Project Mariana: cross-border exchange of wholesale CBDCs using automated market-makers
The Bank for International Settlements (BIS) published an interim report on Project Mariana, which investigates combining FX trading and settlement in cross-border transactions into a single instantaneous step using automated market makers (AMMs) and wholesale central bank digital currencies (CBDCs) to eliminate credit and settlement risk. The project also examined cross-border interoperability using wholesale CBDC based on a uniform technical standard, as a way to future-proof CBDC developments. In addition, Mariana investigated asset mobility between different blockchain-based networks using bridges. [Read more at the BIS]
Central bank digital currency global interoperability principles
The World Economic Forum (WEF) published a report that analyses CBDCs from a regional perspective, identifying unique aspects and areas of alignment among jurisdictions. It highlights key CBDC principles that will facilitate interoperability with various types of payment systems, technical standards, regulatory standards and legacy payment architecture and infrastructure, that will allow participants in different systems to conduct, clear and settle payments or financial transactions across systems without participating in multiple systems. The report calls for public-private cooperation, regulatory consistency, innovation and participation in standards development. [Read more at the WEF]
Making it through the (crypto) winter: facts, figures and policy issues
The Bank of Italy published a paper on the challenges crypto-asset regulation faces, as well as the drivers of the most recent regulatory developments, highlighting remaining open issues. It warns that conventional regulatory approaches that rely on entity-based rules will leave some gaps. For example, they may not fully address decentralized finance (DeFi) activities because of their non-traditional legal entity structures, decentralized governance, smart-contracts, and the anonymity of persons in charge. The report calls for an approach based on the combination of legislation and soft regulation, with the advantages of flexibility, dynamism, and pragmatism. [Read more at the Bank of Italy]
Oxbridge Re raises $2.4m for sidecar via DeltaCat Re tokenized reinsurance securities
Cayman Islands-based Oxbridge Re sold $2.4 million DeltaCat Re tokenized reinsurance securities, representing fractionalized interests in reinsurance contracts written by its Oxbridge Re NS reinsurance sidecar. They are tokenized on the Avalanche blockchain. Sidecars are a limited-life special purpose vehicle funded by capital market participants and sponsored by a reinsurer from which it derives its business or quota share. The sidecar assumes a percentage of the ceding reinsurer’s underwriting risk in exchange for a similar percentage of the associated premiums. [Read more at Artemis] and for more on sidecars and other insurance risk transfer vehicles see my 2020 Pension Research Council paper]
*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 Global Payments Summit in Cape Town from June 28 to 30. [Register here]
- 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]
