Kiffmeister’s #Fintech Daily Digest (20260517)

May 17, 2026May 17, 2026 ~ kiffmeister ~ Leave a comment

The Evolution and Future of Money in Canada (Benjamin Geva)

The University of Toronto Press published a book by lawyer and law professor Benjamin Geva on the evolution of money from barter to coins, banknotes, scriptural money, electronic money, and digital currencies. Of course, this has all been covered elsewhere, but what makes this book unique, is the deep, yet very readable, focus on legal aspects, particularly from the perspective of the Canadian monetary regime. The latter includes a thorough history going back to New France’s use of agricultural commodities and playing cards as money, to Bank of Canada explorations of both retail and wholesale central bank digital currencies (CBDCs). The book also extensively covers the legal aspects of virtual currencies, particularly stablecoins, and digital bearer instruments (DBIs). Interestingly, Geva makes a case for DBIs as the optimal Canadian retail CBDC as a path of least resistance through the Bank of Canada and Currency Acts, plus several architectural, economic, and privacy advantages over account-based platforms. He also singles out synthetic CBDCs as an optimal solution for achieving uniformity of money in a framework allowing competition. The book ends by addressing the challenges faced by the current monetary system as the digital age continues to evolve and become more decentralized. [To order the book, click here]

The Moneyness of Stablecoins (Odinet Tosado and Yadav)

In a forthcoming Yale Law Journal article, C. Odinet, A. Tosado and Y. Yadav develop a four-element legal framework for “moneyness” and apply it to stablecoins before and after the U.S. GENIUS Act. Moneyness requires conjunctive adequacy across the nature and substance of the claim, safety, discharge capacity, and negotiability, with deficiency in any element undermining the whole. The authors deconstruct the contractual and reserve structures of dominant issuers (Tether and Circle) to show that redemption is conditional and limited by privity, holders lack proprietary interests in backing reserves, and bankruptcy treatment remains ambiguous. These deficiencies matter because they force holders to assess both issuer and custodian solvency, undermine finality in payment discharge, and expose claimants to credit risk incompatible with money’s core function of circulating at par without investigation. The GENIUS Act of 2025 mandates reserve requirements and redemption frameworks but fails to resolve key vulnerabilities. It compels reliance on third-party custodians rather than Federal Reserve accounts, contains internally contradictory bankruptcy provisions, and provides no finality rules specifying when transfers extinguish obligations. The authors propose five targeted reforms; Federal Reserve master account access for qualifying issuers, industry-funded insurance, a secured interest regime replacing flawed bankruptcy rules, statutory finality provisions for both direct and intermediated transfers, and express tokenization of redemption rights. [Odinet Tosado and Yadav]

I am honored to have been given the opportunity to contribute a chapter to the soon-to-be released book, Tokenisation of Money: From Fiat Currencies to Stablecoins, published by Springer! Expertly edited by Prof. Selim Yazıcı, Prof. C. Coşkun Küçüközmen, and Dr. Michael Salmony, it serves as a critical handbook for navigating the profound transformation of the global financial services industry. At a time when there is substantial confusion regarding new digital instruments, this book distinguishes reality from hype across the dimensions of CBDCs, stablecoins, and tokenized deposits. In my contribution, I provide an overview and reality check on global retail central bank digital currency (CBDC) developments. The book will be available via digital platforms by the end of May and you can pre-order the hard cover version here: https://link.springer.com/book/9783032229458!

FYI 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.

Kiffmeister’s #Fintech Daily Digest (20260502)

May 2, 2026May 2, 2026 ~ kiffmeister

BOE Considers Keeping Digital Pound On Ice as Rivals Race Ahead (Bloomberg)

The Bank of England (BOE) and HM Treasury (HMT) are reportedly considering slowing down the digital pound project to defer making an immediate firm decision to approve or scrap it. Officials have been encouraged by private-sector innovation—especially tokenized deposits—that could deliver many CBDC benefits (faster, cheaper payments) within the existing regulated banking system, reducing the urgency to build a central-bank solution. The project has faced skepticism from the public, Parliament, and even BOE Governor Andrew Bailey, who remains unconvinced of the need for a retail CBDC. A decision to build would entail upfront costs in the hundreds of millions of pounds (albeit later offset by CBDC income), voluntary participation by banks, and risk of political backlash over privacy concerns. [Bloomberg]

Meta Rolls Out Stablecoin Payments (Coindesk)

Meta rolled out digital currency payouts for select creators in Colombia and the Philippines. The payouts use the USDC stablecoin on either the Solana or Polygon blockchain networks, processed via Stripe’s Link wallet and accompanied by tax reporting from both Meta and Stripe. The initiative marks Meta’s return to stablecoins after it attempted to introduce the Libra token, later renamed Diem, only to shut down the project amid regulatory scrutiny in 2022. [Meta]

Central Bank Digital Currency and Monetary Architecture (Dirk Niepelt)

In a literature review that has been accepted for publication by the Journal of Economic Literature, Dirk Niepelt argues that the macroeconomic consequences of retail central bank digital currency (CBDC) depend primarily on the policy choices accompanying its introduction. Organizing the survey around a neutrality result, the paper demonstrates that bank disintermediation does not independently constitute a source of non-neutrality, provided the central bank recycles CBDC proceeds to banks on deposit-equivalent terms. Most existing research conflates policy-contingent with fundamental sources of non-neutrality, obscuring the extent of policymaker control. Because CBDC represents a structural shift in monetary architecture rather than a technical payment upgrade, it raises political economy questions that exceed the conventional mandate of central banks. [Niepelt.ch]

On the Resilience of Payment Methods (NBER)

The U.S. National Bureau of Economic Research (NBER) published a paper that argues, using multi-source U.S. and cross-country evidence, that cash functions as critical fallback liquidity when electricity outages disable digital payment infrastructure during natural disasters. Event studies across store-level transaction data, card aggregates, and household scanner records show that hurricanes generate persistent outages, shifting spending composition sharply toward cash, while pre-disaster expenditure spikes are credit-financed stockpiling. The finding that payment-system fragility is a first-order attribute of any instrument has direct implications for regulators overseeing cashless transitions, mandatory acceptance rules, and the design of offline-capable central bank digital currencies. [NBER]

Kiffmeister’s #Fintech Daily Digest (20260420)

April 20, 2026April 20, 2026 ~ kiffmeister

19th ERPB Technical Session on the Digital Euro (ECB)

The European Central Bank (ECB) posted the presentations discussed at the 19th Euro Retail Payments Board (ERPB) technical session on the digital euro held virtually on April 9. Main topics included a refresher on the fundamentals of the offline digital euro solution and its main components, and an overview of the 12-month pilot slated to start in H2 2027 to be conducted with a limited number of payment service providers, merchants and Eurosystem staff. [ECB]

Canada’s Stablecoin Framework (Government of Canada)

The Government of Canada published a federal framework in which non‑bank issuers of fiat‑backed stablecoins must register with the Bank of Canada, maintain fully backed high‑quality liquid reserves, and offer at‑par redemption in the reference currency. The framework centralizes prudential oversight at the Bank of Canada while leaving trading, payments, and anti‑money‑laundering oversight to existing securities and payments regimes, aiming to enable innovation and competition in digital payments while tightening consumer protection and financial stability safeguards. It is explicitly designed to align with European Union and United States approaches and with Financial Stability Board recommendations, positioning Canadian‑issued coins for prospective cross‑border interoperability. Key open questions concern how detailed reserve, redemption, and governance standards will be calibrated in regulation over 2026–27 and how authorities will exercise expansive national‑security and public‑interest powers to deny or revoke market access. [Government of Canada]

Changes Made for KfW’s Third Blockchain Bond (KfW)

KfW announces that its third blockchain-based crypto security will migrate both registrar and distributed ledger infrastructure mid‑term to stress‑test Germany’s Electronic Securities Act framework under real market conditions. The bond will shift registrar functions from Cashlink to DekaBank and move from the Polygon blockchain to SWIAT/Regulated Layer One, while also switching wholesale payment processing from the Deutsche Bundesbank’s trigger solution at issuance to the Eurosystem’s forthcoming Pontes platform for coupons and redemption. This staged migration aims to generate evidence for scalable, standardized digital capital-market infrastructure in Europe, but leaves open whether secondary-market liquidity and operational risks will prove manageable at scale. [KfW]

Kiffmeister’s #Fintech Daily Digest (20260321)

March 21, 2026March 21, 2026 ~ kiffmeister

The first two papers below were authored by my two friends, Joachim Samuelsson and Ulrich Bindseil, who will also be speaking at this Thursday’s Digital Euro Conference (see below) in Frankfurt. Also, Joachim very kindly helped me to summarize both articles, which I greatly appreciated as I’ve been very tied up in other matters these past few weeks.

Offline Payments at Scale as Digital Money (Crunchfish)

Crunchfish published an executive white paper that reframes offline payments from a resilience add-on to ledger-based payments platforms to core payments infrastructure. In a fully digital economy, the absence of offline capability becomes a systemic vulnerability, but the architecture matters. The paper provides an analytical framework for evaluating offline models as a lens for institutional alignment. It distinguishes between immediate offline (which shifts value and risk to devices), deferred offline (preserves ledger money but introduces credit and reconciliation risk) and governed offline (reservation-based in which funds remain reserved at source, enabling offline execution with deterministic settlement). The governed offline model aligns with card pre-authorization and smart contract settlement. In the case of central bank digital currency (CBDC) it maintains central bank control offline, preserves singleness of digital money and avoids fragmentation. [Crunchfish]

Public Discourse on Retail Payments and the Case of CBDC (Ulrich Bindseil)

Ulrich Bindseil posted a white paper that analyzes retail payments as a network industry shaped by strong incentives to influence public opinion and regulation. Due to network effects, high fixed costs, and path dependence, multiple architectures can deliver similar outcomes while redistributing value across stakeholders. The paper maps how banks, card schemes, Bigtechs, merchants, consumers, crypto actors, and public authorities promote strategic narratives, creating a noisy and biased policy debate. It evaluates central bank digital currency (CBDC) as a central policy choice, alongside alternatives such as regulation or public instant-payment systems. One of the paper’s key insights is that retail payment outcomes are not determined purely by efficiency, but by strategic communication, political economy, and institutional design under uncertainty. In addition, effective policy requires independent analysis, transparency, and preserving a balance between public and private money. [SSRN]

Stablecoins and the Future of Payments: Evidence from Financial Markets (IMF)

The IMF published a working paper that argues that recent U.S. stablecoin legislation is interpreted by markets as a major pro‑competitive shock to the payments industry. Using high‑frequency stock‑price data around key votes on the Guiding and Establishing National Innovation for U.S. Stablecoins (GENIUS) Act, they estimate that passage reduced incumbent U.S. payment firms’ aggregate market capitalization by about 18% (roughly $300 billion) once anticipation is accounted for, with larger losses for cross‑border specialists and smaller or no losses for firms protected by strong network effects or already offering crypto services. The authors infer that investors expect regulated, fully backed “payment stablecoins” to materially intensify competition—especially in cross‑border payments—while leaving open how far network incumbency and early crypto engagement will mitigate disruption over time. [IMF]

Upcoming Speaking Engagements:

The Crypto Assets Conference (Frankfurt, March 25) will focus on the growing importance of digital assets for capital markets and the competitiveness of the European economy. I will be speaking on the uncertain future of CBDC projects. [Register here and get 15% off the regular ticket price.]

The Digital Euro Conference 2026 (Frankfurt, March 26) will explore the future of money with a focus on CBDCs, stablecoins, and commercial bank tokens. This hybrid event offers the perfect platform to understand the future of digital money! [Register here and get 20% off the regular ticket price by using the Kiffmeister20 code!]

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.

Kiffmeister’s #Fintech Daily Digest (20260319)

March 19, 2026March 19, 2026 ~ kiffmeister

Bank of Korea Launches Full-Scale Implementation of “Project Han River” Phase 2 (BOK)

The Bank of Korea (BOK) announced Phase II of Project Hangang. It aims to trial large-scale, won-pegged deposit tokens built on a wholesale central bank digital currency (CBDC) layer, to cut transaction costs for both major corporations and small merchants burdened by credit card fees, building on Phase I’s system build out and 2025 live pilot. Participating banks will expand from 7 to 9 and merchant coverage will be significantly broadened. Phase II will test person to person transfers, biometric authentication, and automatic deposit token funding and sweep out. It will also deepen programmability, using digital vouchers in blockchain based treasury pilots such as an electric vehicle (EV) charging infrastructure project, and continue experiments with AI agent payments and tokenized bonds and equities. The 2026 agenda includes support for government treasury execution, and external consulting on regulation and operating models, with a Phase III vision of low cost universal payments, programmable financial services, and infrastructure for Korea’s broader digital asset ecosystem. [BOK]

ECB Calls for Experts to Participate in Digital Euro Rulebook Development (ECB)

The European Central Bank (ECB) launched a call for experts to join two workstreams under the digital euro Rulebook Development Group (RDG) to support further development of the digital euro scheme rulebook, which will set common rules, standards and procedures for using the digital euro across the euro area. One workstream (G5) will focus on implementation specifications for ATMs and payment terminals, including communication technologies, integration of offline digital euro functionality and leveraging existing standards, requiring expertise in ATM and terminal interfacing or provision. The other (B1) will design a certification and approval framework for testing and certifying payment and acceptance solutions and infrastructure used by payment service providers in the digital euro ecosystem, requiring expertise in payments and acceptance devices. The ECB notes that the flexible draft rulebook will be updated to reflect the outcome of the EU legislative process, with any decision to issue a digital euro to follow only after legislation is adopted. [ECB]

ECB Workshop on Pontes Platform Decentralized Programmability (ECB)

The ECB published an updates to its Pontes project aimed at enabling the settlement of distributed ledger technology (DLT) transactions using central bank money (CeBM). Pontes is the near-term DLT-based interoperability solution linking DLT platforms with TARGET Services so DLT transactions settle in CeBM, using API-based trigger and hash-link mechanisms and dedicated DLT cash wallets funded from TARGET accounts. The update focused on a workshop on market-developed smart contracts deployed by national central banks on the Eurosystem DLT (“decentralized programmability”) that would enable cash-locking for delivery-versus-payment, programmable payments, microtransactions, DLT interoperability, and automated corporate actions. [ECB]

Consultation on the Eurosystem’s Appia Project (ECB)

The ECB also published an update to its Appia project aimed at enabling the settlement of DLT transactions using CeBM. Appia is the longer-term initiative to provide tokenized CeBM for DLT-based wholesale markets via a unified settlement ecosystem. The update concerns the launching a formal consultation inviting market and public authorities to comment on Appia’s proposed DLT‑based wholesale ecosystem design and six‑block workplan via a structured questionnaire due 22 April 2026. Feedback will shape standards, governance choices, cross‑border linkages, and prioritization of analytical and practical work toward a 2028 blueprint. [ECB]

SEC Approves Nasdaq’s Securities Tokenization Plan (SEC)

The U.S. Securities and Exchange Commission (SEC) approved a Nasdaq rule change allowing certain listed securities to clear and settle in tokenized form via a Depository Trust Company (DTC) tokenization pilot. The order authorizes trading tokenized versions of large-cap equities and major index exchange-traded funds (ETFs) on the same order book, with identical CUSIP, symbol, rights, and execution priority as traditional shares, with tokenization preferences expressed through an order flag and implemented post‑trade by DTC. This embeds distributed-ledger-based entitlements within existing exchange, clearing, and surveillance infrastructures, preserves T+1 settlement, and treats tokenized and traditional shares identically for fees, market data, and audit trail. The SEC frames the decision as technology‑neutral, while leaving broader questions about alternative tokenization models, issuer choice, and future non‑fungible tokenized instruments to subsequent rulemakings. [SEC]

Zero-Knowledge Proof Authentication for Offline CBDC Payments (arXiv)

Santanu Mondal and T. Chithralekha propose a hybrid offline central bank digital currency (CBDC) architecture that uses zero-knowledge proofs (ZKPs) and secure hardware to enable cash-like payments on resource-constrained internet of things (IoT) devices while preserving regulatory oversight. The system combines a two-tier CBDC model with hierarchical “main wallet / IoT sub‑wallets,” secure elements and trusted execution environments for tamper-resistant key storage and counters, and NFC/BLE device-to-device transfers backed by lightweight ZKPs. This operationalizes intermittently offline CBDC designs, translating privacy-preserving anti–money laundering and counter–terrorist financing rules into on-device limits and ZKP circuits rather than continuous online monitoring, thereby shifting supervisory leverage into protocol and hardware design choices. Unresolved are empirical tradeoffs among proof complexity, device diversity, and real-world performance under regulatory stress scenarios. [arXiv]

Upcoming Speaking Engagements:

Kiffmeister’s #Fintech Daily Digest (20260314)

March 14, 2026March 14, 2026 ~ kiffmeister

Federal Court Ends Custodia Bank’s Legal Bid for a Master Account (CoinTelegraph)

The US Court of Appeals for the Tenth Circuit has rejected Custodia Bank’s last attempt to force the Federal Reserve to grant it a master account, effectively ending the Wyoming crypto-focused bank’s five‑year effort to gain direct access to Fed payment rails and reserve accounts. Custodia had argued that the Monetary Control Act entitled it, as a state‑chartered institution, to such access, but multiple courts have now affirmed that the Fed retains discretion over master account approvals. The Tenth Circuit, in a 7–3 decision, declined to rehear Custodia’s appeal, though a dissenting judge warned that a master account is “indispensable” to a bank’s operations and that denial is “akin to a death sentence.” The ruling comes shortly after Kraken secured a limited master account from the Federal Reserve Bank of Kansas City, raising broader questions about how and on what terms crypto firms can obtain direct connections to systems like Fedwire. [CoinTelegraph]

Public vs. Private Payment Platforms: Market Impacts and Optimal Policy (Bank of Canada)

The Bank of Canada published a paper that studies competition between a welfare-maximizing public payment platform (e.g., fast payment system) and a profit-maximizing private platform. It finds that the public system should not simply aim to be as cheap as possible, because if it undercuts the private one too aggressively it can actually reduce the overall benefits from having both systems in the market. When a public system enters, more people and businesses use electronic payments and consumers are generally better off, but private providers tend to respond by putting more of their fees onto merchants. The authors also argue that if the public platform is required to cover its costs but forbids fees on consumers, it must load more of those costs onto merchants via fees, which could then reduce merchant participation, which in turn weakens the value of the platform to consumers and erodes the potential welfare gains from having the public system in the first place. [Bank of Canada]

Emerging Capabilities in Fast Payments: NFC and Offline Payments (World Bank)

The World Bank published a technical note outlining how fast payment systems (FPS) can incorporate near-field communication (NFC) and offline payment capabilities as “extended” channels and instruments, largely implemented at the payment service provider (PSP) level rather than in central infrastructure. The paper argues that NFC can shift consumer-initiated payments from cards and QR codes toward FPS by providing tap-based, tokenized, real-time credit transfers across payer‑ and payee‑initiated models, while raising device, scheme-rule, and fraud‑management questions. Offline models—deferred, temporary person‑to‑person, and person‑to‑merchant wallets—are positioned as critical for transit, low‑connectivity regions, and inclusion, but they introduce double‑spend, liability, and supervision challenges that require tight limits, secure elements, and explicit policy stances on where offline FPS should remain an exception versus a mainstream channel. [World Bank]

Upcoming Speaking Engagements:

Kiffmeister’s #Fintech Daily Digest (20251205)

December 5, 2025December 5, 2025 ~ kiffmeister

Marshall Islands Launches Crypto-Based Universal Basic Income (Hauzen)

The Republic of the Marshall Islands has launched the world’s first blockchain-based universal basic income (UBI) program, providing citizens with an annual payment of $800 funded by the country’s Compact Trust Fund. The initiative uses a U.S. Treasury Bill-backed interest-bearing stablecoin called USDM1 and a “Lomalo” digital wallet to deliver payments, particularly targeting financial inclusion for remote island populations affected by the withdrawal of traditional banking services due to “de-risking” in the Pacific region. While the program represents an innovative approach to economic sovereignty and welfare distribution, the IMF is cautioning that the UBI could drive inflation and recommending a more targeted social safety net. Also, the shift to digital wallets introduces complex regulatory risks, requiring robust anti-money laundering (AML) and know your customer (KYC) protocols. [Source: Hauzen LLP]

Understanding Stablecoins (IMF)

The IMF published a paper that examines stablecoins’ potential benefits and risks while surveying emerging international regulatory frameworks. While they offer promising benefits such as faster and cheaper cross-border payments, increased financial inclusion, and reduced remittance costs (which can reach 20% in traditional systems), they also pose substantial risks including potential runs on reserves, currency substitution that undermines national monetary policy, circumvention of capital controls, and facilitation of illicit activities. The paper emphasizes that realizing stablecoins’ potential while mitigating these risks requires coordinated international regulation and cooperation, as current regulatory approaches vary significantly across jurisdictions, creating opportunities for regulatory arbitrage and complicating efforts to monitor cross-border flows and maintain financial stability. [Source: IMF]

Digital Pound – Case Studies (BOE)

The Bank of England (BOE) is looking for participants to help it explore how the digital pound could impact existing companies who choose to integrate it alongside traditional payment methods in the future. This project will consist of a series of bilateral conversations with each of the different participants based the BOE’s previously published information. The aim of the study is to provide insight into where a retail digital pound could add value to different businesses, and what features are expected to be the most/least valuable for different kinds of businesses. The BOE is particularly keen to engage with companies that are interested in the digital pound, but have not yet been involved in the Digital Pound Lab. Applications are open until January 9, 2026. [Source: BOE]

Immediate vs. Deferred Offline Modes for Digital Payment Ecosystems (Crunchfish)

Crunchfish published a paper that compares two approaches to offline digital payments for central bank digital currency(CBDC): “immediate offline mode” that transfers digital value tokens like “digital banknotes” between devices, and “deferred offline mode” that transfers signed payment instructions (IOUs) that settle later online. The paper argues that deferred offline mode is more secure (ledger remains authoritative), more scalable (software-based, no special hardware required), easier to integrate with existing payment systems (aligns with EMV and ISO 20022), and preserves banking system liquidity since funds stay in accounts until settlement. In contrast, immediate offline mode exposes the ecosystem to double-spending risks, dependence on tamper-resistant hardware, complex reconciliation, and potential destabilization of bank lending capacity. The paper recommends that central banks adopt deferred offline mode as the baseline standard for offline CBDC payments. [Source: Crunchfish]

Upcoming Speaking Engagements:

Kiffmeister’s #Fintech Daily Digest (20251115)

November 15, 2025November 15, 2025 ~ kiffmeister

Public Demand and Financial Implications for Retail CBDC: A Randomized Survey Experiment (BOK)

The Bank of Korea (BOK) published a working paper that examines public demand for retail central bank digital currency (CBDC) through a randomized survey experiment conducted in October 2023 with 2,879 South Korean respondents. The researchers tested five different CBDC designs varying by online/offline functionality, privacy protection features (through physical cards), and interest payment options. The key findings indicate that while CBDC design features (privacy protections and offline capabilities) do not significantly influence demand for CBDC as a payment method, offering positive interest rates does enhance its appeal as a store of value. The study finds that CBDC would primarily substitute debit card usage rather than credit cards or mobile payment apps, with overall projected usage around 28% of transactions. Trust in the central bank and willingness to adopt new technology emerge as more important determinants of CBDC demand than specific technical features. The authors recommend setting holding limits around 4-5 million KRW (EUR 3,000) to balance financial innovation against risks to bank disintermediation, as this would affect fewer than 15% of users while potentially reducing demand deposits by approximately 15-17% without such limits. [Source: BOK]

Payment Resilience in Fragile and Conflict-Affected States: Lessons for CBDC (IMF)

The IMF published a Fintech Note that analyzes how payment systems in fragile and conflict-affected states (FCS) face severe disruptions, from cyberattacks and infrastructure breakdowns to institutional challenges, and offers practical strategies to strengthen payment system resilience. Key lessons for policymakers include building redundancy through multisite operational architectures, leveraging distributed/cloud infrastructure and satellite networks, promoting user-centric design and digital literacy, and ensuring robust contingency planning and regulatory agility. The note finds that both cash and digital payments remain essential for continuity, with innovations in digital money, such as stablecoins and CBDC, playing emerging roles. For CBDCs, resilience depends on careful design, redundancy, offline capabilities, interoperability, and trust-building, but adoption faces operational, regulatory, and trust-related challenges unique to FCS settings. [Source: IMF]

The Impact of Central Bank Digital Currency on Payments Competition (IMF)

The IMF published a Fintech Note that examines whether central bank digital currencies (CBDCs) could enhance competition in retail payment markets. The authors analyze CBDC’s potential competitive impact through four channels: pricing discipline, service quality improvements, market contestability, and financial access expansion. The analysis identifies three market scenarios with varying competitive implications. In unregulated markets dominated by private platforms, CBDC could exert substantial competitive pressure by reducing fees and lowering entry barriers, particularly if interoperability with existing systems is ensured. In markets already subject to regulatory interventions such as interchange fee caps, CBDC would likely have more moderate effects, addressing residual gaps rather than fundamentally altering market dynamics. In jurisdictions with well-functioning public fast payment systems, CBDC would offer primarily incremental benefits, mainly extending access to underserved populations. The Note emphasizes that CBDC’s actual competitive impact depends critically on design choices—including fee structures, intermediary participation rules, holding limits, and interoperability requirements—and warns that overly aggressive pricing could crowd out private providers, potentially reducing payment system resilience and diversity. [Source: IMF]

Selected Legal Considerations for Central Bank Digital Currencies (IMF)

The IMF published a Fintech Note that provides comprehensive guidance for policymakers evaluating legal frameworks for central bank digital currency (CBDC) issuance, focusing primarily on retail CBDC (rCBDC) with separate analysis of wholesale CBDC (wCBDC). The authors examine how rCBDC should be legally classified as currency under public law—establishing it as a direct central bank liability with attributes including monopoly of issuance, cours forcé, legal tender status, and criminal law protections. The Note addresses central banks’ legal authority to issue rCBDC and operate payment platforms, the regulatory frameworks needed for intermediaries in two-tier distribution models, and the legal relationships between central banks, intermediaries, and users. Specific design features are analyzed, including limits on holdings and transactions, interest-bearing capabilities, programmability, and offline functionality. For wCBDC, the Note examines legal challenges related to tokenization, settlement finality, and central bank mandates to operate platforms for financial institutions. Throughout, the analysis draws on enacted laws and regulatory drafts from various jurisdictions, emphasizing that while the Note identifies legal considerations and potential approaches, it does not constitute a recommendation for jurisdictions to issue CBDCs. [Source: IMF]

Stablecoin Performance in Cross-Border Payments: Evidence from a Digital Dollar Wallet (Stanford FDCI)

The Stanford University Future of Digital Currency Initiative (FDCI) published a paper that examines the performance of dollar-based stablecoins in cross-border payments using a dataset of over 41 million transactions from Airtm, a digital dollar wallet platform, spanning May 2019 to May 2024. The analysis benchmarks transaction speed and cost against G20 Roadmap targets for enhancing cross-border payments. The findings indicate that stablecoins demonstrate substantial advantages in speed, with more than 96% of transactions settling within one hour, significantly exceeding the G20’s 75% target. Cost performance is more variable: approximately 51% of transactions meet the 3% fee target for remittances and 36.7% meet the 1% target for retail payments, though fees remain elevated for certain transaction types, particularly peer-to-peer marketplace on- and off-ramps. The study also highlights that stablecoins enable previously uneconomical use cases, with nearly half of enterprise disbursements being micropayments under $2. [Source: Stanford FDCI]

Upcoming Speaking Engagements:

The Cedi@60 Anniversary Currency Conference (Accra, Ghana, November 17-20) hosted by the Bank of Ghana, in partnership with Currency Research, will celebrate 60 years of the Ghanaian Cedi, bringing together leaders from across Africa and beyond to reflect on the currency’s legacy and chart its digital future. Learn about Ghana’s eCedi pilot and the future of sovereign digital currencies in Africa, and engage with innovators driving mobile money, QR code payments, and financial inclusion across the region. [Register here and get 15% off by using the Kiffmeister15 code!]

Kiffmeister’s #Fintech Daily Digest (20251107)

November 7, 2025November 7, 2025 ~ kiffmeister

Regulatory Responses to the Financial Stability Implications of Stablecoins (Ulrich Bindseil)

Ulrich Bindseil posted a paper that examines the regulatory and financial stability implications of stablecoins, framing them as electronic money issued by narrow balance sheet entities onto programmable platforms. He highlights that European, U.S and U.K. regulatory approaches aim to prevent stablecoins from destabilizing the financial system, but the rules on what assets must back stablecoins diverge widely, with the U.S. favoring short-dated Treasury bills, the EU requiring bank deposits, and the U.K. preferring central bank deposits. However, all insist that stablecoins must not pay interest, a legacy from the era of paper money that does not make sense for electronic assets. The rationale appears to be protection of banks from excessive competition, based on supposed positive externalities from deposit creation and lending, yet the author argues that non-remuneration is a blunt instrument, not a well-designed response to any market failure. Opportunity costs for stablecoin holders rise with interest rates, triggering shifts to other assets, while issuers still earn intermediation margins. The author proposes that better-targeted regulation can address risks and market failures without unnecessarily distorting incentives or relying on mechanical non-remuneration, thus calling for more nuanced policy approaches. For example, Ulrich suggests targeted regulatory charges levied on stablecoin issuers, designed to offset any negative externalities or to compensate for positive externalities lost when funds flow out of banks toward stablecoins. [Source SSRN]

Draft Digital Euro Legislation Prioritizes Offline Payments (European Parliament)

It is notable that the European Parliament’s draft digital euro legislation prioritizes the rollout of the offline version. It mandates that the European Central Bank (ECB) complete all technical and organizational preparations for the offline digital euro before the online version is considered. Introduction of the online digital euro will depend on a market assessment by the European Commission, which will proceed only if there is no suitable pan-European private retail payment solution that covers person-to-person, point-of-sale, and e-commerce. Both forms, upon ECB authorization, enter a minimum 24-month adaptation phase to allow payment service providers and stakeholders to adjust securely and gradually. This framework aims to avoid crowding out private sector solutions, synchronize technical standards, and ensure interoperability, with clear fee guidelines and user choice, making public sector intervention conditional and proportional to actual market needs. [Source: European Parliament]

The draft legislation also requires that offline transactions resemble the anonymity of physical cash. Payments are conducted directly between devices, without reliance on central infrastructure, so payment service providers do not process or record any personal data linked to individual transactions. Only minimal information needed for funding or defunding the device—such as device identifiers—is handled, and no monitoring or tracking of payment activity occurs during offline use. Robust safeguards will be required to prevent the identification of users through device registration, mandating that only the data strictly necessary for regulatory compliance is processed and never used for profiling or tracing specific transactions. As a result, offline digital euro payments would be highly privacy-preserving, ensuring that personal information and payment details remain outside the access of both authorities and service providers.

Upcoming Speaking Engagements:

Kiffmeister’s #Fintech Daily Digest (20251022)

October 23, 2025October 23, 2025 ~ kiffmeister

Design Note – Offline Payments (Bank of England)

The Bank of England (BOE) published a note that outlines its current thinking on offline payments for a potential digital pound, distinguishing between “deferred offline payments” (similar to card transactions where payment is queued until a party reconnects online) and “device offline payments” (where value moves directly between devices out of online system view, like cash transfers). The note emphasizes the established use cases for deferred offline payments (e.g., transit, vending machines) and acknowledges future opportunities and resilience benefits for device offline payments, though risks and technical maturity mean such device-to-device features would not be available at launch. [Source: BOE]

India Introduces Digital Rupee for Easy Offline Payments (The CSR Journal)

The Reserve Bank of India (RBI) reportedly launched the offline digital rupee CBDC during the Global Fintech Fest 2025 in Mumbai. It would offer direct wallet-to-wallet transfers, benefiting remote areas and those without banking access. Users will be able to download wallets from 15 major banks. The wallets will offer secure recovery options in case of lost devices, alongside transaction limits set at Rs 50,000 per day or 20 transactions, with wallet balances capped at Rs 1 lakh. Key features will include programmable money (restricting usage by location, time, or purpose), and support for government welfare and corporate payments. [Source: CSR Journal]

Coincidentally, the RBI officially launched its “HaRBInger 2025 – Innovation for Transformation” hackathon, which features as one of the three focus areas, offline central bank digital currency (CBDC). Participants are invited to design a secure, user-friendly, tamper-resistant, and scalable solution for enabling offline digital rupee transactions. The solution should allow consecutive offline payments without real-time internet or telecom connectivity and ensuring double-spend prevention. It should work on low-cost devices and be agnostic across devices and communication protocols, and work on different form factors. [Source: RBI]

Bank-Issued Stablecoins in Europe Under MiCA Regulation (Blockstories)

Blockstories’s Louis Tellier highlighted three key insights about the stablecoin business in Europe under MiCA regulation. First, banks issuing stablecoins are not required to maintain segregated reserves, allowing them to integrate stablecoin assets within their balance sheets and partially lend them under a fractional-reserve model, which provides banks a unique competitive edge over electronic money institutions (EMIs) like Circle that must maintain fully backed, segregated reserves. Second, despite MiCA’s prohibition on yield distribution for stablecoins, some platforms have enabled yield via DeFi integrations through non-custodial wallets—taking advantage of a regulatory “DeFi exemption” that falls outside MiCA’s scope; recent examples include Bitpanda and Deblock using protocols like Morpho. Lastly, deploying bank-issued stablecoins in DeFi is now feasible, with regulations clarifying that issuers need not know the identity of every holder at all times, as long as compliance features such as blacklists and token freezing are embedded in smart contracts, demonstrated by Société Générale and ODDO BHF. [Source: LinkedIn]

Nigeria’s Ministry of Finance and Central Bank to Study Stablecoin Adoption (Business Day Nigeria)

Nigeria’s Ministry of Finance and central bank have reportedly established a working group to examine the adoption of stablecoins as part of its financial sector innovation agenda. They aim to explore the broader implications of integrating stablecoins, balancing support for technological innovation with the need to mitigate associated risks. This is all against the backdrop of the underwhelming response to the e-Naira CBDC. [Source: Business Day Nigeria]

Bank Negara Malaysia to Complete Domestic Wholesale CBDC Proof-of-Concept by End-2025 (MOF)

Bank Negara Malaysia (BNM) is reportedly expected to complete its proof-of-concept for a domestic wholesale central bank digital currency (CBDC) by the end of 2025. This initiative seeks to evaluate the potential use of CBDC within Malaysia’s wholesale payment system, especially focusing on the real-time electronic transfer of funds and securities system (Rentas), and to improve the understanding of distributed ledger technology (DLT) and CBDC for both BNM and the broader financial sector. Additionally, BNM is actively participating in several Bank for International Settlements Innovation Hub-led projects—such as Project Dunbar, Project Mandala, and Project Rialto—which explore how multi-CBDC arrangements can make cross-border wholesale payments more efficient, faster, and secure. [Source: The Edge Malaysia]

Ethiopia’s Parliament Passes CBDC-Enabling Legislation (NBE)

[February 4, 2025] The Ethiopian Parliament passed into law National Bank of Ethiopia (NBE) Proclamation No. 1359/2025, establishing a legal framework for the introduction of a digital birr central bank digital currency (CBDC). It permits the central bank’s Board to issue a Directive to issue CBDC as legal tender of the country. [Source: NBE]

Upcoming Speaking Engagements:

Stablecoin C-Suite Summit (New York City on November 14-15) will be the definitive conference for exploring the future of digital money and intelligent payments. The event brings together founders, C-level executives, investors, policymakers, and developers for two immersive days of talks, panels, and networking. This be the place to be if you’re building, backing, or regulating the next wave of programmable finance. [Register here]

The Digital Euro Conference 2026 (Frankfurt, March 26) will explore the future of money with a focus on CBDCs, stablecoins, and commercial bank tokens. This hybrid event offers the perfect platform to understand the future of digital money! When you register, get 20% off the regular ticket price by using the Kiffmeister20 code! [register here]