this year after an exploit stole at least $130 million in what could be one of the largest thefts in decentralized finance. Cream was involved in similar attacks that stole nearly $38 million in February and almost $19 million in August. Meanwhile, a hacker stole $600 million worth of crypto tokens from the PolyNetwork protocol in August in what is considered to be the largest DeFi hack ever. [Read more]

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Kiffmeister’s #Fintech Daily Digest (10/29/2021)

What does digital money mean for emerging market and developing economies?

The Bank for International Settlements (BIS) published a paper that assesses the supply and demand factors that may determine in which countries innovations, such as crypto-assets, stablecoins and central bank digital currencies (CBDCs), are more likely to be adopted in emerging market and developing economy (EMDE) countries. It also compare these proposals with digital innovations such as mobile money, retail fast payment systems, new products by incumbent financial institutions and new entrants such as specialized cross-border money transfer operators. The paper finds that, while stablecoin initiatives may achieve adoption in certain EMDEs, they may also pose particular development, macroeconomic and cross-border challenges for these countries and have not been tested at scale. It concludes that fast-moving fintech innovations that are built on or improve the existing financial plumbing may address many of the issues in EMDEs that both private stablecoins and CBDCs aim to tackle. [Read more]

The state of mobile internet connectivity in Sub-Saharan Africa

But some basic infrastructure needs to be improved to make any of these payment innovations work in many EMDE countries. For example, the GSMA reports that at the end of 2020, only 28% of the Sub-Saharan African population was connected the internet, and 19% live in an area without mobile broadband coverage – an estimated 210 million people. More concerning though, is the usage gap, which is widening year after year and now stands at 53%. In other words, across the region, more than half of the population is still not using mobile internet, despite living in an area with mobile broadband coverage. To close the usage gap, handsets need to be more affordable for consumers and be available for purchase in rural areas, but unless data also becomes more affordable, people may not be able to take advantage of all that mobile internet has to offer. [Read more]

This also underscores the need to consider payment solutions that work completely offline!

MAS names Global FinTech Hackcelerator finalists

The Monetary Authority of Singapore (MAS) announced the 20 finalists for the Harnessing Technology to Power Green Finance  Global FinTech Hackcelerator. The finalists will pitch their solutions at the Global FinTech Hackcelerator Demo Day during the November 8-12 Singapore Fintech Festival. All finalists will receive a S$20,000 and be eligible for a fast-tracked application process to receive S$200,000. The top three winners will receive a total of S$150,000 in prize money. [Read more]

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Kiffmeister’s #Fintech Daily Digest (10/28/2021)

FATF publishes guidance for regulation of cryptocurrency industry

The Financial Action Task Force (FATF) updated its 2019 Guidance for a Risk-Based Approach for Virtual Assets and Virtual Asset Service Providers (VASPs). The FATF standards require countries to assess and mitigate their risks associated with virtual asset financial activities and providers; license or register providers and subject them to supervision or monitoring by competent national authorities. VASPs are subject to the same relevant FATF measures that apply to financial institutions. This guidance is intended to help countries and VASPs understand their anti-money laundering and counter-terrorist financing obligations, and effectively implement the FATF’s requirements as they apply to this sector. The guidance provides relevant examples and potential solutions to implementation obstacles.

DeFi applications are not VASPs under the FATF standards, as the Standards do not apply to underlying software or technology. However, creators, owners and operators or some other persons who maintain control or sufficient influence in the DeFi arrangements, even if those arrangements seem decentralized, may fall under the FATF definition of a VASP where they are providing or actively facilitating VASP services. This is the case, even if other parties playing a role in the service or portions of the process are automated. Where it is not possible to identify a legal or natural person with control or sufficient influence over a DeFi arrangement, there may not be a central owner/operator that meets the definition of a VASP. (It seems quite common for DeFi arrangements to call themselves decentralized when they actually include a person with control or sufficient influence, and jurisdictions should apply the definition without respect to self-description.)

This Guidance does not address central bank-issued digital currency (CBDC). For FATF’s purposes, these are not VAs as they are digital representation of fiat currencies. The FATF Standards however apply to CBDC similar to any other form of fiat currency issued by a central bank. CBDC may have unique money laundering and terrorist financing (ML/TF) risks compared with physical fiat currency, depending on their design. Such ML/TF risks should be addressed in a forward-looking manner before the launch of any CBDC. However, their non- inclusion in this Guidance does not indicate the FATF considers them unimportant. Rather, it is a product of the fact that they are categorized as fiat currency, rather than the VAs that this Guidance addresses. [Read more]

Central bank digital currencies, cryptocurrencies, and privacy: What experiments tell us 

This article reports on laboratory experiments that ask whether privacy is relevant in shaping the demand for digital currencies. The results show that anonymity does indeed matter and increases the overall appeal of a medium of payment. This effect is stronger for risk-prone individuals. There are several possible interpretations for this result. For example, people may not want others to know that they like risk. That is, as risk aversion is the social norm, risk-loving agents may have a greater desire for anonymity. Another possible interpretation is that risk-prone subjects are more prone to illegal deals and therefore might like anonymity more. [Read more]

The Power of Money: Lessons from Introducing Digital Currency to a Barter Community

This paper investigates how digital currency issuance by a private online platform affected the exchange of used goods in a large North American barter community. Since the community banned cash, users initially relied on beer, gift cards, and transit tokens to complete transactions. The community then introduced a digital token that could be transferred among app users and redeemed at designated local stores for retail goods. Using comprehensive transactions data, the paper shows that a large monetary expansion persistently increased transaction volume by 70% but did not create inflation. However, when token redemption was suddenly halted at a subset of stores, a run on the token ensued and transaction volume fell. The paper uses a search-theoretic model of money to interpret these findings. [Read more

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Kiffmeister’s #Fintech Daily Digest (10/27/2021)

Central Bank of Sri Lanka launches LANKAQR to boost digital payments

The Central Bank of Sri Lanka rolled out LANKAQR, a standardized and interoperable QR code for payments launched “with the aim of moving towards a less-cash society while increasing financial inclusion in Sri Lanka.” LANKAQR enables customers to make payments, directly from their bank accounts to accounts of merchants or service providers, using payment apps of LANKAQR certified financial institutions. LANKAQR is a low-cost digital payment solution, which targets small and medium enterprises. Customers will not be charged for using LANKAQR based payments. [Read more]

Tether Trials Solution to Comply With FATF Travel Rule

Tether, will test trial a solution that will allow it to comply with the travel rule proposed by the Financial Action Task Force (FATF). The solution that will be tested, provided by Notabene, a software company that offers compliance solutions, will allow this information to be relayed between virtual asset service providers (VASPs). This solution aims to make tether (USDT) more friendly to law enforcement agencies all around the world. [Read more]

What Drives Crypto Users? Distrust of the System or Speculation?

Recent data from the October 2020-based Survey of Consumer Payment Choice, a dataset that is representative for the U.S. population, demand for cryptocurrencies has increased during the pandemic. The pool of investors was much wider in 2020 than in 2019, and almost 4% of survey respondents own at least one cryptocurrency in comparison with the 1.9% of the previous year. [Read more]

Bitcoin Is Still Concentrated in Few Hands, Study Finds

“According to a study by the National Bureau of Economic Research (NBER), the top 10,000 individual investors in Bitcoin control about one-third of the cryptocurrency in circulation. By using a data collection method that differentiated between addresses belonging to intermediaries and individuals, NBER researchers were able to find the former controlled about 5.5 million Bitcoin at the end of last year while the latter controlled about 8.5 million. Additionally, the top 1,000 individual investors controlled about 3 million, and the concentration could be even greater. The concentration of miners is even more profound, data show. The NBER  found that the top 10% of miners control 90% of the Bitcoin mining capacity, and just 0.1% (about 50 miners) control 50% of mining capacity. Such a high concentration could make the Bitcoin network vulnerable to a 51% attack. The paper found the concentration also decreases following sharp increases in the Bitcoin price, meaning the probability the network is vulnerable to a 51% attack is higher when Bitcoin’s price drops sharply.” [Read more]

Central bank digital currencies as superheroes?

This speech by Tara Rice, Head of Secretariat, Committee on Payments and Market Infrastructures, focuses on three topics related to how CBDCs can help on the international dimension of payments: (i) a taxonomy to describe the different forms and elements of cross-border interoperability; (ii) the conceptual trade-off between cost and complexity on the one hand and benefits on the other (which in this case would be mainly in reducing the frictions of cross-border payments); and (iii) some thoughts on lessons learned and the way forward. [Read more]

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Kiffmeister’s #Fintech Daily Digest (10/26/2021)

I’ve updated my tabulation of *retail* central bank digital currency (CBDC) to update Nigeria’s status to “launched” and to include Hungary (see below). I also recently updated my tabulation of recent *wholesale* CBDC experiments.  

At the dawn of a new age – Money in the 21st century

The Central Bank of Hungary (MNB) has published a book that summarizes the theoretical considerations, the most important practical issues, the motives behind the potential creation of this new instrument and the opportunities offered by central bank digital currency (CBDC). It also covers CBDC monetary policy, financial stability, and cash flow impacts, as well as the issues of infrastructural implementation. [Read more

Canada and the Digitalization of Money

An August 25, 2021 virtual workshop was convened with international and Canadian experts from the public and private sectors and from academia to discuss Canadian perspectives on the digitalization of money. It concluded that Canadian governments and service providers need to step up work on delivering a modernized payments system and secure data transfer to facilitate open banking. Secondly, Canada requires a thoroughly updated legislative framework for privacy and data management, and the adoption of industry standards for digital identification. And thirdly, existing regulatory frameworks are ill-suited to deal with new and emerging market structures. [Read more]

Update on Brazil’s Pix instant payments platform

The Central Bank of Brazil launched its instant payments platform Pix last November. Pix allows consumers and companies to make money transfers 24/7 without requiring debit or credit cards through a Pix alias or a QR Code. It is also free of charge for individuals. In March Facebook’s WhatsApp messaging service was cleared to let its users send each other funds using the Visa and Mastercard card networks. It now has over 100 million users – in September over half the adult population used it at least once and total transaction volume was $100 billion. [Read more]

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Jurisdictions Where Retail CBDC Is Being Explored (10/25/2021)

Jurisdictions Where Retail CBDC Is Being Explored (as of October 25, 2021)

Where central banks have launched or piloted (or soon will)

Bahamas (launched)

Jamaica (pilot launch imminent)

China (pilot launched)

Nigeria (pilot launched)

Eastern Caribbean (launched)

Uruguay (pilot completed)

Where central banks have done proofs of concepts (or soon will)

Bhutan (proof of concept planned)

Korea (proof of concept started)

Japan (proof of concept started)

Sweden (proof of concept underway)

Ghana (2021)(update; 2021)

Ukraine (proof of concept done)

Where central banks are in advanced stages of research and development

Canada (update)

Russia (latest report)

Euro Area


Mauritius (update)

United Kingdom


United States

Where central banks are still in the exploratory stages (with year of last update)

Australia (2021)

Kenya (2020)

Brazil (2021)(update, 2021)

Kuwait (2019)

Chile (2021)

Madagascar (2021)

Curaçao en Sint Maarten (2018)

Malaysia (2021)

Czech Republic (2021)

Morocco (2019)(update 2021)

Denmark (2017)

New Zealand (2021)

Eswatini (2020)

Pakistan (2021)

Georgia (2021)(update; 2021)

Peru (2019)

Haiti (Bitkòb)(2021)

Philippines (2020)

Hong Kong SAR (2021)

South Africa (2021)

Hungary (2021)

Switzerland (2019)

Iceland (2018)

Taiwan (2020)

India (2021)

Trinidad and Tobago (2021)

Indonesia (2020)(update; 2021)

Tunisia (2018)

Israel (2021)(update; 2021)

Turkey (2021)

Kazakhstan (2021)


Where central banks have explored or are exploring issuing retail CBDC

(according to reputable sources)

Bahrain (2018)

Lebanon (2020)

Egypt (2018)

Macau (2021)

Guatemala (2021)

Palestine (2021)

Honduras (2021)

Rwanda (2021)

Iran (2018)

United Arab Emirates (2021)

Laos (2021)

Viet Nam (2021)

Where central banks have launched and discontinued

Ecuador (2014-2018)

Finland (1992-2006)

Sources: Central banks or various news sources per hyperlinks above, the Bank for International Settlements CBDC database and

Note: Retail CBDC is 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. This table does not cover wholesale CBDC, which is limited to a set of predefined user groups, typically financial institutions.

Recent papers that focus on the practical aspects of CBDC issuance:

Kiff, J., J. Alwazir, S. Davidovic, A. Farias, A. Khan, T. Khiaonarong, M. Malaika, H.K. Monroe, N. Sugimoto, H. Tourpe, and P. Zhou. 2020. “A Survey of Research on Retail Central Bank Digital Currency,” IMF Working Paper No. 20/104.

Adrian, T., and T. Mancini-Griffoli. 2019a. “The Rise of Digital Money,” IMF Fintech Note 19/01.

Auer, R. and R. Boehme. 2021. “Central Bank Digital Currency: The Quest for Minimally Invasive Technology,” Bank for International Settlements Working Paper No. 948, June.

Auer, R., G. Cornelliand J. Frost. 2020. “Rise of the Central Bank Digital Currencies: Drivers, Approaches and Technologies,” Bank for International Settlements Working Paper No. 880, August.

Bank for International Settlements. 2020. “Central Bank Digital Currencies: Foundational Principles and Core Features,” October.

Bank of England. 2020. “Central Bank Digital Currency: Opportunities, Challenges and Design,” Discussion Paper, March.

Bindseil, U. 2020. “Tiered CBDC and the Financial System,” European Central Bank Working Paper No. 2351, January.

Bossu, W., M. Itatani, C. Margulis, A. Rossi, H. Weeninkand A. Yoshinaga. 2020. “Legal Aspects of Central Bank Digital Currency: Central Bank and Monetary Law Considerations,” IMF Working Paper No. 20/254.

Brookings Institution. 2020. "Design Choices for Central Bank Digital Currency: Policy and Technical Considerations," Global Economy & Development Working Paper 140, July.

European Central Bank. 2019. “Exploring Anonymity in Central Bank Digital Currencies,” ECB In Focus, December.

—-. 2020. “Report on a Digital Euro,” October.

Shah, D., R. Arora, H. Du, S. Darbha, J. Miedema, and C. Minwalla. 2020. “Technology Approach for a CBDC,” Bank of Canada Staff Analytical Note 2020-6.

Sveriges Riksbank. 2020. Economic Review: Second Special Issue on the E-Krona.

World Economic Forum. 2020. Central Bank Digital Currency Policy-Maker Toolkit. And the WEF’s Ashley Lannquist maintains the ultimate CBDC reading list here!

DLT-Based Wholesale CBDC Experiments (10/23/2021)

Central Bank DLT-Based Wholesale CBDC Experiments (October 23, 2021)

Central Bank


Platform/Vendor Partner(s)

Reserve Bank of Australia (RBA)

Syndicated loan funding, settling and repaying


Securities delivery-versus-payment (DVP) settlement


Bank of Canada

Project Jasper Phase 1


Project Jasper Phase 2

R3 Corda

Project Jasper Phase 3

R3 Corda

Project Jasper-Ubin

R3 Corda & Quorum

Banque de France (BdF)

Securities settlement, cross border payments

Multiple platforms

European Central Bank (ECB) & Bank of Japan (BoJ)

Project Stella Phase 1

Hyperledger Fabric

Project Stella Phase 2

R3 Corda, Elements, Hyperledger Fabric

Project Stella Phase 3

Hyperledger Fabric

Hong Kong Monetary Authority (HKMA) & Bank of Thailand (BOT)

Project Inthanon-LionRock

R3 Corda

Project Inthanon-LionRock Phase 2


Saudi Arabian Monetary Authority (SAMA) and the United Arab Emirates Central Bank (CBUAE)

Project Aber

Hyperledger Fabric

Monetary Authority of Singapore (MAS)

Project Ubin Phase 1

R3 Corda

Project Ubin Phase 2

Hyperledger Fabric & Quorum

South Africa Reserve Bank (SARB)

Project Khokha


Project Khokha 2


Swiss National Bank (SNB)

Project Helvetia

R3 Corda

Bank of Thailand

Project Inthanon Phase 1

R3 Corda

Project Inthanon Phase 2

R3 Corda

Bank for International Settlements Innovation Hub (BISIH) and:



SNB and BdF

Project Jura

R3 Corda?


Project Nexus


RBA, Bank Negara Malaysia (BNM), MAS, and SARB

Project Dunbar


HKMA, BOT; the People’s Bank of China (PBOC), and CBUAE

Multiple CBDC (mCBDC) Bridge



Reserve Bank of Australia. 2020. “Reserve Bank partners with Commonwealth Bank, National Australia Bank, Perpetual and ConsenSys Software on Wholesale CBDC Research Project.”

—-. 2021. “Inquiry into Australia as a Technology and Financial Centre – Submission.”

Bank of Canada. 2017. “Project Jasper: A Canadian Experiment with Distributed Ledger Technology for Domestic Interbank Payments Settlement.”

—-. 2017. “Project Jasper: A Canadian Experiment with Distributed Ledger Technology for Domestic Interbank Payments Settlement.”

—-. 2018. “Jasper Phase III: Securities Settlement Using Distributed Ledger Technology.”

Bank of Canada and Monetary Authority of Singapore. 2019. “Jasper-Ubin Design Paper : Enabling Cross-Border High Value Transfer Using Distributed Ledger Technologies.”

Banque de France. 2020. “Central Bank Digital Currency Experiments with the Banque de France: Call for Applications.”

—. 2020. “Use of a central bank digital currency to settle a digital financial securities issue carried out by Société Générale Forge.”

—. 2021. “Successful experiment with IZNES on the use of central bank digital money for interbank settlement purposes.”

—. 2021.Experiment on the use of CBDC for settling digital bonds issued by the EIB on a blockchain.”

—. 2021. “Banque de France, Swiss National Bank and BIS Innovation Hub collaborate for experiment in cross-border wholesale CBDC.”

—. 2021. “Banque de France conducted with a group of participants formed around SEBA Bank a central bank digital currency experiment for settlement of listed securities.”

—. 2021. “Banque de France conducted a successful experiment on the use of CBDC to settle the issuance of a French Government Bond by Agence France Trésor with a consortium of actors driven by Euroclear.”

—. 2021. “The Banque de France and the Monetary Authority of Singapore completed a wholesale cross-border payment and settlement experiment using CBDC.”

—. 2021. “Banque de France and Banque Centrale de Tunisie, successfully conducts an experiment on the use of CBDC with a consortium driven by Prosperous.”

ECB-BoJ. 2017. "Payment Systems: Liquidity Saving Mechanisms in a Distributed Ledger Environment."

—. 2018. “Securities Settlement Systems: Delivery-versus-Payment in a Distributed Ledger Environment.”

—. 2019. “Synchronized Cross-Border Payment.”

HKMA-BoT. 2020. “Project Inthanon-LionRock: Leveraging Distributed Ledger Technology to Increase Efficiency in Cross-Border Payments.”

—. 2020. “Project Inthanon-LionRock has entered the second phase to explore business use cases in cross-border trade settlement and capital market transactions.”

—. 2021. The HKMA, BOT, CBUAE and People’s Bank of China joined the second phase of Project Inthanon-LionRock.

Saudi Arabian Monetary Authority. 2019. “A Statement on Launching “Aber” Project, the Common Digital Currency between Saudi Arabian Monetary Authority (SAMA) and United Arab Emirates Central Bank (CBUAE).”

—. 2020. “The SAMA and CBUAE issue report on results of joint digital currency project Aber.

Monetary Authority of Singapore. 2017. Project Ubin: SGD on Distributed Ledger.

South African Reserve Bank. 2018. “Project Khokha: Exploring the Use of Distributed Ledger Technology for Interbank Payments Settlement in South Africa.”

—. 2021. “Project Khokha 2 launched to explore the policy and regulatory implications of tokenization in financial markets.”

Swiss National Bank. 2020. “Project Helvetia: Settling tokenized assets in central bank money.”

Bank of Thailand. 2019. “Project Inthanon: An application of Distributed Ledger Technology for a Decentralised Real Time Gross Settlement system using Wholesale Central Bank Digital Currency.”

Bank of Thailand. 2019. “Project Inthanon: Enhancing Bond Lifecycle Functionalities & Programmable Compliance Using Distributed Ledger Technology.”

BISIH. 2021. “BISIH, SNB and BdF collaborate for experiment in cross-border wCBDC.”

—-. 2021. “BISIH and MAS proposal for enhancing global real-time retail payments network connectivity.”

—-. 2021. “BISIH, RBA, BNM, MAS and SARB will test CBDCs for international settlements.”

—-. 2021. “Inthanon-LionRock to mBridge: Building a multi CBDC platform for international payments.”



Kiffmeister’s #Fintech Daily Digest (10/25/2021)

Mastercard plans to allow US partners to offer crypto loyalty rewards

Mastercard announced it is preparing to integrate cryptocurrencies into its loyalty program offerings for United States-based banks, merchants and fintech firms on its payment network. It would be working with digital asset platform Bakkt to allow its customers based in the United States to buy, sell and hold digital assets through custodial wallets. The partnership will also enable cardholders to earn and spend rewards in crypto rather than using loyalty points and accruing or redeeming tokens for purchases. [Read more]  

ECB announces members of Digital Euro Market Advisory Group

The European Central Bank (ECB) announced the members of the Market Advisory Group for the digital euro project. The Eurosystem’s High-Level Task Force on Central Bank Digital Currency called for expressions of interest on 14 July, following the Governing Council’s approval of the digital euro project investigation phase. After assessing applications, the selection committee appointed 30 senior business professionals with proven experience and a broad understanding of the euro area retail payments market. Meetings are to be held at least quarterly, starting in November 2021, and written consultations will be organised between meetings. The issues identified will also be considered in the Eurosystem’s established forum for institutional dialogue on retail payments, the Euro Retail Payments Board (ERPB). [Read more

Nigeria’s eNaira CBDC Goes Live

The Central Bank of Nigeria (CBN) launched its eNaira central bank digital currency (CBDC) on Monday, October 24. The launch had been originally scheduled for October 1, but it was delayed in deference to other key activities lined up to commemorate the country’s 61st Independence Anniversary. However, Nigerians have been able to download the eNaira app from either the Google Play or Apple App stores since late September. The CBN also published a white paper that provides detail on the eNaira’s critical dimensions. [Read more]

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Kiffmeister’s #Fintech Daily Digest (10/24/2021)

Nigeria to launch digital currency on Monday

The Central Bank of Nigeria (CBN) announced that it will launch its eNaira central bank digital currency (CBDC) on Monday, October 24. The launch had been originally scheduled for October 1, but it was delayed in deference to other key activities lined up to commemorate the country’s 61st Independence Anniversary. However, Nigerians have been able to download the eNaira app from either the Google Play or Apple App stores since late September. The CBN also published a white paper that provides detail on the eNaira’s critical dimensions. [Read more]

Virtual Assets and Anti-Money Laundering and Combating the Financing of Terrorism

The IMF published two papers aimed at assisting countries in their understanding and mitigation of the money laundering (ML), terror financing (TF), and financing of the proliferation of weapons of mass destruction (PF) risks related to virtual assets (VAs). The first paper explains why VAs are vulnerable for misuse for ML/TF/PF purposes and clarifies which assets and service providers should be subject to anti-money laundering and combating the financing of terrorism (AML/CFT) measures. It discusses the measures that all countries should take, and the type of action necessary in instances of criminal misuse of VA. The second paper focuses on the AML/CFT regulatory and supervisory framework for virtual asset service providers (VASPs), and discusses the necessary AML/CFT measures and provide examples of practical solutions to implement them.  [Download the first paper here and the second here]

A Smart Solution to Advance Consumer-Centric Payments Innovation in America

This opinion piece suggests that the US Congress create a national “payments passport” by allowing money transmitters with at least 40 state licenses to obtain limited access to the payments system, provided they are subject to Federal Reserve regulatory standards and supervision tailored to payments services. State-based licensing and supervisory authority would remain in place, while the Federal Reserve would be empowered to ensure the safety, soundness, and integrity of its own payments system. This framework could also include tailored parent company oversight to protect safety and soundness and be limited to firms whose activities are predominantly financial in nature. And such payments companies would directly originate, clear, and settle payments, but lack access to broader Fed services. They would not be granted full banking powers, limiting the threat to community banks, while the preservation of state-based consumer protections would ease consumer advocates’ concerns. [Read more

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