Digital pound design note – Intermediary roles and scheme rulebook (BOE)

The Bank of England (BOE) published an an overview of its initial thinking and work on the potential roles and responsibilities of digital pound (DP) intermediaries and a preliminary conceptual framework for a DP rulebook (or similar document) aimed at facilitating the proper management of the DP were one to be launched. It includes five broad elements; (I) the key participants in the DP ecosystem, (ii) the governance and oversight of the DP payment system, (iii) intermediaries’ obligations and minimum standards, (iv) the core functions intermediaries are expected to support, and (v) the governance of intermediaries. [Read more at the BOE]

Digital pound experiment report: Offline payments (BOE)

The BOE also published a report on their project aimed to assess whether it is technically feasible to implement an offline payment functionality for a digital pound. The project confirmed the technical feasibility, there are trade-offs, particularly around user experience and preventing double spending and counterfeiting, that make implementing it challenging. It showed that there are several technology choices that could be made for offline payments today, but those are dependent on policy choices, such as risk appetite, product proposition and liability, which impact the options available for mitigating security risks. [Read more at the BOE]

ECB publishes progress report on digital euro rulebook (ECB)

The European Central Bank (ECB) published the fourth update on the work of the digital euro Rulebook Development Group (RDG) in developing a draft digital euro scheme rulebook. The draft rulebook sections have been updated to reflect more than 2,000 comments received as part of the RDG’s interim review in 2024. The report also provides an update on the RDG workstreams since the last update published in September 2024. [Read more at the ECB]

Ripple acquires prime broker Hidden Road for $1.25B (Ripple)

Ripple is acquiring prime broker Hidden Road for $1.25 billion. With the acquisition, Ripple becomes the first crypto company to own and operate a global, multi-asset prime broker. Hidden Road offers institutions a one-stop-shop of advanced services including clearing, prime brokerage, and financing across foreign exchange (FX), digital assets, derivatives, swaps, and fixed income. The acquisition will make Ripple’s RLUSD the first stablecoin to enable efficient cross-margining between the digital asset space and traditional markets, and increase XRP Ledger usage. [Read more at Ripple]

Offline Payments Based on a Trusted Platform Module (MDPI)

The Journal of Cybersecurity published a paper that proposes a secure offline payment model utilizing a Trusted Platform Module (TPM) to enhance the security of digital currency transactions. Additionally, the monotonic counter, the basic component of the TPM, is integrated into this model to prevent double spending in a completely offline environment. The research presents a protocol model that combines these easily implementable technologies to facilitate the efficient processing of transactions entirely offline. However, it is crucial to acknowledge the security implications associated with the TPMs and near-field communications upon which this protocol relies. [Read more at the Multidisciplinary Digital Publishing Institute]

The Evolution of Video Games’ Payments Infrastructure (Kansas City Fed)

The U.S. Kansas City Federal Reserve Bank published a research briefing on the video game industry and its evolving revenue models. As more consumers play video games, companies have changed how they monetize and distribute games to their customers as well as adapted and evolved their payments infrastructure to support new revenue models. Meanwhile, regulators are monitoring the industry due to concerns related to consumer protection, data privacy, and financial crime. [Read more at the Kansas City Fed]

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.