2nd Bank of Canada and Sveriges Riksbank conference on CBDC economics
The Riksbank will host a joint conference with the Bank of Canada on the “Economics of Central Bank Digital Currency (CBDC)” November 16-17, 2023 in Stockholm. In addition to presentation of academic papers on CBDC and payment innovations, the conference will feature a keynote address by Franklin Allen (Imperial College London), a distinguished policy panel, and a poster session. Participation in the conference is by invitation only. [Download the call for papers at the Riksbank]
Demand for tokenized US Treasury securities soars
Demand for tokenized versions of U.S. Treasury bonds is soaring as rising yields in traditional financial markets attract fresh capital from crypto investors. The combined market capitalization of tokenized money market funds nears $500 million, and has quadrupled in size this year. Franklin Templeton’s Franklin OnChain U.S. Government Money Fund (FOBXX) – which gives a BENJI token on the Stellar blockchain representing one share – grew to $276 million in assets at end-April. Ondo Finance’s OUSG and Matrixdock’s SBTB tokenized short-term Treasury security products , have grown to $132 million and $72 million of funds so far, respectively. [Read more at CoinDesk]
The digital euro: a precautionary device, not a deus-ex-machina
The Leibniz Institute for Financial Research Sustainable Architecture for Finance in Europe (SAFE) published a paper that concludes that the risks and imponderables do not favor the launch of a digital euro if that decision had to be made now. However, there may be future circumstances in which having a CBDC ready for use may be useful. For example, there could be an unexpected collapse in the availability of banknotes or sudden switches in consumer preferences towards payment instruments which current infrastructures cannot easily handle with the available technologies. Or we could experience phases of financial instability requiring the central bank to back up the private sector in order to preserve the functionality of the payment system. Or, there could be strategic security conditions necessitating more state-driven payment infrastructures. All these are unlikely scenarios, but not impossible ones, which would lead to the need for central banks to step in, perhaps in a short time. Therefore, preparing is a good thing, even if the odds of its usefulness in normal conditions are slim. [Read more at SAFE]
Payments are a utility and critical infrastructure
David Birch calls radical rethinking about payment infrastructure , like allowing more direct access to the pipes, provide digital fiat (dollars with an API) as a public good and allow non-credit creating payment banks/ institutions/ utilities to implement the transfers in space as a utility bringing value together (electronic money and digital cash) to put in place robust, inclusive and sustainable pipes for the rest of the economy to use. Let banks focus on creating credit and let them find other ways to stay in the transaction loop. [Read more on David Birch’s blog]
Project Leap: Quantum-proofing the financial system
Earlier this month (May 2023) the Bank for International Settlements (BIS) together with the Banque de France and Deutsche Bundesbank, launched Project Leap to build quantum-resistant IT environments for the financial system. It will test the implementation of post-quantum cryptographic protocols in central bank processes, and help to advance the central banking community’s knowledge of post-quantum cryptography. A concluding report and the accompanying technical architecture will be published. [Read more at the BIS]
*For those interested in intra-day updates, check out my searchable Diigo Fintech developments database, which is also a good place to go to query for past developments: https://www.diigo.com/user/kiffmeister/ART.
Upcoming conferences, webinars and speaking engagements:
- I’ll be participating in Currency Research’s in-person Central Bank Payments Conference and Global Payments Summit in Cape Town from June 26 to 30. [Register here and here respectively]
- I’ll be lecturing at the Digital Euro Association (DEA) Digital Money Academy on July 27, 2023. [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]