Kiffmeister’s #Fintech Daily Digest (20221005)

The Book of [Blockchain, Crypto and Web3] Jargon

Latham & Watkins LLP has published a very helpful interactive glossary of acronyms, slang, and blockchain, crypto and Web3 industry terminology. [Download at Latham & Watkins LLP]

SWIFT innovation paves way for global use of CBDCs and tokenized assets

SWIFT, working with Capgemini, has shown that central bank digital currencies (CBDCs) and tokenized assets can move seamlessly on existing financial infrastructure. The findings, from two separate experiments, bridged transactions between different distributed ledger technology (DLT) platforms (JPMorgan Quorum and R3 Corda) and real-time gross settlement systems. However, it appears that it still uses intermediaries for cross border payments, and and intermediaries are a significant cause of friction in the payment system. Fourteen banks will be involved in further experiments to scale the system. [Read more at SWIFT]

Privacy in cross-border digital currency: A transatlantic approach

The Atlantic Council published an article illustrating how various technical design choices can affect the privacy and transparency of cross-border CBDCs. Many of the cross-border CBDC pilot studies to date have adopted the technical designs provided by enterprise DLT platforms. However, some of these designs make tradeoffs regarding privacy, efficiency, and/or security. Whether these tradeoffs are acceptable is a matter of policy, and requires coordination between different regulators and central banks. [Read more at the Atlantic Council]

Smart Contracts Could Improve Efficiency And Transparency In Financial Transactions

S&P Global has published a smart contract explainer. Using smart contracts in financial transactions can improve efficiency and reduce reliance on third parties like asset servicers and custodians, as well as make transaction resolutions faster–enhancing creditworthiness and the integrity of business dealings. However, smart contracts have had slow and limited adoption in the financial markets owing to key risks including technology issues (such as incorrect coding) and legal and regulatory ambiguities that make accountability difficult. [Read more at S&P Global]

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 (20220929)

ECB provides update on its digital euro work

The European Central Bank (ECB) provided a status report on its central bank digital currency (CBDC) work. It confirmed that a digital euro would incorporate individual user holding limits to slow the possible conversion of bank deposits into digital euro  (disintermediation risk). A digital euro would also bear interest calibrated to make digital holdings above a certain threshold unattractive compared to other highly liquid low-risk assets.  Offline payments will only be allowed for low value, low risk, close proximity transactions. [Read the report here] In addition, ECB board member Fabio Panetta set out a plan for a digital euro scheme involving a set of rules, practices and standards with plans to start working on a rulebook. [Read the plan here]

Digital Currency: Yuan comes with an expiry date: Spend or it will vanish

China is reportedly exploring putting expiration dates on its e-CNY retail CBDC, which could force holders to use it up by a certain date. This idea has most recently been explored in a Celo working paper that advocated using expiration dates to increase the “velocity” of money, based on an an unconventional monetary policy instrument known as a Gesell money. [Read more at the Economic Times]

Bank of England: FMI Sandbox will start with DLT securities post trade

The Bank of England announced that the U.K.’s Financial Market Infrastructure (FMI) Sandbox would initially focus on distributed ledger technology (DLT) based securities settlement systems. The Sandbox is a joint initiative between HM Treasury, the Bank of England and the Financial Conduct Authority. [Read more at the Bank of England]

ERC-20R and ERC-721R: Reversible Transactions on Ethereum

This paper proposes reversible versions of ERC-20 and ERC-721, whereby a transaction is eligible for reversal for a short period of time after it has been posted on chain. After the dispute period has elapsed, the transaction can no longer be reversed. Within the short dispute period, a sender can request to reverse a transaction by convincing a decentralized set of judges to first freeze the disputed assets, and then later convincing them to reverse the transaction. The paper provides a prototype implementation. [Read more at arxiv.org]

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 (20220914)

Securitize KKR Health Care Growth II Tokenized Fund

Through a partnership with Securitize Capital, investors can gain tokenized exposure to investment firm KKR’s latest health care focused growth equity fund, with lower investment minimums and greater potential for liquidity. It marks the first time exposure to one of KKR’s alternative investment strategies has been offered in a digital format in the United States. The fund is tokenized on the eco-friendly Avalanche public blockchain-based smart contract platform. [Read more at Securitize Capital]

OpenNode Is Testing Bitcoin Payments With The Central Bank Of Bahrain

The Central Bank of Bahrain (CBB) has authorized OpenNode to test its bitcoin payment processing and payouts solution in the central bank’s regulatory sandbox. The sandbox is a virtual space for CBB-licensed financial institutions and other start-ups and FinTech firms to test their technology-based innovative solutions/services relevant to FinTech before scaling up their operations in Bahrain and across the region. [Read more at  PR Newswire]

Discounted 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 (20220826)

Reserve Bank Australia says a live CBDC likely to be wholesale

Members of the Reserve Bank of Australia (RBA) Payment Systems Board discussed the increasing interest in central bank digital currency (CBDC) internationally and in Australia. Many see an increased likelihood of issuing some form of CBDC in the future, especially to support wholesale transactions. [Read more at the RBA]

China Introduces Digital Yuan Payments in Ningbo Subway, Guangzhou Buses

Ningbo Rail Transit, the operator of the subway system in the city of Ningbo in the eastern Chinese province of Zhejiang, has reportedly launched payments in digital yuan at 125 stations. Also, bus riders in Guangzhou will be able to buy tickets with digital yuan. They will be able to use their e-CNY wallets on 10 bus lines. [Read more at Bitcoin.com]

China’s Digital Yuan App Can Now Link to Users’ Bank Accounts

The digital yuan payment app reportedly can now be linked to bank accounts to ensure that funds in users’ e-CNY wallets never run dry. The app can automatically draw amounts from a linked account at a commercial bank when the e-CNY wallet’s balance is not enough. Users also have the option not to link the app to a bank account. [Read more at Yicai Global]

Indonesian central bank provides update on CBDC plans

Perry Warjiyo, Governor of the Bank Indonesia (BI), provided an update on the central Banks’s CBDC plans. It sounds like the BI is leaning towards a distributed ledger technology (DLT) based platform, but it is undecided as to whther it will be a retail or wholesale digital currency. It will build in interoperability to open up the possibility of cross-border payments, particularly in the ASEAN+5 region, where there is already cooperation with Thailand and Malaysia through the support for the implementation of QR Cross Border and Local Currency Settlement (LCS). [Read more at the BI]

New UCC Amendments to Establish Ground Rules for Blockchain Transactions and Crypto-Backed Secured Financings

A joint committee of the U.S. Uniform Law Commission (ULC) and the American Law Institute (ALI) finalized a significant and wide-ranging amendment to the Uniform Commercial Code (UCC) that addresses the quirks and nuances of digital asset transactions and crypto-as-collateral secured financings. The amendments include a completely new Article 12 that is devoted to defining various digital asset classes and setting ground rules for crypto-backed secured financings. New Article 12 will dovetail with a series of amendments to existing Article 9 (secured transactions) and Article 3 (negotiable instruments). [Read more at JD Supra]

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 (20220803)

Japan abandons CBDC project (fake news alert)

There are misleading stories circulating that the Bank of Japan has shut down its central bank digital currency (CBDC) project. They seem to be triggered by an Asia Times story that rehashed the July 5, 2022 report from the BoJ’s Liaison and Coordination Committee on Central Bank Digital Currency, which reiterated its October 2020 position that “while the Bank of Japan currently has no plans to issue CBDC, from the viewpoint of ensuring the stability and efficiency of the overall payment and settlement systems, the Bank considers it important to prepare thoroughly to respond to changes in circumstances in an appropriate manner.” So the project lives on! [Read more at the BoJ]

ASX CHESS Replacement Schedule Delay Independent Review

The Australian Securities Exchange (ASX) has delayed its overhaul of its Clearing House Electronic Subregister System (CHESS) share trading software by up to 20 months, citing problems achieving “scalability and resilience”. The CHESS software enables ASX’s registry to manage settlement of transactions, and the exchange has strived since 2017 to replace it with Digital Asset‘s blockchain-based technology in a bid to cut costs. ASX has also engaged Accenture to provide an independent review. [Read more at the ASX]

RBI interoperable distributed ledger technology proof of concept

The Reserve Bank of India Innovation Hub (RBIH) conducted a successful interoperable distributed ledger technology (DLT) platform proof-of-concept exercise with 11 banks, DLT fabric partners, DLT application layer partners, and fintech startups. Inland Letter of Credit was chosen as the use case, because its end-to-end flows is paper intensive, time consuming, requires human intervention at multiple level, and prone to fraud. DLT allowed stakeholders to digitally share accurate and reliable trade information in real-time. Smart contracts supported by DLT, allowed for automated execution of payments on meeting pre-set conditions of the contract. [Read more at the RBIH]

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]

Kiffmeister’s #Fintech Daily Digest (20220727)

Central African Republic begins public sale of Sango Coin

The national cryptocurrency of the Central African Republic, Sango Coin, is now on sale. People looking to buy the token need at least $100 in Bitcoin, Ethereum, BNB Smart Chain, Tether, USD Coin, Binance USD, or DAI. Buyers cannot withdraw or transfer their tokens until the lock-up period is over. However, only 5% of the tokens had been sold in the first 24 hours of the public sale. [Read more at the Block]

JAM-DEX officially launched through Lynk App

The Bank of Jamaica (BOJ) officially launched Jamaica’s JAM-DEX central bank digital currency (CBDC)  through the Lynk app on July 11.  Lynk is currently the only transaction platform for Jamaicans to use their JAM-DEX. As part of the launch, the first 100,000 customers that signed up for JAM-DEX via the Lynk app were given an incentive bonus of J$2,500 JAM-DEX in their wallets by the Government of Jamaica. [Read more at the Lynk]

BME,  BBVA and IADB issue blockchain-registered regulated bond in Spain

Bolsas y Mercados Españoles (BME), through Iberclear, Banco Bilbao Vizcaya Argentaria (BBVA) and the Inter-American Development Bank (IADB), have completed the first bond issuance in Spain listed in a regulated market and registered using blockchain technology developed by ioBuilders. The blockchain platform allows the registration, trading in the secondary market and life cycle management of a bond issued in a regulated market. Smart contracts have been used for the execution of the distribution, purchase and sale, settlement and corporate events processes, using electronic money tokenized by BBVA for the management of cash throughout the term of the issuance. [Read more at BME]

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]

Kiffmeister’s #Fintech Daily Digest (20220725)

UK to explore blockchain-based government bond

The Financial Services and Markets Bill 2022 has been introduced into the U.K. Parliament. Section 22 of the Bill contains a new power for the government to introduce bespoke rules on the regulation of payments, payment systems and service providers in relation to the payments that include “digital settlement assets”, which includes any digital representation of value or rights that “(a) can be used for the settlement of payment obligations; (b) can be transferred, stored or traded electronically, and (c) uses technology supporting the recording or storage of data (which may include distributed ledger technology).” The Chancellor of the Exchequer said that HM Treasury will be working to understand how distributed ledger technology could be applied to a U.K. sovereign debt instrument. [Read more at Gov.uk]

What can CBDC designers learn from asking potential users? Results from a survey of Austrian residents

The Österreichische Nationalbank (ONB) published a paper that summarizes the results of a survey of 2006 Austrian residents about their central bank digital currency (CBDC) design preferences and their likelihood of using a digital euro. Respondents were satisfied with the existing payment options, and only about half expressed at least some interest in a digital euro. In terms of CBDC design, high importance was placed on security against fraud and theft, but less than a third considered privacy important. [Read more at the ONB]

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]

Kiffmeister’s #Fintech Daily Digest (20220720)

Stablecoins’ role in crypto and beyond: functions, risks and policy

This European Central Bank (ECB) article analyses the role played by stablecoins within the wider crypto-asset ecosystem and finds that some existing stablecoins are already critical to liquidity in crypto-asset markets. This could have wide-ranging implications for crypto-asset markets if a large stablecoin were to fail and could also have contagion effects if crypto-assets’ interlinkages with the traditional financial system continue rising. The article calls for the urgent implementation of effective regulatory, supervisory and oversight frameworks before significant further interconnectedness with the traditional financial system occurs. [Read more at the ECB]

Integrating DLTs with market infrastructures: analysis and proof-of-concept for secure DvP between TIPS and DLT platforms

The Banca d’Italia published a paper that evaluates two solutions for synchronizing the asset-leg and the cash-leg of a DvP (delivery versus payment) transaction on distributed ledger technology (DLT) rails. Both use the Target Instant Payment Settlement (TIPS) platform to provide the settlement services of the cash leg. The solutions preserve the atomic nature of a DvP transaction, building a “bridge” between the DLT asset management platform and the central bank payment system. This architecture offers the potential to standardize communications with DLTs and avoid the need to issue central bank money as cash tokens on DLTs – a key point of other approaches – thus preserving the central bank’s control over the cash-leg of the DvP. [Read more at the Banca d’Italia]

ING pilots ultra-wideband tech for P2P contactless payments

ING, working with Samsung and NXP Semiconductors, is piloting a peer-to-peer payments app that uses ultra-wideband (UWB) technology to let users transfer money by simply pointing one handset at another. There is no need to enter another person’s email address, phone number or International Bank Account Number (IBAN) when making a payment. UWB is a technology based on radio waves that that can precisely lock onto an object, discover its location and communicate with it. [Read more at Finextra.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]

Kiffmeister’s #Fintech Daily Digest (20220718)

Reconciling the Atlantic Council CBDC Tracker with My Tabulations

The Atlantic Council publishes a CBDC Tracker that aspires to be the definitive record of publicly announced central bank digital currency (CBDC) projects. However, it publishes with headline numbers that are significantly higher than those implied by my retail and wholesale CBDC tabulations. The Atlantic Council CBDC Tracker recently reported that 105 countries were exploring, whereas I count 86 central banks that are authorized to issue CBDC.

I’ve plodded through their graphic and I think I have nailed down the most of the difference, a combination of double counting and including some central banks that, in my opinion,  are not exploring CBDC:

  • I count the Eurozone as one “country” because only the European Central Bank is authorized to issue currency there, whereas the Atlantic Council counts all nine national central banks conducting CBDC projects.
  • Similarly I count the Eastern Caribbean Currency Union as one because only the Eastern Caribbean Central Bank can issue currency there, whereas the Atlantic Council counts seven of the national central banks, although counts Anguilla separately even though they’re part of the Union.

If I follow that scheme my count would go from 86 to 101. Then there are six countries that the Atlantic Council includes that I don’t:

  • Belarus, Belize, and Senegal, where private and/or government-owned banks were piloting digital currencies with the central bank’s blessing.
  • Venezuela, where the government (not the central bank) issued the Petro, with no apparent central bank backing or involvement.
  • Fiji and Vanuatu, which were focus of a digital currency research effort by Japanese Fintech firm Soramitsu, commissioned by NTT Data Institute of Management Consulting with the blessing of the Japanese government. (Solomon Islands and Tonga were part of the project too, but for some reason were left off the Atlantic Council Tracker.)

Those would take my total to 107, but then the Atlantic Council missed five projects from my tabulation: Bangladesh, Paraguay, Qatar, Sudan and Yemen, takes it to 112, so go figure!

If anyone can help me with the reconciliation, please let me know in the comments!

BNP Paribas issues tokenized bond for EDF on public blockchain

BNP Paribas structured and tokenized a project finance bond on the public Ethereum blockchain. The proceeds were used to fund solar energy projects through Électricité de France Energies Nouvelles Reparties (EDF ENR), which helps businesses and individuals install solar panels. [Read more at Ledger Insights]

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]