Month: April 2022

Kiffmeister’s #Fintech Daily Digest (20220429)

~ kiffmeister

I’ve updated my tabulation of wholesale central bank digital currency (CBDC) projects, adding the Bangko Sentral ng Pilipinas’s Project CBDCPh: https://kiffmeister.com/jurisdictions-where-wholesale-cbdc-is-being-explored.

Telegram adds Toncoin to its messaging app

Telegram now allows users to send and receive Toncoin within its messaging app.  The TON crypto project was originally created by Telegram but later transitioned to an open-source project after an SEC lawsuit alleged Telegram sold unregistered securities. The Telegram platform is said to have over 550 million users, and the TON Foundation’s messaging app bot has over 800,000 users. [Read more]

Upcoming events I’m affiliated with:

The Bank of Ukraine will present virtually on their E-Hryvnia retail CBDC project on May 3 (at 08:00 EST) at the CBDC Think Tank  [Register here]

Satoshi Capital Advisors is hosting a virtual workshop on wholesale CBDC, stablecoins and digital capital markets on May 24 (starting at 08:00 EST). [Register here with the passcode: CBDC]

Kiffmeister’s #Fintech Daily Digest (20220428)

~ kiffmeister

ECB issues expression of interest for CBDC prototype user interfaces

The European Central Bank (ECB) has launched a call for expression of interest for payment service providers, banks and technology companies to join an exercise to develop prototype user interfaces for a digital euro. The ECB specifies 28 separate possible use cases, covering all aspects of the design process, from QR codes to user authentication, electronic ID (EID) and know-your-customer (KYC), among others. [Read more]

Would retail CBDC holding limits thwart its chances of achieving its intended purpose?

A briefing note based on a 2021 Swiss National Bank working paper argues that while retail central bank digital currency (CBDC) holding limits may limit the potential for commercial bank deposit substitution (or disintermediation), they may also undermine the use of CBDC as a medium of exchange. Retail CBDC could thus miss its intended purpose. The same would go for remunerated retail CBDC where the interest rate is set at unattractive levels for large holdings. [Read more]

Upcoming events I’m affiliated with:

The Bank of Ukraine will present virtually on their E-Hryvnia retail CBDC project on May 3 (at 08:00 EST) at the CBDC Think Tank  [Register here]

Satoshi Capital Advisors is hosting a virtual workshop on wholesale CBDC, stablecoins and digital capital markets on May 24 (starting at 08:00 EST). [Register here with the passcode: CBDC]

Kiffmeister’s #Fintech Daily Digest (20220427)

~ kiffmeister

I’ve updated my tabulation of retail central bank digital currency (CBDC) explorers: https://kiffmeister.com/jurisdictions-where-retail-cbdc-is-being-explored.

Discussion paper on e-HKD from policy and design perspective

The Hong Kong Monetary Authority (HKMA) has published a discussion paper inviting views on the key issues around a retail CBDC. This is a follow-up to the paper published in October 2021 on potential architectures and design options for distributing e-HKD, and this new one focuses on use cases, the issuance mechanism, interoperability with other payment systems, privacy and data protection. Members of the public and the industry have until May 27, 2022 to submit comments. [Read more]

Bangko Sentral ng Pilipinas pursues digital currency pilot project

The Bangko Sentral ng Pilipinas (BSP) has decided to pursue a wholesale CBDC pilot project as part of its efforts to promote the stability of the country’s payment system. Dubbed CBDCPh, it will test the use of CBDCs for large-value financial transactions on a 24/7 basis across a limited number of financial institutions. [Read more]

Centrale Bank van Curaçao en Sint Maarten is exploring digital currency

The Centrale Bank van Curaçao en Sint Maarten intends to issue a position paper on the potential contribution of CBDC to financial inclusion in Curaçao and Sint Maarten. [Read more]

Central African Republic adopts bitcoin as legal currency

The President of the Central African Republic (CAR) has reportedly signed a law making bitcoin a legally recognized currency in the country following a unanimous parliamentary vote on the matter. Like El Salvador, which has also designated bitcoin as legal tender, CAR doesn’t issue its own currency. It uses the Euro-pegged CFA franc, also the currency of Cameroon, Chad, Republic of the Congo, Equatorial Guinea and Gabon, issued by the Banque des États de l’Afrique Centrale. [Read more] [Update: Text of legislation]

Upcoming events I’m affiliated with:

The Bank of Ukraine will present virtually on their E-Hryvnia retail CBDC project on May 3 (at 08:00 EST) at the CBDC Think Tank  [Register here]

Satoshi Capital Advisors is hosting a virtual workshop on wholesale CBDC, stablecoins and digital capital markets on May 24 (starting at 08:00 EST). [Register here with the passcode: CBDC]

Kiffmeister’s #Fintech Daily Digest (20220426)

~ kiffmeister

Deciding on a Digital Dollar: The Necessary Steps for Canada

I spoke at a workshop hosted by the Centre for International Governance Innovation (CIGI) and Bennett Jones on the need for, and design of, a digital Canadian central bank digital currency (CBDC) or “digital loonie”. It focused on three areas: what can Canada learn from CBDC first movers (that was the session I participated in), what are the early steps necessary to prepare and design a digital loonie, and what will be required legally for a CBDC and what are the legal pillars on which that system could be based. It was run under Chatham House Rule but a summary report will be published within the next few months. [Read more]

Are Cryptocurrencies Currencies? Bitcoin as Legal Tender in El Salvador

This US National Bureau of Economic Research (NBER) paper reports the results of a representative national face-to-face survey of bitcoin’s usage in El Salvador, since the government made bitcoin legal tender and launched its “Chivo” bitcoin wallet, giving major incentives to download it. The results show that, despite the government’s big push and a large fraction of people downloading the Chivo wallet, usage of bitcoin for everyday transactions is low and is concentrated among the banked, educated, young, and male population. 60% did not even bother to download the wallet, and over 60% of those that downloaded it ended up abandoning it after spending the $30 bitcoin airdrop. [Read more]

The Central Bank of West African States (BCEAO) sets up FinTech Knowledge and Monitoring Office

The Central Bank of West African States (BCEAO) sets up FinTech Knowledge and Monitoring Office (BCSF) to promote and support the development of startups offering financial services in West Africa. The BCSF will organize discussions between the central bank and fintech startups, collect and process information or interview requests and handle other tasks related to technological innovation and financial sector regulation. The BCEAO serves the eight west African countries of the West African Economic and Monetary Union (Benin, Burkina Faso, Guinea-Bissau, Ivory Coast, Mali, Niger, Senegal and Togo) that all share a common currency (the euro-pegged CFA Franc). [Read more]

Upcoming events I’m affiliated with:

The CBDC Think Tank is hosting several webinars over the next month:

Satoshi Capital Advisors is hosting a virtual workshop on wholesale CBDC, stablecoins and digital capital markets on May 24 (starting at 08:00 EST). [Register here with the passcode: CBDC]

Kiffmeister’s #Fintech Daily Digest (20220425)

~ kiffmeister

The History of Cash-Like Digital Payment Instruments

CoinDesk has published my article on the history of cash-like digital payment instruments! It covers how and why such digital payments projects have come and gone, giving us an idea of what needs to be done to do it right. [Read more]

Mexico plans a retail CBDC by 2025

The new Governor of the Bank of Mexico, Victoria Rodríguez Ceja, confirmed plans to release a retail central bank digital currency (CBDC) during 2025. During a presentation to the Mexican Senate, the Governor said the first goal of its CBDC will be financial inclusion. It also wants to provide more fast payments options and ensure the economy is efficient and interoperable. The Governor said she’s also keen to enable programmable money and promote innovation. [Read more]

Upcoming events I’m affiliated with:

The CBDC Think Tank is hosting several webinars over the next month:

Satoshi Capital Advisors is hosting a virtual workshop on wholesale CBDC, stablecoins and digital capital markets on May 24 (starting at 08:00 EST). [Register here with the passcode: CBDC]

Kiffmeister’s #Fintech Daily Digest (20220424)

~ kiffmeister

G20 TechSprint 2022

The 2022 TechSprint will be launched by the BIS Innovation Hub and Bank Indonesia on April 25. It will focus on solving technology challenges related to wholesale and retail central bank digital currencies (CBDCs). Shortlisted teams will be invited to showcase their prototypes in July and winners will be chosen in October by an independent panel. Key challenges identified include building effective and robust means to issue, distribute and transfer CBDCs, enabling financial inclusion, and improving interoperability. Proposals must be submitted by May 20, and the short list will be announced on June 15. [Read more]

Will the digital euro respect citizens’ privacy?

This very closely reflects my personal view on an appropriate central bank digital currency (CBDC) privacy standard: “Physical cash should be the standard for evaluating how to strike a balance between ensuring privacy and adhering to anti-money laundering (AML) and countering the financing of terrorism (CTF) rules. At a minimum, this implies allowing real anonymity and transaction privacy for daily life transactions up to limits that are similar to the current limits for cash. In addition to full anonymity for low-value transactions, a high level of pseudo-anonymity should be provided for all larger transactions to ensure a high level of identity protection.” [Read more]

Upcoming events I’m affiliated with:

The CBDC Think Tank is hosting several webinars over the next month:

Satoshi Capital Advisors is hosting a virtual workshop on wholesale CBDC, stablecoins and digital capital markets on May 24 (starting at 08:00 EST). [Register here with the passcode: CBDC]

Kiffmeister’s #Fintech Daily Digest (20220422)

~ kiffmeister

Russia makes digital ruble, home-grown credit card push

Russia reportedly plans to have a digital ruble capable of making international payments ready by next year and also wants to expand the number of countries that accept its Visa- and Mastercard-style banking cards that are administrated by the central bank. Central Bank Governor Elvira Nabiullina also said Russia aims to extend the number of countries that accept the central bank’s MIR banking cards, an alternative to Visa and MasterCard which have joined other Western firms and suspended operations in Russia. [Read more]

Retail interest in bitcoin is dwindling, Google data suggests

Worldwide searches for bitcoin have reached mid-2020 levels as of April 22, 2022, with readings of 17 for the week of April 17-April 23 versus May 2021’s all-time high reading of 76. This does not mean the total number of searches for “bitcoin”  is decreasing, but that its popularity is decreasing compared to other searches. Data suggests most searches for bitcoin originate from Nigeria, followed by El Salvador and Austria. [Read more]

State of Effectiveness and Compliance with the FATF Standards

The Financial Action Task Force (FATF) published a report on the state of effectiveness of global efforts to tackle money laundering, terrorist and proliferation financing. It reports that 76% of countries have “satisfactorily” implemented the FATF recommendations, compared to 36% in 2012. However, in distinguishing between “technical” compliance and “effectiveness,” it finds that while 76% of countries are technically compliant, effectiveness sits at just 21%, indicating there is much more work to be done. [Read more]

Upcoming events I’m affiliated with:

The CBDC Think Tank is hosting several webinars over the next month:

Satoshi Capital Advisors is hosting a virtual workshop on wholesale CBDC, stablecoins and digital capital markets on May 24 (starting at 08:00 EST). [Register here with the passcode: CBDC]

Kiffmeister’s #Fintech Daily Digest (20220421)

~ kiffmeister

Exploring the “CBDCness” of the Digital Sovereign Yidindji Dollar

The Sovereign Yidindji Government has launched a digital version of their Sovereign Yidindji Dollar (SYD). The new payment system is connected to the MetaMUI self-sovereign identity system that is already in use throughout Yidindji. The government is calling the SYD a central bank digital currency (CBDC) ascertain the “CBDCness” of the SYD. But is it CBDC? [Read more]

Cryptos on the rise 2022 — a complex regulatory future emerges

Thomson Reuters Regulatory Intelligence published its updated compendium of cryptocurrency regulations by country. It offers a country-by-country overview of regulatory and legal frameworks in 70 countries, their regulatory approaches or stances on cryptos, general tax status, plus links to pertinent regulatory bodies or enacted regulations. [Download here]

Canadian’s Bitcoin Awareness, Ownership and Use: 2016–20

The Bank of Canada published a survey-based analysis of trends in Canadians’ use of cash, payments and cryptocurrencies. About 90% of Canadians have heard of Bitcoin while only 5% owned it, and most bitcoin owners are male, young, university educated, but with low financial literacy. Most buy for price appreciation, and not to make payments or for lack of trust. [Read more]

Upcoming events I’m affiliated with:

The CBDC Think Tank is hosting several webinars over the next month:

Satoshi Capital Advisors is hosting a virtual workshop on wholesale CBDC, stablecoins and digital capital markets on May 24 (starting at 08:00 EST). [Register here with the passcode: CBDC]

Exploring the “CBDCness” of the Digital Sovereign Yidindji Dollar

~ kiffmeister

The Sovereign Yidindji Government launched a digital version of their Sovereign Yidindji Dollar (SYD) on January 26, 2022, and the first successful transaction was confirmed on February 1. The new payment system is connected to the MetaMUI self-sovereign identity system that is already in use throughout Yidindji. The Sovereign Yidindji Government and MetaMUI are calling the SYD a central bank digital currency (CBDC) and the purpose of this post is to ascertain the “CBDCness” of the SYD.

Yidindji is an Australian pre-colonial indigenous nation that asserted its independence and continuing validity of Yidindji laws and customs in 2014, in accord with Resolution 1514 adopted by the United Nations General Assembly in 1960. However, until a treaty is signed between the governments of the Commonwealth of Australia and the Sovereign Yidindji Government, regarding land rights, Yidindji will not be represented by the United Nations or international law.

Is the SYD a central bank digital currency?

According to the Bank for International Settlements (BIS) a CBDC is a digital payment instrument, denominated in the jurisdiction’s unit of account, that is issued by and a direct liability of the jurisdiction’s central bank or monetary authority. The SYD is a obviously a digital payment instrument, and the rest of this note argues that it seems to meet the other BIS CBDC criteria too.

Does the Yidindji Nation have a central bank?

The Yidindji Reserve Bank Act 2016 established the Yidindji Reserve Bank (YRB) as the central bank of the Yidindji Nation to issue SYD. The SYD was pegged to the Australian Dollar (AUD) and backed by gold and silver.[1] The Yidindji Department of the Treasury guarantees the ability to exchange from SYD to AUD. Appropriate amounts of AUD are held by the YRB to for these exchanges. (Before the introduction of the digital currency, SYD transactions were settled in commercial bank money on a manual ledger.)

However, according to the Act, the YRB wasn’t responsible for some of the key functions associated with a central bank. The YRB had no payment system role, and it was prohibited from issuing bearer money, both foundational central bank roles. But the Act was revised in 2022 to give the YRB typical central bank responsibilities, including issuing currency, regulating/supervising deposit-taking institutions, and overseeing and promoting an efficient, sound, and safe payment system. So, Yidindji has a central bank.

Is the SYD denominated in the Yidindji’s unit of account?

To be a unit of account, a currency must be usable as a medium of exchange across a variety of transactions between several people and as such represent a form of co-ordination across society. The Yidindji Currency Acts of 2014 and 2022, Yidindji citizens must settle their obligations in SYD, and Australian citizens must settle their obligations in AUD.[2] But the two currencies are convertible one-to-one, it would seem that, if the digital SYD is convertible one-to-one into SYD and AUD, which are both units of account in Yidindji, then there’s no reason to dispute its status as a unit of account.

Conclusion

When Yidindji’s central bank is fully operational and carrying out typical central bank operations and responsibilities, the digital SYD will indeed be a CBDC, as it will meet all other CBDC defining criteria; like being issued and backed by, and a direct liability of, Yidindji’s central bank, and being denominated in Yidindji’s unit of account.

[1] Gold and silver bars are kept in two undisclosed locations. These bars are from internationally recognized mints and meets current standards of fineness, majority are from Perth Mint with much smaller amounts from other mints. All bars are in accord with the specifications of the LBMA Good Delivery Rules though not listed on the LBMA list. Once again it is this lack of formal agreement to be seen legally in the UN sphere of jurisdiction. The gold is rebalanced on a monthly basis, whilst audits of the metals take place at three monthly intervals.

[2] Upon the completion of a treaty with the Commonwealth of Australia, the SYD will be the only mechanism for Yidindji residents to discharge their monetary obligations.