Kiffmeister’s #Fintech Daily Digest (01/25/2022)*

FYI I’ve updated my tabulation of wholesale central bank digital currency (CBDC) experiments for the latest developments in the Bank for International Settlements Innovation Hub (BISIH) Project Helvetia with the Swiss National Bank and SIX:

BIS Innovation Hub to focus on CBDC, payments, DeFi and green finance in 2022 work program

In 2022, the BISIH will launch new projects into CBDCs, next generation payments systems and Decentralised Finance (DeFi). CBDCs and improvements in payments systems account for 13 of 17 projects that were active in 2021 or will be launched in 2022. Project Aurum, to be run out of the BISIH’s Hong Kong hub, is one of the new CBDC projects. It will study the benefits and challenges of tiered architectures for the distribution of retail CBDC through banks and payment service providers, focusing on hybrid CBDC and private CBDC-backed e-money architectures. [Read more]

BigTech in Financial Services

According to a new IMF Fintech Note, the rapid and significant expansion of BigTechs in financial services and their interconnectedness with financial service firms are potentially creating new channels of systemic risks. To achieve effective implementation and multiple objectives of financial regulation and supervision, a hybrid approach, combining a mix of entity- and activity-based approaches, is recommended. Home supervisors should establish an entity-based approach to cover the global activities of a BigTech group, while host supervisors could in principle address local risks and concerns mainly through activity-based regulations. This process will require cross-sector and cross-border cooperation, and in the interim, regulatory authorities should actively use all existing regulatory powers to manage risks, while BigTech should adopt and improve governance frameworks through industry codes of conduct and enhanced disclosures. The note recommends that the Joint Forum’s 2012 Principles for the Supervision of Financial Conglomerates be reviewed to address regulatory gaps. [Read more]

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DC3 Conference – From Cryptocurrencies to CBDCs

The International Telecommunication Union (ITU) “DC3 Conference – From Cryptocurrencies to CBDCs” is currently underway and runs to January 27. 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. On the 27th, 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]