Month: September 2022

Kiffmeister’s #Fintech Daily Digest (20220909)

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Central Bank Digital Currency – an opportunity for financial inclusion in developing and emerging economies?

The Alliance for Financial Inclusion (AFI) published a report that evaluates the extent to which retail central bank digital currency (CBDC) can advance financial inclusion in emerging market and developing economy (EMDE) countries. It concludes that, retail CBDC can be designed to alleviate identity gaps, and mobile phone and digital access divides through its unique ability to generate digital identity proxies and enable offline capabilities while being device agnostic. However, CBDC will not automatically advance financial inclusion, and if not designed appropriately, could reinforce existing barriers. Also, in many EMDE jurisdictions, they are likely to be limited by poor electricity coverage, access to (and affordability of) CBDC-enabled devices and limited cash-in and cash-out infrastructure. Finally, the report concludes that CBDC may not always be the right tool for addressing financial inclusion in different EMDE country contexts relative to other digital payment interventions. The unique feature of CBDC, which makes it distinct from other digital payments instruments, is that is issued by the central bank. But this feature does not necessarily make CBDC a better tool. [Read more at the AFI]

Norges Bank CBDC Sandbox Code Now Public

Nahmii AS, a Norwegian software company, announced that, as part of its ongoing work with Norges Bank, it’s making the source code for the central bank’s CBDC sandbox publicly available. Nahmii’s work is focusing on defining and commissioning a sandbox production environment with open sourced services to allow for the testing of basic token management use cases, including minting, burning and transferring ERC-20 tokens. (Nahmii is an Ethereum layer-2 scaling protocol.) [Read more at Nahmii AS]

Harmonization of ISO 20022: partnering with industry for faster, cheaper, and more transparent cross-border payments

The Committee on Payments and Market Infrastructures (CPMI) published an article that provides an update on a workstream of the G20 cross-border payments program focused on the harmonization of ISO 20022 for enhancing cross-border payments. Most of the world’s payment systems will adopt ISO 20022 by 2025, when SWIFT will discontinue its support of the current MT (message type/text) standard for cross-border payments. Hence the coming years will be crucial for converging on a harmonized use of the messaging standard to fully leverage its potential to make cross-border payments faster, cheaper and more transparent. [Read more at the CPMI]

White House Suggests Banning Proof-Of-Work Crypto

The U.S. White House Office of Science and Technology released a report on Thursday urging the Environmental Protection Agency (EPA) and the Department of Energy (DOE) to take measurable actions to control high energy consumption by crypto mining proof-of-work mechanism. The report goes on to say that “should these measures prove ineffective at reducing impacts, the Administration should explore executive actions, and Congress might consider legislation, to limit or eliminate the use of high energy intensity consensus mechanisms for crypto-asset mining.” [Read more at the White House]

 

Discounted tickets available for CBDC Think Tank masterclass

The CBDC Think Tank, in partnership with the IMF and George Washington University, is hosting a full-day in-person CBDC Masterclass on October 12 in Washington DC for “official sector” staff only. The sessions are designed as instructional deep dives with full presentations and Q&A components.  Ticket prices start at $99 and you can save 30% by entering KIFFMEISTER where the registration page asks for a discount code. [Register here]

Also, the CBDC Think Tank, in partnership with Georgetown University and the DC FinTech Week, is hosting a FREE (also in-person) Digital Currency Lecture Series, a set of digital currency lightning talks delivered by subject matter experts, on October 14 in Washington DC. [Request an invite here]

Kiffmeister’s Global Central Bank Digital Currency Monthly Monitor

Just a reminder that I produce a monthly digest of central bank digital currency (CBDC) developments exclusively for the official sector. So for any of you out there who work for a central bank, ministry of finance or international financial institution who would like to receive it by email on the first business day of every month, please DM me on LinkedIn or email me at chronicles@kiffmeister.com.

Kiffmeister’s #Fintech Daily Digest (20220908)

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PBOC Releases Digital CNY Smart Contract Prepaid Fund Management Product

The People’s Bank of China (PBOC) has reportedly launched an e-CNY smart contract prepaid fund management product – “Yuanguanjia”. It aims to provide users with prepaid consumption service scenarios by deploying smart contracts on e-CNY wallets. This stops merchants from running away with prepaid consumption and protects consumers’ rights and interests. [Read more at Blockchain.news]

Discounted tickets available for CBDC Think Tank masterclass

The CBDC Think Tank, in partnership with the IMF and George Washington University, is hosting a full-day in-person CBDC Masterclass on October 12 in Washington DC for “official sector” staff only. The sessions are designed as instructional deep dives with full presentations and Q&A components.  Ticket prices start at $99 and you can save 30% by entering KIFFMEISTER where the registration page asks for a discount code. [Register here]

Also, the CBDC Think Tank, in partnership with Georgetown University and the DC FinTech Week, is hosting a FREE (also in-person) Digital Currency Lecture Series, a set of digital currency lightning talks delivered by subject matter experts, on October 14 in Washington DC. [Request an invite here]

Kiffmeister’s Global Central Bank Digital Currency Monthly Monitor

Just a reminder that I produce a monthly digest of central bank digital currency (CBDC) developments exclusively for the official sector. So for any of you out there who work for a central bank, ministry of finance or international financial institution who would like to receive it by email on the first business day of every month, please DM me on LinkedIn or email me at chronicles@kiffmeister.com.

Kiffmeister’s #Fintech Daily Digest (20220907)

~ kiffmeister

Russia’s Finance Ministry is working on stablecoin platforms to avoid cross-border dollar settlement

Russia’s finance ministry is reportedly looking to stablecoins to avoid international payment rails denominated in the U.S. dollar and euro. “The stablecoins can be tied to some generally accepted instrument like, for example, gold, whose value is understood and appreciable for all parties… It will require additional regulation, and the ministry is only considering approaches to it, there are no ready-made solutions.” [Read more at Tass]

Exiles Put Crypto, Fed Funds at Center of Myanmar Finance Plan

Myanmar exiles ousted in a 2021 coup are pressing the US Federal Reserve to endorse their bid to use $1 billion in funds frozen by the US to back a digital currency and a plan to establish a new central bank. If the exiles can get US support, they would then seek to establish a new central bank that could issue the digital currency to help support the opposition’s “revolutionary efforts.” [Read more at Bloomberg]

Ethereum’s Bellatrix upgrade now live despite concerns

The Bellatrix upgrade preparing Ethereum for the Merge was successfully completed on September 6, 2022. This upgrade brought Ethereum’s consensus layer, the Beacon Chain, into a ready state for the Merge which is slated to occur around September 15 once the final (“Paris”) upgrade goes live. Some concerns were raised over an almost one in ten missed block rate across the last 600 slots. This could be due to some validators being not fully upgraded to the latest software, which could leave them unable participate in the post-merge proof-of-stake network. [Read more on Decrypt]

Liquidity bridges across central banks for cross-border payments

The Committee on Payments and Market Infrastructures (CPMI) published a report  on central bank liquidity bridges –  short-term intraday liquidity arrangement set up between two or more central banks. In a liquidity bridge, collateral held by a payment service provider (PSP) with one central bank can be used by a PSP’s related entity in another jurisdiction to get intraday liquidity from that other central bank. Liquidity bridges may help reduce credit and settlement risks to PSPs arising from FX transactions and reduce intraday settlement risk across borders. [Read more at the CPMI]

Discounted tickets available for CBDC Think Tank masterclass

The CBDC Think Tank, in partnership with the IMF and George Washington University, is hosting a full-day in-person CBDC Masterclass on October 12 in Washington DC for “official sector” staff only. The sessions are designed as instructional deep dives with full presentations and Q&A components.  Ticket prices start at $99 and you can save 30% by entering KIFFMEISTER where the registration page asks for a discount code. [Register here]

Also, the CBDC Think Tank, in partnership with Georgetown University and the DC FinTech Week, is hosting a FREE (also in-person) Digital Currency Lecture Series, a set of digital currency lightning talks delivered by subject matter experts, on October 14 in Washington DC. [Request an invite here]

Kiffmeister’s Global Central Bank Digital Currency Monthly Monitor

Just a reminder that I produce a monthly digest of central bank digital currency (CBDC) developments exclusively for the official sector. So for any of you out there who work for a central bank, ministry of finance or international financial institution who would like to receive it by email on the first business day of every month, please DM me on LinkedIn or email me at chronicles@kiffmeister.com.

Kiffmeister’s #Fintech Daily Digest (20220906)

~ kiffmeister

RBI in talks with 4 banks, fintechs for CBDC launch this financial year

The Reserve Bank of India (RBI) is reportedly in talks with fintech companies and state-controlled banks about a trial run of a central bank digital currency (CBDC) with a possible rollout by the end of the fiscal year ending March 31, 2023. The list of fintechs that the RBI is consulting include US-based FIS, plus four state-run banks to run a pilot CBDC project (State Bank of India, Punjab National Bank, Union Bank of India and Bank of Baroda). [Read more at MoneyControl]

Binance, Issuer of 3rd Biggest Stablecoin, to Stop Supporting Larger Rival USDC

Binance effectively banished USD Coin (USDC), the second-biggest stablecoin, from trading at its cryptocurrency exchange in favor of its own competing product. On September 29, customers’ holdings of USDC will be converted to Binance USD (BUSD). The same will happen with two smaller stablecoins: Pax Dollar (USDP) and TrueUSD (TUSD).  The action effectively removes USDC as a tradable asset on one of the most prominent perches in crypto, and creates a headache for Circle Internet Financial, USDC’s issuer, as the company mulls an IPO. [Read more at Binance]

Bitcoin S&P 500 Correlation: Be Careful What You Wish For

Here’s an interesting observation from Caitlin Long. The correlation between Bitcoin and the S&P 500 bounced around zero for years, but hasn’t been negative since 2020, and now it’s fluctuating around 50% (see below). Caitlin attributes this to hedge funds buying leverage on, and correlation with, them, and Bitcoin trading markets have paid a big price for the liquidity they brought. I would argue that it’s an instance of “be careful what you wish for” with respect to the “institutionalization” and popularization of crypt. Crypto is just another “risk-on/risk-off” asset class.

 

Discounted tickets available for CBDC Think Tank masterclass

The CBDC Think Tank, in partnership with the IMF and George Washington University, is hosting a full-day in-person CBDC Masterclass on October 12 in Washington DC for “official sector” staff. The sessions are designed as instructional deep dives with full presentations and Q&A components.  Ticket prices start at $99 and you can save 30% by entering KIFFMEISTER where the registration page asks for a discount code. [Register here]

Also, the CBDC Think Tank, in partnership with Georgetown University and the DC FinTech Week, is hosting a FREE Digital Currency Lecture Series, a set of digital currency lightning talks delivered by subject matter experts, on October 14 in Washington DC. [Request an invite here]

Kiffmeister’s Global Central Bank Digital Currency Monthly Monitor

Just a reminder that I produce a monthly digest of central bank digital currency (CBDC) developments exclusively for the official sector. So for any of you out there who work for a central bank, ministry of finance or international financial institution who would like to receive it by email on the first business day of every month, please DM me on LinkedIn or email me at chronicles@kiffmeister.com.

Kiffmeister’s #Fintech Daily Digest (20220902)

~ kiffmeister ~ 1 Comment

A conversation on CBDCs, with Jamiel Sheikh, of the CBDC Think Tank

Forbes published an interview focused on central bank digital currency (CBDC) with Jamiel Sheikh , CEO of the CBDC Think Tank (CBDCTT). The CBDCTT delivers education, the CBDC Summit in Washington D.C in collaboration with the IMF,  and is expanding into advisory with a number of key clients and central banks.  A key interview takeaway for me was the stressing of the importance of central banks building internal CBDC competencies instead of relying on vendors. [Read more at Forbes]

Central Bank of Nigeria announces eNaira’s Integration with NIBSS

The Nigerian Central Bank (CBN) has declared the eNaira to be completely implemented into the Nigeria Inter-Bank Settlement System (NIBSS) Customers can now transfer money from their eNaira wallet to any Nigerian bank account of their choice thanks to the integration with NIBBS Instant Payments (NIP), the country’s main payment system. NIP is a virtual real-time Inter-Bank payment method based on account numbers. [Read more on the CBN Twitter feed]

The Perverse Impacts of the Anti-Money-Laundering System

In theory, anti-money laundering (AML) measures are meant to identify and stop the global movement of funds either earned through criminal activity or intended to fund bad actors. However, Matt Collin, a global development specialist who works with the Brookings Institution and the World Bank, says he is unaware of a single economic study clearly showing a reduction of crime following new AML rules (though he admits such a study might be difficult to design). [Read more on CoinDesk]

Reimagining Money in the Age of Crypto and Central Bank Digital Currency

The future of money is undoubtedly digital, and in the latest issue of the IMF’s Finance & Development some of the world’s leading experts explore what it will look like? It includes my article about offline central bank digital currency (CBDC). [Read more at the IMF]

Discounted tickets available for CBDC Think Tank masterclass

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.  Ticket prices are as low as $99 and you can save 30% by entering KIFFMEISTER where the registration page asks for a discount code. [Register here]

Also, the CBDC Think Tank, in partnership with Georgetown University and the DC FinTech Week, is hosting a FREE Digital Currency Lecture Series, a set of digital currency lightning talks delivered by subject matter experts, on October 14 in Washington DC. [Request an invite here]

Kiffmeister’s Global Central Bank Digital Currency Monthly Monitor

Just a reminder that I produce a monthly digest of central bank digital currency (CBDC) developments exclusively for the official sector. So for any of you out there who work for a central bank, ministry of finance or international financial institution who would like to receive it by email on the first business day of every month, please DM me on LinkedIn or email me at chronicles@kiffmeister.com.

Kiffmeister’s #Fintech Daily Digest (20220901)

~ kiffmeister

Reimagining Money in the Age of Crypto and Central Bank Digital Currency

The future of money is undoubtedly digital, and in the latest issue of the IMF’s Finance & Development some of the world’s leading experts explore what it will look like? It includes my article about offline central bank digital currency (CBDC). [Read more at the IMF]

The Financial Stability Implications of Digital Assets

The US Fed published a paper that explores whether the digital financial system creates new potential challenges to financial stability. It describes emerging vulnerabilities that could present risks to financial stability in the future if the digital asset ecosystem becomes more systemic, including: run risks among large stablecoins, valuation pressures in crypto-assets, fragilities of decentralized finance (DeFi) platforms, growing interconnectedness, and a general lack of regulation. [Read more at the Fed]

Asia Far Ahead in Mobile Payment Adoption

WorldPay data from FIS has found that the Asia-Pacific region reached a much higher market share of mobile payments than other parts of the world (see above graphic). 44% of the transactions made at point of sale (POS) were carried out with a mobile phone instead of a debit/credit card or cash and 69% of online shop payments were completed on a mobile device. According to Global management consulting firm McKinsey, Southeast Asia has become a “wallet-first region.” Africa had the second highest share of POS mobile payments, at 12%, while Europe only saw 8% of POS transactions carried out on mobile. [Read more at Statista]

SAMA Updates Its Regulatory Sandbox Framework to Drive Innovation

The Saudi Central Bank (SAMA) updated its Regulatory Sandbox framework as part of its efforts to achieve the national strategic goals in the Saudi Vision 2030 Financial Sector Development Programme. The updated framework will also support the objectives of the fintech strategy and contribute to the economic empowerment of the Saudi society and its citizens by promoting further Fintech innovations. [Read more at the SAMA]

Bigtechs vs Banks

The Bank for International Settlements (BIS) published a paper that analyses an economy in which large technology companies, Bigtechs, provide credit to firms operating on their platforms. It focuses on two advantages that Bigtechs have with respect to banks: better information on their clients and better enforcement of credit repayment since big techs can exclude a defaulting firm from their ecosystem. While Bigtechs have both superior enforcement and complete and private information of the firm type Bigtechs can encroach on banks’ turf only if they guarantee some privacy to firms by tempering their drive to collect information about firm characteristics and leaving some rents to them. The way Bigtechs share information i.e. by providing information publicly or in a private way entails different outcomes in terms of efficiency. [Read more at the BIS]

Should we trust the credit decisions provided by machine learning models?

An article by a couple of Banco de España economists proposes a framework to assess how reliable machine learning (ML) technology is to credit assessments. It is based on generating datasets intended to resemble typical credit settings, in which the relationship between the variables is defined. It uses non-interpretable ML models on these generated datasets, and explain their results using two popular interpretability techniques. It then calculates to what extent the explanations given by the interpretability techniques match the underlying truth.  [Read more at SUERF]

Discounted tickets available for CBDC Think Tank masterclass

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.  Ticket prices are as low as $99 and you can save 30% by entering KIFFMEISTER where the registration page asks for a discount code. [Register here]

Also, the CBDC Think Tank, in partnership with Georgetown University and the DC FinTech Week, is hosting a FREE Digital Currency Lecture Series, a set of digital currency lightning talks delivered by subject matter experts, on October 14 in Washington DC. [Request an invite here]

Kiffmeister’s Global Central Bank Digital Currency Monthly Monitor

Just a reminder that I produce a monthly digest of central bank digital currency (CBDC) developments exclusively for the official sector. So for any of you out there who work for a central bank, ministry of finance or international financial institution who would like to receive it by email on the first business day of every month, please DM me on LinkedIn or email me at chronicles@kiffmeister.com.