Kiffmeister’s #Fintech Daily Digest (20251024)

October 24, 2025October 24, 2025 ~ kiffmeister

The Bank of England (BOE) published a digital pound design note that explores how alternative aliases, such as mobile numbers, email addresses, or randomly generated codes, could improve convenience, privacy, and interoperability in retail payments. The note highlights that, when used as alternative identifiers for digital money accounts, aliases can improve the convenience, privacy and security of retail payments, while also supporting interoperability between different payment schemes and jurisdictions. The BOE proposes that a digital pound alias service should be integrated into its infrastructure, ensuring neutral mapping of aliases to user accounts irrespective of provider, but with careful safeguards for privacy. The preferred model would see the BOE host or orchestrate the service while potentially delegating data management to intermediaries (payment interface providers), balancing system control with innovation and privacy. [Source: BOE]

Bank of England Launches Synchronization Lab (BOE)

The BOE launched its Synchronization Lab, a non-live environment aimed at helping industry participants demonstrate and test synchronization use cases for the renewed real-time gross settlement (RTGS) service (RT2). The Lab enables potential synchronization operators, such as RTGS account holders, asset ledger operators, and end-customers, to experiment with and validate business models, technical designs, and settlement processes for synchronized (atomic) transactions in central bank money. Running for six months starting in spring 2026, it will provide a platform for hands-on prototyping and evaluation of different synchronization models, allowing participants to build, integrate, and demonstrate their solutions while the Bank gathers insights to refine the RTGS synchronization capability for future production. The initiative is complementary to the Bank’s other innovation programs but does not involve real-money payments or constitute a regulatory sandbox. [Source: BOE]

The BIS Financial Stability Institute (FSI) published a brief that analyzes regulatory approaches for stablecoin-related yield products, where crypto-asset service providers (CASPs) offer returns to holders of payment stablecoins, despite these tokens not being designed to generate on-chain yields. CASPs create returns through mechanisms such as lending, margin pools, DeFi protocols, or loyalty programs, which blur payment-investment boundaries and expose users to consumer protection risks, absent deposit insurance or strict oversight. While all surveyed jurisdictions prohibit issuers from directly remunerating stablecoin balances, regulation of CASP-provided yields varies: some (EU, Hong Kong) ban yield products entirely, some (Singapore) restrict them for retail users but allow for professionals, and others (US) currently lack explicit prohibitions. The paper highlights potential risks of these products, including consumer protection holes, financial stability vulnerabilities, and operational conflicts of interest. Addressing these risks may require a regulatory framework that cover CASPs’ stablecoin-related activities, close regulatory gaps and safeguard end users’ protection and financial stability. [Source: BIS FSI]

Vantage Bank and Custodia Launch Tokenized Deposit Platform for U.S. Banks (Custodia)

Vantage Bank and Custodia have launched a platform enabling U.S. community and regional banks to offer tokenized deposits and stablecoins, integrating these digital assets directly into online banking environments. This interoperable solution allows member banks to control their own wallets for tokenized deposits and stablecoins, shifting tokens seamlessly between regulatory categories while maintaining oversight and deposit stability. Early use cases include instant cross-border payments and flexible payroll options. The initiative distinguishes itself by addressing interoperability—creating a single token usable as both a tokenized deposit and a stablecoin—and offers open access to institutions of all sizes. Custodia’s compliance credentials ensure regulatory alignment, and the system is designed to preserve deposit stability within banks, and unify tokenized deposits and Avit stablecoins under a shared smart contract framework. Only traditional and tokenized deposits are FDIC insured; stablecoins remain uninsured and subject to regulatory risks. [Source: Custodia Bank]

Upcoming Speaking Engagements:

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]

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 (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]

Kiffmeister’s #Fintech Daily Digest (20250920)

September 20, 2025September 20, 2025 ~ kiffmeister

Chile’s Central Bank Considers CBDC to Settle Tokenized Assets (BCCh)

The Central Bank of Chile (BCCh) is preparing to launch a proof of concept to simulate the transfer of tokenized assets between agents on a blockchain ledger using a wholesale central bank digital currency (CBDC) as the settlement instrument. [Source: BCCh]

Optimal Policy for Financial Market Tokenization (IMF)

The IMF published a paper that analyzes how policymakers should approach the emergence of broker-led platforms that tokenize financial assets, promising efficiency gains but risking market fragmentation. The authors model competing brokers—each with varying numbers of clients—who can form coalitions to set up tokenized markets offering faster, cheaper settlement, but which may exclude rivals. The resulting equilibrium tends to produce partial coalitions, meaning either excessive investment in platforms (where private incentives for trade diversion outweigh social costs) or insufficient tokenization (excluding brokers who would increase welfare), while the welfare-maximizing outcome is either full participation or no tokenization. The analysis shows that neither mandating interoperability among platforms nor public-private cost-sharing alone is sufficient for optimal market structure—but their combination is. Even if open-access (public blockchain) platforms are allowed, policy intervention is still required to achieve the social optimum. Thus, the study suggests efficiency gains from tokenization are real, but policy must carefully balance interoperability mandates and cost sharing to avoid market fragmentation or inefficient investment. [Source: IMF]

Blockchain Consensus Mechanisms: A Primer for Supervisors (IMF)

The IMF published an update of a 2022 paper on blockchain consensus mechanisms such as proof-of-work, proof-of-stake, and Solana’s Tower BFT/proof-of-history, emphasizing their mechanics, incentives, and supervisory risks. The paper details operational risks (e.g., centralization of mining, energy use, network attacks), economic and market integrity challenges (e.g., validator dominance, slashing, liquid staking, maximal extractable value), and settlement finality differences across major networks. Additionally, it reviews scalability solutions (state channels, rollups, sidechains), highlighting the “scalability trilemma” and new complexities and risks these layer 2 solutions introduce. It notes regulatory challenges around staking, embedded supervision, and the trend toward distinguishing mature (decentralized) vs. centralized networks in regulation. [Source: IMF]

Upcoming Speaking Engagements:

Stablecoin NYC 2025 (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]

Kiffmeister’s #Fintech Daily Digest (20250814)

August 14, 2025August 14, 2025 ~ kiffmeister

Industry Working Group Completes On-Chain US Treasury Financing on Canton Network (Canton)

Digital Asset and a consortium of major financial firms executed a fully on-chain U.S. Treasury financing (repo) on the Canton Network, settling atomically and near-instantly via Tradeweb outside traditional market hours using the USDC stablecoin for cash and tokenized Treasuries as collateral, with underlying assets custodied at Depository Trust & Clearing Corporation (DTCC). Participants included Bank of America, Circle, Citadel Securities, Cumberland DRW, Hidden Road, Société Générale, Tradeweb, and Virtu Financial, demonstrating true 24/7 liquidity and eliminating the limitations of off-ledger cash and market-hour restrictions seen in legacy implementations– all of which is critical to creating a real, always-available, interoperable capital markets infrastructure. [Read more at Canton]

2024 Canadian Methods-of-Payment Survey Report (Bank of Canada)

According to the Bank of Canada, in 2024, Canadians’ cash use remained stable at roughly one-fifth of transaction volume and about one-tenth of value, holding its place behind credit and debit at the point of sale; meanwhile, nominal cash holdings ticked up (with more $50/$100 notes on hand), and withdrawals rose across ABMs, branches, and cashback though still below pre‑2017 levels. Most people report good access to cash (ABMs and branches), strong note quality perceptions, and limited appetite to go fully cashless—nearly four in five have no plans to abandon cash, and even many “cashless” consumers still keep some on hand. Cash transactions skew toward lower‑value purchases (average around the mid‑$20s over the diary window), while contactless cards and rising mobile payments continue to capture higher shares of in‑person spending; merchant acceptance of cash remains high, and the overall post‑pandemic leveling suggests cash persists as a meaningful, resilient payment option despite ongoing growth in digital alternatives. [Read more at the Bank of Canada]

Upcoming Speaking Engagements:

The CB+DC Conference (Nassau, Bahamas, September 9-11) is a premier gathering centered on CBDCs, tokenized assets, and stablecoins. It provides a forum for central bankers, commercial bankers, technology innovators, policymakers, and academics to explore the latest advancements in digital currency, engage with experts and peers, and discuss the future of digital currency. [Register here but before you do, email me at john@kiffmeister.com for a 15% discount]

Kiffmeister’s #Fintech Daily Digest (20250704)

July 4, 2025July 4, 2025 ~ kiffmeister

Building Tomorrow’s Markets: The Digitalization of Finance (BOE)

The Bank of England’s (BoE’s) Financial Market Infrastructure Executive Director, Sasha Mills, outlined the central bank’s vision for digitalizing wholesale financial markets through tokenization of assets and smart contracts on distributed ledger technology (DLT). She pointed to the Bank’s updated thinking on settlement assets, particularly allowing systemic stablecoins to be backed by remunerated high quality liquid assets (HQLAs) rather than solely unremunerated central bank deposits. Ms. Mills highlighted progress through the Digital Securities Sandbox and the UK Government’s Digital Gilt pilot (DIGIT), while outlining plans for enhanced access to the upgraded real time gross settlement (RTGS) service and exploring synchronization interfaces to enable conditional settlement across different ledger systems. She emphasized that the future financial system will likely be a “mixed ecosystem” where new and old structures coexist, requiring interoperability between different systems, and called for moving beyond theoretical discussions to practical implementation of these digital foundations. Ms. Mills also floated potential holding limits for systemic stablecoins, likely be in the region of £10,000 to £20,000 for individuals and £10 million for businesses. [Read more at the BoE]

Project Guardian: Using Tokenized Deposits for FX Transaction Banking (MAS)

The Monetary Authority of Singapore (MAS) published a paper on the implementation of tokenized deposits and shared ledger technology in foreign exchange (FX) transaction banking within Project Guardian. It presents three architectural models: single-bank ledgers for internal transfers, multi-bank shared ledgers requiring governance consensus, and cross-ledger interoperability through protocols like hash time-locked contracts. The architecture relies heavily on price oracles for FX rate discovery and smart contracts for programmable compliance. However, critical technical challenges remain unaddressed, including consensus mechanism selection, cross-chain settlement finality, oracle failure scenarios, and performance scalability for institutional-grade transaction volumes in distributed ledger environments. [Read more at the MAS]

Driving Financial Inclusion Through CBDCs: A Methodology for Implementation (UNDP)

The United Nations Development Programme (UNDP) published a five-stage methodology for implementing central bank digital currencies (CBDCs) to advance financial inclusion in emerging economies. The methodology progresses through: (1) understanding financial inclusion barriers and user needs, (2) CBDC preparation including cost-benefit analysis and stakeholder coordination, (3) user-centric design and prototyping with emphasis on privacy protection and accessibility, (4) piloting to test assumptions and gather feedback, and (5) full implementation with ongoing monitoring and capacity building. The paper emphasizes that retail CBDCs, when properly designed with features like offline functionality and simplified identification requirements, can address persistent barriers such as high transaction costs, limited documentation, and poor connectivity that exclude underserved populations from traditional financial services. However, the authors stress that CBDCs should be viewed as one component of broader Digital Public Infrastructure rather than standalone solutions, and successful implementation requires robust stakeholder engagement, regulatory frameworks, and continuous adaptation to ensure these digital currencies effectively serve vulnerable populations while maintaining security and sustainability. [Read more at the UNDP]

Competition in Mobile Payment Services (OECD)

The OECD published a paper that examines competition in the rapidly growing mobile payment services sector. While mobile payments offer opportunities for innovation and enhanced competition by potentially bypassing traditional payment rails controlled by banks and card networks, several competition risks are emerging. These include market concentration, data asymmetries favoring BigTech companies, barriers to accessing key technologies like NFC, and exclusionary practices such as self-preferencing. Despite entry from FinTechs, BigTech firms, and mobile network operators, traditional payment providers have largely preserved their market positions through structural advantages and regulatory barriers. The paper recommends combining proactive competition enforcement with targeted pro-competitive regulations, including open banking frameworks, data portability requirements, interoperability standards, and development of alternative public payment infrastructures. Success requires coordination between competition authorities and financial regulators to ensure mobile payment markets remain contestable and deliver benefits to consumers and merchants. [Read more at the OECD]

Central Bank of Bahrain Issues Framework for Regulating Stablecoin Issuance (CBB)

The Central Bank of Bahrain (CBB) introduced a framework for licensing and regulating stablecoin issuers. It mandates that any entity seeking to issue, mint, burn, custody, or offer stablecoins from within Bahrain must be licensed and obtain CBB approval—unregulated activity is prohibited . Licensed stablecoin issuers will be permitted to issue single currency stablecoins backed by Bahraini Dinar (BHD), United States Dollar (USD), or any other fiat currency acceptable by the CBB, with a strict 1:1 high-quality liquid reserve requirement (cash and demand deposits held at banks with at least an AA‑ credit rating or its equivalent, debt securities issued by the CBB, or repurchase agreements (repos) backed by short‑term government money‑market instruments). The module also allows yield-bearing variants—returns generated solely from interest or Sharia-compliant rewards on reserve assets—but caps issuers from offering interest tied to user balances. [Read more at the CBB]

Upcoming Speaking Engagements:

And just a reminder that I produce a monthly digest of central bank digital currency (CBDC) developments exclusively for the official sector. So (only) if you work at a central bank, ministry of finance or international financial institution (e.g., the BIS, IMF, OECD, World Bank) and who would like to receive it by email on the first business day of every month, please DM me on LinkedIn or email me at john@kiffmeister.com.

Kiffmeister’s #Fintech Daily Digest (20250701)

July 1, 2025July 1, 2025 ~ kiffmeister

ECB Commits to DLT Settlement Plans with Dual-Track Strategy (ECB)

The European Central Bank (ECB) will follow a dual-track strategy to enable distributed ledger technology (DLT) transaction settlement using central bank money. The “Pontes” track is a short-term solution that will pilot connections between DLT platforms and the Trans-European Automated Real-time Gross Settlement Express Transfer (TARGET) platform by the end of Q3 2026. “Appia” is a long-term approach focused on creating innovative, integrated financial ecosystems, like the “full DLT” solutions tested by the Banque d France” in which settlements were completed using on-chain “exploratory cash tokens” (i.e., wholesale central bank digital currency (CBDC)). This decision builds on the Eurosystem’s 2024 exploratory work involving 64 participants conducting over 50 DLT trials and experiments, the results of which were published along with the announcement of the dual-track strategy. [Read more at the ECB]

Swiss National Bank Extends and Expands Project Helvetia (SNB)

The Swiss National Bank (SNB) is extending and expanding Project Helvetia, which examines various approaches to settling tokenized assets in central bank money, for a further year and continue the pilot until at least mid-2027. (The project was slated to end a two-year extension on June 2026.) Additionally, the SNB is expanding Project Helvetia to include the settlement of tokenized assets with traditional central bank money through a real time gross settlement (RTGS) link, providing BX Digital with a production environment to test this approach alongside the existing wholesale central bank digital currency (CBDC) settlement on the SIX Digital Exchange platform. The extension allows for a direct comparison between the two settlement approaches in a production environment to provide further insights into their respective advantages and disadvantages. [Read more at the SNB]

Robinhood Launches Layer-2 Blockchain for Stock Trading in Europe (CoinTelegraph)

Robinhood launched a tokenization-focused layer-2 blockchain and introducing stock token trading European Union (EU) users. Built on Arbitrum, the new layer-2 network will enable the issuance of over 200 US stock and exchange-traded fund (ETF) tokens, giving European investors access to U.S. assets. Robinhood’s stock tokens will have zero commissions and be available for trading 24 hours a day, five days a week. [Read more at Robinhood]

Paxos Launches Global Dollar USDG in the EU (Ledger Insights)

Paxos has launched its Global Dollar stablecoin (USDG) in the European Union in compliance with local Markets in Crypto-Assets (MiCA) regulations, with initial distributors including Kraken and Gate. The stablecoin operates under a revenue-sharing model where Paxos shares most of the revenues earned on reserves with distribution partners, departing from industry norms. Originally issued under Singapore laws, USDG entered the EU market through Paxos’s acquisition of Finland’s Membrane Finance, which held a MiCA license. The launch highlights the complexity of managing multi-jurisdictional stablecoins, as EU regulations require 30% of reserves to be held as cash in local bank accounts, necessitating a rebalancing process that has drawn criticism from EU parliamentarians who worry about potential regulatory circumvention during crisis situations. [Read more at Paxos]

Circle Applies for National Trust Charter (Circle)

Circle submitted an application to the Office of the Comptroller of the Currency (OCC) to establish a national trust bank, First National Digital Currency Bank, N.A. If approved, the bank would be authorized to operate as a federally regulated trust institution, subject to OCC oversight, and would oversee the management of the USDC Reserve on behalf of Circle’s U.S. issuer. An approval would also further strengthen the infrastructure that supports the issuance and circulation of USDC and would offer digital asset custody services to institutional customers. A federally regulated trust charter would also help Circle meet expected requirements under the proposed GENIUS Act legislation, which would represent a meaningful step forward in integrating digital assets into the broader U.S. financial system. [Read more at Circle]

New Technology and Settlement in Central Bank Money Between Banks (Danmarks Nationalbank)

Danmarks Nationalbank published a paper that examines how distributed ledger technology (DLT) could transform financial market infrastructure while maintaining the critical role of central bank money in interbank settlements. The paper explains that while DLT platforms offer potential benefits like streamlined capital markets, automated smart contracts, and reduced intermediaries, they currently cannot integrate with central bank money systems, creating risks of market fragmentation and reduced monetary policy effectiveness. To address this challenge, central banks are exploring two main approaches: connecting existing central bank systems to DLT platforms through interoperability solutions, or developing new systems where central bank money and digital assets operate on the same DLT platform. The analysis emphasizes that regardless of technological advances, maintaining central bank money as the primary settlement asset is essential for financial stability, and Denmark will collaborate with the European Central Bank (ECB) through the TARGET Services platform to ensure future settlement infrastructure developments benefit the Danish financial system while preserving the unique safety and liquidity properties of central bank money. [Read more at Danmarks Nationalbank]

Upcoming Speaking Engagements:

Kiffmeister’s #Fintech Daily Digest (20250624)

June 24, 2025June 24, 2025 ~ kiffmeister

European Commission Consumer Survey: Offline transactions (EC)

The European Commission (EC) has launched a study to assess existing technology and technology preferences for offline electronic proximity transactions. The study has three objectives: (1) conduct a market analysis and forecast future trends for offline payments; (2) perform a technology assessment of currently available solutions and explore future innovation scenarios and; (3) identify barriers to innovation. The study is kicking off with a survey conducted by Bearing Point to seek opinions from a consumer perspective to help understand current end user preferences on electronic payments in terms of devices, value transfer technologies but also possible hurdles that may serve as barriers to adoption of potentially innovative payment solutions. [Read more at the EC]

Bank of England / BIS Innovation Hub DLT Innovation Challenge (BoE)

In collaboration with the Bank for International Settlements Innovation Hub (BISIH), the Bank of England (BoE) has launched the DLT Innovation Challenge to engage with the private sector to better understand the implications of incorporating distributed ledger technology (DLT) into wholesale central bank settlement, and demonstrate how to securely transact and settle central bank money on an external ledger that is not controlled by the Bank. In particular, it will explore environments where trust is not inherent—where participants must rely on mechanisms other than central bank control of the ledger to ensure security, finality, and integrity. This framing allows us to test how trust can be established in decentralized or externally governed infrastructures, and to draw insights that may inform the wider wholesale experimentation program. [Read more at the BoE]

The Next-Generation Monetary and Financial System (BIS)

The Bank for International Settlements (BIS) issued a “special chapter” ahead of its 2025 Annual Economic Report, cautioning that privately-issued stablecoins lack essential qualities of “sound money”—namely integrity (against financial crime and other illicit activity), singleness (accepted universally without hesitation), and elasticity. Stablecoins’ failure on elasticity stems from their construction: any additional issuance requires full upfront payment by holders (i.e., a strict cash-in-advance setup with no room to create leverage when it is required for the functioning of the system). This differs fundamentally from banks, which can elastically expand their balance sheets by extending credit within regulatory limits. Stablecoins also pose risks to monetary sovereignty, financial stability, and emerging‑market capital flows. Instead, it advocates for a monetary system built on a unified ledger platform integrating tokenized central bank reserves, commercial bank deposits, and government bonds. [Read more at the BIS]

Guidance on Financial Inclusion and AML/CFT Measures (FATF)

The Financial Action Task Force (FATF) published guidance on aligning financial inclusion with anti-money laundering and counter-terrorist financing (AML/CFT) measures. It promotes a risk-based approach (RBA) to ensure proportionate measures, allowing simplified due diligence in lower-risk scenarios while maintaining robust controls for higher risks. The guidance addresses barriers to financial inclusion, such as identity verification challenges and de-risking, and provides examples of best practices from various countries. It also highlights the role of digital financial services and public-private collaboration in expanding access to regulated financial systems for underserved populations, ensuring integrity and inclusivity. The document is non-binding but encourages policymakers, regulators, and financial institutions to adopt flexible, risk-sensitive frameworks. [Read more at the FATF]

Upcoming Speaking Engagements:

Kiffmeister’s #Fintech Daily Digest (20250611)

June 11, 2025 ~ kiffmeister

Transforming global payments: the role of tokenized money & funds in cross-border transactions (VISA)

VISA published an interim report on Phase 2 of the e-HKD Pilot Programme, an initiative by the Hong Kong Monetary Authority (HKMA) to explore cross-border transactions using new forms of digital money including central bank digital currency (CBDC) and tokenized deposits. The pilot, involving VISA, ANZ, Fidelity International, and ChinaAMC Hong Kong, testis how Australia-based investors can purchase tokenized fund units from Hong Kong asset managers using e-HKD or tokenized deposits. The program aims to explore the potential of blockchain technology for near real-time settlements, enhanced interoperability between public and permissioned blockchains, and the establishment of token standards, ultimately seeking to accelerate digital asset adoption and improve the efficiency of fund management and cross-border payments. [Read more at VISA]

Public consultation on possible extension of T2 operating hours (ECB)

The European Central Bank (ECB) is seeking input from market stakeholders on potentially extending the operating hours of T2, its real-time gross settlement system. The Eurosystem is considering the possibility of moving T2 towards a 24/7 model. The consultation will consider several options for extending T2 operating hours, including a move towards (i) a 24-hour operational day, (ii) a 6 or 7-day operational week, or (iii) a 365-day operational year. Additionally, the Eurosystem is considering some potential adjustments to key operational features or longstanding conventions such as (i) reorganizing payments settlement during night-time, (ii) adjusting key cut-off times and (iii) introducing new value dates. [Read more at the ECB]

Upcoming Speaking Engagements:

Kiffmeister’s #Fintech Daily Digest (20250523)

May 23, 2025May 23, 2025 ~ kiffmeister

Banks Explore Venturing Into Crypto World Together With Joint Stablecoin (WSJ)

According to the Wall Street Journal (WSJ) a consortium of the biggest U.S. banks, including Bank of America, Citigroup JP Morgan Chase, and Wells Fargo, are in the early conceptual stages of exploring issuing a joint stablecoin. Early Warning Services, the operator of the Zelle peer-to-peer payment system, and The Clearing House payments network, are also reportedly involved. Early Warning Services, which runs the Zelle instant payments system, is owned by Bank of America, Capital One, JP Morgan Chase, PNC Bank, Truist, U.S. Bank and Wells Fargo. The Clearing House is owned by 22 banks which include the same ones as Early Warning Services, but also Bank of New York, Citigroup and many international banks such as Barclays, Deutsche Bank, HSBC and Santander. [Read more at the WSJ]

USDF Consortium Reportedly Shuttered (Ledger Insights)

The USDF Consortium, launched in 2022 to create a US dollar stablecoin-based interbank payment system on a permissionless blockchain, has reportedly closed down. The original idea was that its USDF tokens would be redeemable at any of the participant community banks. The banks involved were New York Community Bank, Synovus, Bank, Sterling National Bank, FirstBank, and NBH Bank. Under regulatory pressure, it moved to a private chain until it became clear that regulators still didn’t want it to proceed and so it reportedly shuttered late last year. However, its website (usdfconsortium.com) is currently displaying a “maintenance mode is on… site will be available soon” message, so maybe it’s not so dead? [Read more at Ledger Insights]

Second MOF/BOJ Interim Report on a Japanese CBDC (LinkedIn)

Japan’s Ministry of Finance (MOF) published the second interim report of the joint task force with various government ministries and the Bank of Japan (BOJ) on central bank digital currency (CBDC). It’s currently available only in Japanese, but Norbert Gehrke has very helpfully provided a summary in English (see it here). The primary focus is on three main themes; (i) the legal framework (private law), (ii) privacy and data utilization, and (iii) the roles and division of labor with private payment systems. [Read more at the MOF]

Enabling Central Bank Money Settlement and Collateral Eligibility for DLT-based Securities (AFME)

The Association for Financial Markets in Europe (AFME) published proposals in areas key to further scaling of distributed ledger technology (DLT) based capital markets. Both the ability to settle DLT transactions in central bank money and to use DLT-based securities as eligible collateral are key to building liquidity and attractiveness of DLT-based markets. Two of the key building blocks are the (i) availability of a well-designed solution for settlement in central bank money of DLT-based transactions; and (ii) eligibility of DLT-based assets to serve as collateral in Eurosystem credit operations. The report goes on to recommend concrete actions by the ECB and Eurosystem with respect to these two building blocks. [Read more at the AFME]

Upcoming Speaking Engagements:

Kiffmeister’s #Fintech Daily Digest (20250415)

April 15, 2025April 15, 2025 ~ kiffmeister

A formally defined model to describe and compare payment system architectures (BIS)

The Bank for International Settlements (BIS) proposed a formally defined model to represent three key functions of payment system architectures: issuance/withdrawal, holding and transfer of funds in a standardized manner. The model defines payment diagrams, using a precisely defined syntax. The paper illustrates the application of these diagrams for domestic and cross-border account transfers, as well as cash, card, e-money and stablecoin payments. However, the payment diagrams can be used for any type of funds and can be applied across different payment system architectures. It also demonstrates how the diagrams correspond to the balance sheet approach commonly used in economics, and that it offers added value by providing an end-to-end visualization of every stage of the payment journey. The model provides a tool for central banks, regulators and the payment industry to better understand and compare existing and new payment system architectures. [Read more at the BIS]

Fnality rolls out “earmarking” for programmable payments (Fnality)

Fnality has released a new “earmarking” feature that allows banks to program funds for release upon receipt of proof of an event elsewhere. For example, institutions will be able to systematically program when funds move in exchange for a specified asset, or a related market event. A proof is a cryptographically signed piece of data representing specific information from another system, triggering the release of the £FnPS’s digital representation of central bank funds. When an earmark is in place prior to its release, the funds remain on the originating participant’s balance sheet at all times. [Read more at Fnality]