CBDC’s Design Implications for Financial Stability (BCU)
Banco Central del Uruguay (BCU) published a paper that investigates the financial stability implications of introducing a central bank digital currency (CBDC). It addresses concerns about “slow” disintermediation (where CBDC crowds out bank deposits) and “fast” disintermediation (where CBDC facilitates digital bank runs). The authors find that a simple, non-interest-bearing CBDC, designed as a digital equivalent of cash, does not inherently cause disintermediation, as it primarily substitutes physical cash for transactions. Additionally, they demonstrate that a well-implemented emergency liquidity assistance (ELA) policy, enabled by real-time CBDC transactions, can prevent bank runs by providing timely liquidity to illiquid banks. [Read more at the BCU]
Wyoming Plots August Debut for WYST Stablecoin (Decrypt)
The Wyoming Stable Token Commission (WSTC) is reportedly targeting an August 20 launch for its U.S. state-issued stablecoin, during the Wyoming Blockchain Symposium. Wyoming is launching a stablecoin to generate state revenue by earning interest on reserves held in short-duration US Treasury bonds. The WSTC has evaluated at least 12 blockchains (Aptos, Arbitrum, Avalanche, Base, Ethereum, Hedera, Polygon, Optimism, Sei, Stellar, Solana, and Sui) with Aptos, Solana and Sei reportedly leading the way according to the selection criteria. [Read more at the WSTC]
Upcoming Speaking Engagements:
The CB+DC Conference (Nassau, Bahamas, September 9-11) is a premier gathering centered on CBDCs, tokenized assets, and stablecoins. It provides a forum for central bankers, commercial bankers, technology innovators, policymakers, and academics to explore the latest advancements in digital currency, engage with experts and peers, and discuss the future of digital currency. [Register here but before you do, email me at john@kiffmeister.com for a 15% discount]
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.
