US judge rebuffs SEC-Ripple crypto lawsuit settlement proposal (Reuters)

U.S. District Judge Analisa Torres rejected a joint motion by Ripple Labs and the U.S. Securities and Exchange Commission (SEC) to endorse Ripple’s reduced $50 million fine to settle a civil lawsuit over the sale of unregistered securities. She chastised both sides for claiming that their settlement in March should excuse Ripple from honoring her permanent injunction against violating the law. In July 2023, Torres ruled that while XRP sold by Ripple on public exchanges did not meet the legal definition of a security, $728 million of XRP sales to institutional investors should have complied with securities laws. Ripple and the SEC appealed, but agreed to settle if Torres set aside her injunction and approved lowering the $125 million fine she imposed last August. Torres said, however, that both sides had “not come close” to showing that exceptional circumstances outweighing the public interest and administration of justice justified the settlement. [Read more at Reuters]

Stablecoins and Digital Euro: Friends or Foes of European Monetary Policy? (European Parliament)

The European Parliament ECON Committee published a paper that analyses whether dollar-denominated stablecoins pose risks to European monetary policy and assesses the potential of the digital euro as a countermeasure. It concludes that large-scale adoption of foreign stablecoins in Europe is unlikely due to strong trust in the euro, advanced local payment systems, and regulatory barriers like MiCA. Although stablecoins could theoretically disrupt interest rate transmission, bank lending channels, and exchange rate dynamics, these impacts are minimal under current conditions. The paper argues that the digital euro could offer a credible public alternative to stablecoins, but warns its effectiveness depends on design choices such as holding limits, privacy guarantees, and costs to merchants. Ultimately, while stablecoins currently pose little threat, continuous monitoring is recommended, and the digital euro’s success will hinge on addressing user needs and competitive functionality. [Read more at the European Parliament]

Driving Financial Inclusion Through Central Bank Digital Currencies (UNDP)

The United Nations Development Programme (UNDP) published a paper that outlines a methodology for the design, testing, and implementation of central bank digital currencies (CBDCs) to advance financial inclusion. It suggests design features that reduce identity management requirements in low-risk contexts to remove the need for bank accounts or minimum balances and offer offline functionality to mitigate the impact of physical remoteness. In addition, CBDCs have the potential to address price impediments and make financial services more affordable for the unserved and underserved populations. However, it gives short shrift to alternatives that could achieve the same end goals. For example, a 2023 IMF Fintech Note points out that CBDC is not uniquely equipped to overcome such financial inclusion barriers as low financial literacy, cultural factors, poor digital connectivity infrastructure and low trust in formal financial institutions. Also, other solutions may tackle the barriers to financial inclusion that are not addressed by CBDC, such as regulations to limit fees of existing financial services, policies requiring banks to offer basic deposit accounts without fees or minimum balance requirements, fast payment systems, open banking initiatives and open API standards to support competition and interoperability of existing financial services. [Read more at the UNDP]

On the Programmability and Uniformity of Digital Currencies (Bank of Canada)

The Bank of Canada published a paper that explores how programmability affects the uniformity and social utility of money using a stylized theoretical framework. It shows that programmable digital currencies emerge naturally when users value the ability to commit to future payments, which they find useful privately. However, this programmability can lead to fragmenting money into different forms with varying liquidity, posing public costs when informational frictions impede their use. The authors find that banning programmability could reduce welfare if informational frictions are minor—but may help if commitment frictions are low. Their results imply that programmable currencies could offer greater social benefits in decentralized, permissionless blockchain environments than in centralized systems. [Read more at the Bank of Canada]

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.