Bank of Namibia consultation paper on central bank digital currency (CBDC)
The Bank of Namibia (BoN) published a consultation paper on central bank digital currency (CBDC). It notes that its degrees of freedom is likely to be influenced by Namibia’s Common Monetary Area (CMA) membership, with the South African Rand co-circulating alongside the Namibia Dollar as legal tender in Namibia. The options open to Rand holders are likely to also impact the options that the BoN would give Namibia Dollar holders. Hence, the CBDC direction taken by South African Reserve Bank is likely to have an impact on the BoN’s decisions in this regard. Consultations and collaborations between the CMA member countries are being held to push for and develop as far as possible, a common view and approach on CBDCs that will serve all the CMA countries optimally. [Read more at the BoN]
Curb your enthusiasm: The Fintech hype meets reality in the remittances market
The IMF published a paper that investigates claims that the remittances market is on the verge of being disrupted by Fintechs. As remittances are considered too costly and incumbent remittance service providers inefficient, opaque, and outdated. The paper concludes that, contrary to expectations, instead of disrupting incumbents Fintechs have increasingly been entangled with them. Therefore, not only there is no evidence of disruption, but it is unlikely to occur in the foreseeable future. Even so, the paper argues that Fintechs play an important role in the remittances market. Richard Turrin provides an excellent summary of the paper on LinkedIn. [Download the paper at the IMF]
Rising Tether loans add risk to stablecoin, crypto world
The Wall Street Journal published an article that claims that Tether has increasingly been lending its own USDT stablecoins to customers rather than selling them for hard currency upfront. “The shift adds to risks that the company may not have enough liquid assets to pay redemptions in a crisis.” Tether says it does indeed make short-term USDT loans to carefully vetted customers, but they are required to post “lots of extremely liquid” collateral, which could be sold for dollars if borrowers default. About 9% of USDT’s backing assets are comprised of such secured loans, according to Bloomberg’s Matt Levine. [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.
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