I’ve updated my tabulation of retail central bank digital currency (#CBDC) explorers. There are now 95 with the addition of Mauritania. FYI my 95 is less than the Atlantic Council CBDC Tracker’s 130 mostly because I don’t “double count” currency zone countries: https://kiffmeister.com/2023/09/02/jurisdictions-where-retail-cbdc-is-being-explored-2/
Recent central bank digital currency developments in Asia and their implications
The Asian Development Bank (ADB) published a paper that analyzes the evolution of central bank digital currencies (CBDCs) in Asia and the Pacific, assesses their potential risks and technical challenges, and shows their potential to improve cross-border payments and financial inclusion. It details various models and explores how China, Singapore, and Thailand are taking the lead. Outlining global developments and emerging trends, it shows why a robust digital infrastructure, strong public–private collaboration, and Fintech literacy are central to ensuring CBDCs help drive the transition to a digital economy. [Read more at the ADB]
Functional consistency across retail CBDC and commercial bank money
Three Barclays staffers circulated a paper on how functional consistency could mitigate the risk of retail CBDCs fragmenting payments markets and retail deposits. In the context of the Bank of England’s digital pound platform model, they identify the common operational characteristics and design options to achieve this based on their provision by the central bank, payment interface providers, technical service providers (TSPs) or a financial market infrastructure (FMI). They conclude that a complete solution would need to combine the suitable design option(s) for each key capability and include common ecosystem services provided by an FMI and TSPs. [Read more at arXiv]
How does post-quantum cryptography affect central bank digital currency?
Lars Hupel (G+D) and Makan Rafiee (secunet) circulated a paper that provides insight into the future of cryptography as it applies to CBDC. They first give an overview of classical cryptographic algorithms and what they are used for in the CBDC context. Then, they introduce the threats that quantum computing poses, as well as post-quantum algorithms that address those threats. Equipped with this, they can then examine the cryptography in use for CBDC implementations and match them to appropriate algorithms. Finally, they propose an opinionated framework for rolling updates, i.e., to put the earlier insights into practice. [Read more at arXiv]
From clicks to claims: emerging trends and risks of big techs’ foray into insurance
The BIS published an overview of Bigtech involvement in insurance in 14 jurisdictions, analyzing their involvement from three main perspectives according to the activity they perform: as risk carriers, intermediaries or service providers. Currently, Bigtech’s regulated insurance activities as risk carriers or insurance intermediaries are limited, but that could change due to their potential to rapidly scale. The insurance activities of big techs are covered under existing insurance regulatory requirements, though none are specific to Bigtechs. Hence, regulatory frameworks based on suitable international standards that encompass all these activities and the risks they entail, including those beyond the remit of sectoral regulations, may be required. [Read more at the BIS]
*For those interested in intra-day updates, check out my searchable Diigo Fintech developments database, which is also a good place to go to query for past developments: https://www.diigo.com/user/kiffmeister/ART.
Kiffmeister’s central bank digital currency monthly monitor
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 chronicles@kiffmeister.com.
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