Kiffmeister’s #Fintech Daily Digest (20220708)

US Treasury Develops ‘Framework’ for International Crypto Regulation

The U.S. Treasury Department published a fact sheet outlining how it could work with foreign regulators to address the cryptocurrency sector. The fact sheet, which is the first report published by the department as a result of U.S. President Joe Biden’s executive order on crypto, said the framework “is intended to ensure that … America’s core democratic values are respected,” pointing to consumer, investor and business protection, the safety of the global financial system and interoperability. The framework’s policy objectives also include reducing the potential use of crypto for illicit finance, promoting access to financial services, supporting technological advancement and “reinforc[ing] U.S. leadership in the global financial system.” [Read more]

Experts invited to join technical talks on digital euro

The European Central Bank (ECB) is inviting technology experts to take part in online technical talks to explore options for the design of a central bank digital currency. The talks will focus on the large-scale application of privacy-enhancing technologies in settlement of retail payments. For example, how can the payment asset issuer exert control over settlement rules and maintain adequate, tamper-proof evidence of the amounts in circulation, while also minimizing the accessibility of sensitive information? The talks will be held at expert level as closed sessions with members of the ECB’s digital euro project team. [Read more]

Essays on Digital Currencies and Monetary Policy

This dissertation by Jonas Gross studies issues related to digital currencies and monetary policy. In particular, it analyzes the determinants of the monetary policy of the European Central Bank (ECB) and examines design aspects of central bank digital currencies (CBDCs), e.g., related to financial stability, monetary policy, and privacy. For example, it finds that CBDCs crowd out bank deposits and negatively affect bank funding, but this crowding-out effect can be mitigated if the central bank chooses to provide additional central bank funds or to disincentivize large-scale CBDC accumulation via low or potentially even negative interest rates (if the CBDC is remunerated). [Read more]

Interlinking payment systems and the role of application programming interfaces: a framework for cross-border payments

The Committee on Payments and Market Infrastructures (CPMI) published a report that provides a framework to help payment system operators and authorities understand and evaluate the benefits, challenges and risks of interlinking arrangements. It also provides an overview of important trends in interlinking arrangements and adoption of application programming interfaces (APIs) by payment systems. Interlinking arrangements allow banks and other payment service providers to transact with each other without requiring them to participate in the same payment system or use intermediaries. Such arrangements can shorten transaction chains, reduce overall costs and increase the transparency and speed of payments. [Read more]

NIST Announces First Four Quantum-Resistant Cryptographic Algorithms

The U.S. Department of Commerce’s National Institute of Standards and Technology (NIST) has chosen the first group of encryption tools that are designed to withstand the assault of a future quantum computer, which could potentially crack the security used to protect privacy in the digital systems we rely on every day — such as online banking and email software. The four selected encryption algorithms will become part of NIST’s post-quantum cryptographic standard, expected to be finalized in about two years. [Read more]

Upcoming events I’m affiliated with:

The CBDC Think Tank, in partnership with the International Monetary Fund and George Washington University, is hosting a full-day in-person CBDC Masterclass on October 12 in Washington DC. The sessions are designed as instructional deep dives with full presentations and Q&A components.  [Register here]