Kiffmeister’s #Fintech Daily Digest (20220805)

Jurisdictions Where Retail CBDC Is Being Explored

I’ve made some minor updates to my tabulation of retail central bank digital currency (CBDC) explorers. I count 85, which is lower than the count of some other trackers that, for currency unions, count all member countries. I count only the central bank that is responsible for currency issuance (e.g., the European Central Bank (ECB) in the Eurozone, and the Eastern Caribbean Central Bank in the Eastern Caribbean Currency Union (ECCU)). If I count all eight Eurozone member countries whose central banks are contributing to the ECB CBDC work, plus all eight member countries of the ECCU, my tally goes up to 101. If I also include all Eurozone countries I have a big fat headline number of 112! [See my tabulation here]

Thailand’s Central Bank Extends Retail CBDC Study to Pilot Phase

The Bank of Thailand (BoT) is extending the scope of retail CBDC development by starting a pilot study. It will adopt technology developed by Giesecke+Devrient and it is expected to run from the end of 2022 to mid-2023. However, the BoT emphasized that the purpose of the pilot is to assess the suitability of technology and CBDC design, and at present it does not have plans to issue retail CBDC until thorough consideration of benefits and associated risks for the financial system. [Read more at the Bank of Thailand]

ZB Exchange Loses Nearly $5M in Suspected Hack, Pauses Withdrawals

Crypto exchange ZB Exchange has paused user withdrawals, likely in response to a suspected hack that appears to have drained nearly $5 million in tokens from the firm’s hot wallet. The multimillion-dollar loss is the latest in a series of security breaches to hit crypto companies this year and the third multimillion-dollar hack reported this week. [Read more at CoinDesk]

PayTech and the D(ata) N(etwork) A(ctivities) of BigTech Platforms

The Bank of Canada published a paper that models the trade-off faced by BigTech payment platforms between costs associated with compensating users for their privacy concerns and revenues from the harvested data. The results of the modeling lead to two policy implications. First, data monetization is not necessarily inefficient from a social point of view because data are socially valuable and users are compensated for their privacy concerns with cheaper platform services. Second, when assessing BigTechs’ introduction of payment services, one needs to consider the bundling of data and payments and the implied complementarity. In economies with large payment frictions, data-driven payments tend to increase social surplus. In advanced economies, however, where payments are already fairly efficient, payment-driven data can lead to inefficient adoption by platforms that seek to generate data beyond what is socially efficient. [Read more at the Bank of Canada]

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]