Indonesia to progress wholesale DLT-based CBDC trials
Bank Indonesia (BI) shared [on December 27, 2023] the results of its wholesale distributed ledger technology (DLT) based central bank digital currency (CBDC) consultation. In general, the top-level design of wholesale digital rupiah is in line with public expectations. The project will now enter the proof of concept stage, which will be followed by prototyping and piloting/sandboxing. [Read more at the BI]
Bank profitability and central bank digital currency
The European Commission (EC) published a paper [in June 2023] that analyzes the potential effect of a digital euro on banks’ profitability. It uses a large sample of European Union (EU) banks that span the period from 2007 to 2021 to assess the sensitivity of banks’ profits to the loss of deposits. The results show that, for a large take-up of CBDC, there might be substantial challenges for banks’ profitability, especially for small banks, that mostly rely on deposits as a source of funding. The paper recommends that digital euro holdings be capped (e.g., at EUR 3,000) to preserve the inherited profitability that comes from banks’ cheap deposit funding. [Read more at the EC]
FYI here are some of my upcoming speaking engagements:
– Digital Euro Conference 2024 (Frankfurt on February 29)[Register here and get a 20% discount with the Kiffmeister20 code]
*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]
