Sveriges Riksbank: Political decisions needed urgently so that everyone can pay
Sveriges Riksbank responded to the Parliamentary Payment Inquiry report that was published in March 2023. It agreed with the report’s conclusion that too many people lack access to both digital and cash payments and that the state needs to take further measures to make digital systems more accessible, less vulnerable and more reliable. Legislation on cash needs to be tightened up so that retailers are obliged to accept cash as payment for essential goods, with exceptions, such as for smaller businesses. Also, banks should offer payment accounts with limited functionality. However, the Riksbank considers that the Inquiry has not gone far enough in its proposals for a future state role in the payment system and that, for example, legislative work on a possible e-krona should begin immediately. And although the Riksbank agrees with the Inquiry’s proposals on state guarantees for offline card payments, regulatory push and technical standards are also required. [Read more at the Riksbank]
Digital Pound consultation received over 50,000 responses
In his final speech as Deputy Governor for Financial Stability, Jon Cunliffe revealed that the Bank of England (BOE) and HM Treasury (HMT) central bank digital currency (CBDC) consultation paper attracted over 50,000 responses. The majority expressed general, high-level concerns about privacy, programmability and the decline of cash. According to the paper, users of a digital pound would have the same level of privacy that they enjoy today when making electronic payments, and the BOE would not see people’s data. Also, neither government nor the BOE would program a digital pound or constrain the uses to which it could be put. It would be for private sector firms to develop and offer, for user consent, payment services involving greater programmability. As regards cash, the government recently legislated to ensure the availability of physical cash to those who prefer to use it and the BOE has made clear that it will provide physical cash as long as there is any demand for it. [Read more at the BOE]
Tanzania mobile money levy impact assessment
The GSMA published an assessment of the negative impact of levies on mobile money transactions in Tanzania introduced in July 2021. This levy, which amounted to up to 5% of transaction value, led to a sharp decline in the volume of transactions. The levy was reduced in September 2021, and then again in July 2022 and September 2022, after which transaction activity has somewhat recovered albeit on a lower growth path. Those in favor of such levies, which have been introduced in other African countries, argue that it creates an important revenue stream for governments in emerging economies and brings otherwise untaxed informal sector economic activity within the scope of taxation. However, it is regressive and impacts the poorest the most. Tanzanians on lower incomes and living in rural areas particularly suffer as mobile money is often the only way to access financial services. [Read more at the GSMA]
*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
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