Visa proposes account abstraction for recurring auto payments
Visa published a paper that outlines how to write a smart contract application for a self-custodial wallet that could allow a user to setup a programmable payment instruction that can push funds automatically from one self-custodial wallet account to another at recurring intervals, without requiring the user’s active participation each time. This solution taps into a concept known as “Account Abstraction” (AA), a developer proposal currently being explored within the Ethereum ecosystem. The idea behind AA is to make user accounts on Ethereum function more like smart contracts by allowing a user to have programmable features embedded into their wallets. [Read more at Visa]
Currently, there are two types of accounts on the Ethereum network: Externally Owned Accounts (EOA), controlled by a private key, and Contract Accounts (CA), which are essentially smart contracts. EOAs can initiate transactions, but CA’s cannot. However, by using AA, it is possible to create a smart contract that can initiate transactions on behalf of an EOA, enabling the creation of a self-custodial wallet that can make automatic recurring payments. AA combines user accounts and smart contracts into a single type of account on the Ethereum blockchain. This is possible by allowing for the creation of validity rules for individual transactions. [Read more at Coin Desk]
Towards legal interoperability of retail CBDCs: a comparative law perspective
The European Central Bank (ECB) published a collection of papers presented at the September 5-6, 2022 European System of Central Banks (ESCB) Legal Conference, including three on the legal aspects of central bank digital currency (CBDC) interoperability. A paper by Jess Cheng and Joseph Torregrossa discusses the concept of “legal interoperability” in the domestic payment system and its relevance to the retail CBDC context, particularly as the necessary legal foundation for transferability and convertibility. The second by Panagiotis Papapaschalis makes the case for exposing and overcoming technical and legal obstacles to interoperability ex-ante and early on, rather than trying to tackle them ex post, i.e. only when the various, diverging, CBDCs have gained momentum. The third paper, by Seraina Grünewald, focuses particularly on the prospects and challenges for the legal interoperability of a digital euro. [Read more at the ECB]
ECB finds strong demand for both cash and digital payments
Cash is still the most frequently used means of payment at the point of sale, but its share is declining according to the latest study on the payment attitudes of consumers in the euro area, published by the ECB. Cash was used for 59% of point-of-sale transactions in 2022, down from 72% in 2019. It is the means of payment most often used for small-value payments in stores and for person-to-person transactions. A majority (60%) also consider it important to have cash as a payment option. Consumers perceive cash as helpful to remain aware of their expenditures, to protect their privacy and to allow transactions to be settled immediately. [Read more at the ECB]
UAE to launch instant payment platform in 2023
In the first quarter of 2023, the Central Bank of the United Arab Emirates (CBUAE) will start phasing in an Instant Payment Platform with a pilot group of licensed financial institutions. The initiative will enable payments processing and fund transfers in the UAE both around the clock and in real time. The new platform will enable the provision of the next generation of payment services to UAE financial institutions and consumers. [Read more at the CBUAE]
Crunchfish ready to start Digital Cash pilot with Indian banks
Crunchfish in partnership with HDFC Bank and one additional Indian bank have been working together to develop a solution for offline retail payments that will be demonstrated in a pilot to Reserve Bank of India (RBI) in their Regulatory Sandbox program. The project, if successful, will provide the basis for RBI’s guidance and regulatory support in providing offline retail payments, based on Crunchfish Digital Cash platform, to the payment ecosystem of India. [Read more at Crunchfish]
Five ways you can use Bitcoin Lightning today
etonec continued its series of articles on the Lightning Network and Bitcoin Lightning. In the latest article, it focuses on payments in retail, hospitality, e-commerce, as well as donations, cross-border payments, streaming payments, and financial inclusion. The advantages of payments via the Lightning Network are primarily the high transaction speed, direct confirmation and settlement of payments, as well as the marginal transaction fees and a high degree of scalability. As a result, applications with very small payment amounts (“nano-payments”) and a high number of transactions can be achieved in a technically efficient manner. [Read more at etonec]
Digitalization, financial knowledge and financial decisions
La Banca d’Italia published a survey-based paper that analyzed the relationship between digitalization, financial knowledge and financial decisions. It found that digital skills are a useful complement to financial skills in monitoring expenses and therefore to saving money. Moreover, such skills are also related to a more favorable attitude towards digital finance. With the same level of financial knowledge, digital skills do not however affect investment decisions. Finally, there is a significant gender gap, at the expenses of women, in terms of both digital skills and financial knowledge. [Read more at Banca d’Italia]
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]
