FSB details actions for the next phase of the G20 roadmap for enhancing cross-border payments

The Financial Stability Board (FSB) published a report setting out priority actions for achieving the G20 targets for enhancing cross-border payments. They focus on three interrelated priority themes; (i) payment system interoperability and extension, including the extension of real-time gross settlement (RTGS) operating hours and access policies and improving payment system interoperability, (ii) the promotion of an efficient legal, regulatory and supervisory environment for cross-border payments while maintaining their safety, security and integrity, and (iii) facilitating cross-border data exchange and increasing the use of standardized messaging formats. [Download the report here]

On the fragility of DeFi lending

The Bank of Canada (BoC) published a paper that develops a dynamic model of decentralized finance (DeFi) in which borrowing and lending are backed and overcollateralized by crypto-assets and contract terms are pre-specified and rigid. It identifies a price-liquidity feedback loop in which expectations of future higher lending volumes and prices lead to more lending and higher prices in the current period. This feedback loop and smart contract rigidity leads to multiple self-fulfilling equilibria where DeFi lending and asset prices move with market sentiment. This highlights difficulty of achieving stability and efficiency in a DeFi environment without a liquidity backstop. [Read more at the BoC]

IMF high-level technical assistance report on Jordan’s retail CBDC exploration

A technical report on the Central Bank of Jordan’s (CBJ’s) retail central bank digital currency (CBDC) explorations briefly appeared on the IMF’s web page.. It was taken down before I could download it, but AgenParl news service published the abstract: “The report analyzes the retail payments markets of Jordan to identify pain points that retail CBDC (rCBDC) could address. It finds that retail payment systems in Jordan are highly integrated, enabling customers to make interoperable transactions between banks and non-bank Payment Service Providers. The country’s cross-border remittance market is competitive, but may benefit from the reduced transactions cost associated with rCBDC. Despite generally accessible and appropriate product offerings and an enabling environment, various barriers prevent customers from extensively using digital means of payment. Hence, rCBDC might create an opportunity to overcome these barriers, thus making a cross-border rCBDC worth consideration. However, the CBJ should rigorously evaluate benefits against risks and costs before forging ahead. Meanwhile, the CBJ should develop capacity to address technology, cybersecurity, financial integrity, and legal issues.” [Read more at AgenParl]

Update: the Jordan CBDC report is now available here!

Upcoming conferences, webinars and speaking engagements:

• I’ll be providing a (probably virtual) update on global central bank digital currency (CBDC) developments at the Digital Euro Association Digital Euro Conference on March 31 in Frankfurt. [Register here]
• I’ll be moderating a panel on “what happens when the lights go out…different schemes for offline functionality” at the in-person Digital Currency Conference (DCC) in Mexico City on May 18. [Register 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 Sovereign Official Digital Association (SODA) is a technology-agnostic firm offering advisory services at the intersection of central banking, digital finance and the web3 industry, aiming to make public digital money a reality. SODA believes institutions in the existing financial ecosystem should have access to the tools and resources they need to move from discussion to action. SODA offers ‘real life’ use cases to help test digital money and drive adoption as central banks and other public institutions explore the future of a more financially inclusive world powered by interoperable blockchain-based networks. SODA would love you to join us on this journey – please get in touch (chris@sodapublicmoney.org).

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]