Kiffmeister’s #Fintech Daily Digest (20260311)

March 11, 2026March 11, 2026 ~ kiffmeister ~ Leave a comment

National Bank of Kazakhstan Digital Tenge Annual Review (NBK)

The National Bank of Kazakhstan (NBK) published its annual review of the Digital Tenge project, which has shifted from research (2021) to limited production (2023) and scaled pilots in state-related payments (2025) within a broader National Digital Financial Infrastructure strategy. Programmable applications are focused on government spending, tax administration (“Digital VAT”), and targeted subsidies, rather than large-scale retail distribution. It operationalizes central bank digital currency (CBDC) as fiscal and public-finance infrastructure, tightening traceability, automating conditionality, and integrating with identification, anti-fraud, and open banking rails, rather than as a standalone payments product. The open question is how far Kazakhstan will extend CBDC use beyond state-linked flows and cross-border experiments once the 2026 roadmap and full-scale production decisions are implemented. [NBK]

Appia Roadmap for European Tokenized Finance (ECB)

The European Central Bank (ECB) published the Appia roadmap, a strategic workplan to design a tokenized wholesale financial ecosystem in Europe in which central bank money remains the settlement anchor. It will complement its Pontes distributed ledger technology (DLT) settlement solution due to launch in late 2026. Appia will, through structured engagement with market participants and public bodies, generate by 2028 a blueprint for tokenized market infrastructures, including choices between shared versus interconnected DLT networks and associated governance and standard-setting. It seeks to preserve effective monetary policy transmission, safeguard financial stability and payment system functioning, and reduce market fragmentation while enabling smart-contract based innovation in securities and payments. It also has a strategic autonomy dimension, aiming to keep euro-denominated financial market infrastructures competitive and interoperable in a tokenized world. The key open questions concern optimal network configuration, European governance arrangements and how far private infrastructures should rely on central bank money in tokenized form. [ECB]

Stablecoin Shocks (IMF)

The IMF published a paper that constructs narrative, high-frequency measures of “stablecoin shocks” based on USDT/USDC market-cap changes around stablecoin-specific news to identify their causal effects on U.S. financial markets. A 1 percent stablecoin demand shock persistently lowers short-term Treasury yields (about 1.9 bps at the 1‑month tenor), with limited effects on longer maturities. The broad dollar index modestly depreciates and crypto prices rise, with a small, economically minor increase in the S&P 500. Equity effects are heterogeneous: payment providers and crypto platforms benefiting from stablecoin infrastructure see gains, while large and community banks and major retailers show no significant response, implying markets do not yet price material disintermediation risk. Results are robust across identification strategies, event definitions, and econometric specifications. [IMF]

Tokenomics and Blockchain Fragmentation (BIS)

The BIS published a Hyun Song Shin paper that develops a global-games model of distributed technology technology (DLT) network validator coordination to show that higher decentralization requires disproportionately higher validator rents funded by user fees. This implies that capacity must be endogenously constrained and congestion is structurally necessary rather than incidental. This tokenomic structure induces entry of lower-security, lower-fee chains that attract users priced out of incumbent ledgers, generating persistent fragmentation across base layers and layer‑2s and eroding the network effects that normally drive convergence on a single medium of exchange. As a result, for example, nominally identical stablecoins on different chains are non‑fungible, bridged rather than natively interoperable, so liquidity and acceptance remain chain‑specific despite common issuers and regulatory regimes. The paper argues that a central‑bank‑anchored trust and settlement layer is required to deliver monetary integration, rather than relying on fully decentralized consensus. [BIS]

Stablecoins and the Missing Infrastructure Layer (LinkedIn)

Tord Coucheron posted a paper that argues that stablecoin growth reflects a structural response to cross‑border payment frictions in correspondent banking, not a fundamental demand for new private money. It shows that liquidity fragmentation, prefunding costs, and opaque, sequential settlement make traditional cross‑border transfers slow and capital‑intensive, making privately issued tokenized settlement claims economically attractive despite reserve and governance risks. It then introduces a real‑time multi‑currency financial market infrastructure (FMI) in central bank money, where banks hold multiple currencies and settle via payment‑versus‑payment (PvP), driving settlement costs toward zero and preserving the deposit‑funded banking model, monetary policy transmission, and monetary sovereignty. [LinkedIn]

Upcoming Speaking Engagements:

The Crypto Assets Conference (Frankfurt, March 25) I will be speaking on the uncertain future of CBDC projects. [Register here and get 15% off the regular ticket price.]

The Digital Euro Conference 2026 (Frankfurt, March 26) will explore the future of money with a focus on CBDCs, stablecoins, and commercial bank tokens. This hybrid event offers the perfect platform to understand the future of digital money! [Register here and get 20% off the regular ticket price by using the Kiffmeister20 code!]

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.

Kiffmeister’s #Fintech Daily Digest (20260305)

March 5, 2026March 5, 2026 ~ kiffmeister ~ Leave a comment

Call for Payment Service Providers to Participate in Digital Euro Pilot (ECB)

The European Central Bank (ECB) has opened applications for euro area licensed payment service providers (PSPs) to join a twelve‑month digital euro pilot in the second half of 2027. It will use a non‑legal‑tender “beta” digital euro in a controlled environment to test technical, operational and user experience (UX) aspects of P2P (online/offline) and P2B payments at physical and online points of sale. PSPs will onboard users and merchants without remuneration, be selected based on eligibility plus weighted criteria (compliance status, technical capacity, market presence, geographic/segment coverage, delivery track record), and then work directly with national central banks and Eurosystem teams. The ECB has published technical and procedural documentation and PSPs must apply by May 14, 2026, with the whole exercise framed as preparatory and conditional on future EU legislation and a separate decision to issue a digital euro. [ECB]

Towards a Consistent Regulatory Approach to Illicit Payments (BIS)

The Bank for International Settlements (BIS) published a paper that develops a framework for how illicit payment rules, centered on whether payment instruments rely on intermediaries, shape both illicit and legitimate users’ choice among payment instruments. Because detection probabilities differ by design and by whether instruments fall inside or outside anti-money laundering (AML) scope, actors shift activity toward instruments with the lowest expected detection and sanctioning, undermining overall effectiveness and prompting iterative regulatory expansion. Illicit payment measures also constrain informational privacy and freedom of choice for legitimate users, creating a privacy–integrity trade off moderated by data protection regimes and trust in public authorities. The paper argues for a forward looking architecture that applies uniform, risk based lex generalis AML/CFT and data protection requirements across all intermediated instruments, while using lex specialis tools such as transaction/holding limits, reliance on touch points, and additional duties on issuers or platforms for instruments without intermediaries, to reduce regulatory driven substitution across payment instruments while preserving both integrity and user privacy. [BIS]

Targeted Report on Stablecoin and Unhosted Wallet P2P Transactions (FATF)

The Financial Action Task Force (FATF) published a report that concludes that stablecoins, now a major share of on‑chain and illicit virtual‑asset activity, create elevated money laundering/ terrorist financing/ proliferation financing (ML/TF/PF) risks, especially via P2P transfers through unhosted wallets outside direct anti-money laundering/ countering the financing of terrorism/ counter proliferation financing (AML/CFT) controls. FATF affirms that stablecoins are virtual assets and that issuers, intermediaries and relevant DeFi actors must be regulated as virtual asset service providers (VASPs) or financial institutions under Recommendation 15, with licensing, supervision, Travel Rule compliance and sanctions screening. Jurisdictions are encouraged to build stablecoin‑specific regimes, require issuers to embed technical controls (freeze, burn, allow/deny‑lists) and strengthen cross‑border supervisory cooperation and data collection on P2P use. The report stresses expanded use of blockchain analytics, targeted controls on transfers to unhosted wallets, structured public‑private partnerships, and detailed red‑flag indicators to guide monitoring and investigations. [FATF]

New Recommendations for Public Payment Preparedness (Riksbank)

Sveriges Riksbank issued new recommendations on “public payment preparedness,” urging households to see themselves as part of Sweden’s total defence and to maintain multiple means of payment so essential purchases can continue during disruptions, crises or war in an increasingly digitalized environment. It advises adults to hold at least SEK 1,000 in cash at home (in mixed denominations) for roughly a week’s essential spending and to use cash periodically so cash infrastructure remains robust, to have at least two payment cards linked to different card networks (e.g. Visa and Mastercard), to ensure access to a mobile payment service such as Swish that relies on different infrastructure than cards, and to keep physical payment cards and PINs accessible even if mobile wallets are normally used. The recommendations feed into the Riksbank’s broader work on national payment contingency and will also feature in the Payments Report 2026, due on March 12, 2026. [Riksbank]

Upcoming Speaking Engagements:

Kiffmeister’s #Fintech Daily Digest (20260304)

March 4, 2026March 5, 2026 ~ kiffmeister ~ Leave a comment

The New Financial Ecosystem and the Role of Central Banks (BOJ)

Bank of Japan (BOJ) Governor Ueda Kazuo provided updates to the central bank’s digital payments projects. The BOJ is still investigating retail central bank digital currency (CBDC) with an eye towards providing a “digital form of cash” if needed, and has set up (and now plans to reorganize) a CBDC Forum to draw on private‑sector expertise and consider the future of payments more broadly. Internationally, the BOJ is participating in Project Agorá, exploring tokenized deposits and smart‑contract‑based cross‑border interbank payments on blockchains, and domestically it has launched a sandbox to test settlement in central bank current account balances on blockchain‑based systems, including links to existing infrastructures and use cases such as interbank and securities settlement. [BOJ]

Digital Pound Design Phase Progress Update (BOE)

The Bank of England (BOE) published a progress update on the digital pound design phase, which is focusing on four workstreams: a joint assessment of need, policy and public‑interest impacts, commercial viability, and operational feasibility; a detailed blueprint covering product design, roles of intermediaries, interoperability in a multi‑money ecosystem, product roadmap, alias services and offline functionality; targeted experiments and proofs of concept (including a prototype ledger architecture and the Digital Pound Lab, where firms test use cases such as POS payments, conditional B2B payments, tourist wallets and programmable features via allowances and locks); and extensive engagement with industry, academia and civil society to refine requirements, privacy protections and user safeguards. This work is tightly linked to the UK National Payments Vision and the new Retail Payments Infrastructure Board, with an emphasis on interoperability between bank deposits, tokenized deposits, stablecoins and a potential digital pound, and on preserving access to cash, prohibiting “programmable money”, and embedding strong privacy and data‑protection guarantees in both law and system architecture. The design phase runs to 2026, and the Bank and HM Treasury plan to publish the blueprint assessment and a decision on whether to proceed with building a digital pound later in 2026. [BOE]

Kraken Becomes First Crypto Company to Secure a Fed Master Account (CoinDesk)

Kraken has become the first crypto firm to obtain a Federal Reserve master account, granted to its banking subsidiary Kraken Financial under a Wyoming special-purpose bank charter, with oversight by the Federal Reserve Bank of Kansas City. The account gives Kraken direct access to Fedwire, the Fed’s core interbank payment network, eliminating its previous reliance on partner banks to handle U.S. dollar settlements and enabling faster deposits and withdrawals for large traders and institutional clients. The approval is limited in scope, however, as Kraken will not earn interest on reserves nor have access to the Fed’s emergency lending facilities, unlike traditional banks. [CoinDesk]

Stablecoins and Monetary Policy Transmission (ECB)

The European Central Bank (ECB) published a paper on rising stablecoin adoption’s impact on monetary policy by reshaping banks’ funding structures and, in turn, the strength and composition of transmission channels. As stablecoins alter banks’ liability mix towards wholesale funding, the traditional bank lending channel is strengthened (through tighter funding constraints) but the deposit channel is weakened (by changing how deposit rates and quantities react to policy rates), thereby undermining the predictability of the overall pass‑through from policy rates to financial conditions. If foreign‑currency (especially USD‑pegged) stablecoins became widely used in the euro area, they would increase banks’ reliance on foreign‑currency wholesale funding and “import” foreign monetary and risk conditions into domestic liquidity and spending, eroding monetary sovereignty and making it harder for the central bank to stabilize inflation and output, particularly in stress episodes. [ECB]

Upcoming Speaking Engagements:

Kiffmeister’s #Fintech Daily Digest (20260227)

February 27, 2026February 27, 2026 ~ kiffmeister ~ Leave a comment

UK FCA Selects 4 Firms to Test Stablecoin Innovation in its Regulatory Sandbox (UK FCA)

The UK Financial Conduct Authority (FCA) has selected four firms—Monee Financial Technologies, ReStabilise, Revolut and VVTX—from 20 applicants to test stablecoin services in its Regulatory Sandbox, focusing mainly on issuance and use cases including payments, wholesale settlement and crypto trading, so that these products can be trialled in real-world conditions with safeguards while FCA specialists provide feedback and refine proposed rules to ensure stablecoins can be trusted for payments, settlement and trading, inform the UK’s final stablecoin regime due later in 2026, and align with the broader crypto regulatory roadmap and related initiatives such as the Digital Securities Sandbox and the new crypto-asset authorization regime starting from 2026 with full implementation by October 2027. [UK FCA]

ASEAN’s Digital Payment Revolution: A New Frontier for Regional Integration, Thailand (IMF)

The IMF published a paper that reviews how rapid digital payment adoption in ASEAN—especially Thailand’s PromptPay-led fast payments and QR linkages—is reshaping domestic and cross-border transactions by lowering costs, boosting financial inclusion, and supporting SMEs, while introducing new cyber, fraud, and AML risks. It documents a surge in domestic fast and QR payments, the build‑out of bilateral QR and fund-transfer linkages under ASEAN’s Regional Payment Connectivity and Local Currency Transaction frameworks, and emerging multilateral architectures such as BIS’s Project Nexus to overcome the limits of fragmented bilateral models. Using Thai data for 2020–24, the empirical analysis finds that cross‑border QR usage rises when local‑currency–USD volatility is higher, suggesting local‑currency QR payments help users manage FX risk compared with card payments settled via the dollar, and that QR tends to substitute for traditional bank and card channels where financial access is weaker. [IMF]

Upcoming Speaking Engagements:

Kiffmeister’s #Fintech Daily Digest (20260214)

February 14, 2026February 14, 2026 ~ kiffmeister ~ Leave a comment

Bank of Russia to Conduct Study on the Creation of a Russian Stablecoin (TASS)

Russia’s TASS news agency reported that the Bank of Russia plans to conduct a study in 2026 on the feasibility of creating a Russian stablecoin. First Deputy Chairman of the Bank of Russia Vladimir Chistyukhin said “we have plans to conduct a study this year where we will once again assess this situation. Indeed, our traditional position is that this is not allowed, but taking into account the practice of a number of foreign countries, we will once again look at what risks and prospects there are here and bring this up for public discussion”. [TASS]

Indian Government to Launch CBDC-Based Public Distribution System Pilot (Financial Express)

India’s Union Home Minister Amit Shah reportedly announced the February 16, 2026 launch of India’s first central bank digital currency (CBDC)-based public distribution system pilot. It introduces subsidy transfers for foodgrains through the Reserve Bank of India’s CBDC platform. Under the pilot phase, 26,333 families across the Sabarmati zone of Ahmedabad, Surat, Anand, and Valsad receive digital tokens in their wallets containing details of commodity, quantity, and price. Beneficiaries using smartphones authenticate transactions by scanning QR codes at fair price shops, while those with feature phones receive one-time passwords through an Aadhaar-based verification system. The programmable CBDC coupons can only be used to purchase specified foodgrains at authorized ration shops and cannot be converted to cash, creating a clear audit trail of grain movement and subsidy utilization. [Financial Express]

Some more backfilling of my central bank digital currency (CBDC) database:

Madagascar’s Project e-Ariary One-Pager (BFM)

[October 19, 2020] Banky Foiben’i Madagasikara (BFM) published a one-pager on its e-Ariary central bank digital currency (CBDC) project. The project aims to affirm monetary sovereignty, ensure financial system stability, promote financial inclusion, control physical currency circulation, and establish a modern payment system in response to the global shift toward digital payments, cryptocurrencies, and new financial actors accelerated by COVID-19. The project follows a cautious two-phase approach: first conducting analysis, design, and experimentation, then proceeding to deployment only if the pilot phase proves successful, while carefully managing potential impacts on monetary and financial stability. [BFM]

Upcoming Speaking Engagements:

Kiffmeister’s #Fintech Daily Digest (20260211)

February 11, 2026February 11, 2026 ~ kiffmeister ~ Leave a comment

Bank of England Selects DLT Projects for RTGS Atomic Settlement Trials (BOE)

The Bank of England (BOE) has selected ten projects involving eighteen companies to participate in its Synchronisation Lab, which will run for approximately six months starting in Spring. This initiative, part of Project Meridian, aims to test how tokenization and distributed ledger technology (DLT) projects can achieve atomic settlement using central bank money by synchronizing with the real time gross settlement (RTGS) system. The Lab will validate design models for data sharing with RTGS and demonstrate potential applications, allowing both RTGS account holders and DLT operators to participate in the simulation, though it won’t be a live system at this stage. [Source: BOE]

The Bank of England Seeks Engagement on Retail Payments (BOE)

Also, the BOE is establishing three new forums as part of its National Payments Vision to develop next-generation retail payments infrastructure. The Payments End User Forum will gather input from consumers, small businesses, and charities to ensure systems meet real-world needs; the Payments Innovation Design Group will bring together fintech firms, payment providers, and technology companies to explore emerging opportunities and challenges; and the Payments Academic Advisory Group (expanded from the previous CBDC Academic Advisory Group) will convene academics and policy experts to provide evidence-based insights on the future of payments. Applications to join these forums are open until 5pm on March 3, 2026, with the goal of creating a more resilient, innovative, and inclusive payments landscape for the UK. [Source: BOE]

Adoption of Payment Innovations: The Case of Digital Wallets in Peru (BIS)

The BIS published a paper that examines the rapid adoption of digital wallets Yape and Plin in Peru, which grew from minimal usage in 2019 to 50% of retail transactions by April 2024. Using market share data and a logit demand model, the authors find that key success factors include zero fees, immediate 24/7 fund availability, QR code payments, and interoperability with point-of-sale terminals. The study estimates that a PEN 0.01 fee increase would reduce digital wallet market share by 0.31 percentage points, while removing features like POS payments would decrease usage by 26 percentage points. Consumer welfare per transaction among banked individuals increased by 68% by April 2024 due to digital wallet availability. The paper attributes this success to enablers (telecommunications infrastructure, financial inclusion), catalysts (COVID-19 pandemic), and design features (ease of use, large merchant networks), alongside the Central Bank of Peru’s regulatory push for interoperability between payment systems. [Source: BIS]

Upcoming Speaking Engagements:

Kiffmeister’s #Fintech Daily Digest (20260126)

January 26, 2026January 26, 2026 ~ kiffmeister

Stablecoins in Payments: What the Raw Transaction Numbers Miss (LinkedIn)

McKinsey Financial Services published analysis reveals that while stablecoins show headline transaction volumes of up to $35 trillion annually, the actual payment activity is only about $390 billion—representing roughly 0.02% of global payments. Most reported stablecoin transactions consist of trading, internal fund shuffling, and automated blockchain activity rather than real-world payments like supplier payments or remittances. The research, conducted with Artemis Analytics, found that B2B payments dominate actual stablecoin usage at $226 billion (60% of total), with Asia-originated activity leading at $245 billion. While stablecoin supply has grown from under $30 billion in 2020 to over $300 billion today, with projections reaching $2-4 trillion by 2030, the analysis emphasizes that financial institutions need to critically evaluate raw blockchain data and invest strategically in proven use cases rather than relying on inflated volume figures to assess stablecoins’ current market position and potential. [Source: McKinsey]

When Monetary Innovation Makes Money Obsolete (OMFIF)

The Official Monetary and Financial Institutions Forum (OMFIF) published an article by Ousmène Mandeng that argues that tokenization and instant financial transactions could make traditional money holdings obsolete. The author explains that money’s value stems from transaction frictions—the delays and costs of converting assets into purchasing power. As tokenization enables near-instantaneous, frictionless conversion between interest-bearing securities and money, people would no longer need to hold money balances in advance of payments. Instead, they would convert assets to money just-in-time for transactions and immediately back again, causing money holdings to shrink toward zero while money velocity becomes unbounded. This would fundamentally reshape banking, blurring the lines between banks and investment funds, as money transitions from being a store of value to merely a transient settlement instrument within transaction flows. [Source: OMFIF]

Stablecoins Are the Future But Banks Will Survive (Bloomberg)

Bloomberg published an article that argues that stablecoins pose minimal threat to traditional banking. While banks worry that interest-bearing stablecoins will drain deposits and increase their funding costs, the article contends that historical evidence suggests stablecoins and bank deposits serve complementary rather than competing functions—similar to how bank notes and deposits coexisted during the National Banking Era. The authors note that 70-80% of bank deposits are insensitive to interest rates, with customers valuing bundled services like physical branches over higher yields, making mass migration to stablecoins unlikely. They conclude that stablecoins, backed strictly by cash and short-term Treasuries under the GENIUS Act, enhance financial stability rather than threaten it, while providing additional demand for government debt. [Source: Bloomberg]

Stablecoins as Eurodollars 2.0 – Toward a Shadow Dollar Standard (SSRN)

A paper posted on SSRN co-authored by the University of Toronto’s Redouane Elkamhi argues that fiat-backed stablecoins function as “Eurodollars 2.0″—a new generation of offshore dollar liabilities that operate outside traditional banking regulation but remain economically linked to U.S. financial markets through reserve holdings and redemption mechanisms. Like the historical eurodollar system, stablecoins expand dollar liquidity creation and circulation beyond domestic borders, potentially strengthening dollar dominance by embedding the dollar as the default settlement asset in tokenized finance and accelerating digital dollarization in economies with weak currencies. However, this creates similar fragilities: stablecoins can experience rapid redemption runs that force reserve liquidations and transmit stress to money markets, while their global accessibility may erode monetary sovereignty in other jurisdictions. The authors propose the “Stablecoin Eurodollar System” framework to analyze how stress propagates through on-chain payment layers, off-chain reserve portfolios, and wholesale funding markets, emphasizing that the key policy challenge is not whether stablecoins exist but how convertibility into state money is governed when usage becomes systemic—particularly regarding reserve requirements, transparency standards, and whether public sector liquidity backstops should be extended to this new class of dollar instruments. [https://papers.ssrn.com/sol3/papers.cfm?abstract_id=6061095]

Upcoming Speaking Engagements:

Kiffmeister’s #Fintech Daily Digest (20251216)

December 16, 2025December 16, 2025 ~ kiffmeister

Ethiopia’s Central Bank Eyes Digital Birr (Capital Ethiopia)

The National Bank of Ethiopia (NBE) has reportedly initiated an exploratory review of potential central bank digital currency (CBDC) frameworks, aimed at understanding global digital currency developments rather than representing a commitment to implementation. The assessment is situated within Ethiopia’s draft National Digital Payments Strategy and Digital Ethiopia 2025 framework, though the central bank anticipates continued primacy of cash given the country’s substantial rural and informal economy. In February 2025, the Ethiopian Parliament passed into law National Bank of Ethiopia (NBE) Proclamation No. 1359/2025, establishing a legal framework that permits the NBE to issue CBDC as legal tender. [Source: Capital Ethiopia]

PayPal Submits Applications to Establish an Industrial Bank (PayPal)

PayPal has filed applications with the Utah Department of Financial Institutions and the U.S. Federal Deposit Insurance Corporation (FDIC) to establish a Utah-chartered industrial loan company, to be called PayPal Bank. The proposed institution would focus on providing business lending services to U.S. small businesses, a market in which PayPal claims to have extended over $30 billion in credit to more than 420,000 business accounts globally since 2013. PayPal Bank would also offer interest-bearing savings accounts to customers and seek direct membership in card networks to support processing and settlement activities. The company cites operational efficiency and reduced reliance on third-party intermediaries as primary motivations. Customer deposits would receive FDIC insurance coverage subject to regulatory approval. [Source: PayPal]

Upcoming Speaking Engagements:

Kiffmeister’s #Fintech Daily Digest (20251210)

December 10, 2025December 10, 2025 ~ kiffmeister

Norges Bank does not Recommend CBDC Introduction (Norges Bank)

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]

Project Rialto: Improving Instant Cross-Border Payments using Central Bank Money Settlement (BIS)

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 Future of the Federal Reserve Banks’ Check Services (FRB)

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]

Upcoming Speaking Engagements:

Kiffmeister’s #Fintech Daily Digest (20251205)

December 5, 2025December 5, 2025 ~ kiffmeister

Marshall Islands Launches Crypto-Based Universal Basic Income (Hauzen)

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]

Understanding Stablecoins (IMF)

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]

Digital Pound – Case Studies (BOE)

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]

Immediate vs. Deferred Offline Modes for Digital Payment Ecosystems (Crunchfish)

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]

Upcoming Speaking Engagements: