The U.S. Office of the Comptroller of the Currency (OCC) conditionally approved national trust bank charter applications from five major crypto-asset companies. Circle (First National Digital Currency Bank) and Ripple National Trust Bank received de novo charters. BitGo Bank & Trust, Fidelity Digital Assets, and Paxos Trust Company were converted from state trust companies to national trust banks. These firms will now be able to offer regulated crypto-asset services nationwide without navigating complex state-by-state licensing. “The OCC will continue to provide a path for both traditional and innovative approaches to financial services to ensure the federal banking system keeps pace with the evolution of finance and supports a modern economy.” [Source: OCC]
Depository Trust Company (DTC) received a No-Action Letter from the U.S. Securities and Exchange Commission (SEC), authorizing it to offer a tokenization service for real-world, DTC-custodied assets in a controlled production environment, with rollout expected in the second half of 2026. The three-year authorization covers highly liquid assets including Russell 1000 stocks, major index ETFs, and U.S. Treasury securities, allowing DTC to create digital versions with the same entitlements and protections as traditional assets. This milestone aims to enable 24/7 trading access, collateral mobility, and programmable assets while maintaining the same level of security and regulatory oversight, ultimately bridging traditional finance (TradFi) and decentralized finance (DeFi) ecosystems through DTCC’s ComposerX platform suite. [Source: DTCC]
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.
Norges Bank has decided not to recommend introducing a central bank digital currency (CBDC) at this time, as Norway’s current payment system is already efficient, secure, and stable. The bank examined both retail and wholesale CBDC, but found no immediate need for either variant. However, Norges Bank acknowledges that circumstances may change due to rapid technological advances, tokenization trends, and the potential introduction of a digital euro by the Eurosystem. The bank will continue researching CBDCs and tokenization through experimental testing and international collaboration to ensure it can implement a CBDC if necessary in the future, with a detailed report planned for Q1 2026. [Source: Norges Bank]
The BIS Innovation Hub wrapped up Project Rialto, a collaboration with central banks from France, Italy, Malaysia, and Singapore to improve instant cross-border payments. The project successfully demonstrated the technical feasibility of connecting traditional instant payment systems with an automated foreign exchange (FX) market using tokenized central bank money (CeBM) as a settlement asset. The architecture combined two functional blocks: domestic instant payment systems linked through a hub mechanism, and a cross-border distributed ledger network (XDN) for automated FX conversion via automated market makers (AMMs). The proof of concept tested both direct currency transactions and those requiring a vehicle currency for low-liquidity corridors, achieving payment-versus-payment settlement with minimal changes to existing systems. While technically successful, the report identifies key economic considerations for operational viability, including fee structures, performance under different market conditions, transparency impacts, and liquidity requirements, noting that AMMs require pre-funding which introduces costs and that further research is needed on the interaction between traditional intermediaries and decentralized exchanges in currency markets. [Source: BIS]
The Federal Reserve Board (FRB) is seeking public comment on the future of its check processing services as check usage has declined dramatically, while its aging infrastructure requires substantial investment to maintain current operations. The FRB is considering four potential strategies: continuing without investment (leading to service degradation over time), significantly simplifying services, substantially winding down operations, or upgrading infrastructure with major costs that would need to be recovered through higher fees. The FRB, which currently processes nearly half of the nation’s check volume, must balance the declining demand against legal requirements to recover all operating costs through service fees, while considering the broader impacts on the payments system and communities that still depend on checks. [Source: FRB]
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.
The Republic of the Marshall Islands has launched the world’s first blockchain-based universal basic income (UBI) program, providing citizens with an annual payment of $800 funded by the country’s Compact Trust Fund. The initiative uses a U.S. Treasury Bill-backed interest-bearing stablecoin called USDM1 and a “Lomalo” digital wallet to deliver payments, particularly targeting financial inclusion for remote island populations affected by the withdrawal of traditional banking services due to “de-risking” in the Pacific region. While the program represents an innovative approach to economic sovereignty and welfare distribution, the IMF is cautioning that the UBI could drive inflation and recommending a more targeted social safety net. Also, the shift to digital wallets introduces complex regulatory risks, requiring robust anti-money laundering (AML) and know your customer (KYC) protocols. [Source: Hauzen LLP]
The IMF published a paper that examines stablecoins’ potential benefits and risks while surveying emerging international regulatory frameworks. While they offer promising benefits such as faster and cheaper cross-border payments, increased financial inclusion, and reduced remittance costs (which can reach 20% in traditional systems), they also pose substantial risks including potential runs on reserves, currency substitution that undermines national monetary policy, circumvention of capital controls, and facilitation of illicit activities. The paper emphasizes that realizing stablecoins’ potential while mitigating these risks requires coordinated international regulation and cooperation, as current regulatory approaches vary significantly across jurisdictions, creating opportunities for regulatory arbitrage and complicating efforts to monitor cross-border flows and maintain financial stability. [Source: IMF]
The Bank of England (BOE) is looking for participants to help it explore how the digital pound could impact existing companies who choose to integrate it alongside traditional payment methods in the future. This project will consist of a series of bilateral conversations with each of the different participants based the BOE’s previously published information. The aim of the study is to provide insight into where a retail digital pound could add value to different businesses, and what features are expected to be the most/least valuable for different kinds of businesses. The BOE is particularly keen to engage with companies that are interested in the digital pound, but have not yet been involved in the Digital Pound Lab. Applications are open until January 9, 2026. [Source: BOE]
Crunchfish published a paper that compares two approaches to offline digital payments for central bank digital currency(CBDC): “immediate offline mode” that transfers digital value tokens like “digital banknotes” between devices, and “deferred offline mode” that transfers signed payment instructions (IOUs) that settle later online. The paper argues that deferred offline mode is more secure (ledger remains authoritative), more scalable (software-based, no special hardware required), easier to integrate with existing payment systems (aligns with EMV and ISO 20022), and preserves banking system liquidity since funds stay in accounts until settlement. In contrast, immediate offline mode exposes the ecosystem to double-spending risks, dependence on tamper-resistant hardware, complex reconciliation, and potential destabilization of bank lending capacity. The paper recommends that central banks adopt deferred offline mode as the baseline standard for offline CBDC payments. [Source: Crunchfish]
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.
According to Georgetown Law’s Professor Adam Levitin, argues that, despite its intentions, the GENIUS Act fails to adequately protect stablecoin holders in an issuer bankruptcy. While the Act claims to give stablecoin holders “first priority” over an issuer’s reserves, Levitin explains that they actually rank fifth in practice, behind: (1) repo and margin lenders, (2) debtor-in-possession (DIP) lenders, (3) bankruptcy professionals via carve-outs, and (4) setoff claims from depositaries and brokers. This is because the Bankruptcy Code’s priority provisions only apply to unsecured debt, while secured claims (which these other parties hold) are paid first under separate rules. Additionally, the Act’s promise of rapid payment within 14 days is unrealistic—distributions will likely take months or years due to procedural requirements and DIP lender restrictions. Levitin concludes that stablecoin holders will face significant losses and delays in bankruptcy, making stablecoins fundamentally unstable without government backing like deposit insurance. [Source: Credit Slips]
Stanford University Graduate School of Business’s Darrell Duffie is proposing that the U.S. Treasury issue a new security called Perpetual Overnight Rate Treasury Securities (PORTS) to address liquidity demands arising from the digitization of financial markets and the growth of tokenized dollar instruments such as stablecoins. PORTS would be daily redeemable at par, pay interest at rates determined through daily uniform-price auctions, and yield below the Secured Overnight Financing Rate (SOFR) given anticipated demand for their use as collateral and settlement medium. The authors argue that PORTS would provide stablecoin issuers and other market participants with a risk-free, transparent instrument for same-day liquidity, potentially reducing systemic risks associated with runs on tokenized dollar proxies backed by longer-duration assets. Additionally, if demand for PORTS materializes as expected, the Treasury could reduce longer-dated issuance, resulting in taxpayer savings through lower borrowing costs. The proposal acknowledges operational challenges, particularly regarding the infrastructure needed for same-day settlement and selective redemption mechanisms, which would require substantial modifications to existing Treasury market procedures. [Source: Brookings]
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.
The U.S. House Committee on Financial Services published an investigative report on “Operation Choke Point 2.0″—a coordinated effort by Biden Administration regulators to deny banking services to digital asset businesses and individuals. Through over 20 letters, thousands of documents, and two hearings, the Committee found that federal agencies (the Federal Reserve, FDIC, OCC, and SEC) used informal guidance, “pause” letters, non-objection requirements, and enforcement actions to pressure banks into cutting off crypto firms, rather than establishing clear regulations. This approach resulted in at least 30 entities being debanked, stifled American innovation, and drove businesses overseas. [Source: U.S. HCOFS]
The National Bank of Rwanda (NBR) is planning to continue its e-FRW central bank digital currency (CBDC) proof-of-concept work in 2026. It will test technical feasibility, evaluate payment system integration, and develop recommendations for the legal framework prior to the overall technical design phase. These tests are being conducted in partnership with selected financial service providers, and the results will determine NBR’s next steps in the CBDC project. In all phases, consultation with the private sector and policy makers has been, and will be, emphasized. [Source: NBR]
The Bank of England (BOE) published a summary of the findings of the Project Meridian Securities experiment that explored how synchronization can bridge traditional real-time gross settlement (RTGS) systems with tokenized securities platforms using distributed ledger technology (DLT). The project successfully demonstrated that synchronization enables atomic settlement in central bank money for tokenized securities transactions, allowing programmable features like automated repos and cross-platform liquidity management without requiring full infrastructure replacement. Key findings show that smart contracts can automate settlement workflows while maintaining the trust and safety of central bank money, supporting improved liquidity management and interoperability across diverse platforms. The experiments revealed that synchronization can extend programmability to traditional infrastructures cost-effectively, though questions remain about optimal architecture, scalability, and whether independent synchronization operators are needed in multi-platform environments. [Source: BOE]
The VISA Economic Empowerment Institute published a report by Zeke Copic on how new stablecoin regulations across the US, EU, UAE, and Hong Kong are shaping the industry’s future. While all jurisdictions require 1:1 backing with high-quality liquid assets and prohibit interest payments to holders, the specific requirements vary—with the US GENIUS Act being more flexible than Europe’s MiCA regulation, which mandates 30-60% of reserves in bank deposits. Stablecoin issuers like Circle currently generate 95-99% of revenue from interest on reserve assets (primarily Treasury bills and reverse repos), making them highly vulnerable to interest rate fluctuations and counterparty risks, as demonstrated during the Silicon Valley Bank collapse. Although declining interest rates may reduce reserve income, projected growth in stablecoin supply (potentially reaching $1.6-3.7 trillion by 2030) could offset this impact, though issuers may need to develop alternative fee-based revenue streams to maintain viable business models under the new regulatory frameworks. [Source: VISA]
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.
Just a reminder that 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.
I would also like to take this opportunity to give a shout out to Stephen Phillips and Richard Turrin who produce excellent weekly summaries of fintech-related developments on LinkedIn. I heartily recommend following them:
Richard Turrin’s Cashless: CBDC & Fintech with a focus on a Rising Asia & China. You can also follow Richard on X, where he reports on a real-time basis.
I would also be remiss not to mention Norbert Gehrke. Although he describes himself as a “Japan Fintech Observer he is way more than that. If you follow him on LinkedIn you will not miss much in the global Fintech arena.
The South African Reserve Bank published a position paper and background note on retail central bank digital currency (CBDC). They examine whether a retail CBDC could address persistent gaps in South Africa’s payment ecosystem, where approximately 16% of adults remain unbanked and many rely on cash despite growing digital payment adoption driven by commercial banks and fintechs. The SARB identifies three core considerations: whether a CBDC fills an unmet need, whether it should be prioritized given ongoing modernization initiatives (particularly the PayShap fast payments system and expanded non-bank participation), and whether it can match or exceed cash’s value proposition across twelve dimensions including accessibility, offline capability, trust, acceptance, cost, and privacy. Drawing on limited international evidence, primarily characterized by low adoption rates in the few jurisdictions that have launched retail CBDCs, the SARB determines that current resources should focus on existing payment system modernization rather than CBDC implementation. The paper acknowledges potential longer-term value in maintaining public access to central bank money in a digital economy and enabling financial innovation through technologies like smart contracts and tokenization, but concludes these considerations do not justify immediate action. Consequently, the SARB will shift its attention toward wholesale CBDC exploration while continuing to monitor retail CBDC developments globally. [Source: SARB]
At the Currency Research (November 17-20 Cedi@60 Anniversary Currency Conference I had the honor of moderating a panel on central bank digital currency (CBDC) trust establishment with Jean-Michel Godeffroy (ex-ECB), Roman Hartinger (G+D) and Musa Jimoh (Director of the Payments System Policy Department at the Bank of Nigeria). The whole 30 minute session is worth watching (it starts at around the 4h 58m mark), but Musa’s interventions are particularly newsworthy, as he explained why the Nigerian central bank is pivoting away from retail CBDC to wholesale CBDC. Recall that Nigeria is one of only three countries where retail CBDC has recently been fully launched.) He explained how the e-Naira story is not a “rosy” one, and ran through some of the reasons. For starters, commercial banks were not willing to support the new payment instrument that they viewed as competition, and that support was essential for e-Naira success because the banks “owned” the merchants. It didn’t help that the banks couldn’t charge fees on e-Naira transfers, and the central bank wasn’t sharing in any of the platform costs. Also, Nigerians are very much into crypto-asset markets and the e-Naira didn’t offer the payments privacy expected of a payment medium. In addition, the central bank has been running a popular instant payment system since 2014, which made the e-Naira rather redundant. [Source: YouTube]
The European Central Bank (ECB) will invite European payment service providers in early 2026 to join a 12‑month digital euro proof-of-concept (POC) that will take place in the second half of 2027. It will be aimed at testing the technical, functional and operational readiness of a potential digital euro in a controlled environment with limited participants. The POC will involve only Eurosystem staff, selected merchants that already provide everyday services on the office premises of the ECB and of euro area national central banks, as well as selected e-commerce platforms. Eurosystem staff will have the opportunity to make payments from person-to-person (both online and offline) and from person-to-business (both at the physical point of sale and on e-commerce platforms). Participating payment service providers will be selected based on their capabilities and a set of pre-defined selection criteria, and their ability to ensure representative coverage of the Euro area market in terms of size, geographical coverage and market reach. [Source: ECB]
Sveriges Riksbank published a staff memo that argues that while stablecoins are still largely used within the crypto-asset ecosystem, they could meaningfully improve payments—especially cross‑border—by leveraging open distributed ledger technology (DLT) networks, supporting faster and cheaper transfers, and offering easier foreign‑currency access in weak monetary jurisdictions, but that this potential is tightly bound up with significant risks and policy trade‑offs. Key concerns include: heavy concentration in USD‑pegged coins and the associated risk of dollarization and spillovers from US markets; financial‑stability vulnerabilities such as runs, fire‑sale risk in reserve assets, decentralized finance (DeFi) linked contagion, and possible bank disintermediation; and loss of “monetary singleness” if different stablecoins trade at discounts. The memo reviews how regimes like European (MiCA) and U.S. (GENIUS Act), plus emerging U.K. and other hub‑jurisdiction frameworks, try to balance innovation with safeguards around full backing, redemption, governance, and financial integrity, while central banks debate whether to give issuers access to settlement systems, allow reserves as backing assets, or provide liquidity backstops. Overall, it concludes that stablecoins should evolve into tightly regulated private money aligned with existing monetary systems, and that strong international coordination is essential to manage their cross‑border, systemic implications. [Source: Sveriges Riksbank]
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.
S&P has reassessed the ability of Tether (USDT) to maintain its peg to the U.S. dollar to its lowest stability score of 5 (weak) from 4 (constrained), highlighting that while the token has generally maintained its dollar peg and benefits from large scale and liquidity, its risk profile has deteriorated due to a growing share of higher‑risk reserve assets such as Bitcoin, gold, secured loans, and corporate bonds. The report also emphasizes persistent transparency gaps around the composition, credit quality, and custody of reserves, limited insight into Tether’s risk appetite and governance, and the absence of a robust regulatory framework or clear asset segregation to protect holders if the issuer became insolvent. S&P also notes structural frictions in primary market redeemability and the potential vulnerability of USDT’s peg in a severe stress event. [Source: S&P] By comparison, S&P has assigned its second highest stability score of 2 (strong) to Circle’s due to its full backing by low-risk assets, primarily short-dated securities, and deposits with banks. [Source: S&P]
The Bank for International Settlements (BIS) published a paper that assesses how the introduction of a central bank digital currency (CBDC) and/or a central bank-run fast payment system (FPS) affects bank deposits and private tokens issued by digital platform operators. The paper finds that the key welfare driver is whether payments are interoperable across “walled gardens.” In a stylized model with banks and digital platforms, non‑interoperable systems generate financial exclusion and allow intermediaries to extract rents from merchants, reducing trade volumes and welfare relative to the social optimum. Introducing either a retail CBDC or an FPS makes payment instruments interoperable, eliminates financial exclusion, maximizes the volume of transactions, and unambiguously raises social welfare, even though it may lead to some degree of disintermediation. In this framework, a well-designed retail CBDC is effectively equivalent to a central bank-run FPS for the industrial organization of the payment system, implying that in jurisdictions with robust fast payments, launching a retail CBDC is less urgent. [Source: BIS]
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.
Bolivia’s Economy Minister Jose Gabriel Espinoza announced the integration of crypto-assets into its formal financial system, starting with stablecoins. Banks will be allowed to offer crypto-asset services such as savings accounts, credit cards, and loans, so that crypto-assets begin to function as legal tender. This move is intended to leverage the growing adoption of stablecoins in Bolivia, which surged as citizens sought a hedge against boliviano depreciation. Espinoza said the policy is designed to boost financial inclusion and recognizes the global nature of crypto-assets, suggesting that using it to Bolivia’s advantage is preferable to trying to control it. [Source: Reuters]
Kazakhstan’s Prime Minister’s Office (PMO) announced that it is advancing the use of its the country’s digital tenge central bank digital currency (CBDC) to finance government projects, starting with medium-term road repairs and the provision of school meal vouchers. The initiative aims to automate and monitor targeted budget spending using programmatic controls and marking of digital funds, ensuring funds are utilized strictly for contractually specified purposes. Pilot projects in road repairs and school meal distribution have highlighted needs for improved integration and sector-specific digital processes. Additional pilots are testing programmable spending in public procurement, SME support, digital VAT, safe transactions for vehicles and real estate, and procurement of medical and industrial equipment. The program is expected to increase payment transparency and efficiency, with further scaling and integration into broader treasury operations planned for the coming year. [Source: Kazakhstan’s PMO]
The New York (NY) Fed published an article that examines the potential role of permissionless blockchains in future payment infrastructures, focusing on how stablecoins leverage global, peer-to-peer transfer networks for accessibility and borderless payments. While stablecoin transaction volumes have skyrocketed, automated activity and bot transactions dominate, so true payment adoption still lags. The piece contrasts stablecoins’ borderless nature with faster payments systems like FedNow, noting that existing solutions remain reliant on bank accounts and thus exclude unbanked users and impede international transfers. Permissionless blockchains offer universal access, programmability, and composability, but face hurdles around regulation, security, privacy, and scalability. Despite growing regulatory clarity, mainstream adoption rests on balancing user control, societal safety, and functional integration with the financial system, as the public pivots from legacy account-based money toward digital, peer-to-peer transfers in practice. [Source: NY Fed]
The Bank for International Settlements (BIS) published an article on the fast-growing markets for tokenized money market funds (TMMFs). TMMFs operate as tokenized representations of money market fund shares on public permissionless blockchains. They function both as collateral and as savings vehicles, offering money market yields and regulatory protections of securities, unlike stablecoins, which do not pay interest. Primarily used in decentralized finance (DeFi), TMMFs enforce regulatory compliance through the “allow-listing” of blockchain wallets, limiting direct peer-to-peer trading to pre-approved participants, though this mechanism does not prevent all forms of secondary trading. While TMMFs aim to improve on stablecoins by providing yield and programmability, they also introduce risks, such as liquidity mismatches, as well as the operational and anti-money laundering / countering the financing of terrorism-related risks associated with stablecoins. [Source: BIS]
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.
The IMF published a paper that examines how retail central bank digital currencies (rCBDCs) can affect financial integrity, particularly in the context of anti-money-laundering/combating the financing of terrorism (AML/CFT) frameworks. The paper identifies offline-capable rrCBDCs as a distinct departure from standard online payment systems because transactions may be executed without real-time connectivity to a central ledger, which raises unique financial-integrity risks. The authors argue that jurisdictions must explicitly calibrate design choices around offline limits (transaction size, frequency), device and software safeguards, audit trails (including reconnection protocols) and risk-based customer due-diligence regimes for offline use. While offline capability can support resilience, merchant reach and financial-inclusion (especially in connectivity-poor settings), the more flexible the offline mode (in terms of transfer autonomy, reversibility or anonymity), the larger the integrity trade-off becomes. [Source: IMF]
The IMF published a paper that informs its Executive Board on the current state of central bank digital currency (CBDC) development, noting that while wholesale projects are gaining prominence, several retail efforts have stalled or been paused due to a lack of clear domestic necessity. The paper also summarizes the key messages and findings from the third wave (of six) CBDC Virtual Handbook chapters published in November 2025, that cover the macro-financial implications for stability and competition; the legal intricacies regarding frameworks and financial integrity; and specific challenges related to tokenized reserves and payment resilience in fragile, conflict-affected states. In total 23 chapters are planned, with the remaining six to be published in 2026. [Source: IMF]
The U.S. Federal Reserve Board (FRB) published a paper that examines how the speed of settlement in payment networks influences systemic risk and financial stability. It develops a network model that incorporates netting benefits, liquidity costs, and counterparty risks. It finds the effect of faster settlement is ambiguous: while it can reduce the probability of crisis events by lowering the chance of defaults, it can also amplify the severity of crises when they occur by increasing liquidity needs and reducing netting efficiency. The optimal settlement speed for a payment system depends on the network’s structure, the balance between efficiency and risk, and prevailing liquidity conditions. The paper identifies “default threshold points” at which small reductions in settlement time lead to discrete jumps in the number of defaults across the network. The paper concludes against uniform settlement speed policies, arguing that optimal design requires attention to network topology and liquidity conditions, and that targeted liquidity support be provided during times of stress. [Source: FRB]
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.
