Tag: Bigtech

Kiffmeister’s #Fintech Daily Digest (20221101)

~ kiffmeister

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.

And FYI Onalytica published a short interview with me that some of you might find interesting. [Read it here]

Hong Kong to Consider Virtual Asset Property Rights, Establish VASP Regulations

Hong Kong’s Financial Services and Treasury Bureau (FSTB) published a policy statement on virtual assets. It is putting together a licensing regime for virtual asset service providers that will align their requirements to those currently applicable to traditional financial institutions. The Securities and Futures Commission will also conduct a public consultation on retail investors’ access to virtual assets under the new regulations, such as through virtual asset exchange traded funds. Also, it said that the government is open to considering property rights for tokenised assets and the legality of smart contracts, so as to provide a solid legal foundation for their development. [Read more at the FSTB]

Cold hard (digital) cash: the economics of central bank digital currency

The European Central Bank (ECB) published an overview of the economics of CBDC. It first outlines the economic forces that shape the rise of digital money and motivate the current debate. It then looks at the implications for monetary policy and financial stability before discussing policy issues and challenges. Finally, it highlight several areas where the understanding of digital money could be improved by further research. [Read more at the ECB]

African Fintech Sector Had One of the Highest Year-on-Year Growth Rates in Funding in 2021

The number of African fintech startups grew from 311 in 2019 to 564 in 2021, and accounted for 61% of the $2.7 billion deployed across Africa in 2021, according to a MasterCard study. While its share of global fintech funding is just over one percent, the continent’s fintech sector still recorded one of the highest year-on-year growth rates globally. Nigeria, which is home to some of the continent’s fintech unicorns, was not only the leading fintech hub in Africa, but across the Middle East and Pakistan. [Read more at MasterCard]

FCA launches discussion on competition impacts of Big Tech on financial services industry

The UK Financial Conduct Authority (FCA) has announced that it plans to examine the issue of regulation of Big Tech’s financial services. The UK regulator is to consider how such regulation of firms such as Apple, Google and Amazon could prevent the potential for them causing harm to the financial services sector. While acknowledging the ability of such companies to bring innovative approaches to financial services, the FCA has voiced concerns that if they build dominant positions this could lead to a “potential exploitation of market power”. [Read more at the FCA]

The CBDC Think Tank is a New York-based technology- and vendor-agnostic digital currency knowledge-sharing hub for staff of central banks, international financial institutions (IFIs) and non-government organizations (NGOs). It runs webinars, workshops, and masterclasses to disseminate knowledge and facilitate communication. It also engages in advisory work, focusing on delivering impact that best aligns with the needs of its clients and the forward progress of human civilization. The CBDC Think Tank welcomes requests from central bank officials for CBDC advisory services.  [click here for more information].

Satoshi Capital Advisors is a New York-based, global advisory firm that works with central banks, governments, and the private sector to architect, implement, and operate varying initiatives. Satoshi Capital Advisors’ central bank work revolves around CBDC architecture and implementation, providing advisory services from research phase through to growth phase. Utilizing a product-market fit and technology agnostic approach to CBDC architecture and implementation enables Satoshi Capital Advisors to build tailored solutions, bespoke to local financial system nuances. Satoshi Capital Advisors welcomes requests from central bank officials for virtual and in-person CBDC workshops. [Click here for more information]

WhisperCash offers the first fully offline digital currency platform that has the same properties as physical cash. It can perform secure consecutive offline payments without compromising on security, privacy or accessibility. WhisperCash allows direct person to person offline payments without any server infrastructure or internet connectivity. It comes in various form factors including the self-contained credit card-sized “Pro” that sports an eInk screen and capacitive keyboard, and lasts for two weeks between recharges assuming a few transactions per day. [Click here for more information]

Kiffmeister’s #Fintech Daily Digest (20221003)

~ kiffmeister

Tether Increases US Treasury Portfolio, Cuts Commercial Paper Holdings to Below $50M

Tether has cut its commercial paper holding to less than $50 million, as of September 30, and increased its holding of U.S. Treasuries to 58.1% of its total portfolio from 43.5% of its total portfolio as of June 30, according to a Tweet by its Chief Technology Officer, Paolo Ardoino. [Read more at CoinDesk]

Bigtech regulation: in search of a new framework

The Bank for International Settlements (BIS) published a paper on two potential Bigtech regulatory models. The first is segregation, which is a structural approach that seeks to minimize risks arising from group interdependencies between financial and non-financial activities by imposing specific ring-fencing rules. The second is inclusion, that creates a new regulatory category for Bigtech groups with significant financial activities. The paper concludes that the inclusion approach provides for a more tailored option to address specific risks associated with Bigtech business models. [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 (20220901)

~ kiffmeister

Reimagining Money in the Age of Crypto and Central Bank Digital Currency

The future of money is undoubtedly digital, and in the latest issue of the IMF’s Finance & Development some of the world’s leading experts explore what it will look like? It includes my article about offline central bank digital currency (CBDC). [Read more at the IMF]

The Financial Stability Implications of Digital Assets

The US Fed published a paper that explores whether the digital financial system creates new potential challenges to financial stability. It describes emerging vulnerabilities that could present risks to financial stability in the future if the digital asset ecosystem becomes more systemic, including: run risks among large stablecoins, valuation pressures in crypto-assets, fragilities of decentralized finance (DeFi) platforms, growing interconnectedness, and a general lack of regulation. [Read more at the Fed]

Asia Far Ahead in Mobile Payment Adoption

WorldPay data from FIS has found that the Asia-Pacific region reached a much higher market share of mobile payments than other parts of the world (see above graphic). 44% of the transactions made at point of sale (POS) were carried out with a mobile phone instead of a debit/credit card or cash and 69% of online shop payments were completed on a mobile device. According to Global management consulting firm McKinsey, Southeast Asia has become a “wallet-first region.” Africa had the second highest share of POS mobile payments, at 12%, while Europe only saw 8% of POS transactions carried out on mobile. [Read more at Statista]

SAMA Updates Its Regulatory Sandbox Framework to Drive Innovation

The Saudi Central Bank (SAMA) updated its Regulatory Sandbox framework as part of its efforts to achieve the national strategic goals in the Saudi Vision 2030 Financial Sector Development Programme. The updated framework will also support the objectives of the fintech strategy and contribute to the economic empowerment of the Saudi society and its citizens by promoting further Fintech innovations. [Read more at the SAMA]

Bigtechs vs Banks

The Bank for International Settlements (BIS) published a paper that analyses an economy in which large technology companies, Bigtechs, provide credit to firms operating on their platforms. It focuses on two advantages that Bigtechs have with respect to banks: better information on their clients and better enforcement of credit repayment since big techs can exclude a defaulting firm from their ecosystem. While Bigtechs have both superior enforcement and complete and private information of the firm type Bigtechs can encroach on banks’ turf only if they guarantee some privacy to firms by tempering their drive to collect information about firm characteristics and leaving some rents to them. The way Bigtechs share information i.e. by providing information publicly or in a private way entails different outcomes in terms of efficiency. [Read more at the BIS]

Should we trust the credit decisions provided by machine learning models?

An article by a couple of Banco de España economists proposes a framework to assess how reliable machine learning (ML) technology is to credit assessments. It is based on generating datasets intended to resemble typical credit settings, in which the relationship between the variables is defined. It uses non-interpretable ML models on these generated datasets, and explain their results using two popular interpretability techniques. It then calculates to what extent the explanations given by the interpretability techniques match the underlying truth.  [Read more at SUERF]

Discounted tickets available for CBDC Think Tank masterclass

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.  Ticket prices are as low as $99 and you can save 30% by entering KIFFMEISTER where the registration page asks for a discount code. [Register here]

Also, the CBDC Think Tank, in partnership with Georgetown University and the DC FinTech Week, is hosting a FREE 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 (20220805)

~ kiffmeister

Jurisdictions Where Retail CBDC Is Being Explored

I’ve made some minor updates to my tabulation of retail central bank digital currency (CBDC) explorers. I count 85, which is lower than the count of some other trackers that, for currency unions, count all member countries. I count only the central bank that is responsible for currency issuance (e.g., the European Central Bank (ECB) in the Eurozone, and the Eastern Caribbean Central Bank in the Eastern Caribbean Currency Union (ECCU)). If I count all eight Eurozone member countries whose central banks are contributing to the ECB CBDC work, plus all eight member countries of the ECCU, my tally goes up to 101. If I also include all Eurozone countries I have a big fat headline number of 112! [See my tabulation here]

Thailand’s Central Bank Extends Retail CBDC Study to Pilot Phase

The Bank of Thailand (BoT) is extending the scope of retail CBDC development by starting a pilot study. It will adopt technology developed by Giesecke+Devrient and it is expected to run from the end of 2022 to mid-2023. However, the BoT emphasized that the purpose of the pilot is to assess the suitability of technology and CBDC design, and at present it does not have plans to issue retail CBDC until thorough consideration of benefits and associated risks for the financial system. [Read more at the Bank of Thailand]

ZB Exchange Loses Nearly $5M in Suspected Hack, Pauses Withdrawals

Crypto exchange ZB Exchange has paused user withdrawals, likely in response to a suspected hack that appears to have drained nearly $5 million in tokens from the firm’s hot wallet. The multimillion-dollar loss is the latest in a series of security breaches to hit crypto companies this year and the third multimillion-dollar hack reported this week. [Read more at CoinDesk]

PayTech and the D(ata) N(etwork) A(ctivities) of BigTech Platforms

The Bank of Canada published a paper that models the trade-off faced by BigTech payment platforms between costs associated with compensating users for their privacy concerns and revenues from the harvested data. The results of the modeling lead to two policy implications. First, data monetization is not necessarily inefficient from a social point of view because data are socially valuable and users are compensated for their privacy concerns with cheaper platform services. Second, when assessing BigTechs’ introduction of payment services, one needs to consider the bundling of data and payments and the implied complementarity. In economies with large payment frictions, data-driven payments tend to increase social surplus. In advanced economies, however, where payments are already fairly efficient, payment-driven data can lead to inefficient adoption by platforms that seek to generate data beyond what is socially efficient. [Read more at the Bank of Canada]

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]