Kiffmeister’s #Fintech Daily Digest (01/23/2022)

Bitcoin goes down — and time bombs are waiting in the market

As many of you know, crypto markets have recently been tanking, with Bitcoin down about 20% since last Thursday (January 20) and off about 50% from November’s $68,790 all-time high. I don’t cover the ups and downs of the market that closely, but I think this article from David Gerard very succinctly (and amusingly) summarizes the factors behind the latest plunge. I strongly recommend following David for his contrarian views on crypto markets – a nice break from the usual cheerleading. [Read more]

Missed it by That Much: Where the Fed’s Digital Currency Proposal Goes Wrong

George Selgin makes a pitch for the US Fed to facilitate the issuance of synthetic central bank digital currency (sCBDC) as opposed to the intermediated variant (iCBDC) that its recent consultative paper seems to advocate. In the synthetic approach, payment service providers (PSPs) offer digital currency (DC) that is fully backed by reserves held and ring-fenced from the PSPs’ other creditors in Fed Master Accounts. In the intermediated approach, the Fed makes CBDC available to the PSPs who would act as the Fed’s agents (i.e. as custodians and trustees of end user CBDC holdings).

Selgin notes that sCBDC will better promote DC diversity and innovation, because it allows for numerous, entirely distinct retail DCs, whereas iCBDC provides for a single DC only, albeit one offered at and administered by numerous private-sector firms. An iCBDC is likely to be a fairly, if not fully, homogeneous digital product, instead of a set of such products with different features designed to serve the needs of different clients. However, the Fed has so far been reluctant to do open up its Master Accounts to nonbanks, which would be required to get the maximum sCBDC benefits. [Read more]

New Payment System Seeking to Bolster Intra-African Trade Goes Live

A new African payment system, the Pan-African Payment and Settlement System (PAPSS), recently went live in Ghana, setting the stage for its rollout across the continent. The payment system seeks to strengthen African fiat currencies as well as to boost intra-Africa trade. It is an attempt to reduce African countries’ dependence on the U.S. dollar. However, only seven countries — all members of the West African Monetary Zone (WAMZ) — were part of the pilot phase. [Read more]

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DC3 Conference – From Cryptocurrencies to CBDCs

The International Telecommunication Union (ITU) is organizing the “DC3 Conference – From Cryptocurrencies to CBDCs” scheduled to take place virtually from January 25 – 27, 2022. The Digital Currency Conference is organized by the Digital Currency Global Initiative (DCGI) which is a joint collaboration between the ITU and the Future of Digital Currency Initiative at Stanford University. I’ll be part of a “fireside chat” on the DCGI’s digital currency ontology work. [Register here]

Central Bank Digital Currency Workshop, Hosted by the CBDC Think Tank 

The CBDC Think Tank (CBDCTT)  is hosting an in-person CBDC Workshop in Washington DC on February 24. It’s an intensive and hands-on CBDC course for central bank leadership and staff that are looking to understand and position for CBDCs. The workshop is a mix of lectures from CBDC experts and hands-on exercises. Certification of completion will be provided by the CBDCTT. Note that it is open only to staff from the official sector, such as central bank and finance ministry staff! [Register here]