Tag: privacy

Kiffmeister’s #Fintech Daily Digest (20231119)*

~ kiffmeister ~ 1 Comment

CBDC and privacy: A randomized survey experiment

A Bank for International Settlements (BIS) study found privacy-preserving variations of central bank digital currency (CBDC) design have significant effects on willingness to use CBDC to purchase privacy-sensitive products (e.g., psychiatric services and adult products). It was based on a survey of a nationally representative sample of over 3,500 Korean participants. The willingness to use CBDC substantially increases with the provision of information about the privacy benefits of using it. Finally, these effects vary with respondents’ trust in public or private institutions with regard to privacy protection and their demographic characteristics. [Read more at the BIS]

The BIS paper does, however, express some caution about generalizing its findings over time and across countries with different institutional settings and political climates. For instance, with regard to which institution is to safeguard personal data, trust in institutions varies with countries. According to a [2020] US survey, American consumers have more trust in traditional financial institutions than government agencies and Bigtech companies, whereas the respondents in Korean survey show more trust in the government than financial institutions and Bigtech companies. [Read more about the US 2020 survey at the BIS]

Meeting the need for higher privacy in CBDC transactions

The current draft of the digital euro legislation calls for increased privacy for close-proximity offline payments, which is seen as consistent with the European Union AML/CFT framework risk-based approach. The European Data Protection Board (EDPB) and European Data Protection Supervisor (EDPS) suggest increased privacy for low-value online payments too, but not as private as offline transactions, because online transactions would not be limited to proximity payments, resulting in a potentially attractive model for criminals. Hence, they recommend transaction size limits above which complete checks can occur that are lower for online than offline transactions. However, Atakan Kavuklu suggests equalizing the limits at the higher level for all low-value proximity payments (e.g., those using NFC and Bluetooth connections). He believes this could benefit the acceptance and success of a digital euro. [Read more on LinkedIn]

CBDC and bank disintermediation in a portfolio choice model

The IMF published a paper that develops a model to determine the conditions in which the introduction of an interest-bearing CBDC would lead to lower deposits and lending in the banking sector. It finds that richer households increase their holdings of deposits as banks increase deposit interest rates in reaction to the CBDC introduction, which is offset by poorer households switching from deposits to the CBDC. Total deposits are more likely to fall when the mass of poorer households is large and when it is relatively costly to access bank accounts, which tends to be the case in emerging market and developing economy countries. However, even then the impact on lending is quantitatively small if banks have access to other forms of funding, such as wholesale or central bank financing. [Read more at the IMF]

CBDCs: A lesson in the power to disobey

R3’s Jack Fletcher does a nice dismantling of the dystopian case against central bank digital currency (CBDC). First he points out that there are technical solutions to privacy available through distributed ledger technology (DLT) infrastructure that far surpass anything that is available in existing digital solutions, so a CBDC could be as private as cash. Secondly, in a world of payment options, why would anyone use a surveillance CBDC when they could simply use Visa or Mastercard or cash instead? And access to cash is something that no government or central bank is keen to remove. Indeed, they must now step in as consumer preferences drive it to redundancy. But with cash use declining as a global trend, Jack does acknowledge that society must consider a future world whereby it no longer exists and our privacy and our freedom to disobey is removed with it. [Read more on the Tabb Forum]

Mobile money, perception about cash, and financial inclusion

The IMF published a paper that explores survey data for Uganda to compare mobile money users and non-users across a range of indicators that capture individuals’ perceptions about cash, and the extent to which they remit, save, and borrow money. It finds that mobile money users, compared to non-users, are more likely to perceive cash as risky and less likely to prefer carrying large amounts of cash. It also confirms that mobile money users are more likely to receive and send remittances, save, and borrow. They also save and borrow larger amounts. This suggests that the rapid expansion of fintech in Africa is likely to reduce the demand for and usage of cash. [Read more at the IMF]

Is Fintech eating the banks’ lunches?

The IMF published a paper that examines how the growing presence of Fintech firms affects the performance of traditional financial institutions. The findings point to a negative impact on profitability, primarily due to a reduction in interest income and a rise in operational costs. Although established financial institutions have tried to diversify their revenue streams, these efforts have proven inadequate to offset the losses associated with increased competition from Fintech firms. The study also reveals that various Fintech business models, such as peer-to-peer (P2P) lending and balance sheet lending, have varying effects on financial institutions. Cooperative banks experience more significant profit deterioration under both models, whereas (larger) commercial banks appear to benefit from partnerships with P2P platforms, as evidenced by an increase in non-interest income. Furthermore, the findings suggest that Fintech presence has a disproportionately larger adverse effect on banks in countries with more competitive, profitable, and developed financial systems. Interestingly, however, traditional financial institutions in countries with stronger regulatory frameworks appear to benefit from the expanding influence of Fintech firms. [Read more at the IMF]

FYI here are some of my upcoming speaking engagements:

– Currency Research Americas Cash Cycle & Payments Seminar (Orlando Florida on November 27-30)[Register here]

– Digital Euro Conference 2024 (Frankfurt on February 29)[Register here]

*For those interested in intra-day updates, check out my searchable Diigo Fintech developments database, which is also a good place to go to query for past developments: https://www.diigo.com/user/kiffmeister/ART.

Kiffmeister’s central bank digital currency monthly monitor

Just a reminder that I produce a monthly digest of central bank digital currency (CBDC) developments exclusively for the official sector. So (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 chronicles@kiffmeister.com

The Sovereign Official Digital Association (SODA) is a technology-agnostic firm offering advisory services at the intersection of central banking, digital finance and the web3 industry, aiming to make public digital money a reality. SODA believes institutions in the existing financial ecosystem should have access to the tools and resources they need to move from discussion to action. SODA offers ‘real life’ use cases to help test digital money and drive adoption as central banks and other public institutions explore the future of a more financially inclusive world powered by interoperable blockchain-based networks. SODA would love you to join us on this journey – please get in touch (chris@sodapublicmoney.org).

Satoshi Capital Advisors is a New York-based, global advisory firm that works with central banks, governments, and the private sector to architect, implement, and operate varying initiatives. Satoshi Capital Advisors’ central bank work revolves around CBDC architecture and implementation, providing advisory services from research phase through to growth phase. Utilizing a product-market fit and technology agnostic approach to CBDC architecture and implementation enables Satoshi Capital Advisors to build tailored solutions, bespoke to local financial system nuances. Satoshi Capital Advisors welcomes requests from central bank officials for virtual and in-person CBDC workshops. [Click here for more information]

WhisperCash offers the first fully offline digital currency platform that has the same properties as physical cash. It can perform secure consecutive offline payments without compromising on security, privacy or accessibility. WhisperCash allows direct person to person offline payments without any server infrastructure or internet connectivity. It comes in various form factors including the self-contained credit card-sized “Pro” that sports an eInk screen and capacitive keyboard, and lasts for two weeks between recharges assuming a few transactions per day. [Click here for more information]

Kiffmeister’s #Fintech Daily Digest (20231018)*

~ kiffmeister

Eurosystem proceeds to next phase of digital euro project

The European Central Bank (ECB) digital euro project will move to the “preparation” phase on November 1, 2023, with the completion of the “investigation” phase launched in October 2021. Based on the findings from this phase, a digital euro would be widely accessible, free for basic use and available online and offline. It would offer the highest level of privacy and allow users to settle payments instantly in central bank money. It could be used from person to person, at the point of sale, in e-commerce and in government transactions. The preparation phase will initially last two years, and involve finalizing the digital euro rulebook and selecting providers that could develop a digital euro platform and infrastructure. It will also include testing and experimentation. [Read more at the ECB including the investigation phase report]

Digital euro: ensuring the highest data protection and privacy standards

The European Data Protection Board (EDPB) and the European Data Protection Supervisor recommended changes to European Union (EU) draft legislation for a digital euro in order to boost privacy standards. They “strongly recommend” a “privacy threshold” for online transactions so that neither offline nor online low-value transactions are traced for financial integrity purposes. They also question the need for a single access point to verify that the amount of digital euros held by each user does not exceed the maximum amount allowed, arguing that “technical measures allowing for a decentralized storage of these identifiers are feasible, as an alternative”. [Read more at the EDPB]

ECB launches pre-call for wholesale CBDC trial participation

The ECB has launched a survey targeting potential participants in its trials and experiments for central bank money settlement of wholesale financial transactions recorded on distributed ledger technology (DLT) platforms. The plan is to test three settlement solutions, including two that link to existing euro payment systems (from the central banks of Germany and Italy) and one wholesale central bank digital currency (CBDC) developed by the Banque de France. [Read more at the ECB]

CPMI sets out harmonized ISO 20022 data requirements

The Bank for International Settlements (BIS) Committee on Payments and Market Infrastructures (CPMI) published harmonized ISO 20022 data requirements that establish a consistent minimum set of messaging standards for more efficient processing of cross-border payments. They will facilitate the straight through processing of end-to-end payments, making them faster and more reliable. The CPMI will continue its engagement with payment system operators and financial institutions to foster the implementation of the harmonized data requirements by end-2027. [Read more at the BIS]

Linking fast payment systems across borders

The CPMI published a consultative report on initial considerations on governance and oversight for fast payment system (FPS) interlinking, one of the most promising solutions for enhancing cross-border payments. However, agreeing on workable governance and oversight arrangements can be especially challenging due to the multi-jurisdictional, cross-border and/or cross-currency nature of these arrangements. The interim report describes 10 initial considerations, resulting from a series of workshops with global stakeholders that was undertaken by the CPMI to better understand the sensitivities, complexities and experiences in this area. [Read more at the BIS]

*For those interested in intra-day updates, check out my searchable Diigo Fintech developments database, which is also a good place to go to query for past developments: https://www.diigo.com/user/kiffmeister/ART.

Kiffmeister’s central bank digital currency monthly monitor

Just a reminder that I produce a monthly digest of central bank digital currency (CBDC) developments exclusively for the official sector. So (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 chronicles@kiffmeister.com

The Sovereign Official Digital Association (SODA) is a technology-agnostic firm offering advisory services at the intersection of central banking, digital finance and the web3 industry, aiming to make public digital money a reality. SODA believes institutions in the existing financial ecosystem should have access to the tools and resources they need to move from discussion to action. SODA offers ‘real life’ use cases to help test digital money and drive adoption as central banks and other public institutions explore the future of a more financially inclusive world powered by interoperable blockchain-based networks. SODA would love you to join us on this journey – please get in touch (chris@sodapublicmoney.org).

Satoshi Capital Advisors is a New York-based, global advisory firm that works with central banks, governments, and the private sector to architect, implement, and operate varying initiatives. Satoshi Capital Advisors’ central bank work revolves around CBDC architecture and implementation, providing advisory services from research phase through to growth phase. Utilizing a product-market fit and technology agnostic approach to CBDC architecture and implementation enables Satoshi Capital Advisors to build tailored solutions, bespoke to local financial system nuances. Satoshi Capital Advisors welcomes requests from central bank officials for virtual and in-person CBDC workshops. [Click here for more information]

WhisperCash offers the first fully offline digital currency platform that has the same properties as physical cash. It can perform secure consecutive offline payments without compromising on security, privacy or accessibility. WhisperCash allows direct person to person offline payments without any server infrastructure or internet connectivity. It comes in various form factors including the self-contained credit card-sized “Pro” that sports an eInk screen and capacitive keyboard, and lasts for two weeks between recharges assuming a few transactions per day. [Click here for more information]

Kiffmeister’s #Fintech Daily Digest (20230921)*

~ kiffmeister

Emmer’s CBDC Anti-Surveillance State Act passes Financial Services Committee

The US House Financial Services Committee considered Majority Whip Tom Emmer’s CBDC Anti-Surveillance State Act. The bill was passed out of the Committee and reported favorably to the House floor during the markup session, an important step toward passing this legislation through Congress. The Act would prevent the Federal Reserve from issuing a central bank digital currency (CBDC) directly or indirectly to individuals or maintaining accounts on behalf of individuals. It would also prohibit the Secretary of the Treasury from directing the Federal Reserve to issue a CBDC and clarifies that a CBDC can only be issued pursuant to congressional authorization. [Read more on Emmer’s website]

Interestingly, Emmer’s bill does leave the door open for a privacy-preserving digital currency: “this Act and the amendments made by this Act shall not apply to any dollar-denominated currency that is open, permissionless, and private, and fully preserves the privacy protections of United States coins and physical currency.” That could leave the door open for House Representative Stephen Lynch’s ECASH Act that would direct the Secretary of the Treasury (not the Federal Reserve) to develop and pilot digital dollar technologies that replicate the privacy-respecting features of physical cash. [Read the ECASH Act here and the FAQ here]

JP Morgan is part of Regulated Liability Network digital currency project

JP Morgan is participating in the Regulated Liability Network (RLN). Earlier in September 2023, the UK arm of the RLN shared the findings of its latest work without mentioning the participants. The network aims to bring together banks and central banks to support different types of digital currency on the same network. That includes CBDCs, deposit tokens and regulated stablecoins. In July the US RLN published a report involving several other U.S. banks, the New York Federal Reserve’s innovation arm and Mastercard. The premise that underpins the RLN is interoperability so that banks don’t need to use the same type of blockchain to transfer tokens between them. [Read more at Ledger Insights]

R3 lays off a fifth of its employees

R3 has laid off a fifth of its employees as part of cost-cutting drive, blaming tough economic conditions that it says have led the company to shift its focus and business model. According to Bloomberg, the company had laid off just over a fifth of its headcount, affecting the company’s operations globally and across different functions. R3 is based in New York but operates an office in the United Kingdom. While enterprise blockchain technology has gained traction over the years, it remains a slow-moving industry where projects take years. However, these projects have moved slowly while others have been abandoned, leading to lost revenue for R3. [Read more at R3]

PayPal USD (PYUSD) is now available on Venmo

PayPal’s PYUSD dollar-denominated stablecoin is now available on Venmo to select users and will be rolling out fully in the coming weeks. Transfers between PayPal and Venmo users are fast and free, and individuals using compatible external wallets, and merchants accepting payments in PYUSD, will also be able to receive transfers from Venmo users (blockchain network fees apply). Also, PYUSD has been greenlisted by the New York State Department of Financial Services, making it easier for virtual currency entities licensed in New York to support PYUSD. [Read more at PayPal]

BIS and IADB join forces to foster LATAM innovation and financial inclusion

The Bank for International Settlements (BIS) and the Inter-American Development Bank (IDB) are joining forces to explore and develop technology that can help to modernize Latin American and the Caribbean financial systems . The first collaboration will be on Project FuSSE (Fully Scalable Settlement Engine) aiming to design and test backend functionality that can be adapted to multiple types of infrastructures, allowing them to process a growing number of transactions and participants across various types of assets and the number of participants. The technology could support payment systems, security settlement systems or even CBDCs. [Read more at the BIS]

*For those interested in intra-day updates, check out my searchable Diigo Fintech developments database, which is also a good place to go to query for past developments: https://www.diigo.com/user/kiffmeister/ART.

Kiffmeister’s central bank digital currency monthly monitor

Just a reminder that I produce a monthly digest of central bank digital currency (CBDC) developments exclusively for the official sector. So (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 chronicles@kiffmeister.com.

The Sovereign Official Digital Association (SODA) is a technology-agnostic firm offering advisory services at the intersection of central banking, digital finance and the web3 industry, aiming to make public digital money a reality. SODA believes institutions in the existing financial ecosystem should have access to the tools and resources they need to move from discussion to action. SODA offers ‘real life’ use cases to help test digital money and drive adoption as central banks and other public institutions explore the future of a more financially inclusive world powered by interoperable blockchain-based networks. SODA would love you to join us on this journey – please get in touch (chris@sodapublicmoney.org).

Satoshi Capital Advisors is a New York-based, global advisory firm that works with central banks, governments, and the private sector to architect, implement, and operate varying initiatives. Satoshi Capital Advisors’ central bank work revolves around CBDC architecture and implementation, providing advisory services from research phase through to growth phase. Utilizing a product-market fit and technology agnostic approach to CBDC architecture and implementation enables Satoshi Capital Advisors to build tailored solutions, bespoke to local financial system nuances. Satoshi Capital Advisors welcomes requests from central bank officials for virtual and in-person CBDC workshops. [Click here for more information]

WhisperCash offers the first fully offline digital currency platform that has the same properties as physical cash. It can perform secure consecutive offline payments without compromising on security, privacy or accessibility. WhisperCash allows direct person to person offline payments without any server infrastructure or internet connectivity. It comes in various form factors including the self-contained credit card-sized “Pro” that sports an eInk screen and capacitive keyboard, and lasts for two weeks between recharges assuming a few transactions per day. [Click here for more information]

Kiffmeister’s #Fintech Daily Digest (20230615)*

~ kiffmeister

CBDC ’human rights’ tracker revealed at Oslo Freedom Forum

The Human Rights Foundation (HRF) has launched a portal dedicated to tracking the development of central bank digital currencies (CBDCs) and how they relate to violations of civil liberties and human rights. It came out of an eight-month fellowship at the HRF announced in January 2023 and awarded to Cato Institute policy analyst Nick Anthony, researcher Janine Romer and podcaster Matthew Mezinskis. It is expected to become fully functional in November 2023, but it has launched a tip line and has published educational material. [Read more at CBDCHumanrights.org]

Ripple partners with Colombia’s central bank to explore blockchain use cases

Ripple is partnering with Colombia’s central bank to explore blockchain technology use cases. Banco de la República, in conjunction with The Ministry of Information and Communications Technologies (MinTIC) will pilot use cases that will enhance Colombia’s high-value payment system using the Ripple CBDC Platform, powered by the XRP Ledger (XRPL). The pilot will be run with Spain-based blockchain technology firm Peersyst Technology. [Read more at Ripple]

Payments Canada further delays real-time payment launch

Payments Canada will conduct a second review of its proposed Real-Time Rail (RTR) payments system, delaying delivery further. A third party delivery assurance review, focused on program management, people and processes, has recommended additional testing and investments to ensure ongoing operations once the RTR system goes live. Payments Canada is to undertake a new three-month investigation into the risks identified. [Read more at Payments Canada]

*For those interested in intra-day updates, check out my searchable Diigo Fintech developments database, which is also a good place to go to query for past developments: https://www.diigo.com/user/kiffmeister/ART.

Upcoming conferences, webinars and speaking engagements:

Kiffmeister’s global central bank digital currency monthly monitor

Just a reminder that I produce a monthly digest of central bank digital currency (CBDC) developments exclusively for the official sector. So for any of you out there who work for a central bank, ministry of finance or international financial institution who would like to receive it by email on the first business day of every month, please DM me on LinkedIn or email me at chronicles@kiffmeister.com.

The Sovereign Official Digital Association (SODA) is a technology-agnostic firm offering advisory services at the intersection of central banking, digital finance and the web3 industry, aiming to make public digital money a reality. SODA believes institutions in the existing financial ecosystem should have access to the tools and resources they need to move from discussion to action. SODA offers ‘real life’ use cases to help test digital money and drive adoption as central banks and other public institutions explore the future of a more financially inclusive world powered by interoperable blockchain-based networks. SODA would love you to join us on this journey – please get in touch (chris@sodapublicmoney.org).

Satoshi Capital Advisors is a New York-based, global advisory firm that works with central banks, governments, and the private sector to architect, implement, and operate varying initiatives. Satoshi Capital Advisors’ central bank work revolves around CBDC architecture and implementation, providing advisory services from research phase through to growth phase. Utilizing a product-market fit and technology agnostic approach to CBDC architecture and implementation enables Satoshi Capital Advisors to build tailored solutions, bespoke to local financial system nuances. Satoshi Capital Advisors welcomes requests from central bank officials for virtual and in-person CBDC workshops. [Click here for more information]

WhisperCash offers the first fully offline digital currency platform that has the same properties as physical cash. It can perform secure consecutive offline payments without compromising on security, privacy or accessibility. WhisperCash allows direct person to person offline payments without any server infrastructure or internet connectivity. It comes in various form factors including the self-contained credit card-sized “Pro” that sports an eInk screen and capacitive keyboard, and lasts for two weeks between recharges assuming a few transactions per day. [Click here for more information]

Kiffmeister’s #Fintech Daily Digest (20230206)

~ kiffmeister

Crypto exchange Binance will suspend U.S. dollar transfers

Binance will temporarily suspend U.S. dollar deposits and withdrawals as of February 8th. However, only 0.01% of the exchange’s monthly active users do US dollar bank transfers, and the move applies only to non-U.S. customers who transfer money to or from bank accounts in dollars. (Binance US, a unit of the company that’s regulated by the US Treasury Department’s Financial Crimes Enforcement Network (FinCEN), is not impacted by the suspension.) The suspension is likely due to issues with its bank partner Signature Bank, which said last month that it would stop processing crypto SWIFT transactions under $100,000. [Read more at CNBC]

Seeking the Ideal Privacy Protection: Strengths and Limitations of Differential Privacy

The Bank of Japan (BoJ) published a paper that explains the theory behind differential privacy and its application, and studies and discusses the desirable privacy protection considering the strengths and limitations of the differential privacy. In particular, mathematical methodologies including ones based on differential privacy cannot solely suffice social demands for privacy protection, especially for the control over personal information about oneself. The paper concludes that desirable privacy protection for resolving the social issue should adopt a comprehensive approach that includes laws, regulations, IT systems management, business practices, as well as mathematical methodologies and information security. [Read more at the BoJ]

What is Differential Privacy?

  • “Differential privacy is a definition used to describe various methods and techniques for analyzing data sets and extrapolating aggregated results, without directly affecting the privacy of any specific individuals contained within the original data sets.” [Read more at ProPrivacy]
  • “Differential privacy makes it possible for tech companies to collect and share aggregate information about user habits, while maintaining the privacy of individual users.” [Read more at the Conversation]

Upcoming conferences, webinars and speaking engagements:

Kiffmeister’s global central bank digital currency monthly monitor

Just a reminder that I produce a monthly digest of central bank digital currency (CBDC) developments exclusively for the official sector. So for any of you out there who work for a central bank, ministry of finance or international financial institution who would like to receive it by email on the first business day of every month, please DM me on LinkedIn or email me at chronicles@kiffmeister.com.

The Sovereign Official Digital Association (SODA) is a technology-agnostic firm offering advisory services at the intersection of central banking, digital finance and the web3 industry, aiming to make public digital money a reality. SODA believes institutions in the existing financial ecosystem should have access to the tools and resources they need to move from discussion to action. SODA offers ‘real life’ use cases to help test digital money and drive adoption as central banks and other public institutions explore the future of a more financially inclusive world powered by interoperable blockchain-based networks. SODA would love you to join us on this journey – please get in touch (chris@sodapublicmoney.org).

Satoshi Capital Advisors is a New York-based, global advisory firm that works with central banks, governments, and the private sector to architect, implement, and operate varying initiatives. Satoshi Capital Advisors’ central bank work revolves around CBDC architecture and implementation, providing advisory services from research phase through to growth phase. Utilizing a product-market fit and technology agnostic approach to CBDC architecture and implementation enables Satoshi Capital Advisors to build tailored solutions, bespoke to local financial system nuances. Satoshi Capital Advisors welcomes requests from central bank officials for virtual and in-person CBDC workshops. [Click here for more information]

WhisperCash offers the first fully offline digital currency platform that has the same properties as physical cash. It can perform secure consecutive offline payments without compromising on security, privacy or accessibility. WhisperCash allows direct person to person offline payments without any server infrastructure or internet connectivity. It comes in various form factors including the self-contained credit card-sized “Pro” that sports an eInk screen and capacitive keyboard, and lasts for two weeks between recharges assuming a few transactions per day. [Click here for more information]

Kiffmeister’s #Fintech Daily Digest (20230204)

~ kiffmeister

Kazakhstan’s digital currency in PoC stage, per Binance, National Bank joint report

The National Bank of Kazakhstan (NBK) will be conducting central bank digital currency (CBDC) proof-of-concept (PoC) work in 2023. This is according to a report published jointly by the central bank and Binance on digital asset regulation, the digital asset industry and decentralized finance (DeFi) in Central Asia. However, it mentioned that in 2023, the NBK is planning to build several PoC scenarios of integration between the experimental Digital Tenge platform and BnB chain in 2023 to explore opportunities of DeFi and TradFi industry players’ cooperation under central bank supervision. [Read more at Binance and download the report here]

Update on Zimbabwe’s central bank digital currency (CBDC) project

The [Reserve Bank of Zimbabwe’s (RBZ’s)] CBDC Project continued to progress steadily in line with the envisaged CBDC Road Map. In this regard, in November 2022, the Bank rolled out a consumer survey that intends to solicit opinions on the design and nature of the CBDC and its overall acceptance/acceptability by stakeholders. As at January 23, 2023, the survey had received 2,286 responses. [Read more at the RBZ]

Tornado Cash and Blockchain Privacy: A Primer for Economists and Policymakers

The St. Louis Fed published an article that explores non-custodial crypto asset mixers such as Tornado Cash. It analyzes what types of mixers exist and how they work, and discusses opportunities and risks and offer an approach, based on voluntary disclosure, that would allow financial market regulators to combat money laundering and illicit activities, while allowing honest users to interact with privacy-enhancing protocols. The article explains how crypto asset mixers play an important role on public blockchains and that privacy may be difficult to attain without them. [Read more at the St. Louis Fed]

Euro stablecoin launched in Finland, claims to be first approved in the EU

Finland-based Membrane Finance has released a fully-reserved stablecoin backed by the euro. The company is licensed by the Finnish Financial Supervisory Authority (Fin-FSA) and claims that the new ”EUROe” coin is “the first and only … crypto stablecoin.regulated by an EU-based financial authority. [Read more at Membrane]

Accounting for Digital Currencies

A Research in International Business and Finance paper has found that current accounting standards do not precisely cover the treatment of digital currencies. It identifies a need for an accounting standard to provide guidance on the identification, classification, measurement, and presentation of digital currencies, but in the interim, existing standards can be amended to incorporate them to avoid inconsistent global accounting approaches. [Read the paper here]

Upcoming conferences, webinars and speaking engagements:

Kiffmeister’s global central bank digital currency monthly monitor

Just a reminder that I produce a monthly digest of central bank digital currency (CBDC) developments exclusively for the official sector. So for any of you out there who work for a central bank, ministry of finance or international financial institution who would like to receive it by email on the first business day of every month, please DM me on LinkedIn or email me at chronicles@kiffmeister.com.

The Sovereign Official Digital Association (SODA) is a technology-agnostic firm offering advisory services at the intersection of central banking, digital finance and the web3 industry, aiming to make public digital money a reality. SODA believes institutions in the existing financial ecosystem should have access to the tools and resources they need to move from discussion to action. SODA offers ‘real life’ use cases to help test digital money and drive adoption as central banks and other public institutions explore the future of a more financially inclusive world powered by interoperable blockchain-based networks. SODA would love you to join us on this journey – please get in touch (chris@sodapublicmoney.org).

Satoshi Capital Advisors is a New York-based, global advisory firm that works with central banks, governments, and the private sector to architect, implement, and operate varying initiatives. Satoshi Capital Advisors’ central bank work revolves around CBDC architecture and implementation, providing advisory services from research phase through to growth phase. Utilizing a product-market fit and technology agnostic approach to CBDC architecture and implementation enables Satoshi Capital Advisors to build tailored solutions, bespoke to local financial system nuances. Satoshi Capital Advisors welcomes requests from central bank officials for virtual and in-person CBDC workshops. [Click here for more information]

WhisperCash offers the first fully offline digital currency platform that has the same properties as physical cash. It can perform secure consecutive offline payments without compromising on security, privacy or accessibility. WhisperCash allows direct person to person offline payments without any server infrastructure or internet connectivity. It comes in various form factors including the self-contained credit card-sized “Pro” that sports an eInk screen and capacitive keyboard, and lasts for two weeks between recharges assuming a few transactions per day. [Click here for more information]

Kiffmeister’s #Fintech Daily Digest (20221014)

~ kiffmeister

European Data Protection Board statement on the digital euro

The European Data Protection Board (EDPB) reiterated the importance of ensuring digital euro privacy and data protection by design and by default. The EDPB cautioned against the use of systematic validation and tracing of all transactions in digital euros. In this respect, the EDPB recommended that the digital euro be made available both online and offline, along a threshold below which no tracing is possible, to allow full anonymity of daily transactions. [Read more at the EDPB]

Tether Slashes Commercial Paper to Zero

Tether has completely eliminated commercial paper from its USDT stablecoin reserves, replacing them with U.S. Treasury Bills. [Read more at Tether.io]

Digital yuan transactions volume crossed $14B mark

China’s central bank digital currency (CBDC) project has reached the roughly 100 billion yuan ($14 billion) transaction mark during its pilot phase. “Multiple e-government service platforms have opened digital renminbi payment services, supporting online and offline channels to handle various public utility payments, using digital renminbi to issue tax rebate funds, special funds for monthly medical insurance payment, funds for helping people in need, and ‘specialized, special and new’ enterprise support funds, etc.” Going forward, the People’s Bank of China (PBOC) plans to launch the cross-border payments between Hong Kong and mainland China, following the principle of “anonymity for small amounts and traceability of large amounts” to protect the user’s personal data. [Read more on the PBOC’s WeChat page]

Canada’s real-time payments system’s launch delayed

The launch of Canada’s Real-Time Rail (RTR) payments system has been pushed back from the middle of next year to an as yet undetermined date. Payments Canada says an extension will “provide additional time to validate and test the components and end-to-end integration”. RTR will allow Canadians to initiate payments and receive irrevocable funds in seconds, 24/7/365. The system will tap the ISO 20022 messaging standard to support payment information traveling with every payment. [Read more at Payments Canada]

Kiffmeister’s Global Central Bank Digital Currency Monthly Monitor

Just a reminder that I produce a monthly digest of central bank digital currency (CBDC) developments exclusively for the official sector. So for any of you out there who work for a central bank, ministry of finance or international financial institution who would like to receive it by email on the first business day of every month, please DM me on LinkedIn or email me at chronicles@kiffmeister.com.

Kiffmeister’s #Fintech Daily Digest (20221005)

~ kiffmeister

The Book of [Blockchain, Crypto and Web3] Jargon

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

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

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

Privacy in cross-border digital currency: A transatlantic approach

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

Smart Contracts Could Improve Efficiency And Transparency In Financial Transactions

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

Tickets available for CBDC Think Tank masterclass

The CBDC Think Tank, in partnership with the IMF and George Washington University, is hosting a full-day in-person CBDC Masterclass on October 12 in Washington DC for “official sector” staff and academics active in the CBDC / digital currency space only. The sessions are designed as instructional deep dives with full presentations and Q&A components.  Tickets are $99. [Register here]

Also, the CBDC Think Tank, in partnership with Georgetown University and the DC FinTech Week, is hosting a FREE (also in-person) Digital Currency Lecture Series, a set of digital currency lightning talks delivered by subject matter experts, on October 14 in Washington DC. [Request an invite here]

Kiffmeister’s Global Central Bank Digital Currency Monthly Monitor

Just a reminder that I produce a monthly digest of central bank digital currency (CBDC) developments exclusively for the official sector. So for any of you out there who work for a central bank, ministry of finance or international financial institution who would like to receive it by email on the first business day of every month, please DM me on LinkedIn or email me at chronicles@kiffmeister.com.

Kiffmeister’s #Fintech Daily Digest (20220925)

~ kiffmeister

I’ve updated my tabulation of retail central bank digital currency (CBDC) explorers; just minor updates and link repairs. [Click here]

How the US can regulate stablecoins now without congressional action

The Brookings Institution published a paper that proposes a US federal framework for the issuance of stablecoins within the existing regulatory framework for insured depository institutions, a structure that would not require any new legislation. Under current law, the Comptroller of the Currency could authorize a national trust bank charter, organized as an operating subsidiary of an insured depository institution, to create stablecoins through the use of a dedicated trust vehicle. The Comptroller would adopt standards limiting the investment of stablecoin reserves to high quality liquid assets and address redemptions and operational resilience, among other matters. The proposed framework guarantees that holders of a failed stablecoin are paid out rapidly and in full, because it uses the same resolution process by which failed banks are wound up. [Read more at Brookings]

Financial Inclusion and Central Bank Digital Currency in The Bahamas

The Central Bank of the Bahamas (CBOB) published a paper that attempts to assess the introduction of CBDC in the Bahamas. It uses a theoretical model that assumes that CBDC will lead to a decrease in the number of unbanked. As these individuals acquire access to financial institutions, the fraction of hand-to-mouth agents in the economy falls. If the number of unbanked individuals is cut in half, the economic benefits include: a reduction in the volatility of all shocks; monetary policy is more effective at controlling inflation and contributes less to the volatility of the overall economy; fiscal policy becomes more Ricardian, mitigating the size of fiscal shocks. [Read more at the CBOB]

Privacy and Central Bank Digital Currency in the Digital Economy

A paper written by European Central Bank staff studies how the choice of payment instruments affects privacy and welfare in the digital economy. Cash allows merchants to preserve their anonymity but cannot be used for online transactions that generate higher sales. Bank deposits can be used online but do not preserve anonymity. Payment tokens issued by digital platforms allow merchants to hide from the bank but also enable platforms to stifle competition. However, a CBDC that allows agents to share their payment data with selected parties can overcome all frictions and achieve efficient allocation. [Read more at SUERF]

Tickets available for CBDC Think Tank masterclass

The CBDC Think Tank, in partnership with the IMF and George Washington University, is hosting a full-day in-person CBDC Masterclass on October 12 in Washington DC for “official sector” staff and academics active in the CBDC / digital currency space only. The sessions are designed as instructional deep dives with full presentations and Q&A components.  Tickets are $99. [Register here]

Also, the CBDC Think Tank, in partnership with Georgetown University and the DC FinTech Week, is hosting a FREE (also in-person) Digital Currency Lecture Series, a set of digital currency lightning talks delivered by subject matter experts, on October 14 in Washington DC. [Request an invite here]

Kiffmeister’s Global Central Bank Digital Currency Monthly Monitor

Just a reminder that I produce a monthly digest of central bank digital currency (CBDC) developments exclusively for the official sector. So for any of you out there who work for a central bank, ministry of finance or international financial institution who would like to receive it by email on the first business day of every month, please DM me on LinkedIn or email me at chronicles@kiffmeister.com.

Kiffmeister’s #Fintech Daily Digest (02/27/2022)*

~ kiffmeister

What’s the marketing strategy for the Fed’s CBDC?

JP Koning wonders whether the U.S. Fed has a central bank digital currency (CBDC) marketing pitch beyond that it is safer than other forms of money (“free from credit risk and liquidity risk”). He argues that “safe” is something that Americans already have with commercial bank money thanks to deposit insurance. And because the Fed is going with an “intermediated” model, users will still have to deal with (and probably pay fees to) the same old banks and other payment service providers. [Read more]

Central bank digital currencies risk becoming a gigantic flop

Peter Bofinger and Thomas Haas made a similar argument a year ago with respect to advanced economy countries more generally – i.e., where a large share of the population have access to government-insured bank accounts. However, they concede that a supranational CBDC with multi-currency operability and an openness to payment objects that are not system-specific, may be a worthwhile response to monopolistic or oligopolistic global retail payment networks such as PayPal. [Read more]

BOJ on track for digital currency roll-out

The Bank of Jamaica (BOJ) is reportedly still on track for the roll-out of its JAM-DEX central bank digital currency (CBDC) during the first quarter of 2022. The remaining steps include the passage of amendments to the Bank of Jamaica Act to make CBDC legal tender and the BOJ the sole issuer, and increasing the number of deposit-taking institutions onboarding clients. Also, launch awaits an independent third-party quality assurance assessment of the system, the results of which will be made public. [Read more]

New European Commission Data Act aims for more control over smart contracts

The European Commission has released its proposal for the union’s new Data Act. Among other things, it would mandate that applications using smart contracts include “internal functions which can reset or instruct the contract to stop or interrupt the operation to avoid future (accidental) executions.” Fears are being expressed that such “kill switches” could threaten the promise of immutability because, with the ability of a single source to make a change, the contract is no longer autonomous. [Read more]