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]