The Bank for International Settlements (BIS) published a report that analyses the operating, technology, third-party and business continuity risks for the central banks that issue central bank digital currency (CBDC). It proposes an integrated risk-management framework that can be applied to the entire life cycle of a CBDC. For CBDCs to be a reliable means of payments, central banks need to address, among others, the risks of interruptions or disruptions and ensure integrity and confidentiality. Key risk are the potential gaps in central banks’ internal capabilities and skills. While many of the CBDC-related activities could in principle be outsourced, doing so requires adequate capacity to select and supervise vendors. [Read more at the BIS]
The Hong Kong Monetary Authority (HKMA) published a paper that assesses the benefits of bond tokenization. It found that it reduces borrowing costs by 0.78% and underwriting fees by 0.22% of the bond’s par value. Additionally, tokenization improved liquidity by 5.3%, rising to 10.8% if access is available to retail investors. In order to compare tokenized bonds to conventional bonds it selected a single conventional bond by the same issuer with similar characteristics such as maturity and issuance date. [Read more at the HKMA]
FYI here are some of my upcoming speaking engagements:
– Digital Euro Conference 2024 (Frankfurt on February 29)[Register here]
*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
The Sovereign Official Digital Association (SODA) is a technology-agnostic firm offering advisory services at the intersection of central banking, digital finance and the web3 industry, aiming to make public digital money a reality. SODA believes institutions in the existing financial ecosystem should have access to the tools and resources they need to move from discussion to action. SODA offers ‘real life’ use cases to help test digital money and drive adoption as central banks and other public institutions explore the future of a more financially inclusive world powered by interoperable blockchain-based networks. SODA would love you to join us on this journey – please get in touch (chris@sodapublicmoney.org).
WhisperCash offers the first fully offline digital currency platform that has the same properties as physical cash. It can perform secure consecutive offline payments without compromising on security, privacy or accessibility. WhisperCash allows direct person to person offline payments without any server infrastructure or internet connectivity. It comes in various form factors including the self-contained credit card-sized “Pro” that sports an eInk screen and capacitive keyboard, and lasts for two weeks between recharges assuming a few transactions per day. [Click here for more information]
The Bank for International Settlements (BIS) published an update on Project Tourbillon, which explores privacy, security and scalability for retail central bank digital currency (CBDC). The experiment proposes a concept of payer anonymity, providing cash-like anonymity to the payer, combining proven technologies such as blind signatures and mix networks with the latest research on cryptography and CBDC design suggested by David Chaum and Thomas Moser’s eCash 2.0 platform. Project Tourbillon explored not only current, but also quantum-safe blind signatures, an important cryptography used in both designs to guarantee privacy and future security. Tourbillon also demonstrated that implementing quantum-safe cryptography is possible, but it severely limits performance. [Read more at the BIS]
The Bank of Canada published a report on the feedback it has received to date about a potential digital Canadian dollar. It confirmed that Canadians place a high value on central bank-backed cash and want to maintain access to bank notes. Also, Canadians value their right to privacy and many expressed concerns that a digital dollar could compromise that right. In addition, they don’t want a digital dollar that will add to financial stability risks. The Bank reconfirmed that likelihood of a digital loonie being needed is still uncertain, and the ultimate decision whether to go ahead with one depends on the Parliament. [Read more at the Bank of Canada]
The BIS, IMF, World Bank, and Swiss National Bank have launched a project aimed at applying tokenization to the paper-based processes used when richer countries donate into some of the World Bank’s funds to support poorer parts of the world. The idea is to tokenize the original paper-based “promissory notes” to make it easier to transfer when required. [Read more at the BIS]
The Central Bank of Solomon Islands (CBSI) started a retail CBDC (“Bokolo Cash”) proof-of-concept (PoC) on November 1, 2023. The CBSI has been testing the Soramitsu-provided system for domestic and foreign payments, including simulated international remittances. Within the PoC, users will be able to seamlessly scan a QR code with their Bokolo Cash wallet to send instant cash payments to selected merchants or make peer-to-peer transfers. [Read more at Finextra]
The National Bank of Rwanda (NBR) reportedly has determined that a retail CBDC is needed in the country. However, the central bank is still in the early stages of its CBDC research, and it will take about two years before it would ready for launch. [Read more at allAfrica.com]
The U.S. Federal Reserve (Fed) published a review of the literature that examines the risks to the banking sector associated with retail CBDC introduction. These include the possibility of bank disintermediation and associated contraction in bank credit, as well as potential adverse effects on financial stability. The recycling of the new CBDC liability through asset purchases or lending by the central bank plays an important role in determining the economic consequences of the introduction of a CBDC. Ultimately, the effects of a CBDC depend critically on its design features, of which remuneration is the one discussed most often in the literature. [Read more at the Fed]
FYI here are some of my upcoming speaking engagements:
– Currency Research Americas Cash Cycle & Payments Seminar (Orlando Florida on November 30)[Register here]
– Digital Euro Conference 2024 (Frankfurt on February 29)[Register here]
*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
The Sovereign Official Digital Association (SODA) is a technology-agnostic firm offering advisory services at the intersection of central banking, digital finance and the web3 industry, aiming to make public digital money a reality. SODA believes institutions in the existing financial ecosystem should have access to the tools and resources they need to move from discussion to action. SODA offers ‘real life’ use cases to help test digital money and drive adoption as central banks and other public institutions explore the future of a more financially inclusive world powered by interoperable blockchain-based networks. SODA would love you to join us on this journey – please get in touch (chris@sodapublicmoney.org).
WhisperCash offers the first fully offline digital currency platform that has the same properties as physical cash. It can perform secure consecutive offline payments without compromising on security, privacy or accessibility. WhisperCash allows direct person to person offline payments without any server infrastructure or internet connectivity. It comes in various form factors including the self-contained credit card-sized “Pro” that sports an eInk screen and capacitive keyboard, and lasts for two weeks between recharges assuming a few transactions per day. [Click here for more information]
The Canton of Zurich issued a CHF 100 million digital bond via the SIX Digital Exchange (SDX) that will settle on December 1, 2023 using a wholesale central bank digital currency (CBDC) issued by the Swiss National Bank (SNB), marking the launch of the SNB’s Project Helvetia pilot. The pilot will run to June 2024, and according to the SNB “does not constitute a commitment on its part to introduce wholesale CBDC on a permanent basis. Rather, the SNB aims to test the various models for settling tokenized assets”. [Read more at Ledger Insights and the SNB]
The Technology Working Group of the U.K. Government’s Asset Management Taskforce gave authorized investment funds the green light to develop tokenization. According to the announcement, “fund tokenization has the potential to improve operational efficiency, transparency, and international competitiveness… The first stage provides a baseline model for the implementation of tokenization that can be used within the existing legal and regulatory framework, and which investment management firms can implement immediately. [Read more at the U.K. Investment Association]
FYI here are some of my upcoming speaking engagements:
– Currency Research Americas Cash Cycle & Payments Seminar (Orlando Florida on November 27-30)[Register here]
– Digital Euro Conference 2024 (Frankfurt on February 29)[Register here]
*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
The Sovereign Official Digital Association (SODA) is a technology-agnostic firm offering advisory services at the intersection of central banking, digital finance and the web3 industry, aiming to make public digital money a reality. SODA believes institutions in the existing financial ecosystem should have access to the tools and resources they need to move from discussion to action. SODA offers ‘real life’ use cases to help test digital money and drive adoption as central banks and other public institutions explore the future of a more financially inclusive world powered by interoperable blockchain-based networks. SODA would love you to join us on this journey – please get in touch (chris@sodapublicmoney.org).
WhisperCash offers the first fully offline digital currency platform that has the same properties as physical cash. It can perform secure consecutive offline payments without compromising on security, privacy or accessibility. WhisperCash allows direct person to person offline payments without any server infrastructure or internet connectivity. It comes in various form factors including the self-contained credit card-sized “Pro” that sports an eInk screen and capacitive keyboard, and lasts for two weeks between recharges assuming a few transactions per day. [Click here for more information]
Binur Zhalenov, CEO of the National Bank of Kazakhstan National Payments Corporation, has described a pilot that uses digital tenge smart contracts to optimize government subsidies, in this case involving school canteen subsidies. Each school student in the city of Almaty has an “ONAY!” transportation card. When a student uses this card in the school canteen, a smart contract is triggered that transfers digital tenge from the school’s account directly to the canteen operator’s account, but only when the student actually receives the service. This significantly cuts down on unnecessary reporting, canteens receive funds instantly after providing services, and ensures clear visibility of government fund usage. [Read more on LinkedIn]
State Grid Suzhou Power Supply Company completed the first digital yuan smart contract transaction in the solar power industry. The deal was struck the CBDC with the materials and textiles firm Suzhou Shicheng Material Technology that had struck a smart contract loan-type financing deal with a local bank branch. After Suzhou Shicheng Material Technology used electricity over an agreed period, State Grid Suzhou Power Supply issued a bill, causing the contract to close, and Suzhou Shicheng Material Technology’s digital yuan wallet was automatically debited after the issuance of the bill. [Read more at Cryptonews]
FYI here are some of my upcoming speaking engagements:
– Currency Research Americas Cash Cycle & Payments Seminar (Orlando Florida on November 27-30)[Register here]
– Digital Euro Conference 2024 (Frankfurt on February 29)[Register here]
*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
The Sovereign Official Digital Association (SODA) is a technology-agnostic firm offering advisory services at the intersection of central banking, digital finance and the web3 industry, aiming to make public digital money a reality. SODA believes institutions in the existing financial ecosystem should have access to the tools and resources they need to move from discussion to action. SODA offers ‘real life’ use cases to help test digital money and drive adoption as central banks and other public institutions explore the future of a more financially inclusive world powered by interoperable blockchain-based networks. SODA would love you to join us on this journey – please get in touch (chris@sodapublicmoney.org).
WhisperCash offers the first fully offline digital currency platform that has the same properties as physical cash. It can perform secure consecutive offline payments without compromising on security, privacy or accessibility. WhisperCash allows direct person to person offline payments without any server infrastructure or internet connectivity. It comes in various form factors including the self-contained credit card-sized “Pro” that sports an eInk screen and capacitive keyboard, and lasts for two weeks between recharges assuming a few transactions per day. [Click here for more information]
The Bank of Korea (BOK) will reportedly launch two wholesale central bank digital currency (CBDC) tests. The first will be a pilot in which banks will issue tokenized deposits as programmable vouchers, and settle them between each other using wholesale CBDC. This tokenized deposit pilot will involve up to 100,000 people starting in September or October 2024. The second test will be a proof-of-concept that will involve banks using wholesale CBDC to settle carbon credit transactions on the Korea Exchange. [Read more at the Korea Times]
The OECD published a paper that analyzes the benefits, risks and implementation challenges of open finance and provides policy recommendations for the safe and successful implementation of such data-sharing frameworks in finance. It considers the impacts of providing access to customers’ financial data and how to do this responsibly and safely, with due consideration for data privacy. The paper also discusses other consumer safeguards, notably related to consent and liability. Finally, it considers whether there is a need to support the development of technical infrastructure to promote data interoperability. [Read more at the OECD]
The Government of Canada’s Fall Economic Statement includes a promise to implement an open banking banking framework in 2024. The statement also indicated that the government intends to amend the Canadian Payments Act to expand membership eligibility for Payments Canada to firms other than big banks. The framework legislation, to be introduced in Budget 2024, will prescribe a phased-in approach to scope and oversight of the technical standard, with the goal of adopting legislation and fully implementing the necessary governance framework by 2025. [Read more at Finance Canada]
FYI here are some of my upcoming speaking engagements:
– Currency Research Americas Cash Cycle & Payments Seminar (Orlando Florida on November 27-30)[Register here]
– Digital Euro Conference 2024 (Frankfurt on February 29)[Register here]
*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
The Sovereign Official Digital Association (SODA) is a technology-agnostic firm offering advisory services at the intersection of central banking, digital finance and the web3 industry, aiming to make public digital money a reality. SODA believes institutions in the existing financial ecosystem should have access to the tools and resources they need to move from discussion to action. SODA offers ‘real life’ use cases to help test digital money and drive adoption as central banks and other public institutions explore the future of a more financially inclusive world powered by interoperable blockchain-based networks. SODA would love you to join us on this journey – please get in touch (chris@sodapublicmoney.org).
WhisperCash offers the first fully offline digital currency platform that has the same properties as physical cash. It can perform secure consecutive offline payments without compromising on security, privacy or accessibility. WhisperCash allows direct person to person offline payments without any server infrastructure or internet connectivity. It comes in various form factors including the self-contained credit card-sized “Pro” that sports an eInk screen and capacitive keyboard, and lasts for two weeks between recharges assuming a few transactions per day. [Click here for more information]
An article in China’s Sina news service claims that eCNY uptake may be lagging because of a lack of merchant point-of-sale (POS) terminals that can process eCNY transactions. It’s not because of transaction fees, because they are zero on eCNY transactions, and not for a lack of equipment, because existing POS terminals can be adapted to process eCNY transactions. The problem is supposedly that the POS equipment manufacturers get a cut of the transaction fees, so there’s no incentive for them to adapt existing POS equipment. However, the People’s Bank of China (PBOC) reportedly said that it actively offers free upgrades to POS equipment or free equipment. [Read more at Sina]
“Circle has introduced a new standard to streamline the process of launching its USDC stablecoin. The new “bridged USDC standard” allows developers to launch the token through a two-phase process. In the first phase, the third-party developer has control of the token contracts, and the token on the new network is backed by a native version on another network. In the second phase, Circle takes control of the contracts, and the token becomes backed directly by Circle’s reserves. The second phase may not occur with all deployments.” [Read more at Circle]
The European Central Bank (ECB) published a paper that analyzes the drivers of Bitcoin transactions against 44 fiat currencies in the largest peer-to-peer crypto exchanges. The empirical results reinforce the hypothesis that Bitcoin trading is driven by speculative motives. However, Bitcoin seems to offer transactional benefits, in particular in emerging market and developing economy (EMDE) countries. The depreciation of the domestic currency of EMDEs – notably not of the currencies of AEs – induces more Bitcoin trading. This suggests that Bitcoin, despite its wide price fluctuations, might have been appreciated also as a store of value or medium of exchange in countries which experienced a loss in the the purchasing power of their domestic currency. [Read more at the ECB]
Sustainable Futures published an article that delves into the benefits and risks of CBDC and examines social adaptation, and education using expert interviews and conference insights. Vital findings stress the need for targeted educational efforts to facilitate CBDC adoption. The research also emphasizes best practices, engaging external experts, and a phased introduction strategy for safe and efficient implementation. Highlighting key stages, it underscores addressing genuine market needs for successful CBDC introduction. Overall, prudent risk management, strategic education, and well-planned phased deployment are crucial for successful CBDC implementation. [Read more at Sustainable Futures]
FYI here are some of my upcoming speaking engagements:
– Currency Research Americas Cash Cycle & Payments Seminar (Orlando Florida on November 27-30)[Register here]
– Digital Euro Conference 2024 (Frankfurt on February 29)[Register here]
*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
The Sovereign Official Digital Association (SODA) is a technology-agnostic firm offering advisory services at the intersection of central banking, digital finance and the web3 industry, aiming to make public digital money a reality. SODA believes institutions in the existing financial ecosystem should have access to the tools and resources they need to move from discussion to action. SODA offers ‘real life’ use cases to help test digital money and drive adoption as central banks and other public institutions explore the future of a more financially inclusive world powered by interoperable blockchain-based networks. SODA would love you to join us on this journey – please get in touch (chris@sodapublicmoney.org).
WhisperCash offers the first fully offline digital currency platform that has the same properties as physical cash. It can perform secure consecutive offline payments without compromising on security, privacy or accessibility. WhisperCash allows direct person to person offline payments without any server infrastructure or internet connectivity. It comes in various form factors including the self-contained credit card-sized “Pro” that sports an eInk screen and capacitive keyboard, and lasts for two weeks between recharges assuming a few transactions per day. [Click here for more information]
The IMF published a summary of the first five chapters of its forthcoming central bank digital currency (CBDC) handbook. These cover a framework to guide countries’ CBDC exploration, as well as implications for monetary policy transmission, capital flow management measures, and financial inclusion. [Download the summary at the IMF]
In yesterday’s Daily Digest I reported on a Bank for International Settlements (BIS) survey of Koreans’ that found that privacy-preserving variations of CBDC design have significant effects on willingness to use CBDC. These effects were found to vary with respondents’ trust in public or private institutions with regard to privacy protection and their demographic characteristics. However, the BIS paper cautions about generalizing its findings across countries with different institutional settings and political climates. I’ve looked for cross-country comparisons of residents’ trust in government, and so far this OECD metric is the best I’ve found, and the range is quite significant from Switzerland at the very trusting end (84% responding “yes” to the question of confidence in the government) to 31% from Americans, which could explain their tendency to be anti-CBDC. [See the data at the OECD]
The Atlantic Council published an article that argues that if the U.S. Federal Reserve doesn’t initiate a digital dollar strategy domestically there is a significant risk that the United States will be missing in action regarding cross-border payments interoperability. “Driving digital dollar policy through a tokenized banking system and bank-issued stablecoins will do little to address the frictions and costs discussed [in the article]. Markets and central bank reserve policies could easily shift to least-cost alternatives, leaving the Fed with oversight of a smaller universe of economic activity. Actively and publicly exploring CBDC architecture and policy options will at least ensure that U.S. priorities are part of the global conversation – if you are not at the table, you are on the menu!” [Read more at the Atlantic Council]
The Philippines Bureau of the Treasury (BTr) sold 15 billion pesos ($270 million) one-year tokenized treasury bonds for the first time after canceling the traditional auction scheduled for November 20, 2023. The bonds, which were issued by the state-owned Development Bank of the Philippines and the Land Bank of the Philippines, were sold to institutional buyers at minimum denominations of 10 million pesos with increments of 1 million pesos. The bond auction was oversubscribed by more than three times (PHP31.426 billion), pushing the BTr to upsize the offering from the original 10 billion pesos ($179 million). [Read more at the BTr]
FYI here are some of my upcoming speaking engagements:
– Currency Research Americas Cash Cycle & Payments Seminar (Orlando Florida on November 27-30)[Register here]
– Digital Euro Conference 2024 (Frankfurt on February 29)[Register here]
*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
The Sovereign Official Digital Association (SODA) is a technology-agnostic firm offering advisory services at the intersection of central banking, digital finance and the web3 industry, aiming to make public digital money a reality. SODA believes institutions in the existing financial ecosystem should have access to the tools and resources they need to move from discussion to action. SODA offers ‘real life’ use cases to help test digital money and drive adoption as central banks and other public institutions explore the future of a more financially inclusive world powered by interoperable blockchain-based networks. SODA would love you to join us on this journey – please get in touch (chris@sodapublicmoney.org).
WhisperCash offers the first fully offline digital currency platform that has the same properties as physical cash. It can perform secure consecutive offline payments without compromising on security, privacy or accessibility. WhisperCash allows direct person to person offline payments without any server infrastructure or internet connectivity. It comes in various form factors including the self-contained credit card-sized “Pro” that sports an eInk screen and capacitive keyboard, and lasts for two weeks between recharges assuming a few transactions per day. [Click here for more information]
A Bank for International Settlements (BIS) study found privacy-preserving variations of central bank digital currency (CBDC) design have significant effects on willingness to use CBDC to purchase privacy-sensitive products (e.g., psychiatric services and adult products). It was based on a survey of a nationally representative sample of over 3,500 Korean participants. The willingness to use CBDC substantially increases with the provision of information about the privacy benefits of using it. Finally, these effects vary with respondents’ trust in public or private institutions with regard to privacy protection and their demographic characteristics. [Read more at the BIS]
The BIS paper does, however, express some caution about generalizing its findings over time and across countries with different institutional settings and political climates. For instance, with regard to which institution is to safeguard personal data, trust in institutions varies with countries. According to a [2020] US survey, American consumers have more trust in traditional financial institutions than government agencies and Bigtech companies, whereas the respondents in Korean survey show more trust in the government than financial institutions and Bigtech companies. [Read more about the US 2020 survey at the BIS]
The current draft of the digital euro legislation calls for increased privacy for close-proximity offline payments, which is seen as consistent with the European Union AML/CFT framework risk-based approach. The European Data Protection Board (EDPB) and European Data Protection Supervisor (EDPS) suggest increased privacy for low-value online payments too, but not as private as offline transactions, because online transactions would not be limited to proximity payments, resulting in a potentially attractive model for criminals. Hence, they recommend transaction size limits above which complete checks can occur that are lower for online than offline transactions. However, Atakan Kavuklu suggests equalizing the limits at the higher level for all low-value proximity payments (e.g., those using NFC and Bluetooth connections). He believes this could benefit the acceptance and success of a digital euro. [Read more on LinkedIn]
The IMF published a paper that develops a model to determine the conditions in which the introduction of an interest-bearing CBDC would lead to lower deposits and lending in the banking sector. It finds that richer households increase their holdings of deposits as banks increase deposit interest rates in reaction to the CBDC introduction, which is offset by poorer households switching from deposits to the CBDC. Total deposits are more likely to fall when the mass of poorer households is large and when it is relatively costly to access bank accounts, which tends to be the case in emerging market and developing economy countries. However, even then the impact on lending is quantitatively small if banks have access to other forms of funding, such as wholesale or central bank financing. [Read more at the IMF]
R3’s Jack Fletcher does a nice dismantling of the dystopian case against central bank digital currency (CBDC). First he points out that there are technical solutions to privacy available through distributed ledger technology (DLT) infrastructure that far surpass anything that is available in existing digital solutions, so a CBDC could be as private as cash. Secondly, in a world of payment options, why would anyone use a surveillance CBDC when they could simply use Visa or Mastercard or cash instead? And access to cash is something that no government or central bank is keen to remove. Indeed, they must now step in as consumer preferences drive it to redundancy. But with cash use declining as a global trend, Jack does acknowledge that society must consider a future world whereby it no longer exists and our privacy and our freedom to disobey is removed with it. [Read more on the Tabb Forum]
The IMF published a paper that explores survey data for Uganda to compare mobile money users and non-users across a range of indicators that capture individuals’ perceptions about cash, and the extent to which they remit, save, and borrow money. It finds that mobile money users, compared to non-users, are more likely to perceive cash as risky and less likely to prefer carrying large amounts of cash. It also confirms that mobile money users are more likely to receive and send remittances, save, and borrow. They also save and borrow larger amounts. This suggests that the rapid expansion of fintech in Africa is likely to reduce the demand for and usage of cash. [Read more at the IMF]
The IMF published a paper that examines how the growing presence of Fintech firms affects the performance of traditional financial institutions. The findings point to a negative impact on profitability, primarily due to a reduction in interest income and a rise in operational costs. Although established financial institutions have tried to diversify their revenue streams, these efforts have proven inadequate to offset the losses associated with increased competition from Fintech firms. The study also reveals that various Fintech business models, such as peer-to-peer (P2P) lending and balance sheet lending, have varying effects on financial institutions. Cooperative banks experience more significant profit deterioration under both models, whereas (larger) commercial banks appear to benefit from partnerships with P2P platforms, as evidenced by an increase in non-interest income. Furthermore, the findings suggest that Fintech presence has a disproportionately larger adverse effect on banks in countries with more competitive, profitable, and developed financial systems. Interestingly, however, traditional financial institutions in countries with stronger regulatory frameworks appear to benefit from the expanding influence of Fintech firms. [Read more at the IMF]
FYI here are some of my upcoming speaking engagements:
– Currency Research Americas Cash Cycle & Payments Seminar (Orlando Florida on November 27-30)[Register here]
– Digital Euro Conference 2024 (Frankfurt on February 29)[Register here]
*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
The Sovereign Official Digital Association (SODA) is a technology-agnostic firm offering advisory services at the intersection of central banking, digital finance and the web3 industry, aiming to make public digital money a reality. SODA believes institutions in the existing financial ecosystem should have access to the tools and resources they need to move from discussion to action. SODA offers ‘real life’ use cases to help test digital money and drive adoption as central banks and other public institutions explore the future of a more financially inclusive world powered by interoperable blockchain-based networks. SODA would love you to join us on this journey – please get in touch (chris@sodapublicmoney.org).
WhisperCash offers the first fully offline digital currency platform that has the same properties as physical cash. It can perform secure consecutive offline payments without compromising on security, privacy or accessibility. WhisperCash allows direct person to person offline payments without any server infrastructure or internet connectivity. It comes in various form factors including the self-contained credit card-sized “Pro” that sports an eInk screen and capacitive keyboard, and lasts for two weeks between recharges assuming a few transactions per day. [Click here for more information]
The Human Rights Foundation (HRF) launched a central bank digital currency (CBDC) tracker that focuses on civil liberties and human rights impacts, particularly of people living under authoritarian regimes. According to tracker, central banks in 119 countries are researching, piloting, or deploying CBDCs, and the HRF estimates that 46% of the world population are living under autocracies currently experimenting with CBDCs. The coverage is similar to that provided by the Atlantic Council’s CBDC tracker, and similarly “double” counts currency zone countries to pump up the numbers, which the crowd-sourced CBDCTracker.org does not do. [Read more at the HRF CBDC Tracker website]
The Monetary Authority of Singapore (MAS) unveiled three initiatives to ensure the safe and innovative use of digital money in Singapore. First there is the Orchid Blueprint that sets out the technology and infrastructure building blocks that would be required to facilitate digital money transactions in the future. Second, there will be four new Project Orchid digital money trials, including testing the broad applicability of purpose bound money, which enables money to be directed towards a specific purpose, without requiring money itself to be programmed. And third, “live” wholesale CBDC will be tested, with the first pilot focusing on settling retail payments between commercial banks, and future pilots possibly focusing on settling cross-border securities trades. The Orchid Blueprint will support single-currency stablecoins that will be regulated for their value stability under MAS’ proposed regulatory framework for stablecoin activities. The Blueprint will also support tokenized bank deposits issued by MAS-regulated banks. [Read more at the MAS]
Jonas Gross and Conrad Kraft argue that, although the slow uptake of retail CBDC pilots and launches may be viewed as disappointing by some, it isn’t uncommon among transformative payment technologies (e.g., credit cards, online banking and e-wallets). They provide a number of key factors that can guide the gradual transition to wider-spread CBDC adoption, such as education and awareness, maintaining a focus on technological advancements and security, developing regulations that support CBDC growth, and collaborating with all stakeholders, including merchants, banks and payment service providers. And most importantly, “CBDC must offer unique features that surpass the capabilities of existing payment instruments… A CBDC that merely replicates current digital money, differing only in its central bank backing (largely imperceptible to potential users), won’t attract widespread use.” [Read more at CoinDesk]
FYI here are some of my upcoming speaking engagements:
– Currency Research Americas Cash Cycle & Payments Seminar (Orlando Florida on November 27-30)[Register here]
– Digital Euro Conference 2024 (Frankfurt on February 29)[Register here]
*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
The Sovereign Official Digital Association (SODA) is a technology-agnostic firm offering advisory services at the intersection of central banking, digital finance and the web3 industry, aiming to make public digital money a reality. SODA believes institutions in the existing financial ecosystem should have access to the tools and resources they need to move from discussion to action. SODA offers ‘real life’ use cases to help test digital money and drive adoption as central banks and other public institutions explore the future of a more financially inclusive world powered by interoperable blockchain-based networks. SODA would love you to join us on this journey – please get in touch (chris@sodapublicmoney.org).
WhisperCash offers the first fully offline digital currency platform that has the same properties as physical cash. It can perform secure consecutive offline payments without compromising on security, privacy or accessibility. WhisperCash allows direct person to person offline payments without any server infrastructure or internet connectivity. It comes in various form factors including the self-contained credit card-sized “Pro” that sports an eInk screen and capacitive keyboard, and lasts for two weeks between recharges assuming a few transactions per day. [Click here for more information]
The National Bank of Kazakhstan (NBK) kicked off a central bank digital currency (CBDC) pilot involving second tier banks and their clients. The architecture of the platform allows the use of digital tenge by opening a digital account in the mobile application of the banks, between which users can make payments and money transfers. Also, Almaty city administration will distribute automated social support payments using smart contract technology. Also, participating banks have issued digital cards in cooperation with international payment systems like MasterCard and Visa, so that . holders can make digital tenge payments and transfers with familiar form factors. [Read more at the NBK]
The IMF launched its Central Bank Digital Currency (CBDC) Virtual Handbook, a reference guide for policymakers and experts at central banks and ministries of finance. It also serves as the basis for the IMF’s engagement with country authorities and other stakeholders. The CBDC Handbook aims to collect and share knowledge, lessons, empirical findings, and frameworks to address policymakers’ most frequently asked questions on CBDCs. As the IMF’s body of knowledge and analysis grows, it will continue to add about five chapters every year aiming to provide about twenty chapters by 2026. Moreover, chapters will be periodically updated, reflecting evolving views. [Read more at the IMF]
The Monetary Authority of Singapore (MAS) will commence a new series of asset tokenization pilots in collaboration with 17 international banks. The initiative is an extension to MAS’ Project Guardian, in which the central bank collaborated with 15 financial institutions to carry out industry pilots on asset tokenization in fixed income, foreign exchange, and asset management products. The five new pilot projects explore a new set of use cases including listing, distribution, trading, settlement, and asset servicing. Additionally, MAS is collaborating with international policymakers and financial institutions to create an open digital infrastructure called Global Layer One (GL1) to facilitate seamless cross-border transactions and enable trading of tokenized assets across global liquidity pools while adhering to regulatory requirements. Furthermore, MAS is working with the financial industry to develop an Interlinked Network Model (INM) as a common framework for exchanging digital assets across independent networks, enabling transactions among financial institutions without the need for all to be on the same network. [Read more at MAS]
Goldman Sachs, BNP Paribas and DTCC joined Fnality’s £77.7 million Series B funding round. Formerly called Utility Settlement Coin, Fnality plans to offer a wholesale payment and settlement platform using stablecoins backed by deposits at central banks. So far it’s operational only in the U.K., where banks can transfer money from their Bank of England accounts to the Fnality UK central bank account where it’s tokenized. Because the money is tokenized it enables instant atomic securities transaction settlement. One of the intended use cases is cross currency payments, but that will need the cooperation of other central banks, which has been slow in coming. [Read more at Fnality]
The National Bank of Cambodia (NBC) and Ant International have partnered to promote efficient and secure cross-border mobile payments via QR code. The partnership, signed at the Singapore Fintech Festival, will enable users of Alipay+ payment partners to easily make payments at any KHQR merchants across Cambodia, and vice versa. KHQR, launched by the NBC in 2022, is a QR code-based payment solution designed to facilitate retail payments within Cambodia and cross-border transactions within ASEAN. [Read more at Fintech Singapore]
FYI here are some of my upcoming speaking engagements:
– Currency Research Americas Cash Cycle & Payments Seminar (Orlando Florida on November 27-30)[Register here]
– Digital Euro Conference 2024 (Frankfurt on February 29)[Register here]
*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
The Sovereign Official Digital Association (SODA) is a technology-agnostic firm offering advisory services at the intersection of central banking, digital finance and the web3 industry, aiming to make public digital money a reality. SODA believes institutions in the existing financial ecosystem should have access to the tools and resources they need to move from discussion to action. SODA offers ‘real life’ use cases to help test digital money and drive adoption as central banks and other public institutions explore the future of a more financially inclusive world powered by interoperable blockchain-based networks. SODA would love you to join us on this journey – please get in touch (chris@sodapublicmoney.org).
WhisperCash offers the first fully offline digital currency platform that has the same properties as physical cash. It can perform secure consecutive offline payments without compromising on security, privacy or accessibility. WhisperCash allows direct person to person offline payments without any server infrastructure or internet connectivity. It comes in various form factors including the self-contained credit card-sized “Pro” that sports an eInk screen and capacitive keyboard, and lasts for two weeks between recharges assuming a few transactions per day. [Click here for more information]