Digital Fiat Currency (DFC) at the Crossroads (Bitcoin, Fiat and Rock ‘n’ Roll)
I spent a very pleasant hour with Digital Euro Association (DEA) Chair Jonas Gross chatting about the evolution of digital currency, from central bank digital currency (CBDC) to stablecoins and tokenized deposits. Here’s the TL;DR but click here for the whole podcast, which I think you’ll find interesting:
CBDCs are at a pivotal stage, with wholesale CBDCs gaining renewed interest for their potential in efficient, high-value settlements—especially as tokenized deposits and atomic settlement use cases emerge. However, retail CBDCs face uncertainty, as countries like Canada, Sweden, and the UK pause or scale back projects due to limited public interest and adoption challenges, while the European Central Bank continues to push ahead with its digital euro preparations. Lessons from early adopters show that technology alone is insufficient without strong merchant integration and public education. Meanwhile, stablecoins are rising in influence, but their future depends on regulatory acceptance and central bank backing. The debate continues between permissioned and permissionless blockchain infrastructures, and their roles in creating modular, interoperable financial systems .
Fundamentals of Modern Money and its Application to Sharia-Compliant CBDC (BNM)
Bank Negara Malaysia (BNM) published a paper that explores the fundamental nature of modern money—characterizing it as a credit relation and a promise to pay abstract value—and examines its implications for Shariah (Islamic law) analysis, particularly in the context of central bank digital currency (CBDC). It argues that modern money, unlike classical commodity-based money, is constituted by social, economic, and political relationships among individuals, banks, central banks, and the state. The authors highlight that traditional Shariah conceptions, which treat money as a tangible commodity, do not fully capture the essence of modern money. They propose a hybrid Shariah approach that recognizes modern money as both a means of payment and a credit instrument, suggesting that the rules of riba (usury) should apply to modern money in its various forms, including CBDCs, to ensure alignment with Islamic principles. [Read more at the BNM]
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.
