Tag: DLT

Kiffmeister’s #Fintech Daily Digest (20241111)

~ kiffmeister

Intesa Sanpaolo issues tokenized CP as part of ECB DLT settlement trials (Ledger Insights)

Intesa Sanpaolo issued €10 million in commercial paper (CP) using Clearstream’s D7 tokenization platform, using the Bank of Italy’s TIPS Hashlink solution for settlement. TIPS Hashlink is one of three payment options that are part of the European Central Bank’s (ECB’s) distributed ledger technology (DLT) based wholesale settlement trials. Rather than use the on-chain central bank money (i.e., central bank digital currency) being used in the other two trails, the Hashlink interoperability mechanism is used to settle the transaction using the ECB-run Trans-European Automated Real-time Gross settlement Express Transfer (TARGET) Instant Payment Settlement (TIPS) system. This is apparently only the second test of this platform, the other being a €25 million Cassa Depositi e Prestiti (CDP) digital bond issue in July 2024. [Read more at Ledger Insights]

ABN AMRO settles repo pilot trades in Eurosystem wCBDC test (ABN AMRO)

ABN AMRO executed four repo pilot trades with DLT-based wholesale central bank digital currency (CBDC) utilizing tokenized commercial paper (CP) as collateral in late October 2024. This served to test one of three payment options (in this case the one being led by the Banque de France) that are part of the ECB’s DLT-based wholesale settlement trials. ABN AMRO issued €1.1 million of the tokenized CP that was used as collateral in the latest transaction, which involved four reverse repo transactions between ABN AMRO Bank, ABN AMRO Clearing, and Rabobank, cleared by Eurex Clearing. In a repo Repo (repurchase) transaction one party (e.g., Bank A) sells securities to another party (e.g., Bank B) and agrees to buy them back later at a slightly higher price. ABN AMRO Bank’s Treasury regularly uses repos for balance sheet management. [Read more at ABN AMRO]

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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 (20241031)

~ kiffmeister

BIS hands over mBridge CBDC payment system (Ledger Insights)

The Bank for International Settlements (BIS) has handed the mBridge central bank digital currency (CBDC) based cross-border payments platform over to the central banks of China, Hong Kong, Saudi Arabia, Thailand and the United Arab Emirates (UAE). According to BIS General Manager Agustín Carstens, this was not because of “political considerations” but because after the project’s four years it is “at a level where the partners can carry it on by themselves”. This has happened already with other projects such as the Swiss National Bank’s Project Helvetia. By “political considerations”, Mr. Carstens was referring to stories that during discussions among central bankers and finance chiefs at the October 2024 International Monetary Fund and World Bank Annual Meetings, concerns were expressed about the fact that China is supplying the platform’s key technological backbone, and that China and the UAE are BRICS members. (In that regard it is notable that the U.S. Federal Reserve has not joined the project.) [Read more at the BIS]

ECB looking for innovation partnerships for the digital euro (ECB)

The European Central Bank (ECB) has established a digital euro innovation platform to collaborate with stakeholders. The main goal is to (i) demonstrate how conditional payments could be implemented on a technical level, (ii) provide the opportunity for participants to interact with simulated digital euro interfaces, and (iii) explore additional use cases, ideas and visions that stakeholders may have for the digital euro. The ECB is encouraging all interested stakeholders to contribute, and it will carefully consider all applications before making selections in early January 2025. Selected “visionaries” will be invited to half-day workshops to present their idea to the ECB, and will be asked to provide a summarizing outcome report. [Read more at the ECB]

Finding the “just right” level of decentralization (NIM)

The Nuremberg Institute for Market Decisions (NIM) published an article on the challenges of finding the “just right” level of decentralization in the digital platform economy. Blockchain platforms rely on a predefined, algorithmically encoded and publicly visible protocol that enables a network of peers to maintain the platform jointly, rather one central party consolidating all decision authority and control over the platform. However, complete decentralization is no panacea for reducing the power of intermediaries. It comprises several trade-offs, and many challenges are as yet unsolved. Although promising solutions are looming on the horizon, the article proposes that reintroducing some level of centralization might be a more reliable and available solution in the short run. [Read more at NIM]

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 (20241028)

~ kiffmeister

HKMA partners with Banco Central do Brasil and Bank of Thailand on tokenization initiatives (HKMA)

The Hong Kong Monetary Authority (HKMA) has established new cross-border partnerships with Banco Central do Brasil (BCB) and the Bank of Thailand (BOT) to explore cross-border payment-versus-payment (PvP) and delivery-versus-payment (DvP) settlement use cases in areas such as trade finance payments and carbon credits. In the HKMA-BCB case the HKMA will link its Project Ensemble central bank digital currency (CBDC) sandbox to the BCB Drex CBDC pilot platform. In the HKMA-BOT case, the HKMA will link the Ensemble sandbox to the BOT’s Project San experimental tokenization platform, and test linking the two platforms with distributed ledger technology (DLT) based financial market infrastructures (FMIs). The BOT’s Project San, an internal initiative started in June 2024, aims to build and test a prototype for the tokenisation ecosystem. This includes a wholesale settlement engine, EVM-compatible ledgers supporting tokenised private money and assets, and interoperability mechanisms. [Read more at the HKMA here (on the HKMA-BCB part) and here (HKMA-BOT)]

HKMA provides updates on its fintech-related initiatives (HKMA)

Along with the aforementioned Project Ensemble collaborations, the HKMA provided updates on its other initiatives to spearhead fintech development in Hong Kong. The HKMA will collaborate with other members of the Linux Foundation Decentralized Trust on interoperability aspects of DLT-based FMIs in the Ensemble Sandbox. Also, the HKMA has completed the initial phase of six tokenization use cases across four main themes under Project Ensemble and will publish a report detailing the results of the experimentation in 2025. The HKMA is working closely with the People’s Bank of China to establish a cross-boundary linkage between Hong Kong’s Faster Payment System (FPS) and the Mainland’s Internet Banking Payment System (IBPS). This linkage will support 24/7, instant, small-value, cross-boundary remittances using account proxies like mobile numbers. A pilot launch is expected to be around mid-2025 tentatively. [Read more about these and other initiatives at the HKMA]

Project Mandala proves viability of upfront compliance for digital asset transactions (Ledger Insights)

The Bank for International Settlements Innovation Hub (BISIH) has completed the Project Mandala proof of concept (PoC), which aims to bring efficiencies to anti money laundering (AML), sanctions and capital flow management (CFM) compliance. It uses a compliance by design approach to streamline cross-border compliance processes for financial institutions and explores real-time policy and regulatory compliance monitoring for central banks and other regulators. The project preserves the existing regulatory framework whereby it encodes existing jurisdiction-specific regulatory requirements measures into the system, and maintains the current model, in which financial institutions are responsible for interpreting and applying official regulatory measures. [Read more at the BISIH]

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 (20241022)

~ kiffmeister

Tokenization concepts and implications for central banks (CPMI)

The Bank for International Settlements (BIS) published a Committee on Payments and Market Infrastructures (CPMI) report that sets out the concepts related to digital tokens and programmable platforms. Tokenization arrangements can change existing market structures by providing platform-based intermediation across the end-to-end life cycle of financial assets. While this could decrease transaction costs and enable innovative use cases, the potential of token arrangements to improve the safety and efficiency of the financial system will require sound governance and risk management. The risks typically associated with financial market infrastructures also apply to token arrangements, but they may materialize differently. Developments in tokenization offer an opportunity for central banks to reflect on the role of central bank money in the digitalizing financial system. [Read more at the BIS]

The financial stability implications of tokenization (FSB)

Meanwhile, the Financial Stability Board (FSB) published a report on the potential financial stability implications of distributed ledger technology (DLT) based financial asset tokenization. The report opines that many of the purported benefits of tokenization have yet to be fully proven, may not be uniquely achievable through tokenization, and may involve trade-offs that might negate the benefits. And several vulnerabilities are identified relating to liquidity and maturity mismatch; leverage; asset price and quality; interconnectedness; and operational fragilities. Tokenization could have implications for financial stability if the tokenized part of the financial system scales up significantly, if increased complexity and opacity of tokenization projects lead to unpredictable outcomes in times of stress, and if identified vulnerabilities are not adequately addressed through oversight, regulation, supervision, and enforcement. [Read more at the FSB]

Cash bill pay services and U.S. payment inclusion (Kansas City Fed)

The Federal Reserve Bank of Kansas City published an article by Franklin Noll on U.S. “cash bill pay” services that allow consumers to make digital (e.g., bill) payments with cash at participating retailers. A recent Atlanta Fed survey found that American consumer preferences to pay with cash remain pervasive for various reasons, including the costs and other impediments involved in moving to digital payments, lack of needed identification, former credit or banking problems, and the desire for privacy. Cash bill pay services provide cash payment options to such consumers. The article describes how the two main cash bill pay services (“walk-up” and “barcode”) work, and the costs that may make the service expensive for some. [Read more at the Kansas City Fed]

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 (20241014)

~ kiffmeister

Russia outlines proposal for BRICS DLT cross border payment system (Ledger Insights)

Russia’s Ministry of Finance published a proposal to develop a distributed ledger technology (DLT) based cross-border payment infrastructure that serves the interests of the BRICs countries (Brazil, Russia, India, China, South Africa, Iran, Egypt, Ethiopia, and the United Arab Emirates). The BRICS Cross-Border Payment Initiative (BCBP) project is aimed at circumventing the U.S. dollar dominated global financial system, and sanction-proofing member countries. The report was co-authored by the Bank of Russia and Yakov & Partners, as Russia prepares to host leaders for the annual BRICS summit, in Kazan from October 22 to 24. [Read more at the Russian Finance Ministry or here if that doesn’t work]

Banco do Brasil calls for new Drex project participants (BCB)

Banco Central do Brasil (BCB) is calling for new companies to participate in its Drex wholesale central bank digital currency (CBDC) project aimed at the tokenization of the Brazilian financial system. There is no initial limitation on the number of business cases that can be selected. The number of selected proposals will be determined on the set of applications received and considering the central bank’s technical and operational capacity. [Read more at the BCB]

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 (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 (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.