Kiffmeister’s #Fintech Daily Digest (20221031)

India’s Central Bank to Start Wholesale CBDC Pilot November 1

The Reserve Bank of India [RBI] will launch a pilot wholesale central bank digital currency (CBDC) on November 1. The use case for the wholesale Digital Rupee is the “settlement of secondary market transactions in government securities” because it would reduce transaction costs. Nine prominent banks have been identified for participation in the pilot. A pilot of the retail version is planned for launch within a month in select locations in closed user groups comprising customers and merchants. [Read more at the RBI]

MAS Report on Potential Uses of a Purpose-Bound Digital Singapore Dollar

The Monetary Authority of Singapore (MAS) released a report detailing potential uses of a purpose-bound digital Singapore dollar (SGD) and the supporting infrastructure required, marking the successful completion of Phase 1 of Project Orchid. While MAS has assessed that the case for a retail CBDC in Singapore is not compelling for now, Project Orchid aims to build the technical capabilities and competencies necessary for MAS to issue a retail CBDC, should the need arise. Phase 1 explored the concept of purpose-bound digital SGD that enables senders to specify conditions, such as validity period and types of shops, when making transfers in digital SGD. Some of its use cases will be tested through trials with the public and private sector in 2022 and 2023. The next phase of Project Orchid will look at what the best ledger technology is and how this can be integrated with the existing infrastructure. [Read more at the MAS]

Speech by PBOC Governor YI Gang at the Hong Kong FinTech Week 2022

In a Hong Kong Fintech Week 2022 speech, Yi Gang, Governor of the People’s Bank of China (PBOC), described the “delicate balance between protecting privacy and combating illicit activities” in developing its  e-CNY central bank digital currency (CBDC).  “The e-CNY operates on a two-tiered system. At tier one, the PBOC supplies e-CNY to the authorized operators and processes inter-institutional transaction information only. At tier two, the authorized operators only collect the personal information necessary for their exchange and circulation services to the public. Transaction-related data is encrypted for storage. Sensitive consumer information is de-identified to non-transacting parties. Entities and individuals are prohibited from arbitrary inquiry or information usage without rigorous legal authorization. There are small-amount soft wallets and hard wallets to meet the need for small-value anonymous transactions, both online and offline.” [Read more at the PBOC]

Buy Now, Pay Later Drives Gen Z Into Debt

“Younger consumers of Buy Now Pay Later (BNPL) products, which require little or no credit history, now hold the most defaulted accounts in the programs. While 11% of all borrowers paid at least one late fee on the installment loans in 2021, 18% of those aged 18 to 29 fell behind on their payments, according to a Federal Reserve report. The programs, which gained popularity as the pandemic forced shoppers online, are now in the sights of credit bureaus. Equifax and Experian have said they’ll start including BNPL purchases on consumers’ credit reports — and that loans sent to debt collectors can also be reflected.” [Read more at Bloomberg]

New German regulations enable the issuance of securities on distributed ledger technology

The German government has published the regulation on requirements of electronic securities registers in the official journal Bundesgesetzblatt. It entered into force on October 29, 2022. This was the final missing regulation to clarify and enable the issuance of securities (only bearer bonds so far) and fund shares on distributed ledger technology (DLT) platforms in Germany. [Read more on LinkedIn H/T Kurt Zeimers]

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.

The CBDC Think Tank is a New York-based technology- and vendor-agnostic digital currency knowledge-sharing hub for staff of central banks, international financial institutions (IFIs) and non-government organizations (NGOs). It runs webinars, workshops, and masterclasses to disseminate knowledge and facilitate communication. It also engages in advisory work, focusing on delivering impact that best aligns with the needs of its clients and the forward progress of human civilization. The CBDC Think Tank welcomes requests from central bank officials for CBDC advisory services.  [click here for more information].

Satoshi Capital Advisors is a New York-based, global advisory firm that works with central banks, governments, and the private sector to architect, implement, and operate varying initiatives. Satoshi Capital Advisors’ central bank work revolves around CBDC architecture and implementation, providing advisory services from research phase through to growth phase. Utilizing a product-market fit and technology agnostic approach to CBDC architecture and implementation enables Satoshi Capital Advisors to build tailored solutions, bespoke to local financial system nuances. Satoshi Capital Advisors welcomes requests from central bank officials for virtual and in-person CBDC workshops. [Click here for more information]

WhisperCash offers the first fully offline digital currency platform that has the same properties as physical cash. It can perform secure consecutive offline payments without compromising on security, privacy or accessibility. WhisperCash allows direct person to person offline payments without any server infrastructure or internet connectivity. It comes in various form factors including the self-contained credit card-sized “Pro” that sports an eInk screen and capacitive keyboard, and lasts for two weeks between recharges assuming a few transactions per day. [Click here for more information]

Kiffmeister’s #Fintech Daily Digest (20221030)

Digital money and central bank balance Sheets

The IMF published a paper by Adrian Armas and Manmohan Singh that examines the impact of digital money on central bank balance sheets and monetary policy. They show that the impact will depend on the type of substitution into digital money. For example, interest rate and credit monetary policy channels may become weakened by nonbank stablecoins that are backed by investments in government securities, or if there is substitution out of bank deposits into central bank digital currency (CBDC). The common factor in these cases is a reduction of banking credit. However, when substitution is out of currency in circulation (i.e., cash) into private digital money that is deposited at banks, banking credit could expand. [Download at IMF.org]

Use of cash by companies in the euro area

In 2021 the European Central Bank (ECB) launched its first survey on the usage of cash among companies to understand their strategic view on the current and future use and acceptance of cash. It found that almost all businesses surveyed accept cash (even in cash-lite countries, like the Netherlands, 90% accept cash), most businesses prefer customers to pay with card but a quarter prefer cash, security and reliability are the top criteria when deciding on payment type, and very few that accept cash intend to stop accepting it in the future. The ECB concluded that the results provide further support for the Eurosystem’s cash strategy to continue to ensure that cash remains widely available and accepted as a means of payment and store of value. [Read more at the ECB]

Knocked down during lockdown: the return of cash

The Bank of England conducted surveys in 2021 to gain further insights into the store of value role of banknotes. They confirm that over the past decade, the fall in transactional cash use in the UK has been accompanied by a rise in the value of notes in circulation. Covid intensified this trend. As Covid restrictions have lifted, there has been a partial recovery in cash use, and more recently, a stabilization in cash use trends. The value of notes in circulation remains elevated, as people are holding more cash as a store of value.  And there remains a sizable share of the population who value cash and for whom cash remains their preferred means of payment. The Bank reiterated its commitment to  to ensure that cash remains available and accessible for those who want to use it. [Read more at the Bank of England]

Latin America: Financial Inclusion and CashTech Solutions

Most Latin American consumers remain conspicuous cash users. Thus, CashTech could be very successful as specialists are looking for ways to bridge the gap between the digital economy and the cash economy, and many incumbents and startups have launched CashTech solutions in the region. For examples, banks have implemented cardless cash withdrawals through their apps, Amazon allows users in the region to pay for goods with cash through Amazon PayCode and Amazon Cash, and retail chain OXXO, which provides cash and correspondent banking services in its more than 19,000 stores in Mexico, has partnered with BBVA and Santander to offer cash-withdrawal services and with Ria Money Transfer to delivers cash remittances. [Read more at Cash Essentials]

Custodia Bank’s master account lawsuit against Fed likely to advance

“Judge Scott Skavdahl of the U.S. District Court for the District of Wyoming said he likely would not dismiss the lawsuit Custodia Bank filed against the [Fed] earlier this year. Following oral arguments from all parties, Skavdahl declined to issue a ruling from the bench on the Fed’s motion to dismiss the lawsuit. He noted that the scope of the suit might be adjusted but the matter would likely survive “in some form.” Custodia, a Wyoming-chartered special-purpose depository, sued the Fed in June, hoping to compel it to make a decision on the company’s roughly two-year-old application for a master account with the Kansas City Fed.” [Read more at American Banker, some of Skavdahl’s comments are a hoot]

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.

The CBDC Think Tank is a New York-based technology- and vendor-agnostic digital currency knowledge-sharing hub for staff of central banks, international financial institutions (IFIs) and non-government organizations (NGOs). It runs webinars, workshops, and masterclasses to disseminate knowledge and facilitate communication. It also engages in advisory work, focusing on delivering impact that best aligns with the needs of its clients and the forward progress of human civilization. The CBDC Think Tank welcomes requests from central bank officials for CBDC advisory services.  [click here for more information].

Satoshi Capital Advisors is a New York-based, global advisory firm that works with central banks, governments, and the private sector to architect, implement, and operate varying initiatives. Satoshi Capital Advisors’ central bank work revolves around CBDC architecture and implementation, providing advisory services from research phase through to growth phase. Utilizing a product-market fit and technology agnostic approach to CBDC architecture and implementation enables Satoshi Capital Advisors to build tailored solutions, bespoke to local financial system nuances. Satoshi Capital Advisors welcomes requests from central bank officials for virtual and in-person CBDC workshops. [Click here for more information]

WhisperCash offers the first fully offline digital currency platform that has the same properties as physical cash. It can perform secure consecutive offline payments without compromising on security, privacy or accessibility. WhisperCash allows direct person to person offline payments without any server infrastructure or internet connectivity. It comes in various form factors including the self-contained credit card-sized “Pro” that sports an eInk screen and capacitive keyboard, and lasts for two weeks between recharges assuming a few transactions per day. [Click here for more information]

Kiffmeister’s #Fintech Daily Digest (20221029)

I’ve updated my tabulation of wholesale central bank digital currency (#CBDC) explorers. The only change is the updated link for the Bank for International Settlements Innovation Hub (BISIH) led mBridge multi-CBDC cross-border payments platform experiments. Interestingly, the mBridge ledger uses the HotStuff+ consensus mechanism, a variation of the HotStuff mechanism used in the now defunct Libra stablecoin-based payment platform. [Download the wholesale CBDC explorer tabulation here]

China’s Approach to Central Bank Digital Currency

Heng Wang has written one of the most comprehensive summaries of China’s CBDC approach I’ve seen recently. He argues that the role of the state, the potential cross-border use of e-CNY, and China’s proactiveness in international governance are the core features of China’s CBDC. These features contribute to China’s CBDC approach, a possible selective reshaping of international financial order. He adopts a multifactor analytical framework which explores major economic, political economy, legal and regulatory factors affecting the sustainability of China’s CBDC approach to promote a holistic understanding of e-CNY’s evolution. [Download the paper at SSRN.com]

The “Option” of Crypto Regulation

This essay by Noelle Acheson is a great read on some of the paradoxes that surround the buildout (or not) of crypto regulations. Here’s my summary of her narrative, but the whole essay is worth a read:

Crypto markets originally developed at the grass roots level, with no regulatory oversight or protection whatsoever. As the investor base broadened and as certain blow-ups highlighted the often-painful lack of rules, the demand for more reliable platforms led to the birth of the market infrastructure we have today. This in turn fueled the growth of investor interest, including that of more restricted participants with deep pockets, and the boost in volumes supported both prices and further innovation. And institutional investor involvement in crypto markets is good, but the outsized weight of its influence has led to the conflation of “crypto potential” with ‘institutional needs’… And not all of crypto needs ‘regulatory clarity’ or institutional participation. Much of it simply needs testing with real users and real incentives with some degree of supervision to ensure fair markets and mitigate illicit use. 

[FYI Noelle later rolled this into a CoinDesk article that you can read 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.

The CBDC Think Tank is a New York-based technology- and vendor-agnostic digital currency knowledge-sharing hub for staff of central banks, international financial institutions (IFIs) and non-government organizations (NGOs). It runs webinars, workshops, and masterclasses to disseminate knowledge and facilitate communication. It also engages in advisory work, focusing on delivering impact that best aligns with the needs of its clients and the forward progress of human civilization. The CBDC Think Tank welcomes requests from central bank officials for CBDC advisory services.  [click here for more information].

Satoshi Capital Advisors is a New York-based, global advisory firm that works with central banks, governments, and the private sector to architect, implement, and operate varying initiatives. Satoshi Capital Advisors’ central bank work revolves around CBDC architecture and implementation, providing advisory services from research phase through to growth phase. Utilizing a product-market fit and technology agnostic approach to CBDC architecture and implementation enables Satoshi Capital Advisors to build tailored solutions, bespoke to local financial system nuances. Satoshi Capital Advisors welcomes requests from central bank officials for virtual and in-person CBDC workshops. [Click here for more information]

WhisperCash offers the first fully offline digital currency platform that has the same properties as physical cash. It can perform secure consecutive offline payments without compromising on security, privacy or accessibility. WhisperCash allows direct person to person offline payments without any server infrastructure or internet connectivity. It comes in various form factors including the self-contained credit card-sized “Pro” that sports an eInk screen and capacitive keyboard, and lasts for two weeks between recharges assuming a few transactions per day. [Click here for more information]

Kiffmeister’s #Fintech Daily Digest (20221028)

I’ve updated my tabulation of retail central bank digital currency (CBDC) explorers, mostly just updated links, and moving Israel and Norway up to the proof-of-concept (PoC) section. [Download it here]

Does the IMF have a vendetta against cryptocurrencies?

Is the International Monetary Fund (IMF) really hostile to crypto? Many in the cryptocurrency and blockchain space think so, according to this CoinTelegraph article. However, CoinTelegraph was kind enough to offer me and the Atlantic Council’s Josh Lipsky the chance to rebut. [Read the article at Coin Telegraph]

COVID-19 brought U.S. unbanked percentage to record low, FDIC says

Government COVID-related relief payments contributed to a drop in the number of unbanked households in the U.S. in 2021, according to the Federal Deposit Insurance Corp. (FDIC). Roughly 1.2 million more households are banked, compared with 2019 figures, with nearly half of newly banked households that received pandemic relief payments saying the payments contributed to their decision to open a bank account. But still an estimated 4.5% of Americans, representing 5.9 million households, lacked a bank or credit union account in 2021. [Read more at the FDIC]

SWIFT delays the start of ISO 20022 migration until March 2023

Since August 2022, all required ISO 2022 cross-border payments and reporting (CBPR+) capabilities have been deployed and institutions have been able to exchange messages on an opt-in basis.  However, in October the ECB decided to delay the Eurosystem ISO 20022 migration from November 21, 2022 to March 20, 2023, to ensure greater system stability and user readiness, as well as smooth transition to new platform. Hence, an overwhelming majority of SWIFT’s global community requested that SWIFT align the start of the global ISO 20022 migration for CBPR+ with the ECB’s updated timetable to ease implementation. [Read more at SWIFT]

PayPal Brings Back $2500 Penalty for Violations of Acceptable Use Policy

After claiming it was a mistake, PayPal has reinstated its $2500 penalty for each violation of its Acceptable Use Policy. Earlier. PayPal was lambasted for its authoritarian move and intolerance of free speech. While the wording of the policy has changed, it still gives PayPal the right to penalize users that violate the terms by “the promotion of hate, violence, racial or other forms of intolerance that is discriminatory.” While certain aspects can be easily defined, others – such as intolerance – can be subjective depending upon individual beliefs. [Read more at PayPal]

Fed skeptical about bank-issued stablecoins on open permissionless DLT networks

U.S. Federal Reserve Board (FRB) Vice Chair for Supervision Michael Barr shot across the bow of any bank plans to issue dollar-denominated stablecoins on open permissionless distributed ledger technology (DLT) networks. “It remains an open question whether banks can engage in such arrangements in a manner consistent with safe and sound banking and in compliance with relevant law… [Banks] may not be able to track who is holding their tokenized liabilities, or whether they are being used in risky or illegal activity. [Read more at the FRB]

Under-researched areas of CBDC

The Société Universitaire Européenne de Recherches Financières (SUERF) published a briefing paper that highlights some of the under-researched trade-offs in central bank digital currency (CBDC) design. [Read more at SUERF]

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.

The CBDC Think Tank is a New York-based technology- and vendor-agnostic digital currency knowledge-sharing hub for staff of central banks, international financial institutions (IFIs) and non-government organizations (NGOs). It runs webinars, workshops, and masterclasses to disseminate knowledge and facilitate communication. It also engages in advisory work, focusing on delivering impact that best aligns with the needs of its clients and the forward progress of human civilization. The CBDC Think Tank welcomes requests from central bank officials for CBDC advisory services.  [click here for more information].

Satoshi Capital Advisors is a New York-based, global advisory firm that works with central banks, governments, and the private sector to architect, implement, and operate varying initiatives. Satoshi Capital Advisors’ central bank work revolves around CBDC architecture and implementation, providing advisory services from research phase through to growth phase. Utilizing a product-market fit and technology agnostic approach to CBDC architecture and implementation enables Satoshi Capital Advisors to build tailored solutions, bespoke to local financial system nuances. Satoshi Capital Advisors welcomes requests from central bank officials for virtual and in-person CBDC workshops. [Click here for more information]

WhisperCash offers the first fully offline digital currency platform that has the same properties as physical cash. It can perform secure consecutive offline payments without compromising on security, privacy or accessibility. WhisperCash allows direct person to person offline payments without any server infrastructure or internet connectivity. It comes in various form factors including the self-contained credit card-sized “Pro” that sports an eInk screen and capacitive keyboard, and lasts for two weeks between recharges assuming a few transactions per day. [Click here for more information]

Kiffmeister’s #Fintech Daily Digest (20221027)

Some have asked me for a summary of my central bank digital currency (CBDC) position, but I’m not inclined to be so absolute and dogmatic about the topic, since it’s all so jurisdiction specific, but the Digital Euro Association (DEA) CBDC Manifesto comes pretty close to expressing my views on retail CBDC. Here it is in a nutshell:

  1. A retail CBDC should have a strong value proposition (SVP) and tangible benefits for citizens.
  2. A CBDC should provide the highest degree of privacy. In this context, a CBDC should supply technically guaranteed privacy by design and by default, without the need to trust the central bank to preserve privacy.
  3. A CBDC should not be designed in a way to do harm to society, e.g., via very negative interest rates, or via so-called programmable money that restricts the use of money for specific types of expenditures, or that expires after a certain amount of time.
  4. The development of a CBDC should follow a collaborative approach involving all stakeholders (central banks, financial institutions, associations, end-users, companies, researchers, etc.) and have a well-defined governance system. The design and development processes should be transparent, public, and open. Ideally, a CBDC should be open-source and use open-source technology to increase transparency.
  5. The CBDC should exhibit technical, regulatory and usage interoperability, both locally and globally.

For more detail and/or to sign it, if you agree with its principles, click here.

Kazakhstan to build central bank digital currency on BNB Chain

The National Bank of Kazakhstan (NBK) will test the Binance blockchain network BNB Chain for potential integration into the country’s Digital Tenge retail CBDC. This comes a week after the NBK completed a week of CBDC proof-of-concept tests, imitating an actual production environment with Digital Tenge wallets provided through local financial institutions’ interfaces, with 200 real central bank staffers and 4 merchants. [Read more about the BNB Chain testing here, and last week’s tests here]

Central Bank of Nigeria Marks First Anniversary of eNaira

This week, the Central Bank of Nigeria (CBN) commemorated the first anniversary of the launch of its eNaira retail CBDC, which was formally launched on October 25, 2021. The press release is notable, because until now, according to that official announcement in 2021, it was a pilot launch, so sometime in the last year it morphed into a full launch, which many of us (me included) suspected it was from the start, despite the use of the word “pilot”. [Read this week’s press release here and last year’s here]

UK Stablecoin Rules Approved by Lawmaker Committee

U.K. lawmakers agreed on new rules for stablecoins, as the government promised to consult on further crypto-asset regulations and a digital pound in coming weeks. The Financial Services and Markets Bill builds upon existing measures to broaden regulations of stablecoins and mentions “Digital Settlement Assets” (DSA) as a new term, moving away from the use of “crypto assets.” According to the U.K. government, “crypto assets use some form of distributed ledger technology (DLT),” whereas DSA includes stablecoins, “given their potential to develop into a widespread means of payment.” [Download the Financial Services and Markets Bill parliamentary discussions here]

Biden Administration Wants To Make It Easier To Seize Crypto Without Criminal Charges

“Buried deep in a 61-page recent report by the U.S. Attorney General, the Biden Administration called for a dramatic expansion in the federal government’s ability to seize and keep cryptocurrency. If enacted, the proposed changes would bolster both criminal forfeiture, which requires a conviction to permanently confiscate property, as well as civil forfeiture, which doesn’t require a conviction or even criminal charges to be filed.” [Read more on Forbes]

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.

The CBDC Think Tank is a New York-based technology- and vendor-agnostic digital currency knowledge-sharing hub for staff of central banks, international financial institutions (IFIs) and non-government organizations (NGOs). It runs webinars, workshops, and masterclasses to disseminate knowledge and facilitate communication. It also engages in advisory work, focusing on delivering impact that best aligns with the needs of its clients and the forward progress of human civilization. The CBDC Think Tank welcomes requests from central bank officials for CBDC advisory services.  [click here for more information].

Satoshi Capital Advisors is a New York-based, global advisory firm that works with central banks, governments, and the private sector to architect, implement, and operate varying initiatives. Satoshi Capital Advisors’ central bank work revolves around CBDC architecture and implementation, providing advisory services from research phase through to growth phase. Utilizing a product-market fit and technology agnostic approach to CBDC architecture and implementation enables Satoshi Capital Advisors to build tailored solutions, bespoke to local financial system nuances. Satoshi Capital Advisors welcomes requests from central bank officials for virtual and in-person CBDC workshops. [Click here for more information]

WhisperCash offers the first fully offline digital currency platform that has the same properties as physical cash. It can perform secure consecutive offline payments without compromising on security, privacy or accessibility. WhisperCash allows direct person to person offline payments without any server infrastructure or internet connectivity. It comes in various form factors including the self-contained credit card-sized “Pro” that sports an eInk screen and capacitive keyboard, and lasts for two weeks between recharges assuming a few transactions per day. [Click here for more information]

Kiffmeister’s #Fintech Daily Digest (20221026)

Central Bank of Turkey plans to pilot test a CBDC in 2023

According to Turkey’s Presidential Annual Program for 2023, the Central Bank of Turkey will start piloting a central bank digital currency (CBDC) in 2023. Many news services are reporting that a Digital Lira will be launched in 2023, but according to Google Translate the key passage in the Annual Program Budget Rationale (“kullanım testlerine başlanacaktır”) translates to “usage tests will begin” which sounds like a pilot to me. But it does sound like several proofs of concept (PoC) have been done (the Annual Program calls them “pilots”, but if they didn’t include “usage tests” then they’re PoCs by my definition. Also, wholesale CBDCs will be the subject of research, development and testing activities that will be carried out with banks. [Read more at the Turkish Presidency of Strategy and Budget]

Project mBridge: Connecting economies through CBDC

The BIS Innovation Hub’s (BISIH’s) Hong Kong Center and its partner central banks published the results of its pilot testing of its mBridge multi-CBDC (mCBDC) multi-currency cross-border transaction platform. Over six weeks in 2022, the platform was put to the test through a pilot involving real-value transactions among 20 commercial banks from four different jurisdictions. Over $12 million was issued on the platform, facilitating over 160 payment and FX payment-versus-payment (PVP) transactions totaling more than $22 million in value. [Read more at the BIS and for a nice summary, including a discussion of some of the challenges faced, see this CoinDesk article]

Singapore lays down the law for crypto trading and stablecoins

The Monetary Authority of Singapore (MAS) published two consultation papers proposing strict regulatory measures to reduce the risk to consumers from cryptocurrency trading while supporting the development of stablecoins as a credible medium of exchange. One of the papers is focused on reducing the risk to consumers from speculative trading in cryptocurrencies, requiring that digital payment token (DPT) service providers ensure proper business conduct and adequate risk disclosure. The other paper is focused on ensuring that stablecoins have a high degree of value stability, including imposing capital requirements on nonbank issuers. [Read more at the MAS]

Alipay enables transfers to WeChat users via QR codes

AntGroup’s Alipay added a feature that permits its users to transfer sums to WeChat users, bridging the two Chinese digital payments providers.  To perform a transfer, Alipay users first need to select the payment amount they would like to transfer. After that, the app generates a QR code that can be shared with counterparties via WeChat, QQ, Sina Weibo, or DingDing. The move follows the launch of anti-trust measures by the Chinese central government targeting the two payment platforms, as well as practices such as exclusive agreements with vendors and the use of big data to engage in discriminatory pricing. [Read more at the Paypers]

The macroeconomic impact of cryptocurrency and stablecoin economics

The World Economic Forum’s (WEF’s) Digital Currency Governance Consortium has published a summary of the earlier-published comprehensive analysis of the macroeconomic impact of cryptocurrency and stablecoins. The project had two objectives: (i) to project economic outcomes of crypto and stablecoins given various possible high-level regulatory paths and (ii) to arm policymakers and business leaders with the projections to inform decision-making. The rising concern around the potential spillover effects of crypto and stablecoins on the financial system was another impetus. [Read more at the WEF]

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.

The CBDC Think Tank is a New York-based technology- and vendor-agnostic digital currency knowledge-sharing hub for staff of central banks, international financial institutions (IFIs) and non-government organizations (NGOs). It runs webinars, workshops, and masterclasses to disseminate knowledge and facilitate communication. It also engages in advisory work, focusing on delivering impact that best aligns with the needs of its clients and the forward progress of human civilization. The CBDC Think Tank welcomes requests from central bank officials for CBDC advisory services.  [click here for more information].

Satoshi Capital Advisors is a New York-based, global advisory firm that works with central banks, governments, and the private sector to architect, implement, and operate varying initiatives. Satoshi Capital Advisors’ central bank work revolves around CBDC architecture and implementation, providing advisory services from research phase through to growth phase. Utilizing a product-market fit and technology agnostic approach to CBDC architecture and implementation enables Satoshi Capital Advisors to build tailored solutions, bespoke to local financial system nuances. Satoshi Capital Advisors welcomes requests from central bank officials for virtual and in-person CBDC workshops. [Click here for more information]

WhisperCash offers the first fully offline digital currency platform that has the same properties as physical cash. It can perform secure consecutive offline payments without compromising on security, privacy or accessibility. WhisperCash allows direct person to person offline payments without any server infrastructure or internet connectivity. It comes in various form factors including the self-contained credit card-sized “Pro” that sports an eInk screen and capacitive keyboard, and lasts for two weeks between recharges assuming a few transactions per day. [Click here for more information]

Kiffmeister’s #Fintech Daily Digest (20221018)

National Bank of the Republic of Kazakhstan launches CBDC proof-of-concept

The National Bank of the Republic of Kazakhstan (NBK) launched a one-week Digital Tenge central bank digital currency (CBDC) proof-of-concept (PoC) involving NBK staff and local merchants. (This is much like the National Bank of Ukraine 2019 PoC.) The NBK PoC will test basic payment scenarios (e.g., C2B, P2P), non-functional requirements, and programmability. For example, it will test special-purpose tokens on which consumer might purchase only from the “white list” of merchants or products, within particular time period etc. In parallel, the NBK is finalizing its research and development for offline and advanced smart contract deployment on its platform. [Read more on LinkedIn]

Updates:
Day 2: https://www.linkedin.com/posts/binur-zhalenov_digitaltenge-voucher-cbdc-activity-6988129761147408384-ygn9

Day 3: https://www.linkedin.com/posts/binur-zhalenov_digitaltenge-userjourney-anonymity-activity-6988542488122650624-hJWq

Day 4: https://www.linkedin.com/posts/binur-zhalenov_digitaltenge-cbdc-cybersecurity-activity-6988850914920919040-OSaK

Wrap-up: https://www.linkedin.com/posts/binur-zhalenov_retail-cbdc-digitaltenge-activity-6990950914220044288-KdBj

IOSCO address increasing risks and challenges from digitalization of retail marketing and distribution

The International Organization of Securities Commissions (IOSCO) published measures that members should consider when determining their policy and enforcement approaches to retail online offerings and marketing. Part of the risks IOSCO identified include using gamification and other psychological techniques to lure new persons into investing in virtual assets. The IOSCO sees the use of celebrities or influencers to market projects as a major threat, with the report noting that these “finfluencers” can wield a great degree of control for new investors in the space. [Read more at IOSCO]

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 (20221025)

It’s been a quiet few days, which is why I haven’t published a Digest since Friday. Perhaps this quietness is on account of the Diwali Festival of Lights? In any case, Happy Diwali to all of my Hindu followers!

Digital-Currency Plan Falters as Nigerians Defiant on Crypto

“A year after launching Africa’s first digital currency, Nigeria’s central bank is turning to the nation’s three-wheeler taxi operators to speed the adoption of the eNaira, as regulators across the world scrutinize its every move. It’s offering a 5% discount to drivers and passengers of the motorized rickshaws who use the eNaira. It’s the latest attempt to kickstart the central bank digital currency (CBDC), which has so far attracted just one in 200 Nigerians… The relatively low adoption up until this point, while not uncommon for countries in the early phases of launching a digital currency, may be caused by insufficient incentives for commercial banks or mis-targeted consumer messaging, according to John Kiff, managing director of the CBDC Think Tank.” [Read more at Bloomberg]

Wealthsimple first FinTech startup approved by Bank of Canada for direct settlement

Wealthsimple has become the first non-bank or credit union to be approved by the Bank of Canada for a direct settlement account. This means that the FinTech startup will not have to rely on a third-party financial institution to process transactions when Real-Time Rail (RTR) launches in Canada, as it will have direct access. However, for the second time, Payments Canada has delayed the RTR launch, saying it needs more time to validate and test the system’s components and end-to-end integration, and it could be a long wait. [Read more on Wealthsimple’s LinkedIn page]

BIS, UN, Hong Kong Monetary Authority concludes tokenized green bonds trial

The Bank for International Settlements (BIS), the Hong Kong Monetary Authority and the United Nations Climate Change Global Innovation Hub presented the results of their Genesis 2.0 initiative. The project aims to explore the use of blockchain, smart contracts and the Internet of Things (IoT) for a global environment cause. The project resulted in two prototypes of tokenized green bonds, developed by two separate international teams, which are “de facto verified carbon credits” recognized by either international, national or other verification mechanisms. [Read more at the BIS]

Plaid’s 2022 Consumer Survey: The Fintech Effect

Plaid surveyed more than 4,000 consumers in the UK and US as part of its annual Fintech Effect report. It found that 80% use some type of digital financial tool, down from 88% last year – a decrease that Plaid attributes to adoption falling away among ‘baby boomers’, who report lower levels of fintech usage this year compared to 2021. But adoption is still significantly higher than in 2020, when 58% of consumers reported using some sort of fintech tool. [Read more at Plaid]

Sustaining digital payments growth: Winning models in emerging markets

According to McKinsey, digital payment transactions grew rapidly in emerging markets during the past two years, as the pandemic accelerated shifts to contactless payments and e-commerce. E-wallets proliferated, real-time account-to-account transfers took off, and industry players formed new partnerships to access capabilities and broaden their customer base. Some of the fastest growth occurred in Africa and Southeast Asia, where low banking penetration gives payments providers opportunities to capture untapped potential and reach underserved populations.

Margins for digital payments providers are already wafer thin and are likely to be eroded further by competitive intensity and declining fees. In many cases, payments are more a means to cross-sell other products than a profit center in their own right. Some services, such as peer-to-peer (P2P) payments, are usually offered to users for free in most markets. In Brazil, for instance, Pix is pushing margins down by offering P2P payments for free and person-to-merchant (P2M) payments at low cost. [Read more at McKinsey]

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.

The CBDC Think Tank is a New York-based technology- and vendor-agnostic digital currency knowledge-sharing hub for staff of central banks, international financial institutions (IFIs) and non-government organizations (NGOs). It runs webinars, workshops, and masterclasses to disseminate knowledge and facilitate communication. It also engages in advisory work, focusing on delivering impact that best aligns with the needs of its clients and the forward progress of human civilization. The CBDC Think Tank welcomes requests from central bank officials for CBDC advisory services.  [click here for more information].

Satoshi Capital Advisors is a New York-based, global advisory firm that works with central banks, governments, and the private sector to architect, implement, and operate varying initiatives. Satoshi Capital Advisors’ central bank work revolves around CBDC architecture and implementation, providing advisory services from research phase through to growth phase. Utilizing a product-market fit and technology agnostic approach to CBDC architecture and implementation enables Satoshi Capital Advisors to build tailored solutions, bespoke to local financial system nuances. Satoshi Capital Advisors welcomes requests from central bank officials for virtual and in-person CBDC workshops. [Click here for more information]

WhisperCash offers the first fully offline digital currency platform that has the same properties as physical cash. It can perform secure consecutive offline payments without compromising on security, privacy or accessibility. WhisperCash allows direct person to person offline payments without any server infrastructure or internet connectivity. It comes in various form factors including the self-contained credit card-sized “Pro” that sports an eInk screen and capacitive keyboard, and lasts for two weeks between recharges assuming a few transactions per day. [Click here for more information]

Kiffmeister’s #Fintech Daily Digest (20221021)

CBDCs Can Work With Stablecoins, Central Bank Trial Finds

A new experiment by the Bank for International Settlements (BIS) Innovation Hub and Hong Kong Monetary Authority (HKMA) shows central bank digital currency (CBDC) can work with private stablecoins, even if intermediary operators go bust. Project Aurum created a technology stack comprised of a wholesale interbank system and a retail e-wallet system, setting up two different types of tokens: intermediated CBDC and stablecoins backed by CBDC in the interbank system. While intermediated CBDC is a direct liability of the central bank, CBDC-backed stablecoins are liabilities of the issuing bank, with its backing assets held by the central bank. [Read more at the BIS]

USDC adoption is lagging outside of the United States

Coinbase says the adoption of USD Coin has been “more conservative” outside of the United States, which it believes is a result of international currency conversion fees. The U.S. exchange said there is currently three times more USDC bought with U.S. dollars as compared to other currencies. The exchange said it is aiming to “build more on-ramps for users to access USDC,” and will be waiving fees for all customers who buy or sell USDC using any fiat currency. [Read more at Coinbase]

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 (20221020)

BoE looking for help with its offline CBDC research and PoC work

The Bank of England is looking for a specialist supplier to help them with their offline central bank digital currency (CBDC) research and proof of concept (PoC) work. The process of applying is a bit wonky because thy’ve delegated it to the UK government’s digital supplier procurement system, and if you or your firm are not already on their supplier list, tough luck. And tough luck for the Bank too, because the “supply” of offline digital currency experts is rather thin, and most probably aren’t already be on the list. [Read the RFP here and the list of suppliers here]

Israeli government to trial blockchain bonds with stock exchange TASE

The Israeli Ministry of Finance and the Tel Aviv Stock Exchange (TASE) announced plans for a proof of concept to issue government bonds using blockchain. Protocol developer VMWare and custody provider Fireblocks will be part of this Project Eden. The blockchain system will be developed by TASE and involve live tests with local and international banks, with settlement using digital currency in an Israeli state e-wallet. [Read more at Ledger Insights]

Nubank launches its own cryptocurrency running on Polygon

Brazil’s Nubank is launching Nucoin, its own cryptocurrency on the Polygon blockchain network in the first half of 2023. It will be distributed free of charge to customers as the basis for the creation of a rewards program in Brazil. Polygon is an Ethereum scaling blockchain that enhances the functionality of Ethereum while retaining the base layer’s security and decentralization. [Read more at Nubank]

UK to introduce legislation conferring legality on digital documents on blockchain

The UK government has introduced has introduced a new bill into Parliament that bestows legal status on paperless documentation used in international trade. Under the Electronic Trade Documents Bill, digital trade documents will be put on the same legal footing as their paper-based equivalents to give UK business more choice and flexibility in how they trade. The Bill will reduce admin costs, make it easier for British firms to buy and sell internationally, and cut processing times for electronic documents to 20 seconds. [Read more on the UK government website]

API standards for data-sharing (account aggregator)

This BIS Consultative Group on Innovation and the Digital Economy (CGIDE) report presents three models for data sharing: centralised, decentralised and trust – and develops the user interactions and their data flows. Additionally, the report presents account aggregator functionality and possible arrangements for implementation in the open finance ecosystem. Finally, it shows the successful implementation of a demo based on a microservices architecture that promotes high availability, scalability and resilience. [Read more at the BIS]

Tornado Cash Is not free speech. It’s a Golem

Henry Farrell and Bruce Schneier argue that tying free speech arguments to the cause of decentralized autonomous organizations (DAOs) like Tornado Cash imperils some of the important free speech victories that were won in the past. But the risks for everyone might be even greater if that argument wins. A world where democratic governments are unable to enforce their laws is not a world where civic spaces or civil liberties will thrive. [Read more at Lawfare]

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.