Kiffmeister’s #Fintech Daily Digest (20220929)

ECB provides update on its digital euro work

The European Central Bank (ECB) provided a status report on its central bank digital currency (CBDC) work. It confirmed that a digital euro would incorporate individual user holding limits to slow the possible conversion of bank deposits into digital euro  (disintermediation risk). A digital euro would also bear interest calibrated to make digital holdings above a certain threshold unattractive compared to other highly liquid low-risk assets.  Offline payments will only be allowed for low value, low risk, close proximity transactions. [Read the report here] In addition, ECB board member Fabio Panetta set out a plan for a digital euro scheme involving a set of rules, practices and standards with plans to start working on a rulebook. [Read the plan here]

Digital Currency: Yuan comes with an expiry date: Spend or it will vanish

China is reportedly exploring putting expiration dates on its e-CNY retail CBDC, which could force holders to use it up by a certain date. This idea has most recently been explored in a Celo working paper that advocated using expiration dates to increase the “velocity” of money, based on an an unconventional monetary policy instrument known as a Gesell money. [Read more at the Economic Times]

Bank of England: FMI Sandbox will start with DLT securities post trade

The Bank of England announced that the U.K.’s Financial Market Infrastructure (FMI) Sandbox would initially focus on distributed ledger technology (DLT) based securities settlement systems. The Sandbox is a joint initiative between HM Treasury, the Bank of England and the Financial Conduct Authority. [Read more at the Bank of England]

ERC-20R and ERC-721R: Reversible Transactions on Ethereum

This paper proposes reversible versions of ERC-20 and ERC-721, whereby a transaction is eligible for reversal for a short period of time after it has been posted on chain. After the dispute period has elapsed, the transaction can no longer be reversed. Within the short dispute period, a sender can request to reverse a transaction by convincing a decentralized set of judges to first freeze the disputed assets, and then later convincing them to reverse the transaction. The paper provides a prototype implementation. [Read more at arxiv.org]

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 (20220926)

Australian CBDC Pilot for Digital Finance Innovation

The Reserve Bank of Australia (RBA) and the Digital Finance Cooperative Research Centre (DFCRC) published a white paper that explains in detail the objectives and approach of their eAUD central bank digital currency (CBDC) project. They also invited interested industry participants to make submissions on CBDC use cases, and offered participants the chance to express interest in operating their use case in a pilot (or proof of concept?) project to test and demonstrate the value proposition. The DFCRC will develop and install the eAUD platform as a private, permissioned Ethereum (Quorum) implementation, and the eAUD ledger will operate as a centralised platform, under the management and oversight of the RBA. [Read more at the RBA]

Nomura invests in Fnality institutional blockchain payments platform

Nomura is investing in Fnality, the interbank payment and settlement platform that uses “synthetic” wholesale CBDC to settle transactions on distributed ledger technology (DLT) based financial market infrastructures (FMIs). (A “synthetic CBDC” is essentially a stablecoin backed by central bank deposits.) Fnality reportedly says it will launch its first such synthetic CBDC in October 2022, pegged to the British Pound (GBP) and backed by deposits at the Bank of England. [Read more at Ledger Insights]

Demystifying wholesale central bank digital currency

According to European Central Bank (ECB) executive board member Fabio Panetta, the ECB is looking at the potential of DLT in improving the efficiency of interbank settlements. However, after listing the many benefits of DLT, Panetta highlighted some drawbacks, and made a case for a system that builds on the ECB’s existing infrastructure for wholesale settlements, instead of building a new one based entirely on DLT. [Read more at the ECB]

DTCC’s DLT stock settlement system live in parallel production

In August the Depository Trust & Clearing Corporation (DTCC) DLT-based Project Ion platform for stock settlement went into production. The R3 Corda-based platform runs in parallel with the DTC’s classic settlement system, which remains the definitive record. At this stage, Project Ion is designed to only deal with bilateral equity transactions but is already processing an average of 100,000 transactions per day. [Read more at DTCC]

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 (20220920)

The Hong Kong Monetary Authority (HKMA) e-HKD policy stance

The Hong Kong Monetary Authority (HKMA) released a position paper that sets out its policy stance on retail central bank digital currency (CBDC) and outlines its next steps. It was informed by two rounds of market consultation, one on high-level technical design and one on key policy and design issues. Taking into account the feedback received and further study by the central bank’s staff, the HKMA will start paving the way for possible implementation of e-HKD in the future. A three-rail approach will be adopted, one of which will be a pilot involving selected banks, payment companies and other technology firms, plus their staff and a small number of clients. [Read more at the HKMA]

Final Decision on Digital Tenge Still Pending in Kazakhstan

The final decision on the National Bank of Kazakhstan’s Digital Tenge project has reportedly not yet been made, but is expected to be announced by the end of 2022, the project’s head Ainur Kenzhayeva said in an interview with The Astana Times. The team is working now to expand the platform’s functionality. A pilot project with the participation of real users in a limited loop is also planned for this fall. [Read more at The Astana Times]

The Chainalysis 2022 Global Crypto Adoption Index

According to Chainalysis, global crypto adoption has leveled off in the last year after growing consistently since mid-2019. Emerging markets dominate the index. Out of the top 20 ranked countries, ten are lower middle income (:Vietnam, Philippines, Ukraine, India, Pakistan, Nigeria, Morocco, Nepal, Kenya, and Indonesia), eight are upper middle income (Brazil, Thailand, Russia, China, Turkey, Argentina, Colombia, and Ecuador) and two are high income (United States and United Kingdom). [Read more at Chainalysis]

Buy Now, Pay Later: Market trends and consumer impacts

The U.S. Consumer Financial Protection Bureau (CFPB) published research on the U.S. Buy Now, Pay Later (BNPL) market, based on data from Affirm, Afterpay, Klarna, PayPal, and Zip Co. It identifies several benefits of BNPL loans over legacy credit products (no interest and sometimes no late fees, and ubiquitous, easy to access, simple repayment structure) and a number of potential consumer risks (a requirement to use autopay for all loan payments, data harvesting and borrower overextension). [Read more at the CFPB]

Deutsche Börse to issue digital securities on DLT-ready D7 platform

“Last year, the Deutsche Börse unveiled the launch of D7, a digital securities post-trade platform. It is now taking its second step by issuing digitally native securities in the fourth quarter. While the latest phase uses smart contracts, the securities are not yet blockchain-based, which is planned for a third phase.” [Read more at Ledger Insights]

 

 

 

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 (20220727)

Central African Republic begins public sale of Sango Coin

The national cryptocurrency of the Central African Republic, Sango Coin, is now on sale. People looking to buy the token need at least $100 in Bitcoin, Ethereum, BNB Smart Chain, Tether, USD Coin, Binance USD, or DAI. Buyers cannot withdraw or transfer their tokens until the lock-up period is over. However, only 5% of the tokens had been sold in the first 24 hours of the public sale. [Read more at the Block]

JAM-DEX officially launched through Lynk App

The Bank of Jamaica (BOJ) officially launched Jamaica’s JAM-DEX central bank digital currency (CBDC)  through the Lynk app on July 11.  Lynk is currently the only transaction platform for Jamaicans to use their JAM-DEX. As part of the launch, the first 100,000 customers that signed up for JAM-DEX via the Lynk app were given an incentive bonus of J$2,500 JAM-DEX in their wallets by the Government of Jamaica. [Read more at the Lynk]

BME,  BBVA and IADB issue blockchain-registered regulated bond in Spain

Bolsas y Mercados Españoles (BME), through Iberclear, Banco Bilbao Vizcaya Argentaria (BBVA) and the Inter-American Development Bank (IADB), have completed the first bond issuance in Spain listed in a regulated market and registered using blockchain technology developed by ioBuilders. The blockchain platform allows the registration, trading in the secondary market and life cycle management of a bond issued in a regulated market. Smart contracts have been used for the execution of the distribution, purchase and sale, settlement and corporate events processes, using electronic money tokenized by BBVA for the management of cash throughout the term of the issuance. [Read more at BME]

Upcoming events I’m affiliated with:

The CBDC Think Tank, in partnership with the International Monetary Fund and George Washington University, is hosting a full-day in-person CBDC Masterclass on October 12 in Washington DC. The sessions are designed as instructional deep dives with full presentations and Q&A components.  [Register here]

Kiffmeister’s #Fintech Daily Digest (20220725)

UK to explore blockchain-based government bond

The Financial Services and Markets Bill 2022 has been introduced into the U.K. Parliament. Section 22 of the Bill contains a new power for the government to introduce bespoke rules on the regulation of payments, payment systems and service providers in relation to the payments that include “digital settlement assets”, which includes any digital representation of value or rights that “(a) can be used for the settlement of payment obligations; (b) can be transferred, stored or traded electronically, and (c) uses technology supporting the recording or storage of data (which may include distributed ledger technology).” The Chancellor of the Exchequer said that HM Treasury will be working to understand how distributed ledger technology could be applied to a U.K. sovereign debt instrument. [Read more at Gov.uk]

What can CBDC designers learn from asking potential users? Results from a survey of Austrian residents

The Österreichische Nationalbank (ONB) published a paper that summarizes the results of a survey of 2006 Austrian residents about their central bank digital currency (CBDC) design preferences and their likelihood of using a digital euro. Respondents were satisfied with the existing payment options, and only about half expressed at least some interest in a digital euro. In terms of CBDC design, high importance was placed on security against fraud and theft, but less than a third considered privacy important. [Read more at the ONB]

Upcoming events I’m affiliated with:

The CBDC Think Tank, in partnership with the International Monetary Fund and George Washington University, is hosting a full-day in-person CBDC Masterclass on October 12 in Washington DC. The sessions are designed as instructional deep dives with full presentations and Q&A components.  [Register here]