Month: July 2024

Kiffmeister’s #Fintech Daily Digest (20240731)

~ kiffmeister

Russia to allow crypto payments in international trade (Reuters)

Russia’s State Duma passed a bill that will allow businesses to use crypto-assets in international trade, as part of efforts to skirt Western sanctions imposed after Russia’s invasion of Ukraine, starting on September 1, 2024. The final step requires the approval of the Federation Council and the President’s signature. Under the new law, the Bank of Russia will create an experimental infrastructure for cryptocurrency payments, details of which have yet to be announced. [Read more at RIA Novosti]

Birri Gubba Nation to launch a sovereign digital currency (MetaMUI)

The Birri Gubba Nation, an Australian indigenous sovereign nation, has signed a memorandum of understanding (MOU) with Sovereign Wallet, to establish a comprehensive national digital identity system to serve as account addresses for sovereign digital currency. Sovereign Wallet is a blockchain technology company that developed the MetaMUI CBDC Cloud Service for creating digital currencies, which the Yidinji Nation, another Australian indigenous nation, used to launch its Yidindji Dollar (SYD) in 2022. The Birri Gubba Nation national identity and digital currency systems are set to go live in September 2024. If it is structured like the Yidindji Dollar, it will be pegged to the Australian dollar (AUD), although the mechanism hasn’t been revealed. [Read more on CoinDesk]

I wrote about Yidindji’s SYD in 2022 in the Global Financial Intelligencer, arguing that it met the criteria for a central bank digital currency (CBDC) label. According to the Bank for International Settlements (BIS) a CBDC is a digital payment instrument, denominated in the jurisdiction’s unit of account, that is issued by and a direct liability of the jurisdiction’s central bank or monetary authority, and the SYD seems to check all the boxes. The digital currency is issued and backed by the Yidindji Reserve Bank (YRB) established by the YRB Act of 2016, which was revised in 2022 to give the YRB the ability to issue currency. The Yidindji Currency Acts of 2014 and 2022, require Yidindji citizens to settle their obligations in SYD, so it is arguably a unit of account. What do others think?

Project Pyxtrial: monitoring the backing of stablecoins (BIS)

The BIS and the Bank of England have have developed a prototype data analytics pipeline which includes data collection, storage and analysis, that can provide supervisors with near real-time data about stablecoins’ liabilities and their backing assets. Pyxtrial can provide insight into whether the backing assets exceed their liabilities at all times, and enhance the efficiency and responsiveness of the monitoring process, which helps supervisors to respond faster to potential risks. [Read more at the BIS]

CBDCs in Latin America and the Caribbean (LATAM Journal of Central Banking)

The Latin American (LATAM) Journal of Central Banking published a paper on central bank digital currencies (CBDCs) in Latin America and the Caribbean, by staff from the Bank for International Settlements (BIS), Central Bank of Colombia, and American Enterprise Institute (AEI). The paper draws heavily from the Committee on Payments and Infrastructures (CPMI) annual survey of central banks regarding interest in, and motivations for, exploring CBDC in their jurisdiction. [Read more at the LATAM Journal of Central Banking]

Upcoming Speaking Engagements:

  • Intertribal Foreign Affairs Council Forum 2024, Yidindji, August 30-31. The conference will bring together indigenous nations to showcase the excellence of their governance practices and generate new ideas for the future. I’ll be on a panel focused on the future of money and indigenous financial inclusion. [Find out more and register here]
  • CBDC Conference, Istanbul, September 10-12. The conference will offer representatives of central banks, commercial banks, technology providers, policy makers and academics the perfect platform to learn about the latest CBDC developments, exchange ideas with experts and peers. [Find out more and register here][Central bank delegates may be eligible for free registration (email registration@cbdc-conference.com to find out more)]
  • Digital Currency Conference, London, September 23-24. The conference will bring together policymakers, regulators, and technology and innovation experts to network and discuss all aspects of digital currencies. And enter the KiffmeisterDCC code at registration to get a 20% discount! [Find out more and register here]

And 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 john@kiffmeister.com.

Kiffmeister’s #Fintech Daily Digest (20240730)

~ kiffmeister

Bank of England seeks feedback for wholesale CBDC trials (Ledger Insights)

The Bank of England (BOE) published a discussion paper on innovation in money and payments. While it covers payments across the board, it aims to gather feedback for planned wholesale central bank digital currency (CBDC) trials. These will include a synchronization (“trigger”) solution that settles transactions involving assets that are tokenized on distributed ledger technology (DLT) platforms using the real time gross settlement (RTGS) system. The BOE also wants to trial a digital securities transaction in which an end user makes a tokenized deposit payment. Finally, it will test interoperability with global initiatives like the Bank for International Settlements (BIS) Project Agorá for cross-border payments. Comments are due by October 31, 2024. [Read more at the BOE]

Qatar Central Bank launches ‘Request to Pay’ service through Fawran (The Peninsula)

Qatar Central Bank (QCB) launched a “Request to Pay” option through Fawran instant payment service that was launched in March 2024. Request to Pay allows customers to send a payment request from the payee to the payer. The payer will then receive the request, including the payee’s name, the required amount to be transferred and the option to accept or reject the request. In case of acceptance, the required amount will be transferred instantly to the payee’s account. The participating banks are Doha Bank, Qatar Islamic Bank, Commercial Bank, Masraf Al Rayan and Qatar International Islamic Bank. [Read more on the QCB’s X page]

E-Rupee retail CBDC pilot customers grow 285% year-over-year (Business Standard)

The Reserve Bank of India (RBI) published its annual report on currency and Finance in which it reported that as of June 2024, 5 million users (versus 1.3 million a year earlier) and 0.4 million merchants (versus 0.3 million) were participating in e-Rupee CBDC retail pilot. [Read the full report at the RBI]

Byzantine fault tolerant consensus with confidential quorum certificate for a central bank DLT (Banca D’Italia)

Banca d’Italia published a paper on the FROSTed Byzantine Fault Tolerance (FBFT) protocol, an approach to DLT proof of authority (PoA) validation meant to strengthen the security of the ledger, its tolerance to faults or attacks, and the confidentiality of validators. It combines the practical byzantine fault tolerance (PBFT) algorithm with the flexible round-optimized Schnorr threshold (FROST) signature scheme. The resulting system is an alternative platform for a distributed, resilient transactional system. Operated by a set of trusted actors, distributed at geographic scale, it holds potential for mission-critical applications, such as wholesale and retail CBDC, and asset tokenization schemes. [Read more at Banca d’Italia]

Upcoming Speaking Engagements:

  • Intertribal Foreign Affairs Council Forum 2024, Yidindji, August 30-31. The conference will bring together indigenous nations to showcase the excellence of their governance practices and generate new ideas for the future. I’ll be on a panel focused on the future of money and indigenous financial inclusion. [Find out more and register here]
  • CBDC Conference, Istanbul, September 10-12. The conference will offer representatives of central banks, commercial banks, technology providers, policy makers and academics the perfect platform to learn about the latest CBDC developments, exchange ideas with experts and peers. [Find out more and register here][Central bank delegates may be eligible for free registration (email registration@cbdc-conference.com to find out more)]
  • Digital Currency Conference, London, September 23-24. The conference will bring together policymakers, regulators, and technology and innovation experts to network and discuss all aspects of digital currencies. And enter the KiffmeisterDCC code at registration to get a 20% discount! [Find out more and register here]

And 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 john@kiffmeister.com.

Kiffmeister’s #Fintech Daily Digest (20240729)

~ kiffmeister

Currency Research published the July 2024 edition of its Central Bank Payments News, featuring an article by Joachim Samuelsson (Crunchfish) on the assumptions to avoid when developing retail central bank digital currency (CBDC) systems. There is also an article by the Bank of Ghana’s Kwame Oppong and Docia Boakye on legal considerations for the development of a CBDC, plus numerous updates on central bank payment systems. [Download the edition here]

Swiss FINMA publishes guidance on stablecoins (FINMA)

The Swiss Financial Market Supervisory Authority (FINMA) published guidance on the issuance of stablecoins. It provides information on aspects of financial market law that arise in relation to stablecoin projects and the impact of such projects on the supervised institutions. The guidance also draws attention to the increased risks in the areas of money laundering, terrorist financing and the circumvention of sanctions. In particular, the identity of all persons holding the stablecoins must be adequately verified by the issuing institution or by appropriately supervised financial intermediaries. In other words anonymous transfers are prohibited. [Read more at FINMA]

Donald Trump backs strategic Bitcoin stockpile (Wired)

U.S. Presidential hopeful Donald Trump announced that if elected, he would create a strategic bitcoin reserve in the United States. “It will be the policy of my administration to keep 100 percent of all bitcoin the US government currently holds or acquires in the future … as a core of the strategic national bitcoin stockpile,” he said. Right now, the U.S. government owns more than 210,000 bitcoin that were seized via illegal operations. Trump also pledged to create a framework for ensuring the safe expansion of stablecoins, and doubled down on his vow to scrap any effort to issue CBDC. He also defended the right to crypto-asset self custody and promised to fire Securities and Exchange Commission (SEC) Chair Gary Gensler. [Read more at Wired]

Upcoming Speaking Engagements:

  • Intertribal Foreign Affairs Council Forum 2024, Yidindji, August 30-31. The conference will bring together indigenous nations to showcase the excellence of their governance practices and generate new ideas for the future. I’ll be on a panel focused on the future of money and indigenous financial inclusion. [Find out more and register here]
  • CBDC Conference, Istanbul, September 10-12. The conference will offer representatives of central banks, commercial banks, technology providers, policy makers and academics the perfect platform to learn about the latest CBDC developments, exchange ideas with experts and peers. [Find out more and register here][Central bank delegates may be eligible for free registration (email registration@cbdc-conference.com to find out more)]
  • Digital Currency Conference, London, September 23-24. The conference will bring together policymakers, regulators, and technology and innovation experts to network and discuss all aspects of digital currencies. And enter the KiffmeisterDCC code at registration to get a 20% discount! [Find out more and register here]

And 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 john@kiffmeister.com.

Kiffmeister’s #Fintech Daily Digest (20240727)

~ kiffmeister

Brazil’s central bank to integrate AI-based apps into its CBDC (Exame)

Banco Central do Brasil (BCB) is looking to integrate artificial intelligence (AI) based apps into its Drex central bank digital currency (CBDC). Specifically, it plans to incorporate instant payment methods like Pix and leverage AI technologies similar to OpenAI’s ChatGPT. Central bank President Roberto Campos Neto envisions a future where multiple banking apps are replaced by a single, comprehensive super app that aggregates financial data and uses AI to offer personalized financial services. [Read more at the BCB]

Stablecoins’ impact on banks’ balance sheets and prudential ratios (ECB)

The European Central Bank (ECB) published a paper that explores the relationship between banks, and stablecoins and their issuers, focusing on the mechanical effects on banks’ capital and liquidity ratios when issuing stablecoins or collecting deposits from stablecoin issuers. The analysis reveals that converting retail deposits into stablecoin issuers’ deposits weakens a bank’s liquidity coverage ratio (LCR), turning a retail deposit into a wholesale deposit, even when these funds are reinvested in high-quality liquid assets (HQLA). If a credit institution issues its own stablecoins, the impact on its LCR depends on whether it can identify the stablecoin holders; unknown holders weaken the LCR which could incentivize banks to issue stablecoins where they can continually identify the holders to benefit from more favorable liquidity treatment. The study also finds that when retail customers of bank A buy a stablecoin issued by a non-bank that keeps reserves at bank B, both banks could see an unexpected decline in their liquidity ratios, as bank A loses stable retail deposits and bank B gains volatile wholesale deposits. [Read more at the ECB]

The economics of crypto exchange tokens (BIS)

The Bank for International Settlements (BIS) published a paper on the economics of crypto exchange tokens, which are blockchain-based assets issued by crypto exchanges that may promise holders discounts on transaction fees and access to certain platform services. They are an important funding source for centralized crypto exchanges, and they have been at the core of some of the biggest disruptions in the crypto industry. The paper develops a tractable model for the exchange rates of crypto exchange tokens that incorporates user demand, investment demand, and commonly observed pledges by exchanges to buy back tokens. It derives closed-formed solutions for the valuation of exchange tokens and the time required to fulfill the pledge. Buyback pledges increase the amount of funding raised by selling tokens. However, the additional amount raised is always less than the discounted cost of the buyback pledge. Future price manipulation by investors can further increase the cost of the buyback pledge. [Read more at the BIS]

Upcoming Speaking Engagements:

  • Intertribal Foreign Affairs Council Forum 2024, Yidindji, August 30-31. The conference will bring together indigenous nations to showcase the excellence of their governance practices and generate new ideas for the future. I’ll be on a panel focused on the future of money and indigenous financial inclusion. [Find out more and register here]
  • CBDC Conference, Istanbul, September 10-12. The conference will offer representatives of central banks, commercial banks, technology providers, policy makers and academics the perfect platform to learn about the latest CBDC developments, exchange ideas with experts and peers. [Find out more and register here][Central bank delegates may be eligible for free registration (email registration@cbdc-conference.com to find out more)]
  • Digital Currency Conference, London, September 23-24. The conference will bring together policymakers, regulators, and technology and innovation experts to network and discuss all aspects of digital currencies. And enter the KiffmeisterDCC code at registration to get a 20% discount! [Find out more and register here]

And 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 john@kiffmeister.com.

Kiffmeister’s #Fintech Daily Digest (20240726)

~ kiffmeister

ERPB technical session on the digital euro (ECB)

The European Central Bank (ECB) published two documents discussed at the June 28, 2024 meeting of the European Retail Payments Board (ERPB) technical session of the digital euro [agenda here]. One was a summary of inputs on the methodology for calibrating holding limits [download here], and the other was on the strategies for conducting euro user research and engaging with market participants (payment service providers and merchants)[download here].

Thailand distributing stimulus payments in digital currency (CoinTelegraph)

Thailand’s finance ministry is going ahead with a plan to pay a social benefit in digital currency. Up to 45 million Thais will be eligible to receive 10,000 baht (about $280) in digital money on August 1, 2024, about two-thirds of the average monthly income in the country. There are numerous restrictions on usage, including know your customer (KYC) verification that will exclude prisoners and people and businesses with records of economic abuse. There are also restrictions on the items that can be purchased with the digital currency. [Read more at CoinTelegraph]

German banks share tokenized deposit trial results (Ledger Insights)

The German Banking Industry Committee (GBIC) published the results of a proof of concept (POC) for its distributed ledger technology (DLT) based commercial bank money token (CBMT) project. CBMT is focused on serving large corporates, especially industrial companies, allowing them to hold tokens from multiple banks and to make P2P (B2B) transactions 24/7/365. Results confirmed that the CBMT is viable and offers considerable potential, enabling the realization of a variety of use cases across corporate functions. Results also showed that the CBMT works across a variety of DLT platforms, has the potential to scale and should present no barrier to integration into existing systems via application programming interfaces (APIs). [Read more at the GBIC]

Payment behavior in Germany in 2023 (Deutsche Bundesbank)

The Deutsche Bundesbank (BuBa) published an analysis of how people pay in Germany, based on approximately 5,700 randomly selected members of the public aged 18 and over between September and November 2023. Of payment volumes, debit cards accounted for 32%, cash for 26%, transfers and direct debits 20%, credit cards 10%, and mobile payments 6%. In general, 44% of respondents prefer to pay with electronic payment methods, but 24% still prefer cash, and 94% of merchants accept cash at point of sale. The perceived benefits of cash include privacy preservation (63%), immediate and reliable settlement of payments (47%), and easy expense overview (41%). [Read more at BuBa]

CBDC and transmission of monetary policy (Bank of Canada)

The Bank of Canada (BOC) published a paper on how a central bank digital currency (CBDC) changes monetary policy transmission in a general equilibrium model with nominal rigidities, liquidity frictions, and a banking sector where commercial banks face a leverage constraint. It finds that the effects of a shock to the Taylor rule that governs interest on central bank reserves, is magnified with the introduction of a fixed-interest-rate CBDC. More generally, whether CBDC magnifies or abates the response of the economy depends on the type of shock (e.g., interest rate or quantity of reserves shock). The paper also finds that the response of the economy depends on the monetary policy framework—whether the central bank implements monetary policy through reserves or through CBDC—as well as central bank balance sheet rules that govern the quantity of CBDC and reserves. [Read more at the BOC]

Jordanian government launches national blockchain network (Jordan News)

Jordan’s Ministry of Digital Economy and Entrepreneurship (MODEE) launched a national blockchain technology network, MODEE DLT, to enhance trust and transparency in government services. MODEE DLT has been integrated with the Sanad system to provide a decentralized and verifiable digital record of all Sanad transactions. Sanad is a government portal through which residents can access their government digital documents and personal records, apply for government services, digitally sign documents, and make bill payments. [Read more at MODEE]

Qatar Central Bank issues DLT guidelines (Qatar Central Bank)

The Qatar Central Bank (QCB) published its guidelines for the oversight of distributed ledger technology applications or systems provision and usage by QCB-regulated entities to ensure that their usage is safe, secure and efficient. [Read more at the QCB]

Upcoming Speaking Engagements:

  • CBDC Conference, Istanbul, September 10-12. The conference will offer representatives of central banks, commercial banks, technology providers, policy makers and academics the perfect platform to learn about the latest CBDC developments, exchange ideas with experts and peers. [Find out more and register here][Central bank delegates may be eligible for free registration (email registration@cbdc-conference.com to find out more)]
  • Digital Currency Conference, London, September 23-24. The conference will bring together policymakers, regulators, and technology and innovation experts to network and discuss all aspects of digital currencies. And enter the KiffmeisterDCC code at registration to get a 20% discount! [Find out more and register here]

And 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 john@kiffmeister.com.

Kiffmeister’s #Fintech Daily Digest (20240725)

~ kiffmeister

BSP wholesale CBDC proof-of-concept nearing completion (Fintech Philippines)

The Bangko Sentral ng Pilipinas (BSP) is reportedly progressing quickly towards issuing wholesale central bank digital currency (CBDC), codenamed Project Agila, sooner than anticipated, with the proof-of-concept (POC) phase expected to conclude by the end of 2024. Deputy Governor Mamerto E. Tangonan confirmed that the CBDC could likely be launched in the earlier part of BSP Governor Eli M. Remolona Jr.’s six-year term, which runs from 2023 until 2029. Three uses cases mentioned; interbank settlement on weekends and holidays, securities settlement and cross border payments. With regards to the latter, the BSP is an observer of Project mBridge involving the BIS Innovation Hub and the central banks of China, Hong Kong, Thailand, the United Arab Emirates and Saudi Arabia. [Read more at Fintech Philippines]

Simulating the adoption of a retail CBDC (FNA)

Jahrbücher für Nationalökonomie und Statistik (JNS) published a paper by two Financial Network Analytics (FNA) staff that uses agent-based modelling to simulate retail central bank digital currency (CBDC) adoption, calibrated to Spain’s retail payment ecosystem. Results suggest that the distribution of government subsidies via CBDC creates incentives to reduce the use of cash. Also, reverse waterfall functionality (automatic transfer of funds from bank deposits to CBDC wallets) and a positive remuneration spread to bank deposits are effective in fostering adoption. However, the model did not model banks as adaptive decision makers that would include their ability to counter CBDC remuneration. [Read more at the JNS]

A minimum viable offline CBDC using Groth-Sahai proofs (arXiv)

arXiv posted a paper that proposes a design and a first implementation for an offline-first digital euro. The protocol offers complete privacy during transactions using zero-knowledge proofs. Furthermore, transactions can be executed offline without third parties and retroactive double-spending detection is facilitated. To protect the users’ privacy, but also guard against money laundering, bank and trusted third parties for law enforcement must collaborate to decrypt transactions, revealing the digital pseudonym used in the transaction. The transaction can be decrypted without decrypting prior transactions attached to the digital euro. The protocol has a working initial implementation showcasing its usability and demonstrating functionality. [Read more at arXiv]

Upcoming Speaking Engagements:

  • CBDC Conference, Istanbul, September 10-12. The conference will offer representatives of central banks, commercial banks, technology providers, policy makers and academics the perfect platform to learn about the latest CBDC developments, exchange ideas with experts and peers. [Find out more and register here][Central bank delegates may be eligible for free registration (email registration@cbdc-conference.com to find out more)]
  • Digital Currency Conference, London, September 23-24. The conference will bring together policymakers, regulators, and technology and innovation experts to network and discuss all aspects of digital currencies. And enter the KiffmeisterDCC code at registration to get a 20% discount! [Find out more and register here]

And 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 john@kiffmeister.com.

Kiffmeister’s #Fintech Daily Digest (20240724)

~ kiffmeister

Central Bank of Papua New Guinea launches CBDC proof-of-concept (Soramitsu)

The Central Bank of Papua New Guinea (CBPNG) is working with Soramitsu on a central bank digital currency (CBDC) proof-of-concept (POC) aimed at building a common payment platform across the Pacific Island region. Also, some areas of Papua New Guinea are plagued by instability, violence, and frequent occurrences of robberies and muggings, so the POC will explore digital technologies that will allow recovery of funds after such incidents. The project is being funded by the Government of Japan’s Ministry of Economy, Trade and Industry’s 2023 supplementary budget “Subsidy for Global South Future-Oriented Co-Creation Projects (Indirect Subsidy Project Related to the Survey on the Overseas Deployment of Infrastructure by Japanese Companies).” [Read more at Soramitsu]

Bank of Israel selects 14 teams to present use cases for digital shekel (Finextra)

The Bank of Israel (BOI) has chosen 14 teams from the private and public sectors, and academia to study potential digital shekel use cases selected by the BOI. They deal with a variety of functions: connectivity between the digital shekel, other payment systems, and cash; use of the advanced functionalities offered by the digital shekel, such as subwallets, conditional payments, and split payments; and the implementation of various technologies while using the digital shekel as a means of payment. Participant proposals will be tested in a digital sandbox in August 2024, with products developed to be showcased at a concluding conference at the end of October 2024. [Read more at the BOI]

FCA finalizes access to cash rules (Finextra)

Under new rules from the U.K. Financial Conduct Authority (FCA), banks and building societies will need to weigh up if local communities lack access to cash services, like branches and ATMs, and plug significant gaps. Under the new rules banks will need to respond to local residents and community organizations when closing branches and ATMs and provide an assessment of whether there are gaps in local cash access. Where significant gaps are found, banks will be obliged to retain branches and ATMs until alternative solutions are found. [Read more at the FCA]

UAE central bank introduces new stablecoin regulations (Coin Journal)

The UAE Central Bank (CBUAE) approved a framework for stablecoin regulation on June 14, 2024, which allows only dirham-backed stablecoins to be used for payments. Other crypto-assets will be restricted to trading, investment, and corporate treasury purposes while foreign stablecoins will only be permitted for purchasing specific virtual assets like non-fungible tokens (NFTs). The new law mandates that no entity can issue a payment token without submitting a white paper to the central bank for approval. Banks are not directly permitted to issue payment tokens but can do so through subsidiaries or affiliates, provided they meet licensing and regulatory requirements. The new framework is set to commence in June 2025. [Read more at the CBUAE]

UEMOA launches interoperable instant payment system pilot (BCEAO)

The Central Bank of the States of West Africa (BCEAO) has launched the pilot phase of the interoperable instant payment system (IPS) of the West African Economic and Monetary Union (UEMOA). 25 financial institutions across four countries met the criteria required to participate. A second group will join on August 12, 2024.The new interoperable 24/7 IPS infrastructure is capable of processing transactions of any kind, regardless of the account type. [Read more at the BCEAO]

Philippines hits target of digitalizing 50 percent of retail payments (BSP)

The share of digital payment transactions to total monthly retail payments in the Philippines grew from 42.1% in 2022 to 52.8% in 2023, according to the Bangko Sentral ng Pilipinas (BSP). This indicates that the central bank has surpassed its target of digitalizing 50% of digital payments volume in the country under its Digital Payments Transformation Roadmap 2018-2023. In terms of value, the latest e-payments measurement also showed that the share of monthly digital payments to total transactions increased to 55.3% in 2023 from 40.1% in 2022. The main contributors to the rise in e-payments were merchant payments which accounted for 64.9% of monthly digital payments volume, person-to-person transfers at 19.3%, and business-to-business supplier payments at 6.1%. [Read more at the BSP]

Reserve Bank of India joins Project Nexus (RBI)

The Reserve Bank of India (RBI) joined Project Nexus, a multilateral international initiative to enable instant cross-border retail payments by interlinking domestic fast payment systems (FPSs). Nexus, conceptualized by the BIS Innovation Hub aims to connect the FPSs of four ASEAN countries (Malaysia, Philippines, Singapore, and Thailand); and now India. Indonesia, which has been involved from the early stages, continues to be involved as a special observer. The platform is expected to go live by 2026. Once functional, Nexus will play an important role in making retail cross-border payments efficient, faster, and more cost effective. [Read more at the RBI]

    Upcoming Speaking Engagements:

    • CBDC Conference, Istanbul, September 10-12. The conference will offer representatives of central banks, commercial banks, technology providers, policy makers and academics the perfect platform to learn about the latest CBDC developments, exchange ideas with experts and peers. [Find out more and register here][Central bank delegates may be eligible for free registration (email registration@cbdc-conference.com to find out more)]
    • Digital Currency Conference, London, September 23-24. The conference will bring together policymakers, regulators, and technology and innovation experts to network and discuss all aspects of digital currencies. And enter the KiffmeisterDCC code at registration to get a 20% discount! [Find out more and register here]

    And 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 john@kiffmeister.com.

    Kiffmeister’s #Fintech Daily Digest (20240723)

    ~ kiffmeister

    Peru awards contract for first retail CBDC pilot (Ledger Insights)

    Banco Central de Reserva del Perú (BCRP) has awarded its first contract for the development of its retail central bank digital currency (CBDC) pilot. The winner is telecom firm Viettel Perú. The contract will run for one year, which may be extended for up to one additional year at the justified request of Viettel Peru. No further details have been made available. [Read more at the BCRP]

    Emerging markets face regulatory challenges from stablecoin circulation (FSB)

    The Financial Stability Board (FSB) published a report that explores potential factors driving the higher level of activities related to foreign currency-pegged stablecoins in emerging market and developing economies (EMDEs), the associated financial stability risks and regulatory challenges, and provides considerations to address them. EMDEs may be exposed to macro-financial risks arising from the use of foreign currency pegged global stablecoins, which can increase financial stability risks by destabilizing financial flows and straining fiscal resources. [Read more at the FSB]

    Spot Ether ETFs can start trading after the SEC’s final approval (Finance Magnates)

    The U.S. Securities and Exchange Commission (SEC) has provided final approval to spot Ethereum (ETH) exchange-traded funds (ETFs) following the listing of these instruments on three American exchanges on July 23, 2024. The approved issuers include BlackRock, Fidelity, 21Shares, Bitwise, Franklin Templeton, VanEck, and Invesco Galaxy, all of whom also offer Bitcoin ETFs that were greenlighted by the SEC at the beginning of 2024. All spot ETH ETFs, except Grayscale, kept the base fee between 0.15% and 0.25%, but Fidelity, 21Shares, Bitwise, Franklin, and VanEck will waive all fees until a set period or a determined amount in net assets is achieved. Grayscale is charging 2.50%. [Read more at Finance Magnates]

    Brazil delays launch of recurring Pix payments (Banco Central do Brasil)

    Banco Central do Brasil (BCB) has pushed back the addition of recurring payments to its Pix instant payment platform from October 2024 until June 2025. Automatic Pix will facilitate recurring charges that let users authorize periodic debits automatically, without the need for authentication for each transaction. The BCB also published amended Pix regulations that limit transactions on access devices that are unregistered or that have never been used to initiate a Pix transaction to R$200 and R$1,000 per day. The amendments will become effective on November 1, 2024. [Read more at the BCB]

    LIFT Lab resumes innovation projects for Brazil’s national financial system (BCB)

    The Laboratório de Inovações Financeiras e Tecnológicas (LIFT), a joint initiative of the BCB and Federação Nacional de Associações dos Servidores do Banco Central (Fenasbac), will resume activities following a hiatus in 2023. Since its inception in 2018, the laboratory has been at the forefront of innovation within the Brazilian national financial system, focusing on developing technological prototypes. The 2023/2024 edition will feature seven projects to enhance the financial innovation ecosystem. The 2023/2024 edition will include seven projects, including technological solutions for anti-money laundering and compliance, B2B interoperability solutions between incompatible blockchain networks, and scores for Pix payments to identify fake accounts. [Read more at the BCB]

    Global Payments Report 2024 (WorldPay)

    WorldPay published the 2024 edition of its Global Payment Report. It reports that the ubiquitous acceptance of digital wallets is enabling greater consumer choice and control in this era of payments innovation. According to the findings, digital wallets accounted for $13.9 trillion in global transaction value in 2023, representing half of all online and 30% of consumer spend at point-of-sale (POS). In markets where credit and debit cards already had strong consumer attachment, the data suggests consumers remain loyal to these cards, choosing to connect them to their digital wallets. Although cash usage continues to decline, cash accounted for 16% of global transaction value, including double-digit share in 30 of 40 markets in this report. [Read more at WorldPay]

    Upcoming Speaking Engagements:

    • CBDC Conference, Istanbul, September 10-12. The conference will offer representatives of central banks, commercial banks, technology providers, policy makers and academics the perfect platform to learn about the latest CBDC developments, exchange ideas with experts and peers. [Find out more and register here][Central bank delegates may be eligible for free registration (email registration@cbdc-conference.com to find out more)]
    • Digital Currency Conference, London, September 23-24. The conference will bring together policymakers, regulators, and technology and innovation experts to network and discuss all aspects of digital currencies. And enter the KiffmeisterDCC code at registration to get a 20% discount! [Find out more and register here]

    And 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 john@kiffmeister.com.

    Kiffmeister’s #Fintech Daily Digest (20240722)

    ~ kiffmeister

    G+D launches self hosted digital asset wallet that’s recoverable (Ledger Insights)

    Giesecke+Devrient (G+D) unveiled its Convego TruSafe self hosted digital asset wallet solution, which it aims to distribute via banks. It combines a mobile wallet app with a smart card that looks like a debit card and acts as cold wallet storage. If someone loses the card, it’s recoverable by splitting your private key into pieces or shards. One is held on the card, one by your bank and one by G+D. If the card is lost, a new one can be ordered and authenticated and activated through the mobile app, and access to the digital assets on the lost card regained. A wallet holder must use biometrics to request a new card, which recreates the key behind the scenes. [Read more at G+D]

    Upcoming Speaking Engagements:

    • CBDC Conference, Istanbul, September 10-12. The conference will offer representatives of central banks, commercial banks, technology providers, policy makers and academics the perfect platform to learn about the latest CBDC developments, exchange ideas with experts and peers. [Find out more and register here][Central bank delegates may be eligible for free registration (email registration@cbdc-conference.com to find out more)]
    • Digital Currency Conference, London, September 23-24. The conference will bring together policymakers, regulators, and technology and innovation experts to network and discuss all aspects of digital currencies. And enter the KiffmeisterDCC code at registration to get a 20% discount! [Find out more and register here]

    And 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 john@kiffmeister.com.

    Kiffmeister’s #Fintech Daily Digest (20240721)

    ~ kiffmeister

    CBOE gives official launch date for spot Ethereum ETF (CoinTelegraph)

    Five spot Ethereum exchange-traded funds (ETFs) will begin trading on the Chicago Board Options Exchange (CBOE) on July 23, 2024, “pending regulatory effectiveness”. The U.S. Securities and Exchange Commission (SEC) approved rule changes permitting the listing of several spot Ether ETFs on May 23, but the regulator still had to sign off on each fund issuer’s respective S-1 registration statements before trading can commence. [Read more at Coin Telegraph]

    Interoperability between CBDC and fast payment systems (World Bank)

    The World Bank published a technical paper on on its practical experiments on fast payments system (FPS) interoperability with central bank digital currency (CBDC) systems. The first experiment investigated the option of settling FPS obligations in a wholesale CBDC system, including the option to reserve funds to guarantee the settlement of FPS net obligations. The second experiment investigated the interoperability between users within the FPS and retail CBDC users, including the transfer of funds among both types of users, using common services such as address resolution services. This experiment illustrated how CBDC systems could interoperate with retail payment systems through an interlinking bridge that was used to route messages and application programming interface (API) calls among different systems. The programmability features of distributed ledger technology (DLT) were used to link the settlement in CBDC to the transfer of funds in the FPS. [Read more at the World Bank]

    Eurosystem sets policy on access by non-bank PSPs to its central bank payment systems (ECB)

    The Eurosystem defined a harmonized policy to allow non-bank payment service providers (PSPs) to access central bank-operated payment systems, including TARGET. Non-bank PSPs include payment institutions (PIs) and electronic money institutions (EMIs). The broader access criteria for TARGET are aimed at enhancing the efficiency of the European retail payments market, fostering competition and innovation in the European payments landscape, and supporting the uptake of instant payments in the European Union. Starting in April 2025, non-bank PSPs meeting certain requirements will be able to access TARGET, including T2 (for settling payments) and TIPS (for settling instant payments). The Payment Services Directive was also amended to introduce the option for non-bank PSPs to safeguard users’ funds in an account held with a central bank, subject to the discretion of that central bank. [Read more at the European Central Bank]

    Digital payments, informality and economic growth (BIS)

    The Bank for International Settlements (BIS) published a paper that examines the relationship between digital payment innovation, economic growth and informal activities in 101 economies over 2014–19. It finds that a one-percentage point increase in digital payments use is associated with increases in the growth of GDP per capita of 0.10 percentage points and a decline in the share of informal sector employment of 0.06 percentage points, both over a two-year period. Digital payments do not appear to be significantly associated with rises in total factor productivity once controlling for general measures of digitalization and government effectiveness, but they are linked to greater financial inclusion and credit access. The results reinforce the case for government policies to encourage digital payments and, as complementary factors, access to the financial sector and information technology. [Read more at the BIS]

    Upcoming Speaking Engagements:

    • CBDC Conference, Istanbul, September 10-12. The conference will offer representatives of central banks, commercial banks, technology providers, policy makers and academics the perfect platform to learn about the latest CBDC developments, exchange ideas with experts and peers. [Find out more and register here][Central bank delegates may be eligible for free registration (email registration@cbdc-conference.com to find out more)]
    • Digital Currency Conference, London, September 23-24. The conference will bring together policymakers, regulators, and technology and innovation experts to network and discuss all aspects of digital currencies. And enter the KiffmeisterDCC code at registration to get a 20% discount! [Find out more and register here]

    And 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 john@kiffmeister.com.