Category: FastPayments

Kiffmeister’s #Fintech Daily Digest (20241205)

~ kiffmeister

Bangko Sentral ng Pilipinas completes Project Agila WCBDC testing (BSP)

Bangko Sentral ng Pilipinas and participating financial institutions (FIs) have completed proof-of-concept work on Project Agila. Agila allow FIs to transfer funds to each other even during off-business hours, including evenings, weekends, and holidays, using wholesale central bank digital currency (CBDC). The evaluation with FIs covered functional, performance, security, exploratory, end-to-end and programmability testing. [Read more at the BSP]

Eurosystem completes tests using DLT for central bank money settlement (ECB)

The European Central Bank (ECB) concluded its tests of the use of distributed ledger technology (DLT) for wholesale settlement in central bank money. Between May and November 2024, the Eurosystem processed over 200 transactions and a total value of €1.59 billion. In total, 64 participants comprising central banks, financial market participants and DLT operators completed over 40 trials and experiments. Trials included actual settlement in central bank money, while experiments were tests with mock settlement. In January 2025, participants involved in the exploratory work will be invited to discuss lessons learned from the trials and experiments. The outcome of the analysis will inform the Eurosystem’s decision on its next steps. [Read more at the ECB]

Goldman Sachs, Clearstream, HQLAᵡ in live DLT intraday repo transaction (Ledger Insights)

As part of the ECB wholesale DLT settlement trials using central bank money, HQLAᵡ was involved in an intraday repo transaction where Goldman Sachs borrowed cash from Clearstream in exchange for collateral held on the HQLAᵡ DLT platform. HQLAᵡ is a collateral mobility solution in which assets held by custodians are locked and digitized in the HQLAᵡ digital collateral registry, with the legal agreements enabling collateral to transfer instantly using DLT. In this case, the cash leg of the transaction used the Bundesbank’s Trigger solution. The trades were agreed via the Eurex Repo F7 trading system, and Deutsche Börse’s Clearstream D7 digital securities platform was used as the market system operator. [Read more at Ledger Insights]

CBDCs and fast payment systems: rivals or partners? (BIS)

The Bank for International Settlements (BIS) published a paper that analyzes how retail CBDC and fast payment systems (FPSs) compare with each other and why some jurisdictions have opted for a retail CBDC, while others have chosen to introduce an FPS or both. Interviews with central banks in 14 jurisdictions around the world show that some see a case for both to fulfil different policy goals and complement one another. The paper’s key conclusion is that the choice between a retail CBDC or an FPS, or both, is very contextual and will depend on the market features, ecosystem and degree of maturity and innovation of existing payment infrastructures in a country. [Read more at the BIS]

CBDCs, banknotes and bank deposits: the financial stability nexus (Banco de España)

Banco de España published a paper that explores the financial stability nexus within a monetary ecosystem that has been expanded to include a CBDC. It highlights the importance of partially adapting the two-tier system of money by implementing certain limits, as envisaged in CBDC plans. The endogenous mitigation of the risks through improved bank competition often attributed to CBDCs is uncertain and may be insufficient from a systemic risk perspective. The introduction of exogenous mitigants, like CBDC holding limits calibrated on the basis of a robust methodology, seems instrumental to ensure the consistency of a monetary ecosystem that includes a CBDC. Hence, the paper addresses some fundamental methodological issues related to these limits, such as the rationale for alternative targets for the limits, the influence of disintermediation speed, the time horizons involved in the limitation and adaptation process, and the role of regulatory and market frictions. [Read more at Banco de España]

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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 (20241121)

~ kiffmeister

Decentralized dealers? Examining DEX liquidity provision (BIS)

The Bank for International Settlements (BIS) published a paper that explores the role of participants in providing liquidity on decentralized exchanges (DEXs). DEXes allow participants to buy and sell assets without the need for intermediaries, in theory democratizing liquidity provision. However, using data from the largest DEX (Uniswap V3), it shows that liquidity provision, rather than being the purview of a diffused set of market participants, is confined predominantly to a small group of sophisticated ones. These participants submit orders that mimic bids and asks and are able to extract significantly higher profits compared to their unsophisticated counterparts. They also exhibit considerable skill, extracting higher profits during periods of high volatility by capturing a higher share of trading without incurring additional adverse selection. [Read more at the BIS]

The proof-of-stake protocol and run risk (OFR)

The U.S. Treasury Office of Financial Research (OFR) published a paper that examines the scenarios that can increase run risk of crypto-assets, such as Ethereum (ETH), that use proof-of-stake (POW) protocols to validate transactions. It finds that while proof-of-work (POW) protocols are more energy intensive and less scalable, POS requires more capital, and a significant drop in a POS-based crypto-asset price may cause validators to exit their investments. Their exit may impair the tradability of the crypto asset, which in turn may cause more validators to exit, resembling a bank run. In the case of Ethereum, such an event would disrupt activity relying on the Ethereum network, including many crypto firms and DeFi networks. The authors also show that the use of margin only exacerbates this run risk during price declines. If a price decline is steep enough to cause a margin call for investors, those investors must either post additional collateral or sell crypto assets, which could further depress prices. [Read more at the OFR]

Retail fast payment systems as a catalyst for digital finance (BIS)

The BIS published a paper that sheds light on how fast payment systems (FPSs) influence the diffusion of digital finance apps, based on a rich dataset on app downloads and use for 86,163 apps in 95 countries over 2012–22. It identifies various mechanisms through which FPS drive finance app adoption, like stimulating competition and innovation in payments, fostering digital finance adoption via learning effects and expanding access to financial services, particularly in emerging market and developing economies (EMDEs) and low income countries (LICs). This effect is particularly evident for apps by technological disrupters, such as fintechs or big techs, relative to those of incumbent financial institutions. Finally, we identify some characteristics of FPS that further amplify digital finance adoption such as the active role of the central bank, open membership and real-time settlement. [Read more at the BIS]

Sponsored Content:

Supercharge your CBDC research and deployment strategy with Chavanette’s Alpha Knowledge Platform (⍺LP)—the ultimate resource for deep insights into CBDCs and the ecosystem of CBDC technology providers and solutions. Get insider access to the top 20 CBDC platforms through the GALACTIC GRID, dissected by Chavanette’s expert framework. Lead the digital central banking revolution with the tools necessary to deploy Central Banking 4.0—stay informed, stay bold, stay transformative. Be the leader. Register for access here and get a 10% discount on the first year with the kiffmeister10 code.

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 (20241105)

~ kiffmeister

Crypto firms launch Paxos stablecoin-based global network (Paxos)

A consortium of fintech and crypto-asset companies launched the Global Dollar Network based on the U.S. dollar-pegged USDG stablecoin issued out of Singapore by Paxos. Paxos claims that USDG is “substantively compliant with the upcoming Monetary Authority of Singapore (MAS) stablecoin framework. Anchorage Digital, Bullish, Galaxy Digital, Kraken, Nuvei, Paxos and Robinhood are the initial partners. What is unique about USDG, versus the dominant stablecoins, is that partners (financial services and blockchain firms) receive up to 100% of the revenues generated by USDG’s backing assets, and earn additional revenues for minting and acceptance. [Read more at Paxos]

Eurosystem and 5 Asian central banks advance Project Nexus implementation (BIS)

The five Project Nexus central bank partners (India, Malaysia, the Philippines, Singapore, and Thailand) established the Singapore-based Nexus Scheme Organization (NSO) managing entity, which will manage the project in its live implementation stages. Nexus was launched in 2021 by the Bank for International Settlements (BIS) Innovation Hub to enhance cross-border payments by connecting multiple domestic instant payment systems (IPS) globally. The European Central Bank (ECB) also joined Nexus as a special observer as part of exploratory work on linking its TARGET Instant Payment Settlement with other fast payment systems. While the BIS will not own or operate the NSO, it will continue its support by playing a technical advisory role. [Read more at the BIS]

MAS announces plans to support asset tokenization commercialization (MAS)

The Monetary Authority of Singapore (MAS) outlined its vision for how to take the next step from asset tokenization exploration to commercialization. Project Guardian, launched in 2022, convened over 40 financial institutions, industry associations and international policymakers across seven jurisdictions to carry out industry trials on the use of asset tokenization in capital markets. More than 15 industry trials were conducted in six currencies across multiple financial products. In order to achieve scale the MAS is creating the Guardian Wholesale Network Industry Group with the aim of forming commercial networks to deepen market liquidity, developing an ecosystem of market infrastructures, fostering industry frameworks, and enabling access to common settlement facility. [Read more at the MAS]

Security reference model for digital currency hardware wallet (ISO)

The International Organization for Standardization (ISO) announced that a security reference model for digital currency hardware wallets and requirements and recommendations regarding the security of digital currency hardware wallets has now advanced to the internal review phase. It includes security requirements for data management, communication, and access control requirements between different modules of the hardware wallets; security requirements for the running environment of the software operating in the hardware wallet; and security policies for service operation of the hardware wallet. The non-security aspects of digital currency hardware wallets, such as business processes and financial transactions are out of scope. [Unfortunately the draft isn’t available for download]

Refining the definition of the unbanked (SSRN)

A paper co-written by Federal Reserve Board (FRB) staffer Elena Falcettoni proposes to differentiate individuals without a bank account but would like to have one (the “unbanked”) from individuals that do not have a bank account and are not interested in having one (the “out of banking population”). While the unbanked mostly cite financial and past credit or banking history problems as reasons for not having a bank account, the out of banking population cites a growing mistrust toward the traditional banking system. The paper finds that the latter comprises over 70% of U.S. households without a bank account, and concludes that to bank the unbanked (the other 30%) policy interventions should be aimed at encouraging financial institutions to offer more accessible and affordable services. [Read more at SSRN]

Sponsored Content:

Supercharge your CBDC research and deployment strategy with Chavanette’s Alpha Knowledge Platform (⍺LP)—the ultimate resource for deep insights into CBDCs and the ecosystem of CBDC technology providers and solutions. Get insider access to the top 20 CBDC platforms through the GALACTIC GRID, dissected by Chavanette’s expert framework. Lead the digital central banking revolution with the tools necessary to deploy Central Banking 4.0—stay informed, stay bold, stay transformative. Be the leader. Register for access here and get a 10% discount on the first year with the kiffmeister10 code.

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 (20241028)

~ kiffmeister

HKMA partners with Banco Central do Brasil and Bank of Thailand on tokenization initiatives (HKMA)

The Hong Kong Monetary Authority (HKMA) has established new cross-border partnerships with Banco Central do Brasil (BCB) and the Bank of Thailand (BOT) to explore cross-border payment-versus-payment (PvP) and delivery-versus-payment (DvP) settlement use cases in areas such as trade finance payments and carbon credits. In the HKMA-BCB case the HKMA will link its Project Ensemble central bank digital currency (CBDC) sandbox to the BCB Drex CBDC pilot platform. In the HKMA-BOT case, the HKMA will link the Ensemble sandbox to the BOT’s Project San experimental tokenization platform, and test linking the two platforms with distributed ledger technology (DLT) based financial market infrastructures (FMIs). The BOT’s Project San, an internal initiative started in June 2024, aims to build and test a prototype for the tokenisation ecosystem. This includes a wholesale settlement engine, EVM-compatible ledgers supporting tokenised private money and assets, and interoperability mechanisms. [Read more at the HKMA here (on the HKMA-BCB part) and here (HKMA-BOT)]

HKMA provides updates on its fintech-related initiatives (HKMA)

Along with the aforementioned Project Ensemble collaborations, the HKMA provided updates on its other initiatives to spearhead fintech development in Hong Kong. The HKMA will collaborate with other members of the Linux Foundation Decentralized Trust on interoperability aspects of DLT-based FMIs in the Ensemble Sandbox. Also, the HKMA has completed the initial phase of six tokenization use cases across four main themes under Project Ensemble and will publish a report detailing the results of the experimentation in 2025. The HKMA is working closely with the People’s Bank of China to establish a cross-boundary linkage between Hong Kong’s Faster Payment System (FPS) and the Mainland’s Internet Banking Payment System (IBPS). This linkage will support 24/7, instant, small-value, cross-boundary remittances using account proxies like mobile numbers. A pilot launch is expected to be around mid-2025 tentatively. [Read more about these and other initiatives at the HKMA]

Project Mandala proves viability of upfront compliance for digital asset transactions (Ledger Insights)

The Bank for International Settlements Innovation Hub (BISIH) has completed the Project Mandala proof of concept (PoC), which aims to bring efficiencies to anti money laundering (AML), sanctions and capital flow management (CFM) compliance. It uses a compliance by design approach to streamline cross-border compliance processes for financial institutions and explores real-time policy and regulatory compliance monitoring for central banks and other regulators. The project preserves the existing regulatory framework whereby it encodes existing jurisdiction-specific regulatory requirements measures into the system, and maintains the current model, in which financial institutions are responsible for interpreting and applying official regulatory measures. [Read more at the BISIH]

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 (20241025)

~ kiffmeister

Russian banks baulk at digital ruble implementation costs (Bitcoin.com)

Russian banks, particularly smaller ones, are reportedly unhappy about the high cost (between 120 million and 200 million rubles) of integrating with the central bank’s digital ruble platform. The Bank of Russia has mandated that the 13 systemically important banks must offer clients the ability to use the digital ruble starting July 1, 2025. Universal banks (around 208) are expected to follow suit on July 1, 2026, while banks with basic licenses will begin on July 1, 2027. Despite these reservations expressed by some banks, the Bank of Russia is proceeding with the established timeframes and has vowed to fine institutions that fail to abide by the set deadlines. [Read more on Kommersant]

Improving cross-border payments by interlinking fast payment systems (ECB)

The European Central Bank (ECB) will launch initiatives to help improve cross-border payments within the European Union (EU) and beyond, building on the Eurosystem’s TARGET Instant Payment Settlement (TIPS) service. This will include allowing instant payments originating in one TIPS currency to be settled in another TIPS currency and in central bank money, starting with euro, Swedish kronor and Danish krone. The project will also explore linking TIPS with other fast payment systems, include developing links with partners outside the EU. [Read more at the ECB]

Tokenized money-market funds seek to take on Tether (Bloomberg)

BlackRock is pushing to have its money-market digital tokens more widely used as collateral for crypto derivatives trades, as Wall Street firms push deeper into digital asset markets. WisdomTree is also in conversations with prime brokerages, trading desks and crypto exchanges about the use of its fund tokens as collateral. If this type of usage takes off, it could reduce the reliance on unremunerated stablecoins like Tether among crypto traders. Users of such money-market fund tokens can earn interest rates of 4% to 5%. [Read more at Bloomberg]

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 (20240906)

~ kiffmeister

BCB announces projects selected for the second phase of Drex testing (Ledger Insights)

Banco Central do Brasil (BCB) announced the 13 themes that will be trialed during the second phase of the Drex wholesale central bank digital currency (CBDC) project. The first phase involved testing processes such as issuing, transferring and settling digital treasury bonds with tokenized commercial bank deposits with wholesale CBDC utilized for interbank settlements. During the second phase, various financial services will be developed via smart contracts on the Drex platform created by 16 consortia or companies. The platform is a permissioned Ethereum network using Hyperledger Besu. [Read more at the BCB]

Lessons from India’s Unified Payments Interface (UPI)(SUERF)

Société Universitaire Européenne de Recherches Financières (SUERF) published a note that draws lessons from the success of India’s Unified Payments Interface (UPI). It argues that this success majorly owes to ease of development of applications, easy use and zero-transaction fees for end-users. Further success factors have been strict data protection rules, active partnership with the private sector and adept regulation. The note also discusses the organization of the Indian payment market since the launch of UPI, and the changes in digital payment market in India, with a focus on payment volumes and values. It highlights the increasing investments in the payments market and increased adoption over time, and provides insights into the implications of payment systems for financial inclusion in India, and touches upon some challenges UPI faces. [Read more at SUERF]

Tokenization: another giant leap for securities? (NY Fed)

The U.S. Federal Reserve Bank of New York (NY Fed) published an article that explains what tokenization is and how it works, and looks at how past innovation in financial markets might offer lessons for the future. Multiple successful experiments show efficiencies in a completely tokenized world—where money and securities are all tokenized and settlement can be automated and synchronized with smart contracts. Change takes time, and there may be a period of years where tokenized money would need to interact with traditional securities, or vice versa. As an example, the article points to the Swiss National Bank (SNB) Project Helvetia which initially tried to link the existing payment system to a tokenized securities system, but found that without tokenized cash operational burdens were added, not reduced. Hence, when Helvetia went live, it did so with wholesale CBDC. [Read more at the NY Fed]

Focusing on users: lessons for Canada’s CBDC from the digital euro and digital pound (CIGI)

The Centre for International Governance (CIGI) published Ori Freiman’s paper that explores how Canada can craft a responsible and user-centric approach to its digital loonie project. It emphasizes meaningful public engagement in both technical design and regulatory processes — drawing from the U.K. and European Union (EU) consultative approaches. It also highlights the importance of responsible personal data handling and clear regulatory language, learning from EU expectations and UK legislative concerns. It concludes with recommendations that span across five key areas, critical to the successful integration of the digital loonie within the fabric of society; the developmental approach, engagement strategy, regulation and consumer protection, regulatory novelty and further research. [Read more at CIGI]

AI and Central Banks—Speeding Ahead within Legal Guardrails (IMF)

International Monetary Fund (IMF) staff published a short note that highlights the legal challenges concerning central banks’ governance, transparency, and accountability in central banks’ AI exploration, first covered in a 2021 IMF Fintech Note. AI can significantly strengthen central banks’ agility to predict and mitigate crises and improve monetary policy implementation, as well as the regulation and supervision of financial institutions. However, the use of AI tools could pose risks and challenges to central banks’ governance, data privacy, intellectual property, cybersecurity, and legal liability. An effective AI journey for central banks requires completion of ‘AI legal checkpoints’: is there an effective oversight function? Is there adequate expertise? Are central banks’ decisions relating to AI transparently disclosed? Do central banks remain accountable for their actions? Central banks should carefully assess if their legal frameworks are adequate to ensure they are well equipped for their AI journey. [Read more at the Oxford Business Law Blog]

I don’t consider AI a “Fintech” issue but I have recently started to track the topic, mainly from a central banking policy perspective. I’ve been collecting them here: https://www.diigo.com/user/kiffmeister?query=%23AI.

Upcoming Speaking Engagements:

  • CBDC Conference, Istanbul, September 10-12. The conference will offer representatives of central banks, commercial banks, technology providers, policy makers and academics the perfect platform to learn about the latest CBDC developments, exchange ideas with experts and peers. [Find out more and register here][Central bank delegates may be eligible for free registration (email registration@cbdc-conference.com to find out more)]
  • Digital Currency Conference, London, September 23-24. The conference will bring together policymakers, regulators, and technology and innovation experts to network and discuss all aspects of digital currencies. And enter the KiffmeisterDCC code at registration to get a 20% discount! [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 (20240724)

~ kiffmeister

Central Bank of Papua New Guinea launches CBDC proof-of-concept (Soramitsu)

The Central Bank of Papua New Guinea (CBPNG) is working with Soramitsu on a central bank digital currency (CBDC) proof-of-concept (POC) aimed at building a common payment platform across the Pacific Island region. Also, some areas of Papua New Guinea are plagued by instability, violence, and frequent occurrences of robberies and muggings, so the POC will explore digital technologies that will allow recovery of funds after such incidents. The project is being funded by the Government of Japan’s Ministry of Economy, Trade and Industry’s 2023 supplementary budget “Subsidy for Global South Future-Oriented Co-Creation Projects (Indirect Subsidy Project Related to the Survey on the Overseas Deployment of Infrastructure by Japanese Companies).” [Read more at Soramitsu]

Bank of Israel selects 14 teams to present use cases for digital shekel (Finextra)

The Bank of Israel (BOI) has chosen 14 teams from the private and public sectors, and academia to study potential digital shekel use cases selected by the BOI. They deal with a variety of functions: connectivity between the digital shekel, other payment systems, and cash; use of the advanced functionalities offered by the digital shekel, such as subwallets, conditional payments, and split payments; and the implementation of various technologies while using the digital shekel as a means of payment. Participant proposals will be tested in a digital sandbox in August 2024, with products developed to be showcased at a concluding conference at the end of October 2024. [Read more at the BOI]

FCA finalizes access to cash rules (Finextra)

Under new rules from the U.K. Financial Conduct Authority (FCA), banks and building societies will need to weigh up if local communities lack access to cash services, like branches and ATMs, and plug significant gaps. Under the new rules banks will need to respond to local residents and community organizations when closing branches and ATMs and provide an assessment of whether there are gaps in local cash access. Where significant gaps are found, banks will be obliged to retain branches and ATMs until alternative solutions are found. [Read more at the FCA]

UAE central bank introduces new stablecoin regulations (Coin Journal)

The UAE Central Bank (CBUAE) approved a framework for stablecoin regulation on June 14, 2024, which allows only dirham-backed stablecoins to be used for payments. Other crypto-assets will be restricted to trading, investment, and corporate treasury purposes while foreign stablecoins will only be permitted for purchasing specific virtual assets like non-fungible tokens (NFTs). The new law mandates that no entity can issue a payment token without submitting a white paper to the central bank for approval. Banks are not directly permitted to issue payment tokens but can do so through subsidiaries or affiliates, provided they meet licensing and regulatory requirements. The new framework is set to commence in June 2025. [Read more at the CBUAE]

UEMOA launches interoperable instant payment system pilot (BCEAO)

The Central Bank of the States of West Africa (BCEAO) has launched the pilot phase of the interoperable instant payment system (IPS) of the West African Economic and Monetary Union (UEMOA). 25 financial institutions across four countries met the criteria required to participate. A second group will join on August 12, 2024.The new interoperable 24/7 IPS infrastructure is capable of processing transactions of any kind, regardless of the account type. [Read more at the BCEAO]

Philippines hits target of digitalizing 50 percent of retail payments (BSP)

The share of digital payment transactions to total monthly retail payments in the Philippines grew from 42.1% in 2022 to 52.8% in 2023, according to the Bangko Sentral ng Pilipinas (BSP). This indicates that the central bank has surpassed its target of digitalizing 50% of digital payments volume in the country under its Digital Payments Transformation Roadmap 2018-2023. In terms of value, the latest e-payments measurement also showed that the share of monthly digital payments to total transactions increased to 55.3% in 2023 from 40.1% in 2022. The main contributors to the rise in e-payments were merchant payments which accounted for 64.9% of monthly digital payments volume, person-to-person transfers at 19.3%, and business-to-business supplier payments at 6.1%. [Read more at the BSP]

Reserve Bank of India joins Project Nexus (RBI)

The Reserve Bank of India (RBI) joined Project Nexus, a multilateral international initiative to enable instant cross-border retail payments by interlinking domestic fast payment systems (FPSs). Nexus, conceptualized by the BIS Innovation Hub aims to connect the FPSs of four ASEAN countries (Malaysia, Philippines, Singapore, and Thailand); and now India. Indonesia, which has been involved from the early stages, continues to be involved as a special observer. The platform is expected to go live by 2026. Once functional, Nexus will play an important role in making retail cross-border payments efficient, faster, and more cost effective. [Read more at the RBI]

    Upcoming Speaking Engagements:

    • CBDC Conference, Istanbul, September 10-12. The conference will offer representatives of central banks, commercial banks, technology providers, policy makers and academics the perfect platform to learn about the latest CBDC developments, exchange ideas with experts and peers. [Find out more and register here][Central bank delegates may be eligible for free registration (email registration@cbdc-conference.com to find out more)]
    • Digital Currency Conference, London, September 23-24. The conference will bring together policymakers, regulators, and technology and innovation experts to network and discuss all aspects of digital currencies. And enter the KiffmeisterDCC code at registration to get a 20% discount! [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 (20240723)

    ~ kiffmeister

    Peru awards contract for first retail CBDC pilot (Ledger Insights)

    Banco Central de Reserva del Perú (BCRP) has awarded its first contract for the development of its retail central bank digital currency (CBDC) pilot. The winner is telecom firm Viettel Perú. The contract will run for one year, which may be extended for up to one additional year at the justified request of Viettel Peru. No further details have been made available. [Read more at the BCRP]

    Emerging markets face regulatory challenges from stablecoin circulation (FSB)

    The Financial Stability Board (FSB) published a report that explores potential factors driving the higher level of activities related to foreign currency-pegged stablecoins in emerging market and developing economies (EMDEs), the associated financial stability risks and regulatory challenges, and provides considerations to address them. EMDEs may be exposed to macro-financial risks arising from the use of foreign currency pegged global stablecoins, which can increase financial stability risks by destabilizing financial flows and straining fiscal resources. [Read more at the FSB]

    Spot Ether ETFs can start trading after the SEC’s final approval (Finance Magnates)

    The U.S. Securities and Exchange Commission (SEC) has provided final approval to spot Ethereum (ETH) exchange-traded funds (ETFs) following the listing of these instruments on three American exchanges on July 23, 2024. The approved issuers include BlackRock, Fidelity, 21Shares, Bitwise, Franklin Templeton, VanEck, and Invesco Galaxy, all of whom also offer Bitcoin ETFs that were greenlighted by the SEC at the beginning of 2024. All spot ETH ETFs, except Grayscale, kept the base fee between 0.15% and 0.25%, but Fidelity, 21Shares, Bitwise, Franklin, and VanEck will waive all fees until a set period or a determined amount in net assets is achieved. Grayscale is charging 2.50%. [Read more at Finance Magnates]

    Brazil delays launch of recurring Pix payments (Banco Central do Brasil)

    Banco Central do Brasil (BCB) has pushed back the addition of recurring payments to its Pix instant payment platform from October 2024 until June 2025. Automatic Pix will facilitate recurring charges that let users authorize periodic debits automatically, without the need for authentication for each transaction. The BCB also published amended Pix regulations that limit transactions on access devices that are unregistered or that have never been used to initiate a Pix transaction to R$200 and R$1,000 per day. The amendments will become effective on November 1, 2024. [Read more at the BCB]

    LIFT Lab resumes innovation projects for Brazil’s national financial system (BCB)

    The Laboratório de Inovações Financeiras e Tecnológicas (LIFT), a joint initiative of the BCB and Federação Nacional de Associações dos Servidores do Banco Central (Fenasbac), will resume activities following a hiatus in 2023. Since its inception in 2018, the laboratory has been at the forefront of innovation within the Brazilian national financial system, focusing on developing technological prototypes. The 2023/2024 edition will feature seven projects to enhance the financial innovation ecosystem. The 2023/2024 edition will include seven projects, including technological solutions for anti-money laundering and compliance, B2B interoperability solutions between incompatible blockchain networks, and scores for Pix payments to identify fake accounts. [Read more at the BCB]

    Global Payments Report 2024 (WorldPay)

    WorldPay published the 2024 edition of its Global Payment Report. It reports that the ubiquitous acceptance of digital wallets is enabling greater consumer choice and control in this era of payments innovation. According to the findings, digital wallets accounted for $13.9 trillion in global transaction value in 2023, representing half of all online and 30% of consumer spend at point-of-sale (POS). In markets where credit and debit cards already had strong consumer attachment, the data suggests consumers remain loyal to these cards, choosing to connect them to their digital wallets. Although cash usage continues to decline, cash accounted for 16% of global transaction value, including double-digit share in 30 of 40 markets in this report. [Read more at WorldPay]

    Upcoming Speaking Engagements:

    • CBDC Conference, Istanbul, September 10-12. The conference will offer representatives of central banks, commercial banks, technology providers, policy makers and academics the perfect platform to learn about the latest CBDC developments, exchange ideas with experts and peers. [Find out more and register here][Central bank delegates may be eligible for free registration (email registration@cbdc-conference.com to find out more)]
    • Digital Currency Conference, London, September 23-24. The conference will bring together policymakers, regulators, and technology and innovation experts to network and discuss all aspects of digital currencies. And enter the KiffmeisterDCC code at registration to get a 20% discount! [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 (20240721)

    ~ kiffmeister

    CBOE gives official launch date for spot Ethereum ETF (CoinTelegraph)

    Five spot Ethereum exchange-traded funds (ETFs) will begin trading on the Chicago Board Options Exchange (CBOE) on July 23, 2024, “pending regulatory effectiveness”. The U.S. Securities and Exchange Commission (SEC) approved rule changes permitting the listing of several spot Ether ETFs on May 23, but the regulator still had to sign off on each fund issuer’s respective S-1 registration statements before trading can commence. [Read more at Coin Telegraph]

    Interoperability between CBDC and fast payment systems (World Bank)

    The World Bank published a technical paper on on its practical experiments on fast payments system (FPS) interoperability with central bank digital currency (CBDC) systems. The first experiment investigated the option of settling FPS obligations in a wholesale CBDC system, including the option to reserve funds to guarantee the settlement of FPS net obligations. The second experiment investigated the interoperability between users within the FPS and retail CBDC users, including the transfer of funds among both types of users, using common services such as address resolution services. This experiment illustrated how CBDC systems could interoperate with retail payment systems through an interlinking bridge that was used to route messages and application programming interface (API) calls among different systems. The programmability features of distributed ledger technology (DLT) were used to link the settlement in CBDC to the transfer of funds in the FPS. [Read more at the World Bank]

    Eurosystem sets policy on access by non-bank PSPs to its central bank payment systems (ECB)

    The Eurosystem defined a harmonized policy to allow non-bank payment service providers (PSPs) to access central bank-operated payment systems, including TARGET. Non-bank PSPs include payment institutions (PIs) and electronic money institutions (EMIs). The broader access criteria for TARGET are aimed at enhancing the efficiency of the European retail payments market, fostering competition and innovation in the European payments landscape, and supporting the uptake of instant payments in the European Union. Starting in April 2025, non-bank PSPs meeting certain requirements will be able to access TARGET, including T2 (for settling payments) and TIPS (for settling instant payments). The Payment Services Directive was also amended to introduce the option for non-bank PSPs to safeguard users’ funds in an account held with a central bank, subject to the discretion of that central bank. [Read more at the European Central Bank]

    Digital payments, informality and economic growth (BIS)

    The Bank for International Settlements (BIS) published a paper that examines the relationship between digital payment innovation, economic growth and informal activities in 101 economies over 2014–19. It finds that a one-percentage point increase in digital payments use is associated with increases in the growth of GDP per capita of 0.10 percentage points and a decline in the share of informal sector employment of 0.06 percentage points, both over a two-year period. Digital payments do not appear to be significantly associated with rises in total factor productivity once controlling for general measures of digitalization and government effectiveness, but they are linked to greater financial inclusion and credit access. The results reinforce the case for government policies to encourage digital payments and, as complementary factors, access to the financial sector and information technology. [Read more at the BIS]

    Upcoming Speaking Engagements:

    • CBDC Conference, Istanbul, September 10-12. The conference will offer representatives of central banks, commercial banks, technology providers, policy makers and academics the perfect platform to learn about the latest CBDC developments, exchange ideas with experts and peers. [Find out more and register here][Central bank delegates may be eligible for free registration (email registration@cbdc-conference.com to find out more)]
    • Digital Currency Conference, London, September 23-24. The conference will bring together policymakers, regulators, and technology and innovation experts to network and discuss all aspects of digital currencies. And enter the KiffmeisterDCC code at registration to get a 20% discount! [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 (20240701)

    ~ kiffmeister

    Project Nexus advances instant cross-border payments blueprint

    The Bank for International Settlements (BIS) announced that phase three of Project Nexus, which is aimed at enhancing cross-border payments by connecting multiple domestic instant payment systems (IPS) globally, is now complete. The next phase will see Bank Negara Malaysia, Bangko Sentral ng Pilipinas, the Monetary Authority of Singapore, the Bank of Thailand and domestic IPS operators – who worked together in phase three – joined by the Reserve Bank of India, expanding the potential user base to India’s Unified Payments Interface (UPI), the world’s largest IPS. Bank Indonesia will continue its association with the project with special observer status. Nexus is designed to standardize the way domestic IPS connect to one another. Rather than an IPS operator building custom connections for every new country to which it connects, the operator only needs to make one connection to Nexus. This single connection would allow the IPS to reach all other countries in the network. [Read more at the BIS]

    First trials with the Trigger Solution successfully settled

    As part of the Eurosystem exploratory work, the first two trials with the Deutsche Bundesbank’s Trigger Solution were successfully settled. The use case comprised the issuance and primary distribution of a commercial paper with the use case team Clearstream as a market distributed ledger technology (DLT) operator, and two market participants (DekaBank and DZ Bank). The exploration was conducted as a trial in the participants’ production systems and ultimately resulted in real and final bookings in TARGET, the Eurosystem’s payment system, by using the Trigger Solution. The Trigger Solution links DLT platforms operated by the market with the traditional Eurosystem payment system (TARGET), thus enabling the direct settlement of DLT-based wholesale transactions in central bank money on participants’ existing RTGS accounts. [Read more at the Bundesbank]

    Upcoming Speaking Engagements:

    • CBDC Conference, Istanbul, September 10-12. The conference will offer representatives of central banks, commercial banks, technology providers, policy makers and academics the perfect platform to learn about the latest CBDC developments, exchange ideas with experts and peers. [Find out more and register here][Central bank delegates may be eligible for free registration (email registration@cbdc-conference.com to find out more)]
    • Digital Currency Conference, London, September 23-24. The conference will bring together policymakers, regulators, and technology and innovation experts to network and discuss all aspects of digital currencies. And enter the KiffmeisterDCC code at registration to get a 20% discount! [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.