For those receiving this via email, please excuse the glitches that are occurring this week. I’ve moved servers and I’m still trying to get MailChimp to play nicely with it.
International Standard Setters Publish Guidance on Stablecoin Regulations
The Committee on Payments and Market Infrastructures (CPMI) and International Organization of Securities Commissions (IOSCO) published their final “same risk, same regulation” guidance on regulating stablecoin arrangements (SAs). The guidance highlights that the transfer function of an SA is comparable to the transfer function performed by other types of financial market infrastructure (FMI). As a result, an SA that performs this transfer function is considered an FMI for the purpose of applying the Principles for Financial Market Infrastructures (PFMI) and, if determined by relevant authorities to be systemically important, the SA as a whole would be expected to observe all relevant principles in the PFMI. [Read more at BIS.org]
Bank Indonesia to Evaluate CBDC Influence to Local Economy
Bank Indonesia continues to research central bank digital currency (CBDC) and plans to issue a white paper at the end of this year concerning the development of a Digital Rupiah. The central bank’s CBDC exploration has six salient objectives: (i) providing a risk-free means of digital payment using central bank money, (ii) mitigating the risk of non-sovereign digital currency, (iii) expanding payment system coverage and efficiency, including cross-border transactions, (iv) expanding and accelerating financial inclusion, (v) providing new monetary policy instruments, and (vi) facilitating the distribution of fiscal subsidies. [Read more at Bank Indonesia]
Central Bank Digital Currency: Stability and Information
The U.S. Office of Financial Research published a paper that studies how introducing a central bank digital currency (CBDC) would affect the stability of the banking system. It presents a model that captures concerns that the option to hold CBDC can increase the incentive for depositors to run on weak banks. It highlights two countervailing effects. First, banks do less maturity transformation when depositors have access to CBDC, which leaves them less exposed to runs. Second, monitoring the flow of funds into CBDC allows policymakers to identify and resolve weak banks sooner, which also decreases depositors’ incentive to run. The paper’s results suggest that a well-designed CBDC may decrease rather than increase financial fragility. [Read more at FinancialResearch.gov]
Cambodia rolls out unified QR code support for Bakong payment system
The National Bank of Cambodia has introduced a new QR code standard for mobile banking apps in the country, starting with the central bank-backed Bakong blockchain-based peer-to-peer payments system. The KHQR allows merchants to accept mobile payments from any of the 37 commercial bank and payment service provider using a QR code directly supported by Bakong. [Read more at the National Bank of Cambodia]
Issuing Central Bank Digital Currency on Algorand
The Algorand Foundation published a paper that describes its approach to issuing retail CBDC, including a detailed overview of relevant design considerations and examples of use cases facilitated by the Algorand platform. [Read more at Algorand.com]
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]