Month: March 2024
Kiffmeister’s #Fintech Daily Digest (20240331)*
For your Sunday reading pleasure, here are a few excellent central bank digital currency (CBDC) focused newsletters; Conrad Kraft’s Weekly CBDC Chronicles, Richard Turrin’s Weekly Cashless Newsletter, and Guneet Kaur’s Bi-Weekly CBDCs Express. If you’re on LinkedIn you can subscribe to them so you never miss an update. And below are two thoughtful CBDC-related articles from typically anti-CBDC leaning sources.
Powell’s CBDC puzzle: Deciphering where the Fed stands
The Cato Institute published an article calling for the Federal Reserve to share more information regarding where it stands with respect to central bank digital currency (CBDC). The article recommends that the Fed come clean on the specific criteria that would influence it to make an official decision on whether it would or would not recommend launching a digital dollar. The article also calls on the Fed to come clean on whether it believes it has the authority to issue an intermediated CBDC, given that the Federal Reserve Act does not authorize direct Fed accounts for individuals, but may allow for an intermediated one. Also, it would be useful to know whether the Fed believes it has the authority to issue a distributed ledger technology (DLT) based wholesale CBDC, given that it already “issues” centralized ledger technology based wholesale CBDC (e.g., commercial bank reserve accounts). [Read more at the Cato Institute]
Politics aside, what’s the plan for US central bank digital currency?
The Hill published an article that calls for leaving the politics and fearmongering designed to squelch meaningful debate around a digital dollar. Instead it calls proceeding with caution and investing in CBDC research from a technical, legal, ethical and international perspective. That would include reviewing and possibly amending country’s legislation, laws and justice system so that it better protects individual freedoms, including the freedom to transact and the right to financial and individual privacy. The article points out that designing a CBDC with privacy controls that prevent government surveillance is possible, and this kind of technical development should continue. “To outright ban research, development and experimentation on CBDCs without attempting to find technological solutions to legitimate privacy risks first is a lazy and incomplete response that borders on censorship.” [Read more at the Hill]
The external financial spillovers of CBDCs
The Journal of Economic Dynamics and Control (JEDC) published a paper that studies the macroeconomic consequences of a foreign CBDC available to residents in a small open economy using a DSGE model. It finds that a gradual and permanent increase in the domestic households’ preferences toward the foreign CBDC leads to a structural reduction in economic activity, especially if the CBDC is designed to be similar to domestic deposits. The paper suggests several policy responses that may smooth the transition, limit disruptive effects and avoid the long-run GDP loss. It also shows that an economy with a large stock of foreign CBDC is better shielded from exogenous increases in the interest rate on foreign debt, if the CBDC remuneration remains constant. [Read more at the JEDC]
DC Summit: Generative Artificial Intelligence & Finance
Don’t forget that the Washington DC Summit on Generative AI and Finance will be held on April 20 during the week of the IMF/World Bank Spring Meetings at George Washington University’s Jack Morton Auditorium. It will start with a set of lectures in the morning, and be followed by a series of panels in the afternoon. Plus there will be food and drinks, and networking opportunities. To register, go to DCSummit.org where you will also see the draft agenda, list of speakers and schedule.
*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 (20240330)*
I’ve updated my tabulation of DLT-based wholesale central bank digital currency (#CBDC) projects. There has been one project added since the end of January (the HKMA’s Project Ensemble). [Check it out here]
Custodia Bank loses lawsuit challenging Fed master account application rejection
A federal judge has rejected Wyoming-based Custodia Bank’s argument that it is entitled to a Federal Reserve master account and membership with the Fed. Judge Scott Skavdahl, of District of Wyoming, denied Custodia’s motion for judgement on, writing that federal laws do not require the nation’s central bank to give every eligible depository institution access to its master account system, nor did the provided evidence suggest that the Federal Reserve Board of Governors influence a regional branch of the Fed to deny its application for an account. Custodia is now “reviewing the Court’s decision and all of [its] options, including appeal”. [Read more at CoinDesk]
E-money and monetary policy transmission
The IMF published a paper that uses a two-way fixed effect estimator using 2001-2019 panel data, on both monthly (covering 21 countries) and annual (covering 47 countries) frequencies, to estimate the causal effects of e-money development on monetary policy transmission. It finds that e-money development has accompanied stronger monetary policy transmission (measured by the responsiveness of interest rates to the policy rate), growth in bank deposits and credit, and efficiency gains in financial intermediation (measured by the lending-to-deposit rate spread). Evidence is more pronounced in countries where e-money development takes off in a context of limited financial inclusion. [Read more at the IMF]
Mobile internet, collateral, and banking
The IMF published a paper that combines administrative data on credit, internet penetration and a land reform in Rwanda, to shows that the complementarity between technology and law can overcome financial frictions. Leveraging quasi-experimental variation in 3G availability from lightning strikes and incidental coverage, it shows that mobile connectivity steers borrowers from microfinance to commercial banks and improves loan terms. These effects are partly due to the role of 3G internet in facilitating the acquisition of land titles from the reform, used as a collateral for bank loans and mortgages. The paper quantifies that the collateral’s availability mediates 35% of the overall effect of mobile internet on credit and 80% for collateralized loans. [Read more at the IMF]
*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]
Jurisdictions Where DLT-Based Wholesale CBDC Is Being Explored
20 central banks have launched, piloted or done proof-of-concept work on distributed ledger technology (DLT) based wholesale central bank digital currency (CBDC). There has been one project added since the end of January (the HKMA’s Project Ensemble).
*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 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]
Kiffmeister’s #Fintech Daily Digest (20240329)*
I’ve updated my tabulation of central bank retail central bank digital currency (CBDC) explorers. There are now 101 central banks (up one (Kyrgyz Republic) since the end-January update) that have recently issued, piloted, experimented with and/or researched retail CBDC not including two that started issuing retail CBDC and then shut the platforms down (Ecuador and Finland). Keep in mind that I don’t count all of the individual national central banks that are part of currency unions (e.g., the European or Eastern Caribbean Currency Unions). If I did the tally would be around the oft-quoted 130+ central banks. [Check out the tabulation here]
Thailand retail CBDC pilot test project update (Thai only for now)
The Bank of Thailand (BOT) published an update on its retail CBDC experiments. They successfully demonstrated the potential of the technology behind the retail CBDC system, but the BOT said it has no plans to launch one and will use the technology design to further develop a more efficient payment system. I’d like to say more about the paper, such as whether it’s a pilot or proof-of-concept, but it’s written in Thai and Google Translate is returning gibberish, so that determination will have to wait. If anyone else out there can figure it out please let me know! [Read more at the BOT]
*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 (20240328)*
DC Summit: Generative Artificial Intelligence & Finance
The Washington DC Summit on Generative AI and Finance will be held on April 20 during the week of the IMF/World Bank Spring Meetings at George Washington University’s Jack Morton Auditorium. It will start with a set of lectures in the morning, and be followed by a series of panels in the afternoon. Plus there will be food and drinks, and networking opportunities. To register, go to DCSummit.org where you will also see the draft agenda, list of speakers and schedule.
CBDC and other digital payments in Sub-Saharan Africa: A regional survey
The IMF published a Fintech Note on key findings from the Sub-Saharan Africa CBDC and Digital Payments Survey, shedding light on the motivations, benefits, and challenges of CBDC adoption, as well as the developments of digital private money and crypto assets in sub-Saharan Africa. More than 75% of the 33 central banks surveyed are engaged in—or are planning to engage in—CBDC research or pilot activities. Of these, roughly two-thirds are in the research phase, and slightly over one-third are planning to conclude their CBDC pilot programs within the next two years. More than a quarter are actively preparing to launch a CBDC by 2028, although legal challenges pose major hurdles to getting to that point. Financial inclusion, efficiency in domestic payments and facilitating remittances’ are the most dominant motivations for CBDC adoption. Fast payment systems and e-Money (such as mobile money) are considered as quick wins in sub-Saharan Africa, and about two-thirds of countries are in the process of implementing or considering fast payment systems that are mostly accessible through mobile phones or the internet. [Read more at the IMF]
A macroeconomic model of central bank digital currency
A paper by a couple of San Francisco Federal Reserve Bank staff (Pascal Paul and Mauricio Ulate) published a paper that uses a New Keynesian DSGE model to study the introduction of a remunerated retail central bank digital currency (CBDC). At the heart of the model are monopolistic banks with market power in deposit and loan markets. When a remunerated retail CBDC is introduced, households benefit from an expansion of liquidity services and higher deposit rates as bank deposit market power is curtailed. However, even though deposits also flow out of the banking system and bank lending contracts, the paper finds substantial welfare gains as long as the CBDC interest rate doesn’t exceed the policy rate minus 1%. [Read more on Pascal Paul’s blog]
Connectedness between CBDC, financial stability and digital assets
The Journal of International Financial Markets, Institutions and Money (JIFMIM) published a paper that examines the interconnectedness CBDC development and adoption levels, digital asset returns and financial stability. (CBDC development and adoption was measured with a news media coverage based “CBDC Uncertainty Index” developed by Wang et al (2022).) The paper finds a significant level of connectedness between CBDCs, digital assets and financial stability, but only a weak positive connectedness between CBDCs and returns on digital assets. Furthermore, the study finds bidirectional connectedness between CBDCs and other financial stability measures, suggesting that changes in CBDC performance can influence the overall stability of the financial system, and vice versa. [Read more at the JIFMIM]
*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 (20240327)*
Kazakhstan tests central bank digital currency use in public procurement
Kazakhstan authorities are planning to pilot the use smart contract-powered digital tenge to ensure that funds related to public procurement and government subsidies are spent precisely for their intended purposes. The Ministry of Finance and Anti-Corruption Agency as well as other key entities have signed a roadmap to collaborate with the National Bank of Kazakhstan on this particular central bank digital currency (CBDC) use case. This is made possible through the integration with government databases and registries, maintaining white and black lists of legal entities, goods and service categories. [Read more at Global Government Fintech]
Russian Central Bank and Finance Ministry discussing tests of budget payments in digital rubles
The Bank of Russia and Russian Ministry of Finance are reportedly considering piloting the use of digital rubles for some social payments to citizens and subsidies to businesses, to ensure the targeted use of budget funds. In addition, the pilot would test the use of digital rubles for payments to the government. [Read more at Interfax]
Digital currencies impact on financial stability and financial cycle
The Bank of Albania published a paper on the potential impact of digital currencies, including CBDCs, on banking-centric small open economies. It concludes that the main risks come from global stablecoins, should they achieve major traction, which could result in large-scale currency substitution (“stablecoinization”). An effective policy approach towards global stablecoins would be through the cooperation of international standard-setting organizations and national authorities. [Read more at the Bank of Albania]
*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 (20240326)*
Exploring blockchain-based government bonds
Satoshi Capital Advisors CEO Josiah Hernandez and I have written a paper that explores the application of national and sub-national government bond issuances and corresponding trade and asset lifecycle activity on blockchain-based market infrastructures. It considers existing and pending projects, how governments can carry out future projects, the various use cases corresponding to such projects, the broader market opportunity for government debt issued into blockchain-based market infrastructures, the hurdles to overcome with regards to implementing such projects, and the next steps with regards to further exploration. [Read more at SSRN]
The provision of multiple digital euro accounts to individual end users
The European Central Bank (ECB) published a technical note on the potential impact of users holding multiple digital euro accounts. Under the European Commission’s proposed digital euro regulations digital euro users would be able to hold multiple digital euro payment accounts with the same or different payment service providers (PSPs). This entails technical difficulties regarding the interplay of these accounts with the management of a consolidated holding limit. The analysis shows that it is technically feasible to provide users with multiple accounts in conjunction with an individual holding limit, but trade-offs would be necessary, mainly in terms of user experience as well as technical and operational implementation for PSPs. [Read more at the ECB]
SWIFT hails results of CBDC connector testing
SWIFT says a new round of sandbox testing has found that its central bank digital currency interlinking technology can enable financial institutions to carry out a wide range of transactions using central bank digital currency (CBDC) and other forms of digital tokens, easily incorporating them into their business practices. Over six months, SWIFT worked with 38 global institutions and over 125 sandbox users, and made more than 750 transactions, including simulated digital trade, tokenized asset and FX networks, as well as CBDCs for payments. The testing showed that SWIFT’s CBDC connector has the potential to simplify and speed up trade flows, unlock growth in tokenized securities markets, and enable efficient FX settlement, while allowing financial institutions to continue to make use of their existing infrastructure. [Read more at SWIFT]
ESMA finalizes Markets in Crypto-Assets Regulation (MiCA) rules
The European Securities and Market Authority (ESMA) published some of the final rules relating to the Markets in Crypto-Assets Regulation (MiCA) crypto asset regulations. These include the information required for licensing crypto-asset service providers (CASPs) and how regulated institutions provide notification that they plan to offer CASP services [Read more here]. Separately, ESMA published a consultation on a third package of rules covering topics such as detecting market abuse and client rights [Read more here]. [Read more at Ledger Insights]
COVID-19 hasn’t killed merchant cash acceptance in Canada
To better understand trends in payment methods accepted by Canadian businesses, including cash acceptance and the impact of innovations such as mobile payments, the Bank of Canada conducts the Merchant Acceptance Survey, a survey of small and medium-sized businesses. It finds that 96% of these businesses in Canada accepted cash in 2023. Acceptance of debit and credit cards has increased since 2021 to 89%, and acceptance of digital payments has increased as well. However, the vast majority of merchants (92%) have no plans to go cashless in the future. [Read more at the Bank of Canada]
*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 (20240325)*
Chilean central bank publishes CBDC exploration progress report
Banco Central Chile (BCCh) published its second report on the issuance of central bank digital currency (CBDC). It gives an account of lessons learned from different stakeholders, and indicates that it will continue with the exploration process, which will include proofs of concept. However, the continuation of exploration should in no way be understood as a decision to issue CBDC nor is it aimed at eliminating or replacing traditional means of payment, in particular cash, since the BCCh continues to consider that there is not yet sufficient information to make a final decision regarding its issuance. [Read more at the BCCh]
Turkish central bank digital currency project pilot phase confirmed
On February 19, 2024 I reported on the English version of the Türkiye Cumhuriyet Merkez Bankası (CBRT) report on the first phase of its digital Turkish lira testing (originally published in Turkish in December 2023). The report said that “pilot” testing had been done, without providing enough information as to whether the pilots are really pilots. According to the IMF “5P” CBDC product development framework, and the way that CBDCTracker.org and I define pilot, a pilot involves real CBDC and end users, with central bank staff not counting as real end users. However, thanks to Central Bank Payment News, we now have that clarity to label the CBRT phase one testing as pilot testing. Here’s CBRT Deputy Executive Directors Zeynel Abidin Avcı and Bilgehan Kürşad Öz:
“The pilot tests involved real users and specific sale-points, such as cafes, restaurants, and giftshops. In total, the two pilot tests ran for close to a month, and more than 2.000 users, who are not central bank employees, made their payments and transfers. By doing so, they have tested the systems and provided valuable feedback.”
Canton Network completes comprehensive tokenized asset blockchain pilot
The Canton Network, launched in May 2023 completed its exploration of a privacy-enabled open blockchain network for real-time atomic settlement and immediate reconciliation across counterparty systems of tokenized investment asset transactions. Based on more than 350 simulated transactions, the project proved that the blockchain could be leveraged to streamline and synchronize financial applications while at the same time adhering to regulatory asset control, security, and data privacy requirements. It involved 15 asset managers, 13 banks, four custodians, three exchanges, and one financial market infrastructure provider. It exchanged tokenized securities, money market funds and deposits across 22 decentralized applications (dApps). [Read more at the Canton Network]
*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 (20240323)*
CBUAE domestic digital dirham preparation update
The Central Bank of the UAE (CBUAE) is reportedly preparing to operationalize its domestic digital dirham central bank digital currency (CBDC). It is encouraging all UAE commercial banks and payments processors to integrate with the CBUAE digital dirham issuing node, and has decreed digital dirham adoption by all UAE licensed financial institutions (LSIs) by 2026. In the immediate term, those LSIs are being encouraged to develop digital dirham use cases in the CBUAE sandbox. [Read more at Ernst & Young]
CBUAE launches digital central bank digital currency strategy
In March 2023, the CBUAE announced the launch of its CBDC strategy, the first phase of which was expected to be complete June 2024. It included a soft launch of the BIS Innovation Hub led mBridge cross-border wholesale CBDC platform, proof-of-concept work for bilateral CBDC bridges with India, and proof-of-concept work for domestic wholesale and retail CBDC. The CBUAE aims to ensure the readiness of the UAE to integrate CBDC-based payment infrastructures with the future potential tokenization world. [Read more at the CBUAE]
The Bank of Canada published a paper that examines the optimal amount of user anonymity in a CBDC in the context of bank lending. Anonymity, defined as the lender’s inability to discern an entrepreneur’s actions that enable fund diversion, influences the choice of payment instrument due to its impact on a bank’s lending decisions. The paper shows that moderate anonymity in CBDC leads to an inefficient pooling equilibrium. To avoid this, CBDC anonymity should be either low, reducing attractiveness, or high, discouraging bank lending. Specifically, the anonymity should be high when CBDC significantly benefits sales, and low otherwise. However, competition between deposits and CBDC may hinder the implementation of low anonymity. [Read more at the BoC]
The impact of information and communication technologies on banks, credit, and savings
The Bank for International Settlements (BIS) published a paper that examines the impact 4G mobile network introduction on the Brazilian banking sector. It found that 6% of private banks exited municipalities while their branches shrink on average 11% within five years of the introduction of this technology compared to municipalities that do not have it. By contrast, public banks, which have added responsibilities of being direct executioners of public policies, are not reactive to better mobile connectivity. [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]