Fintech wallets go live in digital rupee CBDC pilot (Ledger Insights)

Indian fintech firm CRED become the first fintech to integrate the Reserve Bank of India’s central bank digital currency (CBDC) by launching a beta version of its e-rupee wallet. CRED’s e-rupee wallet supports transactions up to ₹10,000 per transfer, with a daily transaction limit of ₹50,000 and storage up to Rs 1 lakh. These will costless to merchants. Future updates will enable programmable merchant payments, CRED Pay integration and PIN-less transactions below ₹500, with access for all CRED members in the coming months. YES BANK facilitates the issuance of CBDC tokens from RBI to CRED. Other non-banking payment service operators (NBPSOs) including PhonePe, AmazonPay, Google Pay, and Mobikwik are also looking to join the e-rupee pilot. [Read more at the Hindu Businessline]

Tokenization and financial market inefficiencies (IMF)

The IMF published a paper that introduces a taxonomy and a conceptual framework centered on market inefficiencies to evaluate the potential of tokenization for financial markets. It finds that some inefficiencies could decline across the asset life cycle. Others would remain, however, and new ones could emerge. Issuing, servicing, and redeeming assets might involve fewer intermediaries and thus become cheaper. The costs of trading assets may also decrease as tokenization lowers some counterparty risks and search frictions and offers flexibility in settlement. Additionally, greater competition among brokers could lower transaction fees. However, tokenization may amplify shocks if it induces institutions to become more interconnected and hold lower liquidity buffers or higher leverage, potentially jeopardizing financial stability. Programs themselves may introduce new risks related to strings of contingent contracts or faulty code. While competition may grow among financial intermediaries, the provision of market infrastructure could become more concentrated due to network effects. [Read more at the IMF]

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• The Central Bank Payments Conference (Paris, February 17–19) will explore the latest issues and developments confronting central banks and their evolving role as operators, overseers, and catalysts within the payments landscape. The focus will be on cross-border payments, CBDC and tokenization, open finance, instant payments, and financial inclusion, among other topics. When you register get 15% off by using the Kiffmeister15 code. [register here]
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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.