Kiffmeister’s #Fintech Daily Digest (20220927)

First Project mCBDC Bridge Pilot Complete

Project mBridge is a prototype real-time cross-border payments platform based distributed ledger technology (DLT) and multiple central bank digital currencies (CBDCs) developed by the Bank for International Settlements Innovation Hub and four central banks. The first pilot is now complete, with over $12 million in value issued onto the platform facilitating over 160 cross-border payments and FX transactions totaling more than $22 million in value between 20 participating commercial banks over the course of a month. A detailed report will be released in October. [Read more on LinkedIn]

Central Bank Digital Currency: Financial Inclusion vs. Disintermediation

The Dallas Fed published a working paper that analyzes the impact of introducing a central bank digital currency (CBDC) on financial inclusion, and its potential adverse effect on bank funding. The paper highlights the role of two design parameters: the fixed cost of CBDC usage and the interest rate it pays, and derive principles for maximum inclusion and for mitigating the inclusion-intermediation trade-off. Agents’ choice of money instrument is endogenously driven by income heterogeneity. Pre-CBDC, wealthier agents adopt deposits, while poorer agents adopt cash and remain unbanked. CBDCs with low fixed costs (and low interest rates) are adopted by cash holders and directly increase inclusion. CBDCs with high fixed costs (and high interest rates) are adopted by deposit holders and increase inclusion by raising deposit rates. The former allows for more favorable inclusion-intermediation trade-offs. [Read more at the Dallas Fed]

 

Regulating the crypto ecosystem: The case of unbacked crypto assets

The International Monetary Fund (IMF) published a Fintech Note that recommends that global bodies work to develop common crypto-asset taxonomies that can inform global and cross-sectoral standards while improving data insights. Standards should be risk-based, with greater requirements on entities and activities that generate more risk. Crypto asset service providers that deliver core functions and generate key risks should be licensed, registered, or authorized. [Read more at the IMF]

Regulating the crypto ecosystem: The case of stablecoins

The IMF published a Fintech Note that provides key elements that should feature in any stablecoin regulatory arrangement. Global regulation for stablecoins should be comprehensive, consistent, risk-based, flexible, and focus on their structural features and use. Requirements on stablecoins should cover the entire ecosystem and all its key functions, and there should be additional oversight for systemic stablecoin arrangements. In markets where risks are growing quickly, authorities should take immediate action by using all the tools at their disposal. For effective implementation, domestic and international collaboration are key. [Read more at the IMF]

Distributed ledger technology (DLT) options for CBDC

The Swiss National Bank’s Thomas Moser was one of the authors of a paper on the options for designing CBDCs using distributed ledger technology (DLT). It analyzes the various structures for implementation offered by DLT – public, permissioned and private – and the implications that each has for the central bank and the existing financial system. While a CBDC built on an open, permissionless system would provide the full functionality offered by DLT, it is also far more disruptive to the existing financial system and consequently requires more new infrastructure on the part of the central bank. Within the current DLT landscape, public-private partnerships offer the most practical and efficient means of building a DLT-based CBDC. A selection of existing DLT providers able to support a CBDC is also discussed. [Read more at SSRN]

The impact of fintech lending on credit access for U.S. small businesses

The Bank for International Settlements (BIS) published a working paper that explores the characteristics of pre-pandemic (2016-2019) small business lending (SBL) in the United States, using proprietary loan-level data from two fintech SBL platforms (Funding Circle and LendingClub). The results show that fintech SBL platforms lent more in zip codes with higher unemployment rates and higher business bankruptcy filings. Moreover, fintech platforms’ internal credit scores were able to predict future loan performance more accurately than the traditional approach to credit scoring, particularly in areas with high unemployment. Overall, fintech lenders have a potential to create a more inclusive financial system, allowing small businesses that were less likely to receive credit through traditional lenders to access credit and to do so at lower cost. [Read more at the BIS]

Tickets available for CBDC Think Tank masterclass

The CBDC Think Tank, in partnership with the IMF and George Washington University, is hosting a full-day in-person CBDC Masterclass on October 12 in Washington DC for “official sector” staff and academics active in the CBDC / digital currency space only. The sessions are designed as instructional deep dives with full presentations and Q&A components.  Tickets are $99. [Register here]

Also, the CBDC Think Tank, in partnership with Georgetown University and the DC FinTech Week, is hosting a FREE (also in-person) Digital Currency Lecture Series, a set of digital currency lightning talks delivered by subject matter experts, on October 14 in Washington DC. [Request an invite here]

Kiffmeister’s Global 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 for any of you out there who work for a central bank, ministry of finance or international financial institution 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.

Kiffmeister’s #Fintech Daily Digest (20220926)

Australian CBDC Pilot for Digital Finance Innovation

The Reserve Bank of Australia (RBA) and the Digital Finance Cooperative Research Centre (DFCRC) published a white paper that explains in detail the objectives and approach of their eAUD central bank digital currency (CBDC) project. They also invited interested industry participants to make submissions on CBDC use cases, and offered participants the chance to express interest in operating their use case in a pilot (or proof of concept?) project to test and demonstrate the value proposition. The DFCRC will develop and install the eAUD platform as a private, permissioned Ethereum (Quorum) implementation, and the eAUD ledger will operate as a centralised platform, under the management and oversight of the RBA. [Read more at the RBA]

Nomura invests in Fnality institutional blockchain payments platform

Nomura is investing in Fnality, the interbank payment and settlement platform that uses “synthetic” wholesale CBDC to settle transactions on distributed ledger technology (DLT) based financial market infrastructures (FMIs). (A “synthetic CBDC” is essentially a stablecoin backed by central bank deposits.) Fnality reportedly says it will launch its first such synthetic CBDC in October 2022, pegged to the British Pound (GBP) and backed by deposits at the Bank of England. [Read more at Ledger Insights]

Demystifying wholesale central bank digital currency

According to European Central Bank (ECB) executive board member Fabio Panetta, the ECB is looking at the potential of DLT in improving the efficiency of interbank settlements. However, after listing the many benefits of DLT, Panetta highlighted some drawbacks, and made a case for a system that builds on the ECB’s existing infrastructure for wholesale settlements, instead of building a new one based entirely on DLT. [Read more at the ECB]

DTCC’s DLT stock settlement system live in parallel production

In August the Depository Trust & Clearing Corporation (DTCC) DLT-based Project Ion platform for stock settlement went into production. The R3 Corda-based platform runs in parallel with the DTC’s classic settlement system, which remains the definitive record. At this stage, Project Ion is designed to only deal with bilateral equity transactions but is already processing an average of 100,000 transactions per day. [Read more at DTCC]

Tickets available for CBDC Think Tank masterclass

The CBDC Think Tank, in partnership with the IMF and George Washington University, is hosting a full-day in-person CBDC Masterclass on October 12 in Washington DC for “official sector” staff and academics active in the CBDC / digital currency space only. The sessions are designed as instructional deep dives with full presentations and Q&A components.  Tickets are $99. [Register here]

Also, the CBDC Think Tank, in partnership with Georgetown University and the DC FinTech Week, is hosting a FREE (also in-person) Digital Currency Lecture Series, a set of digital currency lightning talks delivered by subject matter experts, on October 14 in Washington DC. [Request an invite here]

Kiffmeister’s Global 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 for any of you out there who work for a central bank, ministry of finance or international financial institution 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.

Kiffmeister’s #Fintech Daily Digest (20220925)

I’ve updated my tabulation of retail central bank digital currency (CBDC) explorers; just minor updates and link repairs. [Click here]

How the US can regulate stablecoins now without congressional action

The Brookings Institution published a paper that proposes a US federal framework for the issuance of stablecoins within the existing regulatory framework for insured depository institutions, a structure that would not require any new legislation. Under current law, the Comptroller of the Currency could authorize a national trust bank charter, organized as an operating subsidiary of an insured depository institution, to create stablecoins through the use of a dedicated trust vehicle. The Comptroller would adopt standards limiting the investment of stablecoin reserves to high quality liquid assets and address redemptions and operational resilience, among other matters. The proposed framework guarantees that holders of a failed stablecoin are paid out rapidly and in full, because it uses the same resolution process by which failed banks are wound up. [Read more at Brookings]

Financial Inclusion and Central Bank Digital Currency in The Bahamas

The Central Bank of the Bahamas (CBOB) published a paper that attempts to assess the introduction of CBDC in the Bahamas. It uses a theoretical model that assumes that CBDC will lead to a decrease in the number of unbanked. As these individuals acquire access to financial institutions, the fraction of hand-to-mouth agents in the economy falls. If the number of unbanked individuals is cut in half, the economic benefits include: a reduction in the volatility of all shocks; monetary policy is more effective at controlling inflation and contributes less to the volatility of the overall economy; fiscal policy becomes more Ricardian, mitigating the size of fiscal shocks. [Read more at the CBOB]

Privacy and Central Bank Digital Currency in the Digital Economy

A paper written by European Central Bank staff studies how the choice of payment instruments affects privacy and welfare in the digital economy. Cash allows merchants to preserve their anonymity but cannot be used for online transactions that generate higher sales. Bank deposits can be used online but do not preserve anonymity. Payment tokens issued by digital platforms allow merchants to hide from the bank but also enable platforms to stifle competition. However, a CBDC that allows agents to share their payment data with selected parties can overcome all frictions and achieve efficient allocation. [Read more at SUERF]

Tickets available for CBDC Think Tank masterclass

The CBDC Think Tank, in partnership with the IMF and George Washington University, is hosting a full-day in-person CBDC Masterclass on October 12 in Washington DC for “official sector” staff and academics active in the CBDC / digital currency space only. The sessions are designed as instructional deep dives with full presentations and Q&A components.  Tickets are $99. [Register here]

Also, the CBDC Think Tank, in partnership with Georgetown University and the DC FinTech Week, is hosting a FREE (also in-person) Digital Currency Lecture Series, a set of digital currency lightning talks delivered by subject matter experts, on October 14 in Washington DC. [Request an invite here]

Kiffmeister’s Global 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 for any of you out there who work for a central bank, ministry of finance or international financial institution 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.

Kiffmeister’s #Fintech Daily Digest (20220924)

What’s next for DAOs? Breaking down the CFTC’s latest enforcement action

The Commodity Futures Trading Commission (CFTC) has filed a lawsuit against Ooki DAO in the U.S. District Court for the Northern District of California. The complaint alleged that the Decentralized Autonomous Organization (DAO) was an unincorporated association involved in unlawful activity. This complaint has broad implications for the crypto industry. There are now 2,276 DAOs, which control about $10 billion of crypto in a wide array of blockchain-based financial tools. [Read more at]

PBOC to expand e-CNY trials to four entire provinces

The People’s Bank of China (PBOC) will reportedly expand its e-CNY trials to Guangdong, Jiangsu, Hebei and Sichuan provinces. Deputy Governor Fan Yifei, reportedly said the number of users, merchants and transactions is “steadily growing”, but he did not provide details. [Read more at the South China Morning Post]

Bitcoin was almost named Netcoin by Satoshi Nakamoto

Historical data of domain name purchases suggest that Satoshi Nakamoto, the creator of Bitcoin (BTC), had an alternate naming option in mind that did not make it to the whitepaper. Bitcoin.org, the website domain linked to the original Bitcoin, was created on August 18, 2008, a day after the creation of Netcoin.org using the same registrar. [Read more at CoinTelegraph]

Tickets available for CBDC Think Tank masterclass

The CBDC Think Tank, in partnership with the IMF and George Washington University, is hosting a full-day in-person CBDC Masterclass on October 12 in Washington DC for “official sector” staff and academics active in the CBDC / digital currency space only. The sessions are designed as instructional deep dives with full presentations and Q&A components.  Tickets are $99. [Register here]

Also, the CBDC Think Tank, in partnership with Georgetown University and the DC FinTech Week, is hosting a FREE (also in-person) Digital Currency Lecture Series, a set of digital currency lightning talks delivered by subject matter experts, on October 14 in Washington DC. [Request an invite here]

Kiffmeister’s Global 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 for any of you out there who work for a central bank, ministry of finance or international financial institution 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.

Kiffmeister’s #Fintech Daily Digest (20220923)

Decentralized Insurance Alternatives: Market Landscape, Opportunities and Challenges

The Society of Actuaries (SOA) published a report on the business models and operating designs of decentralized insurance alternatives. Instead of aggregating risks by centralized insurance entities, these platforms enable cost-effective and scalable peer-to-peer risk sharing with new forms of decentralized business models that leverage global accessibility and transparency, self-executing smart contracts, as well as social media tools like Discord and Twitter to coordinate community decision-making to support operations. [Read more at the SOA]

 

Tickets available for CBDC Think Tank masterclass

The CBDC Think Tank, in partnership with the IMF and George Washington University, is hosting a full-day in-person CBDC Masterclass on October 12 in Washington DC for “official sector” staff and academics active in the CBDC / digital currency space only. The sessions are designed as instructional deep dives with full presentations and Q&A components.  Tickets are $99. [Register here]

Also, the CBDC Think Tank, in partnership with Georgetown University and the DC FinTech Week, is hosting a FREE (also in-person) Digital Currency Lecture Series, a set of digital currency lightning talks delivered by subject matter experts, on October 14 in Washington DC. [Request an invite here]

Kiffmeister’s Global 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 for any of you out there who work for a central bank, ministry of finance or international financial institution 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.

Kiffmeister’s #Fintech Daily Digest (20220816)

US Fed Opens Pathway for Crypto Banks to Tap Central Banking System

The U.S. Federal Reserve published its final guidance for novel financial institutions to access its master accounts. It seemingly moves the Fed one step closer to possibly allowing Wyoming special purpose depository institutions (SPDI), like Custodia (formerly Avanti) and Kraken Bank, access to these accounts so they would not need intermediary banks. The guidance will create a multi-tiered system allowing the Fed to adapt its evaluation process for granting access depending on what kind of financial institution is applying. Each tier corresponds to a respectively more stringent review process. [Read more at the FRB]

How the Crypto Industry is Writing its Own State Laws

This Tech Transparency Project report details the recent experience in three states: Wyoming, Colorado and New Hampshire. While the details differ, the result is largely the same: The states have effectively delegated the task of regulating the crypto sector to those with the greatest financial stake in its success, with little regard for those who may stand to lose. [Read more at the Technology Transparency Project]

Kiffmeister’s Global 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 for any of you out there who work for a central bank, ministry of finance or international financial institution 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.

Upcoming events I’m affiliated with:

The CBDC Think Tank, in partnership with the International Monetary Fund and George Washington University, is hosting a full-day in-person CBDC Masterclass on October 12 in Washington DC. The sessions are designed as instructional deep dives with full presentations and Q&A components.  [Register here]

The CBDC Think Tank, in partnership with Georgetown University and the DC FinTech Week, is hosting a Digital Currency Lecture Series, a set of digital currency lightning talks delivered by subject matter experts, on October 14 in Washington DC. [Request an invite here]

Kiffmeister’s #Fintech Daily Digest (20220922)

More on the purported launch of Iran’s CBDC pilot

Yesterday I reported that the Central Bank of Iran (CBI) was reported to be launching a central bank digital currency (#CBDC) pilot today (September 22, 2022). The news isn’t coming directly from the CBI, but from the Iran Chamber of Commerce. Now Al Jazeera is reporting that the digital rial will run on a platform called Borna, which was developed using Hyperledger Fabric, an open-source permissioned distributed ledger technology (DLT) blockchain platform. [Read more at Al Jazeera]

Responsible advancement of U.S. competitiveness in digital assets

The U.S. Department of Commerce published a report on the Responsible Advancement of U.S. Competitiveness in Digital Assets. It introduced a four-pillar framework that “offers a path forward to promote U.S. competitiveness, responsible innovation, and leadership in digital assets.” [Read more at the Department of Commerce]

Tickets available for CBDC Think Tank masterclass

The CBDC Think Tank, in partnership with the IMF and George Washington University, is hosting a full-day in-person CBDC Masterclass on October 12 in Washington DC for “official sector” staff and academics active in the CBDC / digital currency space only. The sessions are designed as instructional deep dives with full presentations and Q&A components.  Tickets are $99. [Register here]

Also, the CBDC Think Tank, in partnership with Georgetown University and the DC FinTech Week, is hosting a FREE (also in-person) Digital Currency Lecture Series, a set of digital currency lightning talks delivered by subject matter experts, on October 14 in Washington DC. [Request an invite here]

Kiffmeister’s Global 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 for any of you out there who work for a central bank, ministry of finance or international financial institution 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.

Kiffmeister’s #Fintech Daily Digest (20220921)

Iran to start testing a digital rial this week

The Central Bank of Iran (CBI) will reportedly start a central bank digital currency (CBDC) pilot on September 22, 2022. The bank published a draft document outlining the “goals, dimensions, threats and opportunities for the development” of a digital rial in August 2022. The CBI’s current head, Ali Salehabadi, said earlier this month that the bank had the necessary infrastructure and rules in place for a launch. [Read more at Coindesk]

House stablecoin bill would put two-year ban on Terra-like coins

Legislation to regulate stablecoins being drafted in the U.S. House of Representatives would place a two-year ban on coins similar to TerraUSD, the algorithmic stablecoin that collapsed earlier this year. It would be illegal to issue or create new “endogenously collateralized stablecoins.” The definition would kick in for stablecoins marketed as being able to be converted, redeemed or repurchased for a fixed amount of monetary value, and that rely solely on the value of another digital asset from the same creator to maintain their fixed price. [Read more at Bloomberg]

US Treasury seeks public input on illicit finance, national security risks posed by digital assets

The U.S. Department of the Treasury filed a Request for Comment (RFC) to seek feedback from the American people on the illicit finance and national security risks posed by digital assets. The filing is pursuant to President Joe Biden’s recent Ensuring Responsible Development of Digital Assets Executive Order, and the subsequent Treasury Department Illicit Finance Action Plan. [Read more at the U.S. Treasury]

Nasdaq establishes new digital assets business

Nasdaq is launching “Nasdaq Digital Assets” which “will initially develop an advanced custody solution that will incorporate liquidity and execution services to address industry challenges around connectivity, availability, and efficiency. Nasdaq’s custody solution will bring together attributes of hot and cold crypto wallets which will provide a high degree of accessibility and scalability without compromising security. [Read more at NASDAQ]

Tickets available for CBDC Think Tank masterclass

The CBDC Think Tank, in partnership with the IMF and George Washington University, is hosting a full-day in-person CBDC Masterclass on October 12 in Washington DC for “official sector” staff and academics active in the CBDC / digital currency space only. The sessions are designed as instructional deep dives with full presentations and Q&A components.  Tickets are $99. [Register here]

Also, the CBDC Think Tank, in partnership with Georgetown University and the DC FinTech Week, is hosting a FREE (also in-person) Digital Currency Lecture Series, a set of digital currency lightning talks delivered by subject matter experts, on October 14 in Washington DC. [Request an invite here]

Kiffmeister’s Global 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 for any of you out there who work for a central bank, ministry of finance or international financial institution 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.

Kiffmeister’s #Fintech Daily Digest (20220920)

The Hong Kong Monetary Authority (HKMA) e-HKD policy stance

The Hong Kong Monetary Authority (HKMA) released a position paper that sets out its policy stance on retail central bank digital currency (CBDC) and outlines its next steps. It was informed by two rounds of market consultation, one on high-level technical design and one on key policy and design issues. Taking into account the feedback received and further study by the central bank’s staff, the HKMA will start paving the way for possible implementation of e-HKD in the future. A three-rail approach will be adopted, one of which will be a pilot involving selected banks, payment companies and other technology firms, plus their staff and a small number of clients. [Read more at the HKMA]

Final Decision on Digital Tenge Still Pending in Kazakhstan

The final decision on the National Bank of Kazakhstan’s Digital Tenge project has reportedly not yet been made, but is expected to be announced by the end of 2022, the project’s head Ainur Kenzhayeva said in an interview with The Astana Times. The team is working now to expand the platform’s functionality. A pilot project with the participation of real users in a limited loop is also planned for this fall. [Read more at The Astana Times]

The Chainalysis 2022 Global Crypto Adoption Index

According to Chainalysis, global crypto adoption has leveled off in the last year after growing consistently since mid-2019. Emerging markets dominate the index. Out of the top 20 ranked countries, ten are lower middle income (:Vietnam, Philippines, Ukraine, India, Pakistan, Nigeria, Morocco, Nepal, Kenya, and Indonesia), eight are upper middle income (Brazil, Thailand, Russia, China, Turkey, Argentina, Colombia, and Ecuador) and two are high income (United States and United Kingdom). [Read more at Chainalysis]

Buy Now, Pay Later: Market trends and consumer impacts

The U.S. Consumer Financial Protection Bureau (CFPB) published research on the U.S. Buy Now, Pay Later (BNPL) market, based on data from Affirm, Afterpay, Klarna, PayPal, and Zip Co. It identifies several benefits of BNPL loans over legacy credit products (no interest and sometimes no late fees, and ubiquitous, easy to access, simple repayment structure) and a number of potential consumer risks (a requirement to use autopay for all loan payments, data harvesting and borrower overextension). [Read more at the CFPB]

Deutsche Börse to issue digital securities on DLT-ready D7 platform

“Last year, the Deutsche Börse unveiled the launch of D7, a digital securities post-trade platform. It is now taking its second step by issuing digitally native securities in the fourth quarter. While the latest phase uses smart contracts, the securities are not yet blockchain-based, which is planned for a third phase.” [Read more at Ledger Insights]

 

 

 

Tickets available for CBDC Think Tank masterclass

The CBDC Think Tank, in partnership with the IMF and George Washington University, is hosting a full-day in-person CBDC Masterclass on October 12 in Washington DC for “official sector” staff and academics active in the CBDC / digital currency space only. The sessions are designed as instructional deep dives with full presentations and Q&A components.  Tickets are $99. [Register here]

Also, the CBDC Think Tank, in partnership with Georgetown University and the DC FinTech Week, is hosting a FREE (also in-person) Digital Currency Lecture Series, a set of digital currency lightning talks delivered by subject matter experts, on October 14 in Washington DC. [Request an invite here]

Kiffmeister’s Global 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 for any of you out there who work for a central bank, ministry of finance or international financial institution 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.

Kiffmeister’s #Fintech Daily Digest (20220919)

After all this effort, crypto-assets are just tech stocks

Bloomberg’s Joe Weisenthal makes the same point I’ve been making for many months. “Basically [crypto-assets are] just tech stocks. Not only are the coins trading in line with each other still, they’re still basically trading in line with the Nasdaq 100… What does this all mean? One possibility is that the marginal crypto-asset buyers just doesn’t care about any of this stuff. Proof-of-work? Proof-of-stake? The merge? Inflation hedging? The halving? Deflationary monetary policy? What’s all that stuff? In other words, it’s possible that there’s a small coterie of people paying attention to any of this. And that what’s really driving price is just the animal spirits of a much larger group of speculators, who are also moving the price of Zoom or Tesla or Meta or whatever else. [Read more on Twitter]

Are interest rate swaps the next frontier of decentralized finance?

Decentralized finance (DeFi) is expanding into the world of interest rate swaps (IRS), a derivative instrument for exchanging fixed and variable interest rates. DeFi firm Voltz Labs has launched a non-custodial automated market making (AMM) IRS trading platform based on the Aave and Compound DeFi USDT, USDCDAI and ETH lending markets. However, IRS AMMs are challenged by DeFi markets’ lack of fixed-rate products off which to price swaps. (Traditional markets offer variable- and fixed-rate products off which to arbitrage each other.)  [Read more about the Voltz protocol here]

New data on the e-levy in Ghana: unpopular tax on mobile money transfers is hitting the poor hardest

Ghana introduced a 1.5% tax (“E-levy”) on mobile money transactions in May 2022, in a country where 40% of the population aged 15 and above use mobile money platforms. It has been justified as a way to reduce aid dependence, and to capture informal economy workers. An International Centre for Tax and Development (ICTD) paper finds that the overall effect of the E-levy is highly regressive with users in the bottom income quintile paying the largest share as a proportion of their income, especially home-based informal workers. However, a 100 cedi/day (equivalent to about $10/day) taxation threshold has provided some relief. [Read more at the ICTD]

 

Tickets available for CBDC Think Tank masterclass

The CBDC Think Tank, in partnership with the IMF and George Washington University, is hosting a full-day in-person CBDC Masterclass on October 12 in Washington DC for “official sector” staff and academics active in the CBDC / digital currency space only. The sessions are designed as instructional deep dives with full presentations and Q&A components.  Tickets are $99. [Register here]

Also, the CBDC Think Tank, in partnership with Georgetown University and the DC FinTech Week, is hosting a FREE (also in-person) Digital Currency Lecture Series, a set of digital currency lightning talks delivered by subject matter experts, on October 14 in Washington DC. [Request an invite here]

Kiffmeister’s Global 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 for any of you out there who work for a central bank, ministry of finance or international financial institution 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.