Category: DLT

Kiffmeister’s #Fintech Daily Digest (20241022)

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Tokenization concepts and implications for central banks (CPMI)

The Bank for International Settlements (BIS) published a Committee on Payments and Market Infrastructures (CPMI) report that sets out the concepts related to digital tokens and programmable platforms. Tokenization arrangements can change existing market structures by providing platform-based intermediation across the end-to-end life cycle of financial assets. While this could decrease transaction costs and enable innovative use cases, the potential of token arrangements to improve the safety and efficiency of the financial system will require sound governance and risk management. The risks typically associated with financial market infrastructures also apply to token arrangements, but they may materialize differently. Developments in tokenization offer an opportunity for central banks to reflect on the role of central bank money in the digitalizing financial system. [Read more at the BIS]

The financial stability implications of tokenization (FSB)

Meanwhile, the Financial Stability Board (FSB) published a report on the potential financial stability implications of distributed ledger technology (DLT) based financial asset tokenization. The report opines that many of the purported benefits of tokenization have yet to be fully proven, may not be uniquely achievable through tokenization, and may involve trade-offs that might negate the benefits. And several vulnerabilities are identified relating to liquidity and maturity mismatch; leverage; asset price and quality; interconnectedness; and operational fragilities. Tokenization could have implications for financial stability if the tokenized part of the financial system scales up significantly, if increased complexity and opacity of tokenization projects lead to unpredictable outcomes in times of stress, and if identified vulnerabilities are not adequately addressed through oversight, regulation, supervision, and enforcement. [Read more at the FSB]

Cash bill pay services and U.S. payment inclusion (Kansas City Fed)

The Federal Reserve Bank of Kansas City published an article by Franklin Noll on U.S. “cash bill pay” services that allow consumers to make digital (e.g., bill) payments with cash at participating retailers. A recent Atlanta Fed survey found that American consumer preferences to pay with cash remain pervasive for various reasons, including the costs and other impediments involved in moving to digital payments, lack of needed identification, former credit or banking problems, and the desire for privacy. Cash bill pay services provide cash payment options to such consumers. The article describes how the two main cash bill pay services (“walk-up” and “barcode”) work, and the costs that may make the service expensive for some. [Read more at the Kansas City Fed]

Upcoming Speaking Engagements:

  • Digital Euro Conference 2025, Frankfurt, March 27, 2025. The DEC25 conference will explore the future of money with a focus on CBDCs, stablecoins, tokenized deposits, and the intersection of AI and digital ID. When you register, get 20% off the regular ticket price by using the Kiffmeister20 code! [Find out more and register here]

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.

Kiffmeister’s #Fintech Daily Digest (20241016)

~ kiffmeister

Project Aperta: enabling cross-border data portability through open finance interoperability (BIS)

The Bank for International Settlements (BIS) launched Project Aperta (Latin for “open”) to explore how to reduce frictions and costs in global finance by enabling seamless cross-border data portability. The project aims to connect the domestic open finance infrastructures of different jurisdictions. The initial exploratory use case is in trade finance for small and medium-sized enterprises (SMEs). Collaborators include the Central Bank of the United Arab Emirates, Banco Central do Brasil, U.K. Financial Conduct Authority , Hong Kong Monetary Authority, and the Global Legal Entity Identifier Foundation. [Read more at the BIS]

ANZ explores stablecoin to track pension payments (Ledger Insights)

The Health Employees Superannuation Trust Australia (HESTA) and ANZ are examining whether the bank’s A$DC stablecoin could allow HESTA to streamline pension payment reconciliation. Currently, HESAT member firms contributing to staff pensions pay the money across and separately send data about what it relates to. ANZ’s idea is for the data to accompany the stablecoin payment as part of a smart contract. This could eliminate the entire reconciliation process and employees would be able to see their contributions in real time. [Read more at Ledger Insights]

ECB exploratory work on new technologies for wholesale central bank money settlement

Last week I reported on a couple of trials that are part of the European Central Bank (ECB) exploratory work on new technologies for wholesale central bank money settlement. It has since come to my attention that there are a couple of places where all of the trials associated with two of the three solutions are tracked. The Deutsche Börse trials of the Banque de France led wholesale central bank digital currency (CBDC) based solutions are listed on its website here. And trials of the Deutsche Bundesbank (BuBa) “trigger solution is tracked on BuBa’s website here. (The trigger solution links distributed ledger technology (DLT) securities settlement platforms operated by the market with the traditional Eurosystem payment system (TARGET) to achieve atomic settlement.

Upcoming Speaking Engagements:

  • Digital Euro Conference 2025, Frankfurt, March 27, 2025. The DEC25 conference will explore the future of money with a focus on CBDCs, stablecoins, tokenized deposits, and the intersection of AI and digital ID. When you register, get 20% off the regular ticket price by using the Kiffmeister20 code! [Find out more and register here]

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.

Kiffmeister’s #Fintech Daily Digest (20241014)

~ kiffmeister

Russia outlines proposal for BRICS DLT cross border payment system (Ledger Insights)

Russia’s Ministry of Finance published a proposal to develop a distributed ledger technology (DLT) based cross-border payment infrastructure that serves the interests of the BRICs countries (Brazil, Russia, India, China, South Africa, Iran, Egypt, Ethiopia, and the United Arab Emirates). The BRICS Cross-Border Payment Initiative (BCBP) project is aimed at circumventing the U.S. dollar dominated global financial system, and sanction-proofing member countries. The report was co-authored by the Bank of Russia and Yakov & Partners, as Russia prepares to host leaders for the annual BRICS summit, in Kazan from October 22 to 24. [Read more at the Russian Finance Ministry or here if that doesn’t work]

Banco do Brasil calls for new Drex project participants (BCB)

Banco Central do Brasil (BCB) is calling for new companies to participate in its Drex wholesale central bank digital currency (CBDC) project aimed at the tokenization of the Brazilian financial system. There is no initial limitation on the number of business cases that can be selected. The number of selected proposals will be determined on the set of applications received and considering the central bank’s technical and operational capacity. [Read more at the BCB]

Upcoming Speaking Engagements:

  • Digital Euro Conference 2025, Frankfurt, March 27, 2025. The DEC25 conference will explore the future of money with a focus on CBDCs, stablecoins, tokenized deposits, and the intersection of AI and digital ID. When you register, get 20% off the regular ticket price by using the Kiffmeister20 code! [Find out more and register here]

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.