Month: November 2021

Kiffmeister’s #Fintech Daily Digest (11/04/2021)

~ kiffmeister

Central bank digital currencies: motives, economic implications and the research frontier

The Bank for International Settlements (BIS) published a paper that gives a comprehensive guided tour of the literature on central bank digital currency (CBDC) on the microeconomic considerations related to operational architectures, technologies and privacy, and the macroeconomic implications for the financial system, financial stability and monetary policy. A set of questions, particularly on the cross-border dimensions of CBDCs, remains unresolved, and calls for further work to expand the research frontier. [Read more]

The paper’s discussion around the financial stability and monetary policy impacts of introducing retail CBDC particularly comprehensive and informative. Also, there has been a lot of talk about the need for a digital dollar to combat threats to dollar hegemony, but I heartily agree with the paper’s take on CBDC “weaponization”:

mBridge: Building a multi CBDC platform for international payments

The BIS Innovation Hub published a brochure for its mBridge project with a comprehensive list of use cases contributed by 22 commercial banks across four different jurisdictions (China, Hong Kong, Thailand and the United Arab Emirates). The mBridge trial platform has shown that CBDCs can substantially increase the speed of cross-border payments from multiple days to near real-time, while also reducing cost. The project is using an agile and iterative development approach, plus a modular bricks design. [Read more]

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Kiffmeister’s #Fintech Daily Digest (11/03/2021)

~ kiffmeister

Digital yuan pilot surges to 140 million, 10% of population

The People’s Bank of China (PBOC) shared the latest statistics on their digital yuan (eCNY) pilot. The number of wallets opened has increased almost sevenfold since June to 140 million, and the number of merchants capable of accepting the digital renminbi is 1.55 million (see table). However, before launch, more work is needed on capacity expansion, security and risk management, and the legal/regulatory framework. For example, the digital forms of the renminbi have to be added to the People’s Bank of China Law, and regulatory measures for eCNY need to be tailormade. [Read more]

Bahamas central bank estimates ‘north of $300K’ Sand Dollars in circulation

The Central Bank of Bahamas reportedly estimates that in excess of 20,000 individuals are currently utilizing Sand Dollars, with “north of $300,000” of the central bank digital currency (CBDC) currently in circulation. The central bank is nearing the end of ensuring there is interoperability with the automated clearing house (ACH) so there can be a pass-through link between Sand Dollar wallets and deposit accounts. Once that exercise is completed, the central bank along with the financial institutions, is going to be focusing on making an aggressive push to get more businesses enrolled in the infrastructure. [Read more]

JP Morgan, Oliver Wyman predict CBDC to save $100 billion cross border payment costs

Oliver Wyman and JP Morgan published a joint report exploring how a multiple central bank digital currency (mCBDC) network could save corporates money. They estimate that corporate wholesale payments amount to $24 trillion a year and cost $120 billion, which could fall by $100 billion using an mCBDC network. The savings will come at the expense of banks, via the loss of correspondent banking fees and the reduction of corporate overnight balances by up to $10 billion. Plus, banks will have to pay to operate two sets of cross-border payment systems in parallel during this transition. [Read more]

US SEC Delays Decision on Valkyrie Bitcoin Spot ETF Proposal Until 2022

The US Securities and Exchange Commission (SEC) has once again delayed approving a proposed exchange-traded fund (ETF) backed by physical Bitcoin applied by Valkyrie Investments, this time to January 7, 2022. The Valkyrie Bitcoin Fund is a physical bitcoin (spot) ETF, which is fundamentally different from recently-approved futures ETFs such as the Valkyrie Bitcoin Strategy ETF, which gives customers shares tied to a series of contracts to buy Bitcoin in the future. [Read more]

ASIC releases guidance on crypto-asset related investment products

Australian Securities and Investments Commission (ASIC) recently released information for product issuers and market operators on how they can meet their regulatory obligations in relation to crypto-asset exchange traded products (ETPs) and other investment products. It covers good practices in how these products are admitted and supervised by market operators, and good practices in how product issuers establish and operate them. It also includes good practice guidance on admission and monitoring standards, custody of crypto-assets, pricing methodologies, disclosure and risk management. [Read more]

To get these updates sent to your inbox, please sign up here. Also, for those interested in intra-day updates and news that didn’t make the Daily Digest cut, please check out my Diigo fintech bookmarks: https://www.diigo.com/user/kiffmeister/Fintech.

Kiffmeister’s #Fintech Daily Digest (11/01/2021)

~ kiffmeister

President’s Working Group on Financial Markets Publishes Stablecoin Report

The US President’s Working Group on Financial Markets (PWG) released its stablecoin report. It concluded that “the absence of appropriate [stablecoin] oversight presents risks to users and the broader system… and current oversight is inconsistent and fragmented, with some stablecoins effectively falling outside the regulatory perimeter. It called on Congress to create legislation to “require stablecoin issuers to be insured depository institutions, which are subject to appropriate supervision and regulation, at the depository institution and the holding company level.” [Read more]

Questions remain on USDC’s reserves

In August, Circle announced it would shift the assets backing its USDC stablecoin out of commercial paper and only invest in “cash and short US Treasuries.” However, although its latest attestation shows this transition is complete, it is not classifying anything that matures in 90 days or less as CP (see below). Tether is already reporting at this level of granularity, disaggregating “cash and cash equivalents” into its component parts, so why can’t Circle do the same? [Read more]

Avalanche launches fresh $220 million investment fund

The Avalanche Foundation announced a new $220 million investment fund, named Blizzard, that it hopes will attract developers focused on decentralized finance (DeFi), enterprise applications, non-fungible tokens (NFTs) and culture. The program will also assist promising projects with equity investments, token purchases and other kinds of operational support. Outside funding came from Polychain Capital, Three Arrows Capital, Dragonfly Capital, CMS Holdings, Republic Capital, R/Crypto Fund, Collab+Currency, Lvna Capital and Finality Capital Partners. [Read more]

IMF Released the 2021 Financial Access Survey Results

The IMF released the results of the twelfth annual Financial Access Survey. The results confirm that social distancing and lockdowns have reinforced the use of digital financial services during the pandemic, while the usage of traditional financial services remained stable. The value of mobile money transactions as a share of GDP increased by 2 percentage points on average for low- and lower middle-income economies in 2020. The number and the value of mobile and internet banking transactions also grew for all country income groups, most notably among upper middle- and high-income economies. [Read more] 

To get these updates sent to your inbox, please sign up here. Also, for those interested in intra-day updates and news that didn’t make the Daily Digest cut, please check out my Diigo fintech bookmarks: https://www.diigo.com/user/kiffmeister/Fintech.