Bank of England to press on with digital currency (Reuters)
According to Governor Andrew Bailey, the Bank of England (BOE) is pressing on with work on a potential retail central bank digital currency (CBDC) as it sees risks that commercial banks are failing to keep up with digital payment system innovations. “Absent innovation in commercial bank money, central banks may be left as the only game in town insofar as retail payments innovation is concerned, the central bank is indifferent as to whether retail payments are made in central bank or commercial bank money. However, during a 2021 House of Lords Economic Affairs Committee meeting, Bailey and then-Governor Jon Cunliffe implied that they would prefer not to see retail payments fully shift to nonbank payment instruments such as stablecoins. [Read more at the BOE]
G20 Crypto-asset policy implementation roadmap status report (FSB)
The Financial Stability Board (FSB) published a status report on progress made in taking forward the IMF-FSB crypto-asset policy implementation roadmap. Jurisdictions have made progress in implementing the policy and regulatory responses developed by the IMF, FSB, and standard-setting bodies (SSBs). Nearly all FSB member jurisdictions have plans in place to develop new or revise their existing regulatory frameworks for crypto-assets and stablecoins, or they already have those frameworks in place. However, inconsistent implementation of the FSB Framework may hinder its effectiveness and lead to regulatory arbitrage. Cross-border crypto-asset activities that originate from offshore jurisdictions present elevated regulatory and supervisory challenges for authorities. [Read more at the FSB]
Risk-based capital for stable value tokens (Circle)
Circle published a paper that introduces Token Capital Adequacy Framework (TCAF), a risk-based capital framework designed for stable value tokens, including stablecoins, deposit tokens, and tokenized cash. TCAF assesses the capital requirements by considering both financial and non-financial risks that issuers face. TCAF quantifies the capital needed to absorb losses stemming from technological, infrastructure, and operational risks, particularly in an environment marked by rapid innovation and limited historical loss data. The framework is applied to past stress events involving stablecoins to demonstrate that TCAF is a more effective prudential tool compared to fixed-ratio or single factor capital frameworks. [Read more at Circle]
Upcoming Speaking Engagements:
- Digital Euro Conference 2025, Frankfurt, March 27, 2025. The DEC25 conference will explore the future of money with a focus on CBDCs, stablecoins, tokenized deposits, and the intersection of AI and digital ID. When you register, get 20% off the regular ticket price by using the Kiffmeister20 code! [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.
