Month: November 2024

Kiffmeister’s #Fintech Daily Digest (20241129)

~ kiffmeister

Future of Payments 2024: Many Paths, One Goal (OMFIF)

The Official Monetary and Financial Institutions Forum (OMFIF) Digital Monetary Institute (DMI) published its annual Future of Payments report, based on a survey of 34 central banks, 13 from advanced and 21 from emerging market economies. It found that platforms based on multi-currency central bank digital currencies (CBDCs) are emerging as alternatives to existing cross-border payments systems, with Project mBridge being the most advanced, although liquidity issues and governance concerns still pose limitations for widespread adoption. CBDC interoperability will be a key consideration for global payments going forward, with a hub-and-spoke model being favored by survey respondents. Standardization (e.g., migrating to ISO 20022 standards) is helping to reduce the costs and frictions in cross-border payments, but implementation is patchy. However, instant payments systems are rapidly growing in importance, with 47% of survey respondents selecting it as the most promising avenue for improving cross-border payments. [Read more at OMFIF]

Swedish payments infrastructure priorities in a rapidly changing payment landscape (Riksbank)

Sveriges Riksbank published an independent assessment of the Swedish payments system, aiming to gaps in available services and to suggest some possible directions/opportunities for the system’s evolution. It concluded that enabling a wider range of instant (or real-time) account-to-account payments should be a high priority for banks and the payments industry, in addition to the work underway to modernize Swedish bulk/batch payments. Also, the report recommends that, “although the case for a retail central bank digital currency (CBDC) is probably stronger in Sweden than in most other advanced economies”, the best strategy for the Riksbank is to step back but be ready to be a “fast follower” of a digital euro launch, “possibly either using the European Central Bank’s infrastructure or borrowing heavily from its design”. [Read more at the Riksbank]

Third meeting of the Bank of Japan CBDC Forum (BOJ)

The Bank of Japan (BOJ) published an English version of the slides presented at the October 17, 2024 meeting of its CBDC Forum. The BOJ provided an update on the development of the prototype system details of the system, and updates on progress made by different working groups. Since April 2023, the BOJ has been conducting technical evaluations not explored in the earlier proof of concept phase, while leveraging the skills and insights of private businesses. [Read more at the BOJ]

Norwegian krone added to Eurosystem’s TIPS instant payment service (ECB)

The European Central Bank (ECB) and Norges Bank signed an agreement for Norway to join the Eurosystem’s TARGET Instant Payment Settlement (TIPS) service. This will make the Norwegian krone the fourth currency available for settlement in TIPS, in addition to the euro, the Swedish krona and the Danish krone, which is scheduled to join in April 2025. The inclusion of the Norwegian krone in TIPS, which is part of the Eurosystem’s TARGET Services, is planned for the first half of 2028 and will enable market participants in Norway to settle payments instantly, around the clock and in central bank money. [Read more at the ECB]

European Digital Identity Framework implementing acts (EC)

The European Commission (EC) published for consultation the European Digital Identity Framework implementing acts, published in August 2024, which have now been adopted by the EC. The Framework seeks to give citizens and businesses a trusted and secure means of digital identification that works across all Member States via the means of European Union (EU) Digital Identity Wallets. It entered into force in May 2024. Each Member State will offer at least one version of the EU Digital Identity Wallet, built to the same common specifications, by 2026. [Read more at the EC]

Call for candidates to contribute to the digital euro brand rules (ECB)

The ECB is inviting leading experts in branding and communication with advanced knowledge of payments and digital money to contribute to the brand rules workstream. This workstream is the part of the Rulebook Development Group that is to develop a proposal for brand rules that participants in the digital euro scheme, i.e. supervised payment service providers (PSPs), will adopt for their end-user solutions. This excludes brand strategy, expression and the visual identity of the digital euro. [Read more at the ECB]

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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.

Kiffmeister’s #Fintech Daily Digest (20241128)

~ kiffmeister

Tether to shutter euro stablecoin as key MiCA deadline looms (CoinDesk)

Tether will discontinue support for its EUR₮ euro stablecoin. As such, Tether has ceased minting EUR₮, with the last acquisition request processed in 2022, and new EUR₮ issuance requests are no longer accepted. Holders of EUR₮ on all blockchains should redeem their holdings by November 27th, 2025. In any case, there has been little demand for EUR₮ with only $27 million market capitalization, versus Circle’s EURC $90 million and Stasis Euro’s $130 million, and Tether’s USDT’s $132 billion (according to CoinGecko). Also, EUR₮ is not compliant with the European Union’s Markets in Crypto-Assets Regulation (MiCA) which comes into force at the end of 2024. Under it, stablecoin issuers will be required to hold at least 60% of reserve assets in European banks, whereas Tether prefers to invest the bulk of its stablecoin reserves in short-term marketable government securities. [Read more at Tether.io]

Court overturns US sanctions against crypto mixer Tornado Cash (Reuters)

A U.S. appeals court ruled that the U.S. Treasury Department’s Office of Foreign Assets Control (OFAC) acted outside its authority when it sanctioned crypto-asset mixer Tornado Cash in 2022 and accused it of helping launder over $7 billion for North Korean hackers and other malicious cyber actors. Crypto-asset mixers are anonymized software tools that allow users to conceal the source or owner of digital assets. OFAC blacklisted Tornado Cash after concluding it was helping launder proceeds of cyber crimes, including more than $455 million stolen by the Lazarus Group, a North Korean government-backed hacking group. The ruling said that federal law only gave OFAC the authority to regulate property, which Tornado Cash’s immutable crypto-mixing smart contracts did not constitute. [Read more at Reuters]

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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.

Kiffmeister’s #Fintech Daily Digest (20241127)

~ kiffmeister

Retail CBDC legal and system design considerations (BIS)

The Bank for International Settlements (BIS) published reports on retail central bank digital currency (CBDC) system design and legal considerations. They were written by a group comprised of the BIS and seven central banks (Bank of Canada, the Bank of England, the Bank of Japan, the European Central Bank, the Board of Governors of the Federal Reserve System, Sveriges Riksbank and the Swiss National Bank). The system design paper provides perspectives on overall system design and four key issues: privacy, cyber security (including quantum computing), offline functionality and point of sale considerations. The legal paper examines key legal questions, focusing on four areas: the legal classification of retail CBDC; the obligations and liabilities of participants in the retail CBDC ecosystem; privacy and financial crime and cross-border issues. [Read more at the BIS]

Russian ministry urges 2-year transition period for CBDC (Crypto.News)

The Russian Ministry of Industry and Trade has called for a two-year transition period before making merchant acceptance of digital ruble payments mandatory, citing concerns over unprepared infrastructure. The draft law that would make digital ruble payments mandatory for large retailers by July 2025, which could create serious challenges for those businesses. The Ministry particularly emphasized the need for clear operational guidelines, and additional time to finalize software, update information systems, conduct testing, and train staff. [Read more at Izvestia]

Automated fund administration and transfer agency using smart contracts (Chainlink)

As part of the Monetary Authority of Singapore (MAS) Project Guardian, SBI Digital Markets, UBS Asset Management, and Chainlink completed the implementation of a tokenized fund. They showed how tokenization, smart contracts, and Chainlink infrastructure can automate the fund management process for fund administrators and transfer agents. The pilot demonstrated the possibility for a tokenized fund to maintain its share register on one blockchain while using Chainlink’s Cross-Chain Interoperability Protocol (CCIP) to enable the processing of intensive fund lifecycle activities on another blockchain with different underlying security, cost, and efficiency properties. [Read more at PR Newswire]

Sponsored Content:

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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.

Kiffmeister’s #Fintech Daily Digest (20241126)

~ kiffmeister

Iran Central Bank signals imminent digital rial launch (Tasnim News Agency)

Central Bank of Iran Governor Mohammad Reza Farzin reportedly announced that the launch of a digital rial is imminent. A pilot test of the retail central bank digital currency (CBDC) reportedly commenced in July 2024 on the island of Kish, involving two major Iranian banks, Mellat and Tejarat. [Read more at the Tasnim News Agency]

UK FCA outlines its approach to crypto-asset regulation (FCA)

The U.K. Financial Conduct Authority (FCA) outlined its roadmap for crypto-asset regulation, to be implemented by 2026. It plans to publish discussion papers on market abuse and disclosures by the end of 2024, and on stablecoins, trading platforms, staking, prudential crypto exposure and lending by early 2025. The FCA also published the results of a survey that showed that U.K. crypto-asset ownership has grown by 4% in the two years ending in August 2024 to include about 12% of the country’s adult population. [Read more at the FCA]

EIB issues second €100m digital bond in a week using wCBDC (Ledger Insights)

The European Investment Bank (EIB) issued another €100 million digital bond. using the Banque de France’s pilot wholesale central bank digital currency (CBDC) for settlement, as part of the European Central Bank’s (ECB’s) wholesale DLT settlement trials in central bank money which end this month. This time, Goldman Sachs provided its GS DAP as the tokenization platform for the issuance, with Goldman Sachs Bank Europe acting as joint lead manager alongside DZ Bank and LBBW. [Read more at the EIB]

Credit Agricole CIB, CACEIS experiment with tokenized deposits, wCBDC as part of ECB trials (Ledger Insights)

As part of the ECB wholesale DLT settlement trials, Crédit Agricole CIB simulated cross border payments using a tokenized correspondent banking model with the interbank settlement conducted with the Banque de France’s pilot CBDC on its DL3S platform. This experiment tested the potential for corporate clients to manage their real time treasury cash balances 24/7 across jurisdictions. [Read more at Ledger Insights]

Stablecoins and money market funds: Less similar than you think (CEPR)

The Centre for Economic Policy Research (CEPR) posted an article by several Bank for International Settlement (BIS) and European Central Bank (ECB) staffers that explores the reactions of stablecoin capitalization and money market fund assets under management (AUM) to crypto-asset market and US monetary policy shocks. Following a crypto shock, the money market fund AUMs barely budge whereas stablecoin capitalization drops significantly. After a monetary policy tightening, prime money market fund AUMs rise while stablecoin market capitalization substantially declines. As monetary policy tightens, crypto prices fall, the market turns bearish, and investors demand less stablecoins for speculative purposes. This brings into question the role of stablecoins as a crypto safe haven from either crypto or monetary policy and traditional financial market shocks. [Read more at the CEPR]

Take part in the BIS Innovation Hub’s 2025 Analytics Challenge (BIS)

The Bank for International Settlements (BIS) Innovation Hub is inviting interested parties from private and public sector entities as well as academic researchers to compete to develop innovative solutions to combat financial crime and enhance the integrity of the evolving global financial system. The shortlisted solutions will be presented at the BIS Innovation Hub’s Analytics Showcase in London on March 27-28 to an audience of senior leaders from central banks, public sector organizations and financial institutions. [To participate click here]

Sponsored Content:

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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.

Kiffmeister’s #Fintech Daily Digest (20241122)

~ kiffmeister

CFTC advisory subcommittee recommends tokenized margin collateral (Ledger Insights)

The Commodity Futures Trading Commission (CFTC) Global Markets Advisory Committee (GMAC), made up of industry participants, voted in favor (27-0) of three recommendations to adopt distributed ledger technology (DLT) and tokenized assets as collateral for margin. Committee members concluded that no changes to regulations, policies and procedures would be required. The proposals would need to be adopted by the full GMAC Committee and it’s up to the CFTC to decide whether it proceeds. [Read more at the CFTC]

CBOE to launch cash-settled bitcoin ETF options (Cboe)

Cboe Global Markets will launch cash-settled spot bitcoin (BTC) index options on December 2, 2024. Regulated by the U.S. Securities and Exchange Commission (SEC), they will be based on the Cboe Bitcoin U.S. ETF Index (CBTX), which tracks a basket of U.S.-listed spot BTC exchange-traded funds (ETFs). The options will be cash-settled, so that positions are closed in cash at expiration, removing the complexities of physical ETF delivery. Also, they will be exercisable only on the expiration date (“European style”) to eliminate early assignment risk. This follows the November 18 NASDAQ announcement of plans to list options on BlackRock’s BTC ETF, after the CFTC cleared the Options Clearing Corporation to oversee the market a few days earlier. [Read more at the Cboe]

Sponsored Content:

Supercharge your CBDC research and deployment strategy with Chavanette’s Alpha Knowledge Platform (⍺LP)—the ultimate resource for deep insights into CBDCs and the ecosystem of CBDC technology providers and solutions. Get insider access to the top 20 CBDC platforms through the GALACTIC GRID, dissected by Chavanette’s expert framework. Lead the digital central banking revolution with the tools necessary to deploy Central Banking 4.0—stay informed, stay bold, stay transformative. Be the leader. Register for access here and get a 10% discount on the first year with the kiffmeister10 code.

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.

Kiffmeister’s #Fintech Daily Digest (20241121)

~ kiffmeister

Decentralized dealers? Examining DEX liquidity provision (BIS)

The Bank for International Settlements (BIS) published a paper that explores the role of participants in providing liquidity on decentralized exchanges (DEXs). DEXes allow participants to buy and sell assets without the need for intermediaries, in theory democratizing liquidity provision. However, using data from the largest DEX (Uniswap V3), it shows that liquidity provision, rather than being the purview of a diffused set of market participants, is confined predominantly to a small group of sophisticated ones. These participants submit orders that mimic bids and asks and are able to extract significantly higher profits compared to their unsophisticated counterparts. They also exhibit considerable skill, extracting higher profits during periods of high volatility by capturing a higher share of trading without incurring additional adverse selection. [Read more at the BIS]

The proof-of-stake protocol and run risk (OFR)

The U.S. Treasury Office of Financial Research (OFR) published a paper that examines the scenarios that can increase run risk of crypto-assets, such as Ethereum (ETH), that use proof-of-stake (POW) protocols to validate transactions. It finds that while proof-of-work (POW) protocols are more energy intensive and less scalable, POS requires more capital, and a significant drop in a POS-based crypto-asset price may cause validators to exit their investments. Their exit may impair the tradability of the crypto asset, which in turn may cause more validators to exit, resembling a bank run. In the case of Ethereum, such an event would disrupt activity relying on the Ethereum network, including many crypto firms and DeFi networks. The authors also show that the use of margin only exacerbates this run risk during price declines. If a price decline is steep enough to cause a margin call for investors, those investors must either post additional collateral or sell crypto assets, which could further depress prices. [Read more at the OFR]

Retail fast payment systems as a catalyst for digital finance (BIS)

The BIS published a paper that sheds light on how fast payment systems (FPSs) influence the diffusion of digital finance apps, based on a rich dataset on app downloads and use for 86,163 apps in 95 countries over 2012–22. It identifies various mechanisms through which FPS drive finance app adoption, like stimulating competition and innovation in payments, fostering digital finance adoption via learning effects and expanding access to financial services, particularly in emerging market and developing economies (EMDEs) and low income countries (LICs). This effect is particularly evident for apps by technological disrupters, such as fintechs or big techs, relative to those of incumbent financial institutions. Finally, we identify some characteristics of FPS that further amplify digital finance adoption such as the active role of the central bank, open membership and real-time settlement. [Read more at the BIS]

Sponsored Content:

Supercharge your CBDC research and deployment strategy with Chavanette’s Alpha Knowledge Platform (⍺LP)—the ultimate resource for deep insights into CBDCs and the ecosystem of CBDC technology providers and solutions. Get insider access to the top 20 CBDC platforms through the GALACTIC GRID, dissected by Chavanette’s expert framework. Lead the digital central banking revolution with the tools necessary to deploy Central Banking 4.0—stay informed, stay bold, stay transformative. Be the leader. Register for access here and get a 10% discount on the first year with the kiffmeister10 code.

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.

Kiffmeister’s #Fintech Daily Digest (20241120)

~ kiffmeister

Paxos to Buy Finland’s Membrane Finance to gain EU access (CoinDesk)

Stablecoin issuer Paxos will gain access to the European Union (EU), by agreeing to buy Finland-based electronic money institution (EMI) Membrane Finance. “The acquisition is subject to regulatory approval [but] upon completion of the acquisition, Paxos will be a fully licensed EMI in Finland and the EU.” Membrane’s digital assets are regulated by Finland’s Fin-FSA and fully compliant with the EU’s Markets in Crypto-Assets Regulation (MiCA). This follows Tether’s recent investment in Quantoz Payments to support the latter’s launch of its EURQ and USDQ MiCA-compliant stablecoins. In July 2024, USDC and EURC issuer Circle claimed that it became MiCA compliant when it attained an EMI license from the French Autorité de Contrôle Prudentiel et de Résolution (ACPR). [Read more at Paxos]

Deutsche Bank, UBS settle tokenized deposit payments in Bundesbank Trigger solution experiment (Ledger Insights)

UBS and Deutsche Bank have reportedly simulated tokenized deposit payments between the banks as part of the European Central Bank (ECB) wholesale distributed ledger technology (DLT) settlement trials. The Bundesbank’s Trigger solution, that enables blockchain based systems to link to the Trigger Chain, which in turn initiates a payment on the Target2 payment system in central bank money, was used. Adhara, the technology partner of Fnality, provided the orchestration layer that ensures that all the separate settlement legs of the transaction happen atomically. One of the two trails simulated transactions between Deutsche Bank London and UBS in Switzerland involving pounds and Swiss francs, which were settled using euros. [Read more at Ledger Insights]

Brazil’s central bank selects consortium to support Drex trade finance use case experiments (Chainlink)

Banco Central do Brasil has reportedly selected Banco Inter alongside Microsoft Brazil, 7COMm and Chainlink to build a trade finance solution as part of the 2nd phase of Brazil’s DREX central bank digital currency (CBDC) experimentation. The solution leverages blockchain technology and oracles to automate supply chain management and improve trade finance processes. The goal of the pilot is to demonstrate the automated settlement of agricultural commodity transactions across borders, across platforms, and via different currencies. [Read more at PR Newswire]

The Swedish retail payment infrastructure needs to be modernized (Sveriges Riksbank)

Sveriges Riksbank called for the modernization of its retail payments infrastructure and the creation of processes for secure, efficient and accessible retail payments. More specifically, the central bank argued that the infrastructure for clearing (compilation and processing of payment orders) and settlement (finalization) of retail payments in Swedish kronor needs modernization. It presented its view of the way forward over the next five years. Interestingly, no mention was made of an e-kronor retail central bank digital currency (CBDC). [Read more at the Riksbank]

Sponsored Content:

Supercharge your CBDC research and deployment strategy with Chavanette’s Alpha Knowledge Platform (⍺LP)—the ultimate resource for deep insights into CBDCs and the ecosystem of CBDC technology providers and solutions. Get insider access to the top 20 CBDC platforms through the GALACTIC GRID, dissected by Chavanette’s expert framework. Lead the digital central banking revolution with the tools necessary to deploy Central Banking 4.0—stay informed, stay bold, stay transformative. Be the leader. Register for access here and get a 10% discount on the first year with the kiffmeister10 code.

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.

Kiffmeister’s #Fintech Daily Digest (20241119)

~ kiffmeister

Coinbase Launches the Coinbase 50 Index (Coinbase)

Coinbase launched the Coinbase 50 Index (COIN50), a benchmark representing the top 50 digital assets listed on Coinbase Exchange that meet the index’s fundamental criteria for inclusion. Crypto traders can use the COIN50 as a benchmark to track broader market trends and gain insight into the overall performance of the crypto economy. Eligible traders can trade this index via a COIN50 perpetual future (COIN50-PERP) with up to 20x leverage on Coinbase International Exchange and Coinbase Advanced. [Read more on Coinbase]

The impact of the digital euro on Austrian banks (ONB)

The Oesterreichische Nationalbank (ONB) published a paper that studies the impact the introduction of the digital euro might on Austrian banks from a financial stability perspective, based on the premise that the digital euro will not bear interest and will be subject to a holding limit. With respect to bank liquidity risk and profitability, it finds substantial effects only for extreme scenarios and high holding limits. Lower holding limits effectively contain adverse outcomes both with respect to interest income losses and liquidity risk. Overall, it concludes that the introduction of a digital euro would not pose a threat to the stability of the Austrian banking system provided the digital euro is subject to a carefully designed holding limit and remuneration model. From a purely financial stability perspective, low holding limits would be preferable to higher ones. [Read more at the ONB]

EIB issues €100m digital bond settled with wholesale CBDC (Ledger Insights)

The European Investment Bank (EIB) issued €100 million of digital bonds that will be settled using the Banque de France’s pilot wholesale central bank digital currency (CBDC) as part of the European Central Bank (ECB) wholesale distributed ledger technology (DLT) settlement trials. (The Banque de France actually refers to the wholesale CBDC tokens issued on its DL3S DLT platform as “tokenized representations of central bank money (CeBM)”.) The bonds will be issued on the HSBC Orion platform. [Read more at the EIB]

Sponsored Content:

Supercharge your CBDC research and deployment strategy with Chavanette’s Alpha Knowledge Platform (⍺LP)—the ultimate resource for deep insights into CBDCs and the ecosystem of CBDC technology providers and solutions. Get insider access to the top 20 CBDC platforms through the GALACTIC GRID, dissected by Chavanette’s expert framework. Lead the digital central banking revolution with the tools necessary to deploy Central Banking 4.0—stay informed, stay bold, stay transformative. Be the leader. Register for access here and get a 10% discount on the first year with the kiffmeister10 code.

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.

Kiffmeister’s #Fintech Daily Digest (20241117)

~ kiffmeister

Towards immediacy and continuity in money and finance? (SSRN)

The European Central Bank’s (ECB’s) Ulrich Bindseil posted a paper he wrote with Omid Malekan on time structure phenomena in finance, money, payments and settlement and how they are affected by progress in information and communications technology (ICT). While technology is a key driver of the evolution towards immediacy and continuity, they note that in some instruments, settlement lags and discontinuities have remained unchanged for long periods of time despite significant ICT progress, and they identify cases in which even ideal ICT would not seem to imply immediacy and continuity. For example, two-sided transactions in which not only money, but also another often less liquid asset has to be settled, may be resistant to shorter settlement cycles until the role of intermediaries and number of layers are reduced, possibly via decentralized finance (DeFi). [Read more on SSRN]

The impact of CBDC on central bank profitability, risk-taking and capital (ECB)

The ECB published a paper (co-written by Ulrich Bindseil) that uses scenario analyses to illustrate the key drivers of the impact of central bank digital currency (CBDC) on central bank profitability. It finds that CBDC will have broadly the same balance sheet and profit implications as the issuance of banknotes. It shows that pure exchange of banknotes for CBDC has no further implications on central banks’ balance sheets, and thus their financial risks, profits and capital. This is different, however, for other exchanges of monetary liabilities, such as commercial bank deposits, which increase the amount of unremunerated central bank monetary liabilities and may require the creation of additional reserves for banks via the corresponding additional central bank assets. The last two points would could give rise to higher central bank income when interest rates are positive. However, these risk implications can be managed via well-established frameworks and likely be mitigated by measures to limit CBDC take-up. [Read more at the ECB]

A method for uncovering tokenization archetypes and their effects (SSRN)

Anisa Plepi and Peter Schendner posted a paper that proposes a framework for aggregating and categorizing viewpoints on fundamental issues concerning tokenization, and assessing the causal effects of tokenization on market outcomes, using bonds as an example. The framework starts with a taxonomy of bond tokenization use cases according to the tokenization model, which is fed into a causal model to assess how would the outcomes, characterizing its lifecycle processes change if a bond had been tokenized instead of using the traditional infrastructure. Or alternatively, how would the outcomes of interest change if a bond had been exchanged in the traditional infrastructure instead of being tokenized? The paper then proposes an outcomes matrix to estimate the effects of tokenization on particular outcomes for which there are 25 metrics. The framework then conceptualizes the Swiss National Bank (SNB) Project Helvetia tokenization approach and evaluate its effects on efficiency and liquidity. [Read more on SSRN]

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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.

Kiffmeister’s #Fintech Daily Digest (20241115)

~ kiffmeister

UK to trial blockchain-based Gilts within two years (Ledger Insights)

On November 14, 2024, the U.K. Chancellor of the Exchequer announced that HM Treasury plans to launch a distributed ledger technology (DLT) based Digital Gilt Instrument (DIGIT) pilot. No details were provided, but according to an earlier Bloomberg story, it could launch within two years. Also on November 14, UK Finance, a trade association for the U.K. banking and financial services sector, published a paper that it submitted in April 2024 to HM Treasury and the Debt Management Office, with options for such a pilot. These was an “evolutionary” approach to be deployed in three phases over 18 months, and a “big bang” approach that could be deployed in 12 to 18 months. [Read more at Gov.UK]

U.K. government confirms ongoing digital pound design phase (HM Treasury)

The U.K. HM Treasury published its National Payments Vision, in which it committed to continue the design phase for a retail central bank digital currency (CBDC) in partnership with the Bank of England. It reconfirmed that no decision has been taken on whether to implement a digital pound, but any decision to proceed would be accompanied by the introduction of primary legislation, ensuring full Parliamentary scrutiny by both Houses of Parliament, before any launch. Legislation would be preceded by a further public consultation and would guarantee users’ privacy and control of their money. “Irrespective of the final decision, by partnering with the private sector on proofs of concept and experiments, the work will support private innovation in digital currency technologies [and] deepen the retail payments expertise of the UK public authorities. [Read more at HM Treasury]

Norway can wait with CBDC, government task force says (Bloomberg)

A Norwegian government-sponsored task force concluded that there’s no rush for the central bank to launch an e-kroner. However, work should be started “on the necessary regulatory changes” for a possible introduction of a CBDC that may become relevant in future. “The committee doesn’t currently see a need to introduce digital central bank money for reasons of financial inclusion, privacy or emergency preparedness, but doesn’t rule out that a central bank digital currency may in the future be a relevant instrument for safeguarding these considerations.” [Read more on the Norwegian government website]

Sponsored Content:

Supercharge your CBDC research and deployment strategy with Chavanette’s Alpha Knowledge Platform (⍺LP)—the ultimate resource for deep insights into CBDCs and the ecosystem of CBDC technology providers and solutions. Get insider access to the top 20 CBDC platforms through the GALACTIC GRID, dissected by Chavanette’s expert framework. Lead the digital central banking revolution with the tools necessary to deploy Central Banking 4.0—stay informed, stay bold, stay transformative. Be the leader. Register for access here and get a 10% discount on the first year with the kiffmeister10 code.

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.