UAE makes first digital dirham transfer via mBridge CBDC platform
The Central Bank of the United Arab Emirates (CBUAE) conducted its first cross-border digital dirham transfer using the mBridge central bank digital currency (CBDC) platform on January 29, 2024. A 50 million dirhams transfer was sent to China. [Read more at Gulf News]
Public information and stablecoin runs
The Bank for International Settlements (BIS) published a paper on how the promise of par convertibility by various types of stablecoins breaks down. Public information disclosure has an ambiguous effect on run risk. Transparency can lead to greater run risk when market expectations are pessimistic or when transacting in and out of the coins is easy (e.g., USDC). Conversely, transparency strengthens a stablecoin peg when priors are strong and conversion is costly. The paper doesn’t say it, but presumably costly conversion strengthens the peg even if transparency is weak (e.g., as USDT was until recently)? [Read more at the BIS]
The U.S. Federal Reserve (Fed) published a paper on the implications of introducing new types of fixed-rate financial assets in the financial system including retail and wholesale CBDC, and nonbank-issued fully- fiat-backed stablecoins. The paper concludes that such new assets can have significant effects on equilibrium interest rates and patterns of financial intermediation and may also affect the potency of monetary policy tools. These effects are most pronounced when new financial assets are close substitutes for existing financial assets. [Read more at the Fed]
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]