The Massachusetts Institute of Technology (MIT) and the Standards Organization for Digital Assets (SODA) published a white paper that addresses the need for global standards to enable tokenized real-world assets to move seamlessly across different blockchain networks and traditional financial systems. The White Paper describes the need to create neutral, open standards through three workstreams: a data model defining asset information, common digital functions for smart contracts, and legal/governance frameworks ensuring regulatory compliance. The paper draws parallels to historical standardization successes like the internet’s TCP/IP protocol and shipping containers, arguing that without interoperability standards, tokenization will only deliver isolated efficiencies rather than transforming global finance. Contributors from major institutions including Chainlink, Fireblocks, Wormhole, and others emphasize that true scalability requires standardized approaches to cross-chain transfers, identity verification, compliance, and connectivity with existing financial infrastructure, ultimately enabling the tokenized asset market by 2030 to reach its full potential. [Source: SODA]
[December 9, 2025] The National Bank of Ethiopia (NBE) published a draft National Digital Payment Strategy 2026–30. The five-year framework outlines a roadmap to build a trusted, innovative, and integrated digital payments ecosystem. Part of the study involves studying stablecoins, cryptocurrencies, and central bank digital currency (CBDC), map their current use in Ethiopia, and identify concrete, locally viable use-cases for future policy and product development. Furthermore, white papers will be published and, if deemed necessary, required regulatory frameworks and pilot programs will be implemented. [Source: NBE]
I produce a monthly digest of digital fiat currency (DFC) developments exclusively for the official sector (e.g., central banks, ministries of finance and international financial institution (e.g., the BIS, IMF, OECD, World Bank)) plus academics and firms that are active in the DFC space (commercial banks, technology providers, consultants, etc.). (DFCs include central bank digital currency (CBDC), stablecoins and tokenized deposits.) It goes out via email on the first business day of every month, and if you’re interested in being on the mailing list, please email me at john@kiffmeister.com.
The following is a corrected version of my December 29, 2025 post regarding “remunerated digital yuan”. Thanks to Amnon Samid for pointing out that I incorrectly said that the digital yuan itself was remunerated.
The People’s Bank of China (PBOC) has proposed allowing banks to pay interest on customer digital yuan (E-CNY) deposits starting January 1, 2026, as part of efforts to expand the circle of banks participating in the central bank digital currency (CBDC) project. However, the initiative faces challenges: interest rates on demand deposits at major Chinese banks are currently just 0.05%, and the digital yuan has struggled to compete with established payment platforms like WeChat Pay and Alipay despite being piloted in over half of mainland provinces. [Source: Weixin] Such deposits will presumably have the same legal status as traditional bank deposits. Also, the mechanics of the operation are still unknown, with some variations implying that the commercial banks will be effectively authorized to issue digital yuan on behalf of the PBOC in order to pay the interest. [Amnon Samid’s January 1, 2026 LinkedIn post]
A paper co-authored by Barry Eichengreen published in the European Journal of Finance (EJF) contends that reliance of stablecoin issuers on centralized custodians introduces devaluation risk similar to that observed in traditional currencies under pegged exchange rate regimes. The authors construct market-based measures of stablecoin devaluation risk using spot and futures prices for Tether. Conditional on full default, their estimates suggest an average devaluation probability of 60 basis points annually, rising to over 200 basis points during the 2022 Terra-Luna crash. In contrast, the probability of a partial default, defined as a 5% devaluation (trading at 95 cents), is approximately 12 percentage points on an annualized basis. Key risk factors include market volatility and transaction velocity. While elevated interest rates suggest heightened devaluation risk, deviations from covered interest parity indicate segmentation between traditional and stablecoin markets, reflecting the effects of leverage trading and arbitrage costs. To mitigate these risks, their findings suggest the importance of greater transparency and regulatory oversight. For example, the authors suggest implementing proof-of-reserve systems powered by smart contracts which would allow new tokens to be minted only when verified reserve balances increase, providing real-time detection of custodial issues rather than relying on quarterly attestations. [Source: EJF]
I produce a monthly digest of digital fiat currency (DFC) developments exclusively for the official sector (e.g., central banks, ministries of finance and international financial institution (e.g., the BIS, IMF, OECD, World Bank)) plus academics and firms that are active in the DFC space (commercial banks, technology providers, consultants, etc.). (DFCs include central bank digital currency (CBDC), stablecoins and tokenized deposits.) It goes out via email on the first business day of every month, and if you’re interested in being on the mailing list, please email me at john@kiffmeister.com.
Ulrich Bindseil posted an updated version of his paper that examines the financial stability implications of stablecoin regulation, particularly regulations that prohibit remuneration to protect banks from deposit outflows. He argues that these particular regulations make stablecoin viability cyclically dependent on interest rates rather than addressing financial stability systematically. Additionally, the prohibition creates competitive distortions between European and U.S. stablecoin markets, because European Union (EU) regulations also prohibit stablecoin wallet providers from offering indirect returns, whereas U.S. regulations allow circumvention through third-party yield arrangements. This makes EU stablecoins relatively uncompetitive as stores of value. If protecting banks from deposit outflows is the goal, Bindseil proposes requiring stablecoin issuers to hold a proportion of reserves with the central bank at below-market rates. At the extreme, that proportion could be 100%, which would additionally reduce the risk of stablecoin runs. [Source: SSRN]
The Rwanda Bankers’ Association (RBA) published an analysis of pioneering central bank digital currency (CBDC) implementations in the Bahamas (Sand Dollar), Jamaica (JAM-DEX), and Nigeria (eNaira). Using quantitative pre- and post-launch data analysis, the study finds that theoretical fears of bank disintermediation did not materialize—commercial bank deposits actually grew significantly in all three countries after CBDC introduction. The research reveals that CBDC rollouts coincided with broader macroeconomic shifts including tighter monetary policy and economic rebounds, while direct effects on inflation remained statistically insignificant. However, the primary challenge across all cases was achieving widespread public adoption rather than financial instability, with uptake remaining extremely low despite technical readiness. The paper concludes that for Rwanda, currently in its CBDC Proof-of-Concept phase, success will depend less on mitigating theoretical risks and more on delivering a compelling value proposition that addresses the country’s specific challenges including limited smartphone ownership (34.3%), low internet access (29.8%), and the need for enhanced payment system resilience, financial inclusion, and reduced cross-border remittance costs. [Source: RBA]
I produce a monthly digest of digital fiat currency (DFC) developments exclusively for the official sector (e.g., central banks, ministries of finance and international financial institution (e.g., the BIS, IMF, OECD, World Bank)) plus academics and firms that are active in the DFC space (commercial banks, technology providers, consultants, etc.). (DFCs include central bank digital currency (CBDC), stablecoins and tokenized deposits.) It goes out via email on the first business day of every month, and if you’re interested in being on the mailing list, please email me at john@kiffmeister.com.
[December 18, 2025] The Russian government has approved a list of budget expenditures using the digital ruble starting January 1, 2026, reported on the website of the Ministry of Finance (MoF). The list includes social security payments, and salaries and other payments to staff, as well as expenses for capital construction, repair and maintenance of state-owned facilities. Also, the use of the digital ruble will become available for transfers to budgets and transfers of funds to federal institutions. Furthermore, from July 1, 2027, corresponding transactions with regional and local budgets, as well as transactions with extra-budgetary funds and recipients of funds, will become available. Payments from the budget will be made in digital rubles only if the recipients wish. [Source: Russian MoF]
The South Korean press is reporting that the Bank of Korea (BoK) is preparing to launch a new phase of its “Project Hangang River” wholesale central bank digital currency (CBDC) project, focusing on distributing government subsidies. A first three-month proof-of-concept phase with commercial banks, during which central bank authorities made it clear that it was actually testing tokenized deposits, reportedly ended in June 2025. Unfortunately the central bank itself has been silent on the project so we have to rely on press reports that are often short on details, like whether the purported second test will really be about wholesale CBDC or perhaps tokenized deposits again, or a hybrid in which tokenized deposits are settled in wholesale CBDC. [Source: Decenter]
[December 19, 2025] The European Council released a 157-page document outlining its position on digital euro legislation, rejecting a proposal for an offline-only approach and insisting on both online and offline versions of the central bank digital currency (CBDC). While the digital euro is primarily intended for peer-to-peer and retail payments to reduce dependence on Visa and Mastercard, the Council envisions a broader scope including machine-to-machine payments for Industry 4.0, Web3 applications, and business-to-business conditional payments from the outset. The proposal also aims to safeguard acceptance of cash as a payment method throughout the euro area, and guarantee that people have access to cash and are free to choose their preferred payment method. It proposes to effectively ban non-acceptance of cash by retailers or service providers with a few exceptions, notably for payments for goods or services purchased at a distance, including online, and unmanned points of sale. [Source: European Council]
Central Bank Payments News published an article by Ezechiel Copic that examines how new stablecoin regulations in the U.S. (GENIUS Act) and EU (MiCA) may impact the business models of stablecoin issuers. Both regulatory frameworks require 1:1 backing with high-quality liquid assets and prohibit interest payments to holders, but differ in prescribed asset allocations—the EU mandates 30-60% in bank deposits while the U.S. sets no specific limits. The analysis shows that while stablecoin issuers like Circle currently generate 95-99% of revenue from interest on reserve assets (primarily Treasury bills and reverse repos), they face significant interest rate risk as rates are expected to decline. However, projected growth in stablecoin supply to $1.4 trillion by 2030 could offset revenue losses from lower rates, resulting in modest revenue increases. The article concludes that Europe’s more prescriptive MiCA regulations may hinder stablecoin growth compared to the U.S. approach, and issuers may need to develop alternative revenue sources beyond reserve asset yields to maintain viable business models. [Source: CBPN]
I produce a monthly digest of digital fiat currency (DFC) developments exclusively for the official sector (e.g., central banks, ministries of finance and international financial institution (e.g., the BIS, IMF, OECD, World Bank)) plus academics and firms that are active in the DFC space (commercial banks, technology providers, consultants, etc.). (DFCs include central bank digital currency (CBDC), stablecoins and tokenized deposits.) It goes out via email on the first business day of every month, and if you’re interested in being on the mailing list, please email me at john@kiffmeister.com.
The Council of the European Union (“European Council”) has agreed on its positions on introducing a digital euro and clarifying the legal tender status of cash, for its negotiations with the European Parliament. The digital euro would complement physical cash, be backed by the European Central Bank (ECB), and available for payments across the euro area by potentially 2029, with limits on holdings to prevent it being used as a store of value and mandatory free basic services for consumers. Once the proposal to establish the legal framework is adopted by the European Parliament and Council, it will ultimately be for the ECB to decide whether to issue the digital euro. The second position aims to strengthen cash by effectively banning its non-acceptance by retailers (with exceptions for online and unmanned sales), requiring member states to monitor cash acceptance and access, and establishing cash resilience plans for electronic payment disruptions. The Council will now begin negotiations with the European Parliament on both regulations. [Source: European Council]
The U.S. Federal Reserve Board (FRB) is seeking public comment on a new “payment account” designed for eligible financial institutions to use specifically for clearing and settling payments. Unlike traditional master accounts, payment accounts, holders could only maintain limited overnight balances (lesser of $500 million or 10% of total assets), would receive no interest on balances, and would have no access to the discount window or intraday credit. These accounts would only support specific payment services (Fedwire Funds, FedNow, National Settlement Service, and Fedwire Securities free transfers) that have automated controls to prevent overdrafts, while excluding services like FedACH and check processing. The streamlined account is intended to reduce risks to the Federal Reserve system while providing faster access (generally within 90 days) for legally eligible institutions that primarily need payment clearing and settlement capabilities rather than full banking services. Notably, it does not widen eligibility standards beyond those already in place for regular master account access. [Source: FRB]
I produce a monthly digest of digital fiat currency (DFC) developments exclusively for the official sector (e.g., central banks, ministries of finance and international financial institution (e.g., the BIS, IMF, OECD, World Bank)) plus academics and firms that are active in the DFC space (commercial banks, technology providers, consultants, etc.). (DFCs include central bank digital currency (CBDC), stablecoins and tokenized deposits.) It goes out via email on the first business day of every month, and if you’re interested in being on the mailing list, please email me at john@kiffmeister.com.
According to Christine Lagarde, President of the European Central Bank (ECB) technical preparations for a digital euro, including system architecture and safeguards, are now complete, with further progress now awaiting legislative action from the European Council and European Parliament. [Source: ECB]
[October 14, 2024] The Central Reserve Bank of Peru (BCRP) and Bitel signed a framework agreement on October 14, 2024, to launch the country’s first Central Bank Digital Currency (CBDC) pilot program. This initiative, formalized through regulations published in April 2024 and Bitel’s selection in July 2024, aims to improve financial inclusion by providing digital payment services to unbanked populations in rural and underserved areas. During the pilot, Bitel will distribute the CBDC through its Bipay digital wallet, allowing users to make payments and transfers with this sovereign digital money issued by the central bank. The program will assess whether CBDCs can effectively replace cash and foster a digital payments ecosystem in regions with limited financial services. [Source: BCRP]
[March 10, 2025] The Central Reserve Bank of Peru (BCRP) launched an evaluation phase on March 10, 2025, for its first digital currency innovation pilot in partnership with Bitel, following a successful trial period that began in 2024. By February 2025, Bitel’s BiPay wallet had enrolled 67,000 active users processing an average of 91,000 daily transactions, with S/ 4.2 million in BCRP digital currency in circulation. The three-month pilot aims to assess whether a central bank digital currency (CBDC) can effectively complement cash in regions with low financial inclusion and limited digital payment infrastructure, with the wallet accessible even to users without smartphones through USSD text messaging technology. [Source: BCRP]
I produce a monthly digest of digital fiat currency (DFC) developments exclusively for the official sector (e.g., central banks, ministries of finance and international financial institution (e.g., the BIS, IMF, OECD, World Bank)) plus academics and firms that are active in the DFC space (commercial banks, technology providers, consultants, etc.). (DFCs include central bank digital currency (CBDC), stablecoins and tokenized deposits.) It goes out via email on the first business day of every month, and if you’re interested in being on the mailing list, please email me at john@kiffmeister.com.
The National Bank of Ethiopia (NBE) has reportedly initiated an exploratory review of potential central bank digital currency (CBDC) frameworks, aimed at understanding global digital currency developments rather than representing a commitment to implementation. The assessment is situated within Ethiopia’s draft National Digital Payments Strategy and Digital Ethiopia 2025 framework, though the central bank anticipates continued primacy of cash given the country’s substantial rural and informal economy. In February 2025, the Ethiopian Parliament passed into law National Bank of Ethiopia (NBE) Proclamation No. 1359/2025, establishing a legal framework that permits the NBE to issue CBDC as legal tender. [Source: Capital Ethiopia]
PayPal has filed applications with the Utah Department of Financial Institutions and the U.S. Federal Deposit Insurance Corporation (FDIC) to establish a Utah-chartered industrial loan company, to be called PayPal Bank. The proposed institution would focus on providing business lending services to U.S. small businesses, a market in which PayPal claims to have extended over $30 billion in credit to more than 420,000 business accounts globally since 2013. PayPal Bank would also offer interest-bearing savings accounts to customers and seek direct membership in card networks to support processing and settlement activities. The company cites operational efficiency and reduced reliance on third-party intermediaries as primary motivations. Customer deposits would receive FDIC insurance coverage subject to regulatory approval. [Source: PayPal]
I produce a monthly digest of digital fiat currency (DFC) developments exclusively for the official sector (e.g., central banks, ministries of finance and international financial institution (e.g., the BIS, IMF, OECD, World Bank)) plus academics and firms that are active in the DFC space (commercial banks, technology providers, consultants, etc.). (DFCs include central bank digital currency (CBDC), stablecoins and tokenized deposits.) It goes out via email on the first business day of every month, and if you’re interested in being on the mailing list, please email me at john@kiffmeister.com.
Norges Bank has decided not to recommend introducing a central bank digital currency (CBDC) at this time, as Norway’s current payment system is already efficient, secure, and stable. The bank examined both retail and wholesale CBDC, but found no immediate need for either variant. However, Norges Bank acknowledges that circumstances may change due to rapid technological advances, tokenization trends, and the potential introduction of a digital euro by the Eurosystem. The bank will continue researching CBDCs and tokenization through experimental testing and international collaboration to ensure it can implement a CBDC if necessary in the future, with a detailed report planned for Q1 2026. [Source: Norges Bank]
The BIS Innovation Hub wrapped up Project Rialto, a collaboration with central banks from France, Italy, Malaysia, and Singapore to improve instant cross-border payments. The project successfully demonstrated the technical feasibility of connecting traditional instant payment systems with an automated foreign exchange (FX) market using tokenized central bank money (CeBM) as a settlement asset. The architecture combined two functional blocks: domestic instant payment systems linked through a hub mechanism, and a cross-border distributed ledger network (XDN) for automated FX conversion via automated market makers (AMMs). The proof of concept tested both direct currency transactions and those requiring a vehicle currency for low-liquidity corridors, achieving payment-versus-payment settlement with minimal changes to existing systems. While technically successful, the report identifies key economic considerations for operational viability, including fee structures, performance under different market conditions, transparency impacts, and liquidity requirements, noting that AMMs require pre-funding which introduces costs and that further research is needed on the interaction between traditional intermediaries and decentralized exchanges in currency markets. [Source: BIS]
The Federal Reserve Board (FRB) is seeking public comment on the future of its check processing services as check usage has declined dramatically, while its aging infrastructure requires substantial investment to maintain current operations. The FRB is considering four potential strategies: continuing without investment (leading to service degradation over time), significantly simplifying services, substantially winding down operations, or upgrading infrastructure with major costs that would need to be recovered through higher fees. The FRB, which currently processes nearly half of the nation’s check volume, must balance the declining demand against legal requirements to recover all operating costs through service fees, while considering the broader impacts on the payments system and communities that still depend on checks. [Source: FRB]
I produce a monthly digest of digital fiat currency (DFC) developments exclusively for the official sector (e.g., central banks, ministries of finance and international financial institution (e.g., the BIS, IMF, OECD, World Bank)) plus academics and firms that are active in the DFC space (commercial banks, technology providers, consultants, etc.). (DFCs include central bank digital currency (CBDC), stablecoins and tokenized deposits.) It goes out via email on the first business day of every month, and if you’re interested in being on the mailing list, please email me at john@kiffmeister.com.
The U.S. House Committee on Financial Services published an investigative report on “Operation Choke Point 2.0″—a coordinated effort by Biden Administration regulators to deny banking services to digital asset businesses and individuals. Through over 20 letters, thousands of documents, and two hearings, the Committee found that federal agencies (the Federal Reserve, FDIC, OCC, and SEC) used informal guidance, “pause” letters, non-objection requirements, and enforcement actions to pressure banks into cutting off crypto firms, rather than establishing clear regulations. This approach resulted in at least 30 entities being debanked, stifled American innovation, and drove businesses overseas. [Source: U.S. HCOFS]
The National Bank of Rwanda (NBR) is planning to continue its e-FRW central bank digital currency (CBDC) proof-of-concept work in 2026. It will test technical feasibility, evaluate payment system integration, and develop recommendations for the legal framework prior to the overall technical design phase. These tests are being conducted in partnership with selected financial service providers, and the results will determine NBR’s next steps in the CBDC project. In all phases, consultation with the private sector and policy makers has been, and will be, emphasized. [Source: NBR]
The Bank of England (BOE) published a summary of the findings of the Project Meridian Securities experiment that explored how synchronization can bridge traditional real-time gross settlement (RTGS) systems with tokenized securities platforms using distributed ledger technology (DLT). The project successfully demonstrated that synchronization enables atomic settlement in central bank money for tokenized securities transactions, allowing programmable features like automated repos and cross-platform liquidity management without requiring full infrastructure replacement. Key findings show that smart contracts can automate settlement workflows while maintaining the trust and safety of central bank money, supporting improved liquidity management and interoperability across diverse platforms. The experiments revealed that synchronization can extend programmability to traditional infrastructures cost-effectively, though questions remain about optimal architecture, scalability, and whether independent synchronization operators are needed in multi-platform environments. [Source: BOE]
The VISA Economic Empowerment Institute published a report by Zeke Copic on how new stablecoin regulations across the US, EU, UAE, and Hong Kong are shaping the industry’s future. While all jurisdictions require 1:1 backing with high-quality liquid assets and prohibit interest payments to holders, the specific requirements vary—with the US GENIUS Act being more flexible than Europe’s MiCA regulation, which mandates 30-60% of reserves in bank deposits. Stablecoin issuers like Circle currently generate 95-99% of revenue from interest on reserve assets (primarily Treasury bills and reverse repos), making them highly vulnerable to interest rate fluctuations and counterparty risks, as demonstrated during the Silicon Valley Bank collapse. Although declining interest rates may reduce reserve income, projected growth in stablecoin supply (potentially reaching $1.6-3.7 trillion by 2030) could offset this impact, though issuers may need to develop alternative fee-based revenue streams to maintain viable business models under the new regulatory frameworks. [Source: VISA]
I produce a monthly digest of digital fiat currency (DFC) developments exclusively for the official sector (e.g., central banks, ministries of finance and international financial institution (e.g., the BIS, IMF, OECD, World Bank)) plus academics and firms that are active in the DFC space (commercial banks, technology providers, consultants, etc.). (DFCs include central bank digital currency (CBDC), stablecoins and tokenized deposits.) It goes out via email on the first business day of every month, and if you’re interested in being on the mailing list, please email me at john@kiffmeister.com.
The South African Reserve Bank published a position paper and background note on retail central bank digital currency (CBDC). They examine whether a retail CBDC could address persistent gaps in South Africa’s payment ecosystem, where approximately 16% of adults remain unbanked and many rely on cash despite growing digital payment adoption driven by commercial banks and fintechs. The SARB identifies three core considerations: whether a CBDC fills an unmet need, whether it should be prioritized given ongoing modernization initiatives (particularly the PayShap fast payments system and expanded non-bank participation), and whether it can match or exceed cash’s value proposition across twelve dimensions including accessibility, offline capability, trust, acceptance, cost, and privacy. Drawing on limited international evidence, primarily characterized by low adoption rates in the few jurisdictions that have launched retail CBDCs, the SARB determines that current resources should focus on existing payment system modernization rather than CBDC implementation. The paper acknowledges potential longer-term value in maintaining public access to central bank money in a digital economy and enabling financial innovation through technologies like smart contracts and tokenization, but concludes these considerations do not justify immediate action. Consequently, the SARB will shift its attention toward wholesale CBDC exploration while continuing to monitor retail CBDC developments globally. [Source: SARB]
At the Currency Research (November 17-20 Cedi@60 Anniversary Currency Conference I had the honor of moderating a panel on central bank digital currency (CBDC) trust establishment with Jean-Michel Godeffroy (ex-ECB), Roman Hartinger (G+D) and Musa Jimoh (Director of the Payments System Policy Department at the Bank of Nigeria). The whole 30 minute session is worth watching (it starts at around the 4h 58m mark), but Musa’s interventions are particularly newsworthy, as he explained why the Nigerian central bank is pivoting away from retail CBDC to wholesale CBDC. Recall that Nigeria is one of only three countries where retail CBDC has recently been fully launched.) He explained how the e-Naira story is not a “rosy” one, and ran through some of the reasons. For starters, commercial banks were not willing to support the new payment instrument that they viewed as competition, and that support was essential for e-Naira success because the banks “owned” the merchants. It didn’t help that the banks couldn’t charge fees on e-Naira transfers, and the central bank wasn’t sharing in any of the platform costs. Also, Nigerians are very much into crypto-asset markets and the e-Naira didn’t offer the payments privacy expected of a payment medium. In addition, the central bank has been running a popular instant payment system since 2014, which made the e-Naira rather redundant. [Source: YouTube]
The European Central Bank (ECB) will invite European payment service providers in early 2026 to join a 12‑month digital euro proof-of-concept (POC) that will take place in the second half of 2027. It will be aimed at testing the technical, functional and operational readiness of a potential digital euro in a controlled environment with limited participants. The POC will involve only Eurosystem staff, selected merchants that already provide everyday services on the office premises of the ECB and of euro area national central banks, as well as selected e-commerce platforms. Eurosystem staff will have the opportunity to make payments from person-to-person (both online and offline) and from person-to-business (both at the physical point of sale and on e-commerce platforms). Participating payment service providers will be selected based on their capabilities and a set of pre-defined selection criteria, and their ability to ensure representative coverage of the Euro area market in terms of size, geographical coverage and market reach. [Source: ECB]
Sveriges Riksbank published a staff memo that argues that while stablecoins are still largely used within the crypto-asset ecosystem, they could meaningfully improve payments—especially cross‑border—by leveraging open distributed ledger technology (DLT) networks, supporting faster and cheaper transfers, and offering easier foreign‑currency access in weak monetary jurisdictions, but that this potential is tightly bound up with significant risks and policy trade‑offs. Key concerns include: heavy concentration in USD‑pegged coins and the associated risk of dollarization and spillovers from US markets; financial‑stability vulnerabilities such as runs, fire‑sale risk in reserve assets, decentralized finance (DeFi) linked contagion, and possible bank disintermediation; and loss of “monetary singleness” if different stablecoins trade at discounts. The memo reviews how regimes like European (MiCA) and U.S. (GENIUS Act), plus emerging U.K. and other hub‑jurisdiction frameworks, try to balance innovation with safeguards around full backing, redemption, governance, and financial integrity, while central banks debate whether to give issuers access to settlement systems, allow reserves as backing assets, or provide liquidity backstops. Overall, it concludes that stablecoins should evolve into tightly regulated private money aligned with existing monetary systems, and that strong international coordination is essential to manage their cross‑border, systemic implications. [Source: Sveriges Riksbank]
I produce a monthly digest of digital fiat currency (DFC) developments exclusively for the official sector (e.g., central banks, ministries of finance and international financial institution (e.g., the BIS, IMF, OECD, World Bank)) plus academics and firms that are active in the DFC space (commercial banks, technology providers, consultants, etc.). (DFCs include central bank digital currency (CBDC), stablecoins and tokenized deposits.) It goes out via email on the first business day of every month, and if you’re interested in being on the mailing list, please email me at john@kiffmeister.com.
