BOE Considers Keeping Digital Pound On Ice as Rivals Race Ahead (Bloomberg)
The Bank of England (BOE) and HM Treasury (HMT) are reportedly considering slowing down the digital pound project to defer making an immediate firm decision to approve or scrap it. Officials have been encouraged by private-sector innovation—especially tokenized deposits—that could deliver many CBDC benefits (faster, cheaper payments) within the existing regulated banking system, reducing the urgency to build a central-bank solution. The project has faced skepticism from the public, Parliament, and even BOE Governor Andrew Bailey, who remains unconvinced of the need for a retail CBDC. A decision to build would entail upfront costs in the hundreds of millions of pounds (albeit later offset by CBDC income), voluntary participation by banks, and risk of political backlash over privacy concerns. [Bloomberg]
Meta Rolls Out Stablecoin Payments (Coindesk)
Meta rolled out digital currency payouts for select creators in Colombia and the Philippines. The payouts use the USDC stablecoin on either the Solana or Polygon blockchain networks, processed via Stripe’s Link wallet and accompanied by tax reporting from both Meta and Stripe. The initiative marks Meta’s return to stablecoins after it attempted to introduce the Libra token, later renamed Diem, only to shut down the project amid regulatory scrutiny in 2022. [Meta]
Central Bank Digital Currency and Monetary Architecture (Dirk Niepelt)
In a literature review that has been accepted for publication by the Journal of Economic Literature, Dirk Niepelt argues that the macroeconomic consequences of retail central bank digital currency (CBDC) depend primarily on the policy choices accompanying its introduction. Organizing the survey around a neutrality result, the paper demonstrates that bank disintermediation does not independently constitute a source of non-neutrality, provided the central bank recycles CBDC proceeds to banks on deposit-equivalent terms. Most existing research conflates policy-contingent with fundamental sources of non-neutrality, obscuring the extent of policymaker control. Because CBDC represents a structural shift in monetary architecture rather than a technical payment upgrade, it raises political economy questions that exceed the conventional mandate of central banks. [Niepelt.ch]
On the Resilience of Payment Methods (NBER)
The U.S. National Bureau of Economic Research (NBER) published a paper that argues, using multi-source U.S. and cross-country evidence, that cash functions as critical fallback liquidity when electricity outages disable digital payment infrastructure during natural disasters. Event studies across store-level transaction data, card aggregates, and household scanner records show that hurricanes generate persistent outages, shifting spending composition sharply toward cash, while pre-disaster expenditure spikes are credit-financed stockpiling. The finding that payment-system fragility is a first-order attribute of any instrument has direct implications for regulators overseeing cashless transitions, mandatory acceptance rules, and the design of offline-capable central bank digital currencies. [NBER]
FYI 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.
