Day: October 16, 2023

Kiffmeister’s #Fintech Daily Digest (20231018)*

~ kiffmeister

Eurosystem proceeds to next phase of digital euro project

The European Central Bank (ECB) digital euro project will move to the “preparation” phase on November 1, 2023, with the completion of the “investigation” phase launched in October 2021. Based on the findings from this phase, a digital euro would be widely accessible, free for basic use and available online and offline. It would offer the highest level of privacy and allow users to settle payments instantly in central bank money. It could be used from person to person, at the point of sale, in e-commerce and in government transactions. The preparation phase will initially last two years, and involve finalizing the digital euro rulebook and selecting providers that could develop a digital euro platform and infrastructure. It will also include testing and experimentation. [Read more at the ECB including the investigation phase report]

Digital euro: ensuring the highest data protection and privacy standards

The European Data Protection Board (EDPB) and the European Data Protection Supervisor recommended changes to European Union (EU) draft legislation for a digital euro in order to boost privacy standards. They “strongly recommend” a “privacy threshold” for online transactions so that neither offline nor online low-value transactions are traced for financial integrity purposes. They also question the need for a single access point to verify that the amount of digital euros held by each user does not exceed the maximum amount allowed, arguing that “technical measures allowing for a decentralized storage of these identifiers are feasible, as an alternative”. [Read more at the EDPB]

ECB launches pre-call for wholesale CBDC trial participation

The ECB has launched a survey targeting potential participants in its trials and experiments for central bank money settlement of wholesale financial transactions recorded on distributed ledger technology (DLT) platforms. The plan is to test three settlement solutions, including two that link to existing euro payment systems (from the central banks of Germany and Italy) and one wholesale central bank digital currency (CBDC) developed by the Banque de France. [Read more at the ECB]

CPMI sets out harmonized ISO 20022 data requirements

The Bank for International Settlements (BIS) Committee on Payments and Market Infrastructures (CPMI) published harmonized ISO 20022 data requirements that establish a consistent minimum set of messaging standards for more efficient processing of cross-border payments. They will facilitate the straight through processing of end-to-end payments, making them faster and more reliable. The CPMI will continue its engagement with payment system operators and financial institutions to foster the implementation of the harmonized data requirements by end-2027. [Read more at the BIS]

Linking fast payment systems across borders

The CPMI published a consultative report on initial considerations on governance and oversight for fast payment system (FPS) interlinking, one of the most promising solutions for enhancing cross-border payments. However, agreeing on workable governance and oversight arrangements can be especially challenging due to the multi-jurisdictional, cross-border and/or cross-currency nature of these arrangements. The interim report describes 10 initial considerations, resulting from a series of workshops with global stakeholders that was undertaken by the CPMI to better understand the sensitivities, complexities and experiences in this area. [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.

Kiffmeister’s 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 (only) if you work at a central bank, ministry of finance or international financial institution (e.g., the BIS, IMF, OECD, World Bank) and 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]

Kiffmeister’s #Fintech Daily Digest (20231016)*

~ kiffmeister

Before jumping into today’s Fintech news I’d like to bring your attention to the weekly CBDC Chronicles report from the Digital Euro Association’s (DEA’s) Conrad Kraft. He reliably picks and deep dives into the most important central bank digital currency (CBDC) related news [Read this week’s edition here]

A tokenized future for the Australian financial system?

Reserve Bank of Australia (RBA) Assistant Governor Brad Jones provided an update on the RBA’s central bank digital currency (CBDC) proof-of-concept work. First, the project highlighted a range of areas where CBDC could add value in wholesale payments, including by facilitating atomic settlement in tokenized asset markets. Second, it highlighted opportunities for a wholesale CBDC to act as a complement to new forms of privately issued digital money, such as tokenized bank deposits and asset-backed stablecoins. Third, further applied research is needed to better understand operational design issues for new forms of ledgers. [Read more at the RBA]

Australia proposes new licensing regime for crypto exchanges

Australia’s Treasury announced plans to introduce a comprehensive licensing regime for crypto exchanges designed to enhance consumer protection, bring clarity to the digital asset sector, and pave the way for the nation to align with global regulatory standards. Under the proposed framework, crypto exchanges operating in Australia will have to obtain an Australian Financial Services license (AFSL) from the Australian Securities and Investments Commission (ASIC). This regulatory measure will be applicable to exchanges that hold more than AUD 1,500 of any single client’s assets or have total assets exceeding AUD 5 million. [Read more at the Australian Government Treasury]

Retail CBDC and the social costs of liquidity provision

The Centre for Economic Policy Research (CEPR) published an article by Dirk Niepelt that makes a case that a CBDC-based financial system can be a less costly than current two-tier regime that features non-banks that transact with bank deposits, and banks that settle payments with central bank reserves. The slightly lower direct costs of fractional reserve banking are more than offset by its “social” costs such as the fiscal resources and regulation needed to address the former’s inherent frictions and instability. Furthermore, the paper argues that the interest rate on the digital currency should differ from zero and from the rate of interest on reserves. [Read more at the CEPR]

*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.

Kiffmeister’s 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 (only) if you work at a central bank, ministry of finance or international financial institution (e.g., the BIS, IMF, OECD, World Bank) and 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]