Kiffmeister’s #Fintech Daily Digest (20220716)

Central Bank Digital Currencies and Regulatory Alternatives: the Case for Stablecoins

The Richmond Fed published an article that discusses the question of whether a regulatory framework for stablecoins — where regulated banks can issue stablecoins backed 100% by deposits at the central bank — could serve as an alternative to issuing central bank digital currencies (CBDCs). It concludes that appropriate regulation may offer a path whereby stablecoins become effectively equivalent to CBDCs — when they are issued by regulated institutions and backed by reserves. [Read more at the Richmond Fed]

Chile central bank opens CBDC survey

The Central Bank of Chile has opened an online survey on its CBDC project. The poll is aimed at several audiences, including the financial sector and academics; specialists in payments and technological services; and the general public. [Read more] This initiative is expected to deepen the evaluation process started in May with the publication of a first report on CBDC issuance. A second report will be published at the end of this year or beginning of 2023. [Read more]

IMF reports discuss various central banks’ CBDC explorations

I was perusing the IMF website for recent reports that touch on member country CBDC explorations. Here are some of them in no particular order:

  • The IMF ran a peer learning event at its Singapore Regional Training Institute on July 6/7 at which Changchun Mu, Director General, Digital Currency Institute at the People’s Bank of China gave a presentation on the e-CNY. [Read more]
  • The Banque de la République d’Haïti has requested technical assistance from the IMF to help address the risks associated with CBDC deployment. Support has been received from specialized foreign firms and collaboration has been initiated with countries that have already launched a CBDC, particularly in the Caribbean. [Read more]
  • Côte d’Ivoire authorities are “cautiously exploring the benefits of a CBDC and the IMF said it stands ready to offer capacity development support. [Read more] However, it’s unclear how that would work because Côte d’Ivoire doesn’t have it’s own central bank. It’s part of the West African Monetary Union whose currency is the CFA Franc, issued by the Banque Centrale des États de l’Afrique de l’Ouest.
  • The Bank of Mauritius is still considering CBDC issuance, and as part of its recent Article IV consultation the IMF published a paper that assesses the potential impact on liquidity management and monetary policy transmission of various designs of Mauritian Digital Rupee. It finds that issuing a CBDC, especially when remunerated, may not bring clear advantages for liquidity management and may lead to complications for the transmission of the policy rate to market rates. A simpler option of non-interest-bearing retail Digital Rupee could be a safer option as it would lead to a lower risk of interference with policy transmission. [Read more]
  • El Banco Central de la República Dominicana is exploring the benefits of a CBDC and the IMF stands ready to offer capacity development support. [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]