Kiffmeister’s #Fintech Daily Digest (20260411)

April 11, 2026April 14, 2026 ~ kiffmeister ~ Leave a comment

The IMF published a paper that develops a theoretical framework to analyze the tension between stablecoin stability and issuer incentives. The central finding is that unregulated stablecoin issuers hold excessive risky assets to maximize profits, thereby elevating run risk while failing to internalize the welfare consequences for households. A regulator acting in the broad public interest can improve upon this outcome by mandating high-quality liquid asset backing, ideally central bank reserves, but strict liquidity requirements alone reduce issuer profitability and suppress stablecoin supply below socially optimal levels. The authors argue that achieving both stability and adequate issuance requires two complementary policy instruments: a safe backing asset requirement and a supplementary revenue source for issuers, such as remuneration on reserves or regulated data monetization. The paper draws supporting parallels from China’s e-money experience and situates its findings relative to emerging regulatory frameworks including the U.S. GENIUS Act and the EU’s MiCA regulation. [IMF]

Stablecoin Issuance Market: Four Business Models Reshaping the Market (Tiger Research)

Tiger Research published a report arguing that late‑entry stablecoin issuers can survive only by abandoning the dominant reserve‑interest model and specializing in distinct market niches. The authors show that Tether uses scale to monetize reserves while gradually repairing transparency and building a diversified real‑world asset (RWA) and investment portfolio, turning regulatory normalization into a way to defend its monetary base. StraitsX instead treats stablecoins as payments infrastructure, monetizing fee‑based transaction velocity under a Monetary Authority of Singapore license that converts compliance into a regional moat. M0 repositions issuance as shared infrastructure, using network effects across issuers and builders to become a neutral standard rather than a competing coin. KRWQ treats regulatory gaps and offshore non‑deliverable forward demand as an entry point, using offshore liquidity as an option on future domestic legitimacy, leaving open whether such sequencing can withstand eventual onshore regulatory choices. [Tiger Research]

What Are Stablecoins Used for Today? Estimating the Distribution of Stablecoins (Kansas City Fed)

The Federal Reserve Bank of Kansas City (Kansas City Fed) published an article in which Franklin Noll estimates that stablecoins are used predominantly for crypto‑finance trading, with payments accounting for less than 1 percent of supply. He finds roughly half of outstanding stablecoins sit in exchanges, decentralized finance, and related infrastructure, with another large share used for high‑value transfers and a material portion idle in rarely used wallets. This usage pattern implies that stablecoins currently function more as market plumbing and speculative liquidity than as a broad retail or commercial payments instrument, and that reliance on bridges and exchanges highlights interoperability and concentration risks in the ecosystem. [Kansas City Fed]

Self-Custodial Wallets in a Regulated World (Walletconnect and Ubyx)

WalletConnect and Ubyx published a paper arguing that self-custodial wallets can operate within existing anti–money laundering, sanctions, and tax frameworks if regulators adopt technology-neutral, outcomes-based rules and focus obligations on intermediaries at the “edge.” The authors document concrete mechanisms—such as FATF “travel rule” data capture within wallet flows, cryptographic “sign-In with X” ownership proofs, programmable token-level controls, and blockchain analytics—that allow virtual asset service providers to meet customer due diligence, travel rule, and reporting obligations without banning or custodianizing self-custody. This matters because exclusionary rules would push activity offshore, create a two-tier system, and undermine both financial inclusion and supervisory visibility, whereas regulated interoperability preserves open finance benefits while strengthening compliance. The paper highlights unresolved questions around the precise regulatory status of new wallet architectures (trusted execution environments, multi-party computation, bank-deployed wallets) and the scope and consistency of edge-enforcement obligations across jurisdictions. [Walletconnect and Ubyx]

The Central Bank of Bolivia (BCB) to Explore Wholesale CBDC in 2026 (BCB)

[November 6, 2025] Banco Central de Bolivia (BCB) issued a press release outlining a phased roadmap to explore a wholesale central bank digital currency (CBDC) dubbed the Boliviano Digital through 2026. The plan sequences stakeholder consultations, surveys of potential participants, further technical and regulatory evaluation, and prototype testing in controlled environments to minimize operational and technological risk while building institutional capacity. For policy and market structure, the initiative positions CBDC as an infrastructure upgrade for interbank payments, cost reduction, and innovation. [BCB]

FYI 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 (20260404)

April 4, 2026April 4, 2026 ~ kiffmeister ~ Leave a comment

Worldpay 2026 Global Payments Report (Worldpay)

Worldpay published the 2026 edition of its Global Payments Report in which it argues that global consumer payments are rapidly shifting toward digital wallets and app‑based rails, with cards adapting and crypto evolving rather than disrupting. The report documents rising wallet dominance in e‑commerce and at point of sale, regional variation in account‑to‑account systems, and the continued but declining direct share of cards as usage migrates into wallets. These developments sharpen questions about governance of national fast‑payment infrastructures, merchant routing and fee regulation, cross‑border interoperability, and the competitive position of bank‑issued cards versus platform wallets and “superapps.” They also highlight how buy-now-pay-later and card‑backed installments blur prudential and consumer‑protection boundaries, and how stablecoin‑based payment rails may need bespoke oversight alongside traditional systems. [Worldpay]

An Efficient Frontier Analysis of Stablecoin Reserve Management (VISA)

VISA published an article in which Ezechiel Copic uses an efficient frontier framework to show how new U.S. and EU stablecoin rules compress reserve returns and reorient issuer economics toward liquidity and resilience. The article models pre‑regulation reserve strategies using Tether’s historical mix to illustrate a wide opportunity set, then re‑estimates frontiers under the U.S. GENIUS Act and the EU’s Markets in Crypto‑Assets Regulation. Under GENIUS, a narrow set of high‑quality liquid assets leaves only a thin band of feasible risk‑return combinations, making reserve management resemble liquidity engineering rather than portfolio optimization. Under MiCA, lower euro‑area rates and binding bank‑deposit floors further depress and compress the frontier, especially for “significant” issuers. The analysis implies competition will shift from balance‑sheet yield to technology, distribution, and compliance, while leaving open how far reduced issuer economics may constrain market entry and long‑run innovation. [VISA]

Tokenized Finance (IMF)

The IMF’s Tobias Adrian argues that tokenization is a structural reconfiguration of financial architecture that shifts trust and risk management from institutions to programmable infrastructures. Tokenization enables atomic, real-time settlement and embedded compliance across money, banking, capital markets, and financial market infrastructures, compressing value chains but also accelerating liquidity dynamics and potential stress transmission. For emerging and developing economies, although tokenization may lower payment and market-access frictions, it heightens risks of volatile capital flows, currency substitution, and fragmented liquidity. The note emphasizes that the long-term success of tokenization depends on anchoring digital finance in public trust through clear policy frameworks and safe settlement assets, robust governance of code, legal certainty, and international coordination. Absent such anchors, tokenization risks amplifying financial instability through speed, concentration, and fragmentation, as contract-based risk management alter the nature of settlement, liquidity, and systemic risk. [IMF]

Results of the SNB 2025 Payment Methods Survey of Private Individuals (SNB)

The Swiss National Bank (SNB) reported its 2025 survey results on payment behavior among private individuals in Switzerland. The SNB finds that use of payment methods at physical points of sale is largely unchanged from 2024, with debit cards leading, followed by cash and mobile payment apps, based on diary and questionnaire responses from roughly 2,000 residents. For policy and cash-infrastructure design, satisfaction with cash access has dropped from 88% to 81%, likely reflecting the continued reduction of automated teller machines and similar access points, which may pressure authorities to reconsider minimum cash-access standards or incentives for basic cash services. At the same time, only 2% of respondents support abolishing cash, underscoring that cash still fulfills a demanded role in retail payments and resilience planning. [SNB]

And now for more backfilling, more of which is to come…

Do We Really Need the Digital Euro: A Solution to What Problem Exactly? (IEA)

[April 30, 2025] The Instituto Espanol de Analysts (IEA) published a book that included a chapter by European Parliament rapporteur Fernando Navarette, that argues that a digital euro is a mis-specified response to Europe’s payments challenges and should be downgraded to a contingency “Plan B.” He contends that the core problems—trust in money post‑crisis, overreliance on non‑EU payment schemes, and stablecoin‑driven currency substitution—are better addressed through institutional and regulatory reforms, wholesale central bank digital currency (CBDC), and pan‑European instant‑payment solutions based on commercial bank money. Navarrete stresses that retail CBDC is inherently destabilizing for bank funding, raises unresolved privacy and governance risks, and risks crowding out private innovation, especially if coupled with legal tender and complex “waterfall” mechanics. He instead proposes a three‑pillar architecture: private‑led interoperable instant payments, a narrowly scoped offline digital euro, and wholesale CBDC—leaving a full retail CBDC only as a last‑resort backup if private efforts fail. [IEA]

The eNaira Journey So Far (in 2023) (CBN)

[In 2023] the Central Bank of Nigeria (CBN) published a book on the economics of digital currencies in which there was a review of how the eNaira central bank digital currency (CBDC) was designed, launched, and managed. It argues that weak demand reflects structural and institutional frictions rather than purely technological failure. The review documents a phased rollout focused on financial inclusion, payment efficiency, and monetary control, but shows that limited interoperability, burdensome onboarding, and unclear value propositions constrained uptake. It emphasizes how institutional choices around wallet tiers, distribution architecture, and bank–fintech roles reshaped market incentives, often reinforcing banks’ dominance rather than fostering broader innovation. It highlights the need to recalibrate design toward open interfaces, clearer legal and regulatory frameworks, and better alignment between central bank objectives and private‑sector business models. [CBN]

Kiffmeister’s #Fintech Daily Digest (20260319)

March 19, 2026March 19, 2026 ~ kiffmeister ~ Leave a comment

Bank of Korea Launches Full-Scale Implementation of “Project Han River” Phase 2 (BOK)

The Bank of Korea (BOK) announced Phase II of Project Hangang. It aims to trial large-scale, won-pegged deposit tokens built on a wholesale central bank digital currency (CBDC) layer, to cut transaction costs for both major corporations and small merchants burdened by credit card fees, building on Phase I’s system build out and 2025 live pilot. Participating banks will expand from 7 to 9 and merchant coverage will be significantly broadened. Phase II will test person to person transfers, biometric authentication, and automatic deposit token funding and sweep out. It will also deepen programmability, using digital vouchers in blockchain based treasury pilots such as an electric vehicle (EV) charging infrastructure project, and continue experiments with AI agent payments and tokenized bonds and equities. The 2026 agenda includes support for government treasury execution, and external consulting on regulation and operating models, with a Phase III vision of low cost universal payments, programmable financial services, and infrastructure for Korea’s broader digital asset ecosystem. [BOK]

ECB Calls for Experts to Participate in Digital Euro Rulebook Development (ECB)

The European Central Bank (ECB) launched a call for experts to join two workstreams under the digital euro Rulebook Development Group (RDG) to support further development of the digital euro scheme rulebook, which will set common rules, standards and procedures for using the digital euro across the euro area. One workstream (G5) will focus on implementation specifications for ATMs and payment terminals, including communication technologies, integration of offline digital euro functionality and leveraging existing standards, requiring expertise in ATM and terminal interfacing or provision. The other (B1) will design a certification and approval framework for testing and certifying payment and acceptance solutions and infrastructure used by payment service providers in the digital euro ecosystem, requiring expertise in payments and acceptance devices. The ECB notes that the flexible draft rulebook will be updated to reflect the outcome of the EU legislative process, with any decision to issue a digital euro to follow only after legislation is adopted. [ECB]

ECB Workshop on Pontes Platform Decentralized Programmability (ECB)

The ECB published an updates to its Pontes project aimed at enabling the settlement of distributed ledger technology (DLT) transactions using central bank money (CeBM). Pontes is the near-term DLT-based interoperability solution linking DLT platforms with TARGET Services so DLT transactions settle in CeBM, using API-based trigger and hash-link mechanisms and dedicated DLT cash wallets funded from TARGET accounts. The update focused on a workshop on market-developed smart contracts deployed by national central banks on the Eurosystem DLT (“decentralized programmability”) that would enable cash-locking for delivery-versus-payment, programmable payments, microtransactions, DLT interoperability, and automated corporate actions. [ECB]

Consultation on the Eurosystem’s Appia Project (ECB)

The ECB also published an update to its Appia project aimed at enabling the settlement of DLT transactions using CeBM. Appia is the longer-term initiative to provide tokenized CeBM for DLT-based wholesale markets via a unified settlement ecosystem. The update concerns the launching a formal consultation inviting market and public authorities to comment on Appia’s proposed DLT‑based wholesale ecosystem design and six‑block workplan via a structured questionnaire due 22 April 2026. Feedback will shape standards, governance choices, cross‑border linkages, and prioritization of analytical and practical work toward a 2028 blueprint. [ECB]

SEC Approves Nasdaq’s Securities Tokenization Plan (SEC)

The U.S. Securities and Exchange Commission (SEC) approved a Nasdaq rule change allowing certain listed securities to clear and settle in tokenized form via a Depository Trust Company (DTC) tokenization pilot. The order authorizes trading tokenized versions of large-cap equities and major index exchange-traded funds (ETFs) on the same order book, with identical CUSIP, symbol, rights, and execution priority as traditional shares, with tokenization preferences expressed through an order flag and implemented post‑trade by DTC. This embeds distributed-ledger-based entitlements within existing exchange, clearing, and surveillance infrastructures, preserves T+1 settlement, and treats tokenized and traditional shares identically for fees, market data, and audit trail. The SEC frames the decision as technology‑neutral, while leaving broader questions about alternative tokenization models, issuer choice, and future non‑fungible tokenized instruments to subsequent rulemakings. [SEC]

Zero-Knowledge Proof Authentication for Offline CBDC Payments (arXiv)

Santanu Mondal and T. Chithralekha propose a hybrid offline central bank digital currency (CBDC) architecture that uses zero-knowledge proofs (ZKPs) and secure hardware to enable cash-like payments on resource-constrained internet of things (IoT) devices while preserving regulatory oversight. The system combines a two-tier CBDC model with hierarchical “main wallet / IoT sub‑wallets,” secure elements and trusted execution environments for tamper-resistant key storage and counters, and NFC/BLE device-to-device transfers backed by lightweight ZKPs. This operationalizes intermittently offline CBDC designs, translating privacy-preserving anti–money laundering and counter–terrorist financing rules into on-device limits and ZKP circuits rather than continuous online monitoring, thereby shifting supervisory leverage into protocol and hardware design choices. Unresolved are empirical tradeoffs among proof complexity, device diversity, and real-world performance under regulatory stress scenarios. [arXiv]

Upcoming Speaking Engagements:

The Crypto Assets Conference (Frankfurt, March 25) will focus on the growing importance of digital assets for capital markets and the competitiveness of the European economy. 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 (20260318)

March 18, 2026March 18, 2026 ~ kiffmeister ~ Leave a comment

Which is the Fairest of all Tokenized Monies? (OMFIF)

OMFIF published an article in which Ousmène Mandeng pitches tokenized money market fund (MMF) shares as an alternative tokenized settlement asset. They offer bankruptcy‑remote, interest‑bearing claims on sovereign or high‑quality assets rather than bank balance sheets. By enabling instant delivery‑versus‑delivery transfer and collateralization without title transfer, tokenized MMFs could shift institutional liquidity management from episodic subscription/redemption to continuous circulation, potentially easing run dynamics and unlocking high‑quality collateral for intraday liquidity and cross‑border settlement. Constant net asset value MMFs invested in government securities could function as par settlement instruments with favorable prudential treatment, positioning them as strong competitors to tokenized deposits and stablecoins in wholesale use cases. Key uncertainties concern the robustness of distributed ledger technology, the status of the on‑chain versus off‑chain legal register and the prudential and regulatory classification of these instruments, which will determine their scalability and systemic role. [OMFIF]

How Canada Can Shape the Future of Stablecoins and Digital Payments [CD Howe Institute)

The CD Howe Institute published an article in which Peter MacKenzie and Mark Zelmer argue that Canada must rapidly operationalize its Stablecoin Act and consider a central bank digital currency (CBDC) to avoid ceding payment-system sovereignty to U.S. dollar-linked stablecoins enabled by the GENIUS Act. They note that GENIUS-backed U.S. stablecoins and foreign exchanges could become core Canadian payment rails, undermining monetary sovereignty, domestic oversight, and data access, while Canada’s high-level Stablecoin Act leaves key issues on reserves, operations, and foreign platforms unresolved. The authors propose a function-based, two-track regime that treats pure payment stablecoins as fully backed payment instruments under Bank of Canada oversight and keeps tokenized deposits in the banking framework, complemented by Bank of Canada liquidity lines and a CBDC settlement layer to preserve singleness of money and cross-platform interoperability. They stress that the open question is whether Canada will implement detailed, “comparable” rules fast enough to shape international arrangements rather than import foreign standards. [CD Howe Institute]

Upcoming Speaking Engagements:

Kiffmeister’s #Fintech Daily Digest (20260314)

March 14, 2026March 14, 2026 ~ kiffmeister

Federal Court Ends Custodia Bank’s Legal Bid for a Master Account (CoinTelegraph)

The US Court of Appeals for the Tenth Circuit has rejected Custodia Bank’s last attempt to force the Federal Reserve to grant it a master account, effectively ending the Wyoming crypto-focused bank’s five‑year effort to gain direct access to Fed payment rails and reserve accounts. Custodia had argued that the Monetary Control Act entitled it, as a state‑chartered institution, to such access, but multiple courts have now affirmed that the Fed retains discretion over master account approvals. The Tenth Circuit, in a 7–3 decision, declined to rehear Custodia’s appeal, though a dissenting judge warned that a master account is “indispensable” to a bank’s operations and that denial is “akin to a death sentence.” The ruling comes shortly after Kraken secured a limited master account from the Federal Reserve Bank of Kansas City, raising broader questions about how and on what terms crypto firms can obtain direct connections to systems like Fedwire. [CoinTelegraph]

Public vs. Private Payment Platforms: Market Impacts and Optimal Policy (Bank of Canada)

The Bank of Canada published a paper that studies competition between a welfare-maximizing public payment platform (e.g., fast payment system) and a profit-maximizing private platform. It finds that the public system should not simply aim to be as cheap as possible, because if it undercuts the private one too aggressively it can actually reduce the overall benefits from having both systems in the market. When a public system enters, more people and businesses use electronic payments and consumers are generally better off, but private providers tend to respond by putting more of their fees onto merchants. The authors also argue that if the public platform is required to cover its costs but forbids fees on consumers, it must load more of those costs onto merchants via fees, which could then reduce merchant participation, which in turn weakens the value of the platform to consumers and erodes the potential welfare gains from having the public system in the first place. [Bank of Canada]

Emerging Capabilities in Fast Payments: NFC and Offline Payments (World Bank)

The World Bank published a technical note outlining how fast payment systems (FPS) can incorporate near-field communication (NFC) and offline payment capabilities as “extended” channels and instruments, largely implemented at the payment service provider (PSP) level rather than in central infrastructure. The paper argues that NFC can shift consumer-initiated payments from cards and QR codes toward FPS by providing tap-based, tokenized, real-time credit transfers across payer‑ and payee‑initiated models, while raising device, scheme-rule, and fraud‑management questions. Offline models—deferred, temporary person‑to‑person, and person‑to‑merchant wallets—are positioned as critical for transit, low‑connectivity regions, and inclusion, but they introduce double‑spend, liability, and supervision challenges that require tight limits, secure elements, and explicit policy stances on where offline FPS should remain an exception versus a mainstream channel. [World Bank]

Upcoming Speaking Engagements:

Kiffmeister’s #Fintech Daily Digest (20260305)

March 5, 2026March 5, 2026 ~ kiffmeister

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

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

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 (20260225)

February 25, 2026February 25, 2026 ~ kiffmeister

BNP Paribas Uses Public Blockchain for Money Market Fund (MarketsMedia)

BNP Paribas Asset Management has issued a tokenized share class of an existing French‑domiciled money market fund on the public Ethereum blockchain using its AssetFoundry platform, but with a permissioned model that restricts holdings and transfers to authorized participants to remain within regulatory requirements. This follows an earlier tokenized money market fund in Luxembourg on a private blockchain and is structured as a one‑off intra‑group pilot in which BNP Paribas Asset Management acts as issuer, Securities Services as transfer agent and wallet/key operator, and AssetFoundry as the tokenization and connectivity layer, allowing the group to test end‑to‑end issuance, transfer agency and public‑chain connectivity while maintaining governance, investor protection and operational robustness. [MarketsMedia]

U.S. SEC Loosens Broker-Dealer Stablecoin Rules (SEC)

The U.S. Securities & Exchange Commission (SEC) issued an FAQ relating to the treatment of payment stablecoins under the broker-dealer net capital rule (Exchange Act Rule 15c3-1). A “payment stablecoin” is a USD–denominated stablecoin meeting specific regulatory and reserve criteria that change once the GENIUS Act takes effect. The new treatment sharply reduces how much capital firms must reserve against payment stablecoins—from 100% of their market value to a 2% haircut, effectively treating them like money market instruments with a ready market. [SEC]

Upcoming Speaking Engagements:

Kiffmeister’s #Fintech Daily Digest (20260214)

February 14, 2026February 14, 2026 ~ kiffmeister

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]

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