Stablecoins’ role in crypto and beyond: functions, risks and policy
This European Central Bank (ECB) article analyses the role played by stablecoins within the wider crypto-asset ecosystem and finds that some existing stablecoins are already critical to liquidity in crypto-asset markets. This could have wide-ranging implications for crypto-asset markets if a large stablecoin were to fail and could also have contagion effects if crypto-assets’ interlinkages with the traditional financial system continue rising. The article calls for the urgent implementation of effective regulatory, supervisory and oversight frameworks before significant further interconnectedness with the traditional financial system occurs. [Read more at the ECB]
The Banca d’Italia published a paper that evaluates two solutions for synchronizing the asset-leg and the cash-leg of a DvP (delivery versus payment) transaction on distributed ledger technology (DLT) rails. Both use the Target Instant Payment Settlement (TIPS) platform to provide the settlement services of the cash leg. The solutions preserve the atomic nature of a DvP transaction, building a “bridge” between the DLT asset management platform and the central bank payment system. This architecture offers the potential to standardize communications with DLTs and avoid the need to issue central bank money as cash tokens on DLTs – a key point of other approaches – thus preserving the central bank’s control over the cash-leg of the DvP. [Read more at the Banca d’Italia]
ING pilots ultra-wideband tech for P2P contactless payments
ING, working with Samsung and NXP Semiconductors, is piloting a peer-to-peer payments app that uses ultra-wideband (UWB) technology to let users transfer money by simply pointing one handset at another. There is no need to enter another person’s email address, phone number or International Bank Account Number (IBAN) when making a payment. UWB is a technology based on radio waves that that can precisely lock onto an object, discover its location and communicate with it. [Read more at Finextra.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]