Kiffmeister’s #Fintech Daily Digest (20220304)

ECCB DCash Service to Resume Next Week

The Eastern Caribbean Central Bank (ECCB) is completing the final testing and assurance exercises following several system upgrades and will make the DCash platform available for public use during the week of March 7. The DCash system has been down since January 14. The interruption was due to an expiring certificate on the version of the Hyperledger Fabric that hosts the DCash ledger, and not to any external intervention. It has taken longer than expected to fix the problem because the ECCB took the opportunity to undertake several upgrades platform including enhancing the system’s certificate management processes, and updating the version of Hyperledger Fabric. Other upgrades will allow the platform to process government disbursements to individuals and permit commercial websites to accept DCash. The ECCB says that the security and integrity of all DCash data, applications and architecture, including all central bank, financial institutions, merchant and wallet apps remain secure and intact. [Read more]

Central Bank of Brazil Lift Challenge Real Digital selects nine vendors

The Banco Central do Brasil’s Lift Challenge Real Digital has chosen nine partners to help develop a digital real, Brazil’s central bank digital currency (CBDC). They received 47 project proposals from Brazil, Germany, the U.S., Israel, Mexico, Portugal, the U.K. and Sweden. An implementation phase for the selected projects will begin on March 28 and last until July 27, with an eye towards launching a pilot in 2022 and introducing a final version in 2024. [Read more]

  • Aave – gathers resources from several savers (forming a liquidity pool) with a focus on offering loans and ensuring compliance of these operations with the rules of the financial system, using DeFi tools;
  • Banco Santander Brasil – deals with DvP and the conversion to digital format (tokenization) of the right to own vehicles and properties;
  • Febraban – deals with DvP of financial assets;
  • Giesecke + Devrient – ​​handles offline payments;
  • Itaú Unibanco, B3 and R3 – handles international payments, using the PvP method in an application with Colombia;
  • Mercado Bitcoin, Bitrust and CPqD – deals with digital asset DvP, with a focus on crypto assets;
  • Tecban and Capitual – presents a logistics solution for e-commerce based on IoT techniques;
  • VERT, Digital Assets and Oliver Wyman – deals with rural financing based on a programmable tokenized asset with a value linked to the Real (Real stablecoin);
  • Visa do Brasil, ConsenSys and Microsoft – deals with financing small and medium-sized companies based on a DeFi solution.

Swiss DLT trading facilities can have central bank accounts, use SIC for payments

The Swiss National Bank clarified the criteria for allowing distributed ledger technology (DLT) trading facilities to access to the Swiss Interbank Clearing (SIC) payment system, to enable atomic securities settlement. This simultaneous exchange of a tokenized asset for cash ideally requires access to the payment system and an account at the central bank. Last year new legislation came into force that created a “DLT trading facility”  license in the Financial Market Infrastructure Act (FinMIA), without which separate licenses would be needed for trading versus custody and settlement. DLT trading facilities that use SIC are expected to have a central bank account or “sight deposit”.  [Read more]

DvP using CBDC: a “settlement choice model” for securities settlement

This paper from R3 proposes a new “best of both worlds” delivery versus payment (DvP) model that allows for a choice of settlement type at the time of trading and offers the ability to settle both gross and netted trades instantly using CBDC and digital assets on a blockchain infrastructure. DvP is central to the world’s securities settlement systems, but is implemented in multiple forms that differ by jurisdiction. All of these different models exist on a continuum from intraday gross settlement–which minimizes settlement risk while requiring a great deal of liquidity–to delayed batch settlement–which offers netting efficiencies but delays final settlement. Market participants acknowledge the benefits of real time gross settlement but continue to rely on the operational and liquidity advantages of delayed batch settlement. [Read more]