Reserve Bank of New Zealand Pauses Retail CBDC Work (RBNZ)
The Reserve Bank of New Zealand (RBNZ) has paused work on “Digital Cash” (retail central bank digital currency (CBDC)) while it focuses on “modernizing New Zealand’s payments system, including real-time payments… New Zealand’s payments system works well today, but there is an opportunity to make it faster, more innovative and better prepared for the future. The announcement said that “modern payments system could support new technologies and payment options like new forms of digital money including Digital Cash issued by the Reserve Bank, alongside the money people already hold in their bank accounts”. This seems to allude to tokenized commercial bank deposits settled in wholesale CBDC, which is a route being explored by a growing number of other central banks. [RBNZ]
BOE’s Breeden in No Rush to Launch “Britcoin” (Bloomberg)
Bank of England (BOE) Deputy Governor Sarah Breeden, speaking at the IMF Annual Meeting in Bangkok, reportedly said that there’s no rush to introduce a retail central bank digital currency (CBDC) because so many other developments in digital payments are underway. “Maybe we don’t need a digital pound quite so quickly, arguing that alternatives such as commercial stablecoins or tokenized deposits developed by banks could fulfill the role just as well.” Breeden also reportedly said that the BOE is upgrading its real time gross settlement system (RTGS) so it can be used to settle tokenized asset transactions, and that U.K. firms should develop successful sterling stablecoins to offer an alternative to the dollar dominance in the market. [Bloomberg]
Are Stablecoins and Bank Deposits Substitutes? (BIS)
The Bank for International Settlements (BIS) published a paper by Ahmed and Aldasoro that investigates whether stablecoins and bank deposits function as economic substitutes. The authors use weekly 2019 to 2025 U.S. data to argue that increases in bank deposit rates cause a deceleration in stablecoin market capitalization growth. They find that these effects are stronger for USDC than for USDT, consistent with the former’s closer ties to U.S. depositors. However, the authors note that their analysis relies on a sample spanning only a single high-rate tightening cycle and uses aggregate data, which obscures the specific depositor types and bank categories driving the substitution. [BIS]
BTW if you want to see a complete database of my DFC-related posts going back years, including many that didn’t make the Daily Digest cut, click here.
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.
