Bank of Japan CBDC Experiments Progress Report (English version)(BoJ)
The Bank of Japan (BoJ) published an English version of its May 2025 central bank digital currency (CBDC) preparation phase progress report. The technical development focuses on an account-based CBDC ledger system that separates customer management (handling user identities and transaction details) from ledger management (processing only anonymized settlement data with user IDs) to enhance privacy. Also, it implements a record splitting mechanism that divides user balances into multiple records, enabling parallel processing when one record is locked during transactions for high transaction volumes (testing up to 50,000 transaction per second). In addition, significant interoperability challenges with core banking systems were identified, whereby large volumes of CBDC-to-bank deposit conversions could overwhelm core banking systems with excessive traffic loads. The report proposes several solutions including aggregating conversion operations over time periods rather than processing them in real-time. [Read more at the BoJ]
U.S. Banking Associations Urge OCC to Postpone Crypto Firm Applications for Bank Charters (ABA)
Five major U.S. banking associations, including the American Bankers Association (ABA), have submitted a formal letter to the Office of the Comptroller of the Currency (OCC) expressing strong opposition to recent national trust charter applications filed by digital asset companies including National Digital TR CO, Fidelity Digital Assets, First National Digital Currency Bank, and Ripple National TR Bank. The associations argue that these applications present significant policy and legal concerns because the proposed business models—primarily involving digital asset custody services for cryptocurrencies, stablecoins, and other digital assets—do not constitute the traditional fiduciary activities historically required for national trust banks under federal law (12 U.S.C. § 92a). They contend that the public portions of these applications contain insufficient detail to enable meaningful public scrutiny, with comment periods closing despite inadequate transparency, and that approving such charters would represent a fundamental departure from established OCC precedent that should require extensive public notice and comment procedures. The associations urge the OCC to postpone consideration of all applications until more complete business plan information is made publicly available, warning that approval could establish a problematic precedent allowing companies to obtain national bank charter benefits without corresponding regulatory oversight, potentially creating systemic risks to the banking system. [Read more at the ABA]
1:1 Redemptions for Some, Not All (MIT DCI)
The MIT Digital Currency Initiative (DCI) published a blog that discusses the complexities of stablecoin redemptions and the importance of understanding the relationship between issuers, institutional clients, and retail users. It highlights that while issuers promise a 1:1 redemption, this promise is not always guaranteed due to factors such as access, solvency, and liquidity. The article explains that institutional clients have direct access to redeem tokens at face value, whereas retail users rely on intermediaries, leading to a two-tiered system. This system can be particularly punishing during times of market stress, as seen during the USDC-SVB crisis in 2023. (See also Co-Pierre Georg’s discussion on LinkedIn.) [Read more at the MIT DCI]
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]
I produce a monthly digest of digital fiat currency (DFC) developments exclusively for the official sector (e.g., central banks, ministries of finance and international financial institution (e.g., the BIS, IMF, OECD, World Bank)) plus academics and firms that are active in the DFC space (commercial banks, technology providers, consultants, etc.). (DFCs include central bank digital currency (CBDC), stablecoins and tokenized deposits.) It goes out via email on the first business day of every month, and if you’re interested in being on the mailing list, please email me at john@kiffmeister.com.
