Kiffmeister’s #Fintech Daily Digest (11/29/2021)

Bank of Israel accelerating preparations for digital currency

The Bank of Israel is accelerating its study, research and preparation for the possible issuance of a digital shekel aimed at creating a more efficient payments system. Governor Amir Yaron said that, similar to other central banks, the Bank of Israel had not yet decided whether it will issue central bank digital currency (CBDC) and was still examining the issue. “Central banks have a unique role to play in preventing fragmentation and ensuring that the payment system becomes even more uniform and efficient. One way to do this is through CBDC.” [Read more]

What is the Value Proposition of Stablecoins for Financial Inclusion?

A new World Economic Forum white paper investigates the benefits and limitations of stablecoins for supporting financial inclusion in historically excluded or underserved populations. It concludes that, overall, stablecoins do not present features or capabilities that significantly reduce barriers to financial inclusion compared to pre-existing options, once accounting for consistent legal and compliance requirements. Stablecoins are subject to many of the same adoption and inclusion hurdles as other forms of retail finance, such as reliable internet and electricity, digital and financial literacy, and government identity documentation. [Read more]

Making digital currency interoperable

VISA’s research and product teams are working on a universal payment channel (UPC) initiative, a blockchain interoperability hub that connects blockchain networks and allows for transfers of digital assets. The UPC hub would connect different blockchain networks by establishing dedicated payment channels between them — whether that means connecting CBDC networks between countries or connecting CBDC networks with vetted private stablecoin networks. New, trusted blockchains could easily be added to the network of networks by creating new payment channels within the UPC hub. [Read more]

‘Buy now, pay later’ is booming. But companies are facing pressure to change

While “buy now, pay later” (BNPL) can offer benefits compared to credit cards, there are lurking issues that could present challenges to the companies this holiday shopping season. In complaints to the U.S. Consumer Financial Protection Bureau, consumers have said that they’ve had problems with purchases, either because they couldn’t make a return or get a refund, or got charged with fees they didn’t understand. Right now, BNPL is not regulated in the way that credit cards are in the United States. That means there are no standards for disclosures on fees, amounts owed, credit reporting and payments. Even the due dates of payments are not as clear as a credit card with a consistent payment date. The U.K. and Australia, where BNPL has taken off even faster than in the United States, have placed these products under a regulatory regime. U.S. regulators are likely to follow suit. [Read more]

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Upcoming Virtual Conferences at Which I’m Speaking:

1st Annual Central Bank Conference on Development Economics in the Middle East and North Africa

I’ll be moderating a session on central bank digital currency (CBDC) at the “1st Annual Central Bank Conference on Development Economics in the Middle East and North Africa”, hosted by the World Bank and the Central Bank of Tunisia on December 1 from 10:30am to noon (ET). [Register here (it’s free)]