Tag: Blockchain

Kiffmeister’s #Fintech Daily Digest (20241008)

~ kiffmeister

Palau launches blockchain-based savings bonds (Soramitsu)

The Government of Palau launched a prototype of its blockchain-based savings bond system, Palau Invest, which will offer Palauan citizens, via a mobile app, a simple way to invest in their country while earning returns. The funds raised will be allocated to key national projects such as bridges, roads, and public infrastructure. The project is sponsored by the Japanese Ministry of Economy, Trade, and Industry (METI) Global South Future-Oriented Co-Creation Project. The system runs on Soramitsu’s SORA v3 Hub Chain’s Hyperledger Iroha 2-based network. [Read more at Soramitsu]

Capgemini 2025 World Payments Report (Capgemini)

Capgemini published its annual World Payments Report that reflects the views of 600 corporate treasurers from across three industries: insurance, retail, and automotive. It also includes payments insights from focused interviews and surveys with over 200 senior payment executives of leading banks, financial service organizations, payment service providers, industry associations, and central banks representing all regions of the globe. The report finds that supportive regulations and innovative industry initiatives, especially regarding open finance and instant payments, have resulted in surging non-cash payments in the Asia-Pacific region. Also instant payments, now operational in over 80 markets, are picking up speed. [Read more at Capgemini]

Stablecoins, money market funds and monetary policy (ECB)

The European Central Bank (ECB) published a paper that documents the very different short-term (12-week) responses of stablecoins and money market funds (MMFs) to crypto and U.S. monetary policy shocks since 2019. It shows that crypto shocks are inconsequential for MMFs and traditional financial markets but negatively affect stablecoins. In contrast, U.S. monetary policy shocks significantly affect MMFs and stablecoins, but in opposite directions. While prime MMF assets grow after contractionary monetary policy shocks, stablecoin market capitalization significantly declines. [Read more at the ECB]

Kyrgyzstan on the path to creating a digital som (CBPN)

[September 27, 2024] Central Bank Payment News (CBPN) published an article by Aigul Bakesarieva, Head of the Digital Som Project Group, National Bank of the Kyrgyz Republic on central bank digital currency (CBDC) developments at her central bank. On May 25, 2022 the Board of the National Bank launched the digital som concept based on a two-tier retail model. The digital som will be a unique digital token that will be stored in a special digital wallet, with transfers . occurring directly from one digital wallet to another. [Read more at CBPN]

Plus I’m repeating a story from yesterday’s Daily that was missing the links:

Euro WCBDC used to settle ABN AMRO digital commercial paper on DLT (Ledger Insights)

ABN AMRO and Rabobank issued €1.1 million of one-month digital commercial paper tokenized on the Deutsche Börse Clearstream D7 distributed ledger technology (DLT) based platform. The Luxembourg transaction was settled atomically using a wholesale central bank digital currency (CBDC) issued by the Banque de France, as part of the Eurosystem’s DLT trials for wholesale settlement using central bank money. This is Clearstream‘s 5th use case at the European Central Bank (ECB) trials on the D7 platform. [Read more at Ledger Insights]

Upcoming Speaking Engagements:

  • Digital Euro Conference 2025, Frankfurt, March 27, 2025. The DEC25 conference will explore the future of money with a focus on CBDCs, stablecoins, tokenized deposits, and the intersection of AI and digital ID. When you register, get 20% off the regular ticket price by using the Kiffmeister20 code! [Find out more and register here]

And just a reminder that I produce a monthly digest of central bank digital currency (CBDC) developments exclusively for the official sector. So (only) if you work at a central bank, ministry of finance or international financial institution (e.g., the BIS, IMF, OECD, World Bank) and 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 john@kiffmeister.com.

Kiffmeister’s #Fintech Daily Digest (20241004)

~ kiffmeister

Brazil tests DeFi elements, compatibility in Drex CBDC pilot (Cointelegraph)

Banco Central do Brasil (BCB) is incorporating decentralized finance (DeFi) principles into ongoing experiments toward developing ecosystems that use “synthetic” central bank digital currency (CBDC) as payment instruments. Digital asset transactions would be settled in “Drex” wholesale CBDC issued by the BCB within the distributed ledger technology (DLT) Drex Platform. The BCB also plans to speed up its Open Finance tokenization efforts and bring decentralized finance (DeFi) into the regulatory perimeter. [Read more at the BCB and hear more on YouTube]

BoE wants to ensure tokenized wholesale transactions use central bank money (Ledger Insights)

Bank of England (BoE) Executive Director of Financial Market Infrastructure Sasha Mills outlined the need for tokenized wholesale transactions to be settled in central bank money. “If central bank money is unable to interact with new technologies, there could be a risk of high value wholesale settlement activity moving away from central bank money to private settlement assets, weakening financial stability.” Options include the use of the BoE’s omnibus account facility, extending real-time gross settlement (RTGS) system hours, and wholesale CBDC. [Read more at the BoE]

Visa introduces the Visa tokenized asset platform (Visa)

Visa launched its Tokenized Asset Platform ( VTAP), a business-to-business (B2B) solution designed to enable banks to bring fiat currencies on chain in a safe, seamless, and efficient manner. VTAP provides a platform for banks to mint, burn and transfer fiat-backed tokens, such as tokenized deposits and stablecoins, and experiment with use cases. VTAP is also designed to enable banks to use their fiat-backed tokens within smart contracts. In addition, Visa’s vision is to enable interoperability across different blockchains for banks utilizing the VTAP platform. [Read more at Visa]

Upcoming Speaking Engagements:

  • Digital Euro Conference 2025, Frankfurt, March 27, 2025. The DEC25 conference will explore the future of money with a focus on CBDCs, stablecoins, tokenized deposits, and the intersection of AI and digital ID. When you register, get 20% off the regular ticket price by using the Kiffmeister20 code! [Find out more and register here]

And just a reminder that I produce a monthly digest of central bank digital currency (CBDC) developments exclusively for the official sector. So (only) if you work at a central bank, ministry of finance or international financial institution (e.g., the BIS, IMF, OECD, World Bank) and 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 john@kiffmeister.com.

Kiffmeister’s #Fintech Daily Digest (20240904)

~ kiffmeister

Retail digital Aruba florin for inclusive resilience (CBA)

The Central Bank van Aruba (CBA) published a paper that reviews the best implementation options for a retail digital florin. It concludes that an inclusively-resilient retail digital florin must at least exhibit a three-tiered know-your-customer (KYC) approach (to balance privacy and KYC efforts), have offline features, one-to-one conversion between commercial bank deposits and CBDC, be unremunerated, and based on permissioned distributed ledger technology (DLT). Cross-border payments have been tabled for future consideration. This paper represents the first of a five-step five-year evaluation and implementation process. The paper also revealed that in 2019, the CBA conducted a feasibility study on a local wholesale CBDC, but concluded that its risks may fall outside the CBA’s risk appetite. The 2019 paper does not seem to be available online. [Read more at the CBA]

Siemens issues €300m digital bond settled in central bank money (Ledger Insights)

“Siemens has issued its second digital bond, a €300 million one year bond using the SWIAT permissioned blockchain. Settlement took just minutes and used Germany’s Trigger solution, which triggers a central bank money payment on the TARGET 2 system. Last year Siemens issued a €60 million ‘crypto security’ bond on the Polygon blockchain which still required two-day settlement. The issuance formed part of the European Central Bank’s (ECB) wholesale DLT settlement trials.” [Read more at Siemens]

SWIAT (Secure Worldwide Interbank Asset Transfer), established by DekaBank in February 2022, is a software developer for blockchain-based digital financial services platform for regulated financial market players to flexibly issue, trade and settle any type of asset – traditional or digital – on the blockchain. It was determined from the start that the platform would be open to partners to be built as a market consortium, and eventually expanded into an international network. It’s competitors include the Regulated Liability Network (RLN) and Partior. [Read more at SWIAT]

Bank of England approach to innovation in money and payments (JD Supra)

On July 30, 2024, the Bank of England (BOE) published a paper on its proposed approach to innovation in money and payments. It includes developing additional functionalities for the real-time gross settlement (RTGS) system such as extending settlement hours and a synchronization interface that would allow RTGS to connect to external ledgers, including those based on programmable platforms, and settle assets in central bank money. The bank is also planning a programme of experiments for a wholesale central bank digital currency (CBDC). Broadly these would cover, DvP securities transactions, PvP foreign exchange transactions and interoperability with other global ledger initiatives. The use of tokenized money and programmable payments is also up for discussion. [Read more at the BOE]

Upcoming Speaking Engagements:

  • CBDC Conference, Istanbul, September 10-12. The conference will offer representatives of central banks, commercial banks, technology providers, policy makers and academics the perfect platform to learn about the latest CBDC developments, exchange ideas with experts and peers. [Find out more and register here][Central bank delegates may be eligible for free registration (email registration@cbdc-conference.com to find out more)]
  • Digital Currency Conference, London, September 23-24. The conference will bring together policymakers, regulators, and technology and innovation experts to network and discuss all aspects of digital currencies. And enter the KiffmeisterDCC code at registration to get a 20% discount! [Find out more and register here]

And just a reminder that I produce a monthly digest of central bank digital currency (CBDC) developments exclusively for the official sector. So (only) if you work at a central bank, ministry of finance or international financial institution (e.g., the BIS, IMF, OECD, World Bank) and 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 john@kiffmeister.com.

Kiffmeister’s #Fintech Daily Digest (20240903)

~ kiffmeister

Ripple to add smart contracts to XRP Ledger (Cointelegraph)

Ripple will add smart contracts to the XRP Ledger (XRPL) developer ecosystem and XRPL mainnet, although it’s still in its research phase and the firm did not provide a definite time frame for deployment. It also invited programmers familiar with Ethereum virtual machine (EVM) languages to explore possibilities on its sidechain. Ripple also said the sidechain was created for developers using Ethereum-based smart contracts. This gives a familiar environment for deploying DApps, allowing them to use Solidity, a programming language used to build smart contracts on Ethereum. [Read more at Ripple]

CBDCs, payment firms, and geopolitics (NBER)

The U.S. National Bureau of Economic Research (NBER) published a paper that analyzes the effect of a major central bank digital currency (CBDC) – the digital euro – on the payment industry, finding “remarkably” heterogeneous effects. Stock prices of U.S. payment firms decrease, while stock prices of European payment firms increase in response to positive announcements on the digital euro. Bank stocks do not react. The results are consistent with the notion that the development of the digital euro is driven by a desire for strategic autonomy in payments, pointing to a novel geopolitical dimension of CBDCs. [Read more at the NBER]

Russia’s largest bank to start offering customers CBDC in 2025 (Crypto.news)

Russia‘s Sberbank plans to start operations with the country’s digital ruble for its customers in early 2025. Sberbank is among Russian banks expected to join the project in the second round of testing CBDC, along with about 20 other financial institutions. [Read more at the Moscow Times]

Upcoming Speaking Engagements:

  • CBDC Conference, Istanbul, September 10-12. The conference will offer representatives of central banks, commercial banks, technology providers, policy makers and academics the perfect platform to learn about the latest CBDC developments, exchange ideas with experts and peers. [Find out more and register here][Central bank delegates may be eligible for free registration (email registration@cbdc-conference.com to find out more)]
  • Digital Currency Conference, London, September 23-24. The conference will bring together policymakers, regulators, and technology and innovation experts to network and discuss all aspects of digital currencies. And enter the KiffmeisterDCC code at registration to get a 20% discount! [Find out more and register here]

And just a reminder that I produce a monthly digest of central bank digital currency (CBDC) developments exclusively for the official sector. So (only) if you work at a central bank, ministry of finance or international financial institution (e.g., the BIS, IMF, OECD, World Bank) and 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 john@kiffmeister.com.

Kiffmeister’s #Fintech Daily Digest (20240829)

~ kiffmeister

Malawi central bank to launch a CBDC proof of concept (RBM)

The Reserve Bank of Malawi (RBM) is looking to engage a consultant to further its central bank digital currency (CBDC) proof of concept work. The initiative aims at exploring the feasibility, benefits and challenges associated with the implementation of a CBDC in Malawi. [Read more at the RBM]

Assessing the implications of a Dominican Republic retail CBDC (IMF)

The International Monetary Fund (IMF) published a technical assistance report that helped the Banco Central de la República Dominicana (BCRD) to assess a CBDC’s potential macro-financial, legal, and financial integrity implications, and shared lessons from other countries’ CBDC and digital money projects, technology considerations, practices for stakeholder engagement, and how CBDC can increase financial inclusion, among others. The mission advised the BCRD to continue the exploration of macro-financial implications of a CBDC, conduct the legal framework revisions should a positive decision of CBDC be taken, assess risks to financial integrity once a firmer design choice is made, and build up technology knowledge and capacity meanwhile. [Read more at the IMF]

Novel risks, mitigants and uncertainties with permissionless DLT (BCBS)

The Basel Committee on Banking Supervision (BCBS) published a working paper on the various risks faced by banks that transact on permissionless blockchains or similar distributed ledger technologies (DLTs). Certain risks stem from the blockchain’s reliance on unknown or third parties, which makes it difficult for banks to conduct due diligence and oversight. These risks require new risk management strategies and safeguards. The paper finds that current practices for mitigating these risks remain in various stages of development and have not been tested under stress. [Read more at the Bank for International Settlements]

ECB hosting a digital euro design focus session (ECB)

The European Central Bank (ECB) is hosting a virtual digital euro design focus session on September 9, 2024. The “digital euro design for the European payments market” is a technical forum aimed at payment service providers and professionals from the financial sector with an interest in the design of the digital euro and its impact on the European payments market. The entire focus session will be live streamed, recorded and published on the ECB’s website shortly after the event, together with the slides presented. [Read more at the ECB]

WFE sets out crypto-asset custody provider good practice (WFE)

The World Federation of Exchanges (WFE) published good practice recommendations for crypto-asset custody providers. These include segregating client assets to ensure they are protected in the event of a company’s bankruptcy, ensuring client assets remain bankruptcy-remote, having adequate insurance and/or surety bonds and disclose these policies in clear understandable terms, and seeking independent audits from reputable and credible auditors to provide an assessment of financial statements, process and controls. [Read more at the WFE]

Upcoming Speaking Engagements:

  • Intertribal Foreign Affairs Council Forum 2024, Yidindji, August 30-31. The conference will bring together indigenous nations to showcase the excellence of their governance practices and generate new ideas for the future. I’ll be on a panel focused on the future of money and indigenous financial inclusion. [Find out more and register here]
  • CBDC Conference, Istanbul, September 10-12. The conference will offer representatives of central banks, commercial banks, technology providers, policy makers and academics the perfect platform to learn about the latest CBDC developments, exchange ideas with experts and peers. [Find out more and register here][Central bank delegates may be eligible for free registration (email registration@cbdc-conference.com to find out more)]
  • Digital Currency Conference, London, September 23-24. The conference will bring together policymakers, regulators, and technology and innovation experts to network and discuss all aspects of digital currencies. And enter the KiffmeisterDCC code at registration to get a 20% discount! [Find out more and register here]

And just a reminder that I produce a monthly digest of central bank digital currency (CBDC) developments exclusively for the official sector. So (only) if you work at a central bank, ministry of finance or international financial institution (e.g., the BIS, IMF, OECD, World Bank) and 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 john@kiffmeister.com.

Kiffmeister’s #Fintech Daily Digest (20240730)

~ kiffmeister

Bank of England seeks feedback for wholesale CBDC trials (Ledger Insights)

The Bank of England (BOE) published a discussion paper on innovation in money and payments. While it covers payments across the board, it aims to gather feedback for planned wholesale central bank digital currency (CBDC) trials. These will include a synchronization (“trigger”) solution that settles transactions involving assets that are tokenized on distributed ledger technology (DLT) platforms using the real time gross settlement (RTGS) system. The BOE also wants to trial a digital securities transaction in which an end user makes a tokenized deposit payment. Finally, it will test interoperability with global initiatives like the Bank for International Settlements (BIS) Project Agorá for cross-border payments. Comments are due by October 31, 2024. [Read more at the BOE]

Qatar Central Bank launches ‘Request to Pay’ service through Fawran (The Peninsula)

Qatar Central Bank (QCB) launched a “Request to Pay” option through Fawran instant payment service that was launched in March 2024. Request to Pay allows customers to send a payment request from the payee to the payer. The payer will then receive the request, including the payee’s name, the required amount to be transferred and the option to accept or reject the request. In case of acceptance, the required amount will be transferred instantly to the payee’s account. The participating banks are Doha Bank, Qatar Islamic Bank, Commercial Bank, Masraf Al Rayan and Qatar International Islamic Bank. [Read more on the QCB’s X page]

E-Rupee retail CBDC pilot customers grow 285% year-over-year (Business Standard)

The Reserve Bank of India (RBI) published its annual report on currency and Finance in which it reported that as of June 2024, 5 million users (versus 1.3 million a year earlier) and 0.4 million merchants (versus 0.3 million) were participating in e-Rupee CBDC retail pilot. [Read the full report at the RBI]

Byzantine fault tolerant consensus with confidential quorum certificate for a central bank DLT (Banca D’Italia)

Banca d’Italia published a paper on the FROSTed Byzantine Fault Tolerance (FBFT) protocol, an approach to DLT proof of authority (PoA) validation meant to strengthen the security of the ledger, its tolerance to faults or attacks, and the confidentiality of validators. It combines the practical byzantine fault tolerance (PBFT) algorithm with the flexible round-optimized Schnorr threshold (FROST) signature scheme. The resulting system is an alternative platform for a distributed, resilient transactional system. Operated by a set of trusted actors, distributed at geographic scale, it holds potential for mission-critical applications, such as wholesale and retail CBDC, and asset tokenization schemes. [Read more at Banca d’Italia]

Upcoming Speaking Engagements:

  • Intertribal Foreign Affairs Council Forum 2024, Yidindji, August 30-31. The conference will bring together indigenous nations to showcase the excellence of their governance practices and generate new ideas for the future. I’ll be on a panel focused on the future of money and indigenous financial inclusion. [Find out more and register here]
  • CBDC Conference, Istanbul, September 10-12. The conference will offer representatives of central banks, commercial banks, technology providers, policy makers and academics the perfect platform to learn about the latest CBDC developments, exchange ideas with experts and peers. [Find out more and register here][Central bank delegates may be eligible for free registration (email registration@cbdc-conference.com to find out more)]
  • Digital Currency Conference, London, September 23-24. The conference will bring together policymakers, regulators, and technology and innovation experts to network and discuss all aspects of digital currencies. And enter the KiffmeisterDCC code at registration to get a 20% discount! [Find out more and register here]

And just a reminder that I produce a monthly digest of central bank digital currency (CBDC) developments exclusively for the official sector. So (only) if you work at a central bank, ministry of finance or international financial institution (e.g., the BIS, IMF, OECD, World Bank) and 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 john@kiffmeister.com.

Kiffmeister’s #Fintech Daily Digest (20240726)

~ kiffmeister

ERPB technical session on the digital euro (ECB)

The European Central Bank (ECB) published two documents discussed at the June 28, 2024 meeting of the European Retail Payments Board (ERPB) technical session of the digital euro [agenda here]. One was a summary of inputs on the methodology for calibrating holding limits [download here], and the other was on the strategies for conducting euro user research and engaging with market participants (payment service providers and merchants)[download here].

Thailand distributing stimulus payments in digital currency (CoinTelegraph)

Thailand’s finance ministry is going ahead with a plan to pay a social benefit in digital currency. Up to 45 million Thais will be eligible to receive 10,000 baht (about $280) in digital money on August 1, 2024, about two-thirds of the average monthly income in the country. There are numerous restrictions on usage, including know your customer (KYC) verification that will exclude prisoners and people and businesses with records of economic abuse. There are also restrictions on the items that can be purchased with the digital currency. [Read more at CoinTelegraph]

German banks share tokenized deposit trial results (Ledger Insights)

The German Banking Industry Committee (GBIC) published the results of a proof of concept (POC) for its distributed ledger technology (DLT) based commercial bank money token (CBMT) project. CBMT is focused on serving large corporates, especially industrial companies, allowing them to hold tokens from multiple banks and to make P2P (B2B) transactions 24/7/365. Results confirmed that the CBMT is viable and offers considerable potential, enabling the realization of a variety of use cases across corporate functions. Results also showed that the CBMT works across a variety of DLT platforms, has the potential to scale and should present no barrier to integration into existing systems via application programming interfaces (APIs). [Read more at the GBIC]

Payment behavior in Germany in 2023 (Deutsche Bundesbank)

The Deutsche Bundesbank (BuBa) published an analysis of how people pay in Germany, based on approximately 5,700 randomly selected members of the public aged 18 and over between September and November 2023. Of payment volumes, debit cards accounted for 32%, cash for 26%, transfers and direct debits 20%, credit cards 10%, and mobile payments 6%. In general, 44% of respondents prefer to pay with electronic payment methods, but 24% still prefer cash, and 94% of merchants accept cash at point of sale. The perceived benefits of cash include privacy preservation (63%), immediate and reliable settlement of payments (47%), and easy expense overview (41%). [Read more at BuBa]

CBDC and transmission of monetary policy (Bank of Canada)

The Bank of Canada (BOC) published a paper on how a central bank digital currency (CBDC) changes monetary policy transmission in a general equilibrium model with nominal rigidities, liquidity frictions, and a banking sector where commercial banks face a leverage constraint. It finds that the effects of a shock to the Taylor rule that governs interest on central bank reserves, is magnified with the introduction of a fixed-interest-rate CBDC. More generally, whether CBDC magnifies or abates the response of the economy depends on the type of shock (e.g., interest rate or quantity of reserves shock). The paper also finds that the response of the economy depends on the monetary policy framework—whether the central bank implements monetary policy through reserves or through CBDC—as well as central bank balance sheet rules that govern the quantity of CBDC and reserves. [Read more at the BOC]

Jordanian government launches national blockchain network (Jordan News)

Jordan’s Ministry of Digital Economy and Entrepreneurship (MODEE) launched a national blockchain technology network, MODEE DLT, to enhance trust and transparency in government services. MODEE DLT has been integrated with the Sanad system to provide a decentralized and verifiable digital record of all Sanad transactions. Sanad is a government portal through which residents can access their government digital documents and personal records, apply for government services, digitally sign documents, and make bill payments. [Read more at MODEE]

Qatar Central Bank issues DLT guidelines (Qatar Central Bank)

The Qatar Central Bank (QCB) published its guidelines for the oversight of distributed ledger technology applications or systems provision and usage by QCB-regulated entities to ensure that their usage is safe, secure and efficient. [Read more at the QCB]

Upcoming Speaking Engagements:

  • CBDC Conference, Istanbul, September 10-12. The conference will offer representatives of central banks, commercial banks, technology providers, policy makers and academics the perfect platform to learn about the latest CBDC developments, exchange ideas with experts and peers. [Find out more and register here][Central bank delegates may be eligible for free registration (email registration@cbdc-conference.com to find out more)]
  • Digital Currency Conference, London, September 23-24. The conference will bring together policymakers, regulators, and technology and innovation experts to network and discuss all aspects of digital currencies. And enter the KiffmeisterDCC code at registration to get a 20% discount! [Find out more and register here]

And just a reminder that I produce a monthly digest of central bank digital currency (CBDC) developments exclusively for the official sector. So (only) if you work at a central bank, ministry of finance or international financial institution (e.g., the BIS, IMF, OECD, World Bank) and 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 john@kiffmeister.com.

Kiffmeister’s #Fintech Daily Digest (20240725)

~ kiffmeister

BSP wholesale CBDC proof-of-concept nearing completion (Fintech Philippines)

The Bangko Sentral ng Pilipinas (BSP) is reportedly progressing quickly towards issuing wholesale central bank digital currency (CBDC), codenamed Project Agila, sooner than anticipated, with the proof-of-concept (POC) phase expected to conclude by the end of 2024. Deputy Governor Mamerto E. Tangonan confirmed that the CBDC could likely be launched in the earlier part of BSP Governor Eli M. Remolona Jr.’s six-year term, which runs from 2023 until 2029. Three uses cases mentioned; interbank settlement on weekends and holidays, securities settlement and cross border payments. With regards to the latter, the BSP is an observer of Project mBridge involving the BIS Innovation Hub and the central banks of China, Hong Kong, Thailand, the United Arab Emirates and Saudi Arabia. [Read more at Fintech Philippines]

Simulating the adoption of a retail CBDC (FNA)

Jahrbücher für Nationalökonomie und Statistik (JNS) published a paper by two Financial Network Analytics (FNA) staff that uses agent-based modelling to simulate retail central bank digital currency (CBDC) adoption, calibrated to Spain’s retail payment ecosystem. Results suggest that the distribution of government subsidies via CBDC creates incentives to reduce the use of cash. Also, reverse waterfall functionality (automatic transfer of funds from bank deposits to CBDC wallets) and a positive remuneration spread to bank deposits are effective in fostering adoption. However, the model did not model banks as adaptive decision makers that would include their ability to counter CBDC remuneration. [Read more at the JNS]

A minimum viable offline CBDC using Groth-Sahai proofs (arXiv)

arXiv posted a paper that proposes a design and a first implementation for an offline-first digital euro. The protocol offers complete privacy during transactions using zero-knowledge proofs. Furthermore, transactions can be executed offline without third parties and retroactive double-spending detection is facilitated. To protect the users’ privacy, but also guard against money laundering, bank and trusted third parties for law enforcement must collaborate to decrypt transactions, revealing the digital pseudonym used in the transaction. The transaction can be decrypted without decrypting prior transactions attached to the digital euro. The protocol has a working initial implementation showcasing its usability and demonstrating functionality. [Read more at arXiv]

Upcoming Speaking Engagements:

  • CBDC Conference, Istanbul, September 10-12. The conference will offer representatives of central banks, commercial banks, technology providers, policy makers and academics the perfect platform to learn about the latest CBDC developments, exchange ideas with experts and peers. [Find out more and register here][Central bank delegates may be eligible for free registration (email registration@cbdc-conference.com to find out more)]
  • Digital Currency Conference, London, September 23-24. The conference will bring together policymakers, regulators, and technology and innovation experts to network and discuss all aspects of digital currencies. And enter the KiffmeisterDCC code at registration to get a 20% discount! [Find out more and register here]

And just a reminder that I produce a monthly digest of central bank digital currency (CBDC) developments exclusively for the official sector. So (only) if you work at a central bank, ministry of finance or international financial institution (e.g., the BIS, IMF, OECD, World Bank) and 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 john@kiffmeister.com.

Kiffmeister’s #Fintech Daily Digest (20240724)

~ kiffmeister

Central Bank of Papua New Guinea launches CBDC proof-of-concept (Soramitsu)

The Central Bank of Papua New Guinea (CBPNG) is working with Soramitsu on a central bank digital currency (CBDC) proof-of-concept (POC) aimed at building a common payment platform across the Pacific Island region. Also, some areas of Papua New Guinea are plagued by instability, violence, and frequent occurrences of robberies and muggings, so the POC will explore digital technologies that will allow recovery of funds after such incidents. The project is being funded by the Government of Japan’s Ministry of Economy, Trade and Industry’s 2023 supplementary budget “Subsidy for Global South Future-Oriented Co-Creation Projects (Indirect Subsidy Project Related to the Survey on the Overseas Deployment of Infrastructure by Japanese Companies).” [Read more at Soramitsu]

Bank of Israel selects 14 teams to present use cases for digital shekel (Finextra)

The Bank of Israel (BOI) has chosen 14 teams from the private and public sectors, and academia to study potential digital shekel use cases selected by the BOI. They deal with a variety of functions: connectivity between the digital shekel, other payment systems, and cash; use of the advanced functionalities offered by the digital shekel, such as subwallets, conditional payments, and split payments; and the implementation of various technologies while using the digital shekel as a means of payment. Participant proposals will be tested in a digital sandbox in August 2024, with products developed to be showcased at a concluding conference at the end of October 2024. [Read more at the BOI]

FCA finalizes access to cash rules (Finextra)

Under new rules from the U.K. Financial Conduct Authority (FCA), banks and building societies will need to weigh up if local communities lack access to cash services, like branches and ATMs, and plug significant gaps. Under the new rules banks will need to respond to local residents and community organizations when closing branches and ATMs and provide an assessment of whether there are gaps in local cash access. Where significant gaps are found, banks will be obliged to retain branches and ATMs until alternative solutions are found. [Read more at the FCA]

UAE central bank introduces new stablecoin regulations (Coin Journal)

The UAE Central Bank (CBUAE) approved a framework for stablecoin regulation on June 14, 2024, which allows only dirham-backed stablecoins to be used for payments. Other crypto-assets will be restricted to trading, investment, and corporate treasury purposes while foreign stablecoins will only be permitted for purchasing specific virtual assets like non-fungible tokens (NFTs). The new law mandates that no entity can issue a payment token without submitting a white paper to the central bank for approval. Banks are not directly permitted to issue payment tokens but can do so through subsidiaries or affiliates, provided they meet licensing and regulatory requirements. The new framework is set to commence in June 2025. [Read more at the CBUAE]

UEMOA launches interoperable instant payment system pilot (BCEAO)

The Central Bank of the States of West Africa (BCEAO) has launched the pilot phase of the interoperable instant payment system (IPS) of the West African Economic and Monetary Union (UEMOA). 25 financial institutions across four countries met the criteria required to participate. A second group will join on August 12, 2024.The new interoperable 24/7 IPS infrastructure is capable of processing transactions of any kind, regardless of the account type. [Read more at the BCEAO]

Philippines hits target of digitalizing 50 percent of retail payments (BSP)

The share of digital payment transactions to total monthly retail payments in the Philippines grew from 42.1% in 2022 to 52.8% in 2023, according to the Bangko Sentral ng Pilipinas (BSP). This indicates that the central bank has surpassed its target of digitalizing 50% of digital payments volume in the country under its Digital Payments Transformation Roadmap 2018-2023. In terms of value, the latest e-payments measurement also showed that the share of monthly digital payments to total transactions increased to 55.3% in 2023 from 40.1% in 2022. The main contributors to the rise in e-payments were merchant payments which accounted for 64.9% of monthly digital payments volume, person-to-person transfers at 19.3%, and business-to-business supplier payments at 6.1%. [Read more at the BSP]

Reserve Bank of India joins Project Nexus (RBI)

The Reserve Bank of India (RBI) joined Project Nexus, a multilateral international initiative to enable instant cross-border retail payments by interlinking domestic fast payment systems (FPSs). Nexus, conceptualized by the BIS Innovation Hub aims to connect the FPSs of four ASEAN countries (Malaysia, Philippines, Singapore, and Thailand); and now India. Indonesia, which has been involved from the early stages, continues to be involved as a special observer. The platform is expected to go live by 2026. Once functional, Nexus will play an important role in making retail cross-border payments efficient, faster, and more cost effective. [Read more at the RBI]

    Upcoming Speaking Engagements:

    • CBDC Conference, Istanbul, September 10-12. The conference will offer representatives of central banks, commercial banks, technology providers, policy makers and academics the perfect platform to learn about the latest CBDC developments, exchange ideas with experts and peers. [Find out more and register here][Central bank delegates may be eligible for free registration (email registration@cbdc-conference.com to find out more)]
    • Digital Currency Conference, London, September 23-24. The conference will bring together policymakers, regulators, and technology and innovation experts to network and discuss all aspects of digital currencies. And enter the KiffmeisterDCC code at registration to get a 20% discount! [Find out more and register here]

    And just a reminder that I produce a monthly digest of central bank digital currency (CBDC) developments exclusively for the official sector. So (only) if you work at a central bank, ministry of finance or international financial institution (e.g., the BIS, IMF, OECD, World Bank) and 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 john@kiffmeister.com.

    Kiffmeister’s #Fintech Daily Digest (20240718)

    ~ kiffmeister

    Basel Committee final disclosure framework for banks’ cryptoasset exposures

    The Basel Committee on Banking Supervision published its final disclosure framework for banks’ crypto-asset exposures and targeted amendments to its crypto-asset standard published in December 2022. The disclosure framework includes a set of standardized tables and templates covering banks’ crypto-asset exposures to enhance information availability and support market discipline. The targeted amendments include clarified criteria for stablecoins to receive a preferential regulatory treatment. [Read more at the Bank for International Settlements]

    [Ledger Insights provides a summary of the key points regarding the criteria for stablecoin preferential treatment here.]

    HKMA proposes rules for ‘fiat-referenced’ stablecoins (Decrypt)

    The Hong Kong Monetary Authority (HKMA) is looking to roll out a comprehensive regulatory framework for fiat-referenced stablecoin (FRS) issuers. This comes alongside a proposal for legislation. The new regime would require foreign FRS issuers to establish a physical presence in Hong Kong, require that issuers custody reserves at Hong Kong banks, and prohibit issuers from paying interest to holders. [Read more at the HKMA]

    State Street planning tokenized deposits and stablecoin (Ledger Insights)

    State Street is reportedly exploring creating its own stablecoin and deposit token. The bank is already an investor in Fnality, the interbank distributed ledger technology (DLT) synthetic wholesale central bank digital currency (CBDC) payment solution backed by 20 institutions. [Read more at Bloomberg]

    Oxbridge Re raises $2.88m for EpsilonCat Re tokenized reinsurance sidecar securities (Artemis.bm)

    Oxbridge Re Ltd., the Cayman Islands based reinsurance company, through its SurancePlus digital securities subsidiary, completed a private placement of 287,705 Participation Shares represented by the digital tokens, EpsilonCat Re, under a 3-year Participation Share Investment Contract to raise roughly $2.88 million. [Read more at Artemis.bm]

    Upcoming Speaking Engagements:

    • CBDC Conference, Istanbul, September 10-12. The conference will offer representatives of central banks, commercial banks, technology providers, policy makers and academics the perfect platform to learn about the latest CBDC developments, exchange ideas with experts and peers. [Find out more and register here][Central bank delegates may be eligible for free registration (email registration@cbdc-conference.com to find out more)]
    • Digital Currency Conference, London, September 23-24. The conference will bring together policymakers, regulators, and technology and innovation experts to network and discuss all aspects of digital currencies. And enter the KiffmeisterDCC code at registration to get a 20% discount! [Find out more and register here]

    And just a reminder that I produce a monthly digest of central bank digital currency (CBDC) developments exclusively for the official sector. So (only) if you work at a central bank, ministry of finance or international financial institution (e.g., the BIS, IMF, OECD, World Bank) and 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 john@kiffmeister.com.