The concept of “digital fiat currency” (DFC) has started to catch on as a catch-all for digital currencies that are based on fiat currencies, including central bank digital currency (CBDC), stablecoins, tokenized deposits, and various other forms of electronic money. The term “DFC” goes back to a series of reports by the International Telecommunications Union (ITU) between 2017 and 2019, the meaning of which was best articulated in a 2019 technical report:
Digital fiat currency (DFC) is a tokenized, digital representation of a sovereign currency issued by an authorized public or private entity. When issued and distributed by a central bank or other monetary authority, it is a central bank digital currency (CBDC). If it is issued by a private entity, it may be e-money or another form of digital commercial bank money/private digital tokens/stablecoins, even if backed by central bank money.
[Source: ITU. 2019. “Digital Currency Including Digital Fiat Currency Reference Architecture and Use Cases Report,” ITU Telecommunication Standardization Sector Focus Group Digital Currency Including Digital Fiat Currency Technical Report.]
IMF Global Standards for Macroeconomic Statistics now include crypto-assets (IMF)
The IMF now recognizes crypto-assets in its Balance of Payments and International Investment Position Manual. It divides cryptos into fungible and non-fungible tokens. Cryptos without backing liabilities are treated as non-produced nonfinancial assets under the capital account, which means cross-border transactions involving them will be tracked as acquisitions or disposals of non-produced assets. Stablecoins and other cryptos backed by liabilities are considered financial instruments. Platform-based cryptos, such as Ethereum and Solana, may be classified as equity-like instruments, reflecting ownership rights similar to traditional equities. The manual also addresses staking and crypto yield activities, which are to be treated as sources of income akin to dividends, depending on the holder’s intent and scale of holdings. Additionally, services related to crypto mining and staking are now recognized as exportable computer services, aligning with broader trends in the digital economy. [Read more at the IMF]
Upcoming Speaking Engagements:
- The Crypto Assets Conference (Frankfurt, March 26) will delve into the advancements in digital assets, tokenization, crypto assets, web3, and more, through insightful talks, interactive debates, and presentations by industry experts, founders, investors, and representatives from public institutions. [Register here and get a 10% discount]
- The Digital Euro Conference 2025 (Frankfurt, March 27) 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! [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.
