India to Start Retail CBDC Pilot in Four Cities With Four Banks
The Reserve Bank of India (RBI) will start pilot testing its digital rupee retail central bank digital currency (CBDC), on December 1, 2022 in Mumbai, New Delhi, Bengaluru and Bhubaneswar with the initial participation of four banks: State Bank of India, ICICI Bank, Yes Bank and IDFC First Bank, later extending to nine more cities and another four institutions. The pilot will be conducted in a closed user group of participating customers and merchants. The CBDC will be issued in the same denominations currently used for notes and coins. Payments to merchants will be made using QR codes and, like cash, the digital rupee will not earn any interest. [Read more at the RBI]
National Bank of Ukraine releases draft concept for digital hryvnia
The National Bank of Ukraine (NBU) presented a draft concept for its potential e-hryvnia CBDC. It considers three design options. The first would be a retail CBDC with smart contract functionality to implement targeted government (G2P) payments. The second option envisions what sounds like a wholesale e-hryvnia for usage in operations related to virtual asset operations, including on crypto exchanges. The third option include cross-border payments functionality, although it’s not clear that this is being looked at at the retail or wholesale level. [Read more at the NBU]
Stablecoins and their risks to financial stability
The Bank of Canada [BoC] published a paper on the risks stablecoins could pose to the financial system. It argues that the stabilization mechanisms of stablecoins give rise to the risk of confidence runs, which can propagate to broader crypto-asset markets and the traditional financial sector. It also argues that stablecoins can contribute to financial stability risks by facilitating the buildup of leverage and liquidity mismatch in decentralized finance (DeFi). Such risks cannot be addressed by ensuring the price stability of stablecoins alone. Finally, it explores the potential implications of stablecoins for the current system of bank-intermediated credit and for monetary policy. [Read more at the BoC]
Brazil’s central bank to release Pix’s protocols to other countries for free
The President of Banco Central do Brasil (BCB), Roberto Campos Neto, reportedly said that the central bank would release Pix’s technology to other countries. Launched by the BCB in 2020, Pix allows for instant, free, and immediate payments, and as of July 2022, more than 478 million passwords were registered on Pix. This system has been widely adopted in the country due to its simplicity and 24/7 availability. [Read more at LatamList]
Mr. Neto also reportedly introduced some novel ideas that the central bank has for a possible CBDC, including the integration of the digital real with traditional and decentralized financial structures and institutions. He also showed off a “super app” that will allow customers to hold stablecoins and the CBDC, and showcased the connection the system will have with the already available PIX payments network. [Read more at Bitcoin.com]
BlockFi files for bankruptcy protection, set to sue Sam Bankman-Fried over collateral
Crypto lender BlockFi and eight affiliates filed for Chapter 11 bankruptcy protection in the U.S. district of New Jersey on Monday, the latest casualty in the implosion of the FTX cryptocurrency exchange this month. BlockFi owes more than $1 billion to its three biggest creditors, the largest being Ankura Trust Company, followed by FTX US, and an undisclosed company. BlockFi has $256.9 million in cash on hand, which is expected to provide sufficient liquidity to support certain operations during the restructuring process,” according to the filing. [Read more at Forkast News]
JPMorgan, Other Banks in Talks to Reimburse Scammed Zelle Customers
US banks are reportedly exploring ways to get consumers to trust the fast payments system Zelle, which is jointly owned by several financial institutions, by standardizing the refund procedure. They are discussing a “playbook” on how to refund customers and each other for illegitimate transfers. While Zelle operator Early Warning Services maintains fraud and scam claims make-up less than 0.1% of payments, scammers often use Zelle to trick users into sending them money “under the guise of customer support.” Banks are required to refund customers for transactions they didn’t authorize, but there is no such protection for customers who are duped into sending money. [Read more at the Wall Street Journal]
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.
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]
