Digital euro – Prototype summary and lessons learned

The European Central Bank (ECB) published a summary of the results of its July 2022 to February 2023 prototyping exercise to test how design choices for the digital euro could be technically implemented and integrated into the existing European payments landscape. The tests showed that it is possible to smoothly integrate them, while leaving ample scope for innovative features and technologies. The findings also confirmed that a digital euro could in principle work both offline. [Read more at the ECB]

Digital euro technology market research outcome report

The ECB also reported on its market research on potential technical solution providers for a digital euro. It was aimed at better understanding the level of knowledge in the market and the existing experience in building solutions and identifying suitable technologies to potentially implement a digital euro. [Read more at the ECB]

ESRB publishes report on cryptos and decentralized finance

The European Systemic Risk Board (ESRB) published a report outlining the systemic implications of crypto markets and proposing policy options to address the risks stemming from crypto-assets and decentralized finance (DeFi). It finds that crypto markets have few interlinkages with the traditional financial sector and the real economy, and none of those links are currently significant. However, given the exponential growth and high volatility of cryptos, they need to be closely monitored as they may come to pose systemic risks. [Read more at the ESRB]

An introduction to Web3 with implications for financial services

The Federal Reserve Bank of Atlanta published a paper by the University of California, Berkeley’s Christine Parlour that describes the elements of Web3 including blockchains and tokens. (“Web3” is used to describe the next iteration of the internet in which decentralized services are automated on blockchains.) It describes the largest DeFi protocols and some specific services where blockchain and tokens can be used. The paper concludes with a brief discussion of some regulatory challenges. [Read more at the Atlanta Fed]

*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]