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 (20220914)

Securitize KKR Health Care Growth II Tokenized Fund

Through a partnership with Securitize Capital, investors can gain tokenized exposure to investment firm KKR’s latest health care focused growth equity fund, with lower investment minimums and greater potential for liquidity. It marks the first time exposure to one of KKR’s alternative investment strategies has been offered in a digital format in the United States. The fund is tokenized on the eco-friendly Avalanche public blockchain-based smart contract platform. [Read more at Securitize Capital]

OpenNode Is Testing Bitcoin Payments With The Central Bank Of Bahrain

The Central Bank of Bahrain (CBB) has authorized OpenNode to test its bitcoin payment processing and payouts solution in the central bank’s regulatory sandbox. The sandbox is a virtual space for CBB-licensed financial institutions and other start-ups and FinTech firms to test their technology-based innovative solutions/services relevant to FinTech before scaling up their operations in Bahrain and across the region. [Read more at  PR Newswire]

Discounted 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 (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]

Kiffmeister’s #Fintech Daily Digest (20220718)

Reconciling the Atlantic Council CBDC Tracker with My Tabulations

The Atlantic Council publishes a CBDC Tracker that aspires to be the definitive record of publicly announced central bank digital currency (CBDC) projects. However, it publishes with headline numbers that are significantly higher than those implied by my retail and wholesale CBDC tabulations. The Atlantic Council CBDC Tracker recently reported that 105 countries were exploring, whereas I count 86 central banks that are authorized to issue CBDC.

I’ve plodded through their graphic and I think I have nailed down the most of the difference, a combination of double counting and including some central banks that, in my opinion,  are not exploring CBDC:

  • I count the Eurozone as one “country” because only the European Central Bank is authorized to issue currency there, whereas the Atlantic Council counts all nine national central banks conducting CBDC projects.
  • Similarly I count the Eastern Caribbean Currency Union as one because only the Eastern Caribbean Central Bank can issue currency there, whereas the Atlantic Council counts seven of the national central banks, although counts Anguilla separately even though they’re part of the Union.

If I follow that scheme my count would go from 86 to 101. Then there are six countries that the Atlantic Council includes that I don’t:

  • Belarus, Belize, and Senegal, where private and/or government-owned banks were piloting digital currencies with the central bank’s blessing.
  • Venezuela, where the government (not the central bank) issued the Petro, with no apparent central bank backing or involvement.
  • Fiji and Vanuatu, which were focus of a digital currency research effort by Japanese Fintech firm Soramitsu, commissioned by NTT Data Institute of Management Consulting with the blessing of the Japanese government. (Solomon Islands and Tonga were part of the project too, but for some reason were left off the Atlantic Council Tracker.)

Those would take my total to 107, but then the Atlantic Council missed five projects from my tabulation: Bangladesh, Paraguay, Qatar, Sudan and Yemen, takes it to 112, so go figure!

If anyone can help me with the reconciliation, please let me know in the comments!

BNP Paribas issues tokenized bond for EDF on public blockchain

BNP Paribas structured and tokenized a project finance bond on the public Ethereum blockchain. The proceeds were used to fund solar energy projects through Électricité de France Energies Nouvelles Reparties (EDF ENR), which helps businesses and individuals install solar panels. [Read more at Ledger Insights]

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 (20220615)

Brazil’s digital currency implementation pushed to 2024

Banco Central do Brasil is reportedly pushing out its central bank digital currency (CBDC) pilot work from end-2022 to 2023. This is due to a workers’ strike at the central bank, which impacted the original schedule. [Read more]

Deciding on a Digital Dollar: The Necessary Steps for Canada

The Centre for International Governance Innovation (CIGI) published a conference report based on an April 2022 workshop attended by Canadian and international experts (including yours truly). The discussion focused on the international backdrop and what can be learned from global leaders in CBDCs, to determine next steps for Canada and to assess the legal and regulatory changes required to support a Canadian CBDC. [Read more]

Tether Condemns False Rumors About Its Commercial Paper Holdings

Tether pushed back on rumors that the commercial paper held as USDT stablecoin reserves is 85% comprised of paper backed by (mostly shaky) Chinese or Asian firms. As of the most recent attestation report commercial paper made up about 25% of USDT’s backing, and Tether is gradually switching maturing paper into short-maturity U.S. Treasury securities. Also, Tether’s Celsius position has been liquidated with no losses to Tether, and Tether has currently zero exposure to Celsius apart from a small investment made out of Tether equity in the company. [Read more]

DeFi lending: intermediation without information?

A Bank for International Settlements (BIS) paper explores decentralized finance (DeFi) lending platforms, concluding that their current institutional features mostly facilitate speculation in crypto-assets rather than real economy lending. Due to the anonymity of borrowers, over-collateralization is pervasive, which generates procyclicality. Reliance on collateral also limits access to credit to borrowers who are already asset-rich, negating financial inclusion benefits. The paper concludes that for DeFi lending to make inroads into the real economy, it needs to tokenize real assets and rely less on collateral by developing its ability to gather information about borrowers; as such, the system is likely to gravitate towards greater centralization. [Read more]

Upcoming events I’m affiliated with:

The CBDC Think Tank is hosting a CBDC Papers Lecture Series on June 17 and 24 starting at 7am EST and running for 4 hours each day. [View list of papers and register here]

Kiffmeister’s #Fintech Daily Digest (20220605)

Initial steps towards a central bank digital currency by the Central Bank of Brazil

This Central Bank of Brazil (BCB) note discusses the development of its central bank digital currency (CBDC). The main objective is to provide entrepreneurs with a safe and reliable environment to innovate through the use of programmability technologies, such as programable money and smart contracts. In the context of a modern payment system, already available to the Brazilian population, a full-fledged CBDC must enable new functionalities, beyond those brought by an instant payment arrangement. Therefore, the innovation tool for which the BCB envisions the greatest potential is the development of a platform for smart payments. [Read more]

Are There Compelling Reasons to Consider a Central Bank Digital Currency for the U.S.?

A U.S. Richmond Fed article examines alternative arguments for considering a CBDC for the U.S. It points out that introducing a CBDC is unlikely to substantially improve the current U.S. money and payments system. A more compelling reason to consider a CBDC is to prepare the U.S. system against future threats, especially those associated with the rise of private and foreign digital currencies. Therefore, there appears no immediate need for the U.S. to issue a CBDC, but the U.S. needs to explore the CBDC technology now for potential future use. [Read more]

Jamaica’s Senate Approves Central Bank Digital Currency

The Bank of Jamaica has been given the authority to issue CBDC with the Senate’s passage of the Bank of Jamaica (Amendment) Act, 2022 at Gordon House on June 3, 2022. [Read more]

DLT Pilot regime released: EU is preparing for tomorrow’s digital securities market

Regulation 2022/858 of the European Parliament and of the Council on a pilot regime for market infrastructures based on distributed ledger technology (DLT) was published in the Official Journal of the European Union. Tokenization is expected to open up opportunities for efficiency improvements in trading and post-trading processes, but EU financial services legislation was not designed with such technology and crypto-assets in mind and contains provisions that could limit the use of blockchain technology. For these reasons, the DLT Pilot Regime is being introduced to allow for such technology to flourish, while accounting for potential risks at the same time. [Read more]

Upcoming events I’m affiliated with:

The CBDC Think Tank is hosting a CBDC Papers Lecture Series on June 17 and 24 starting at 7am EST and running for 4 hours each day. [View list of papers and register here]

Kiffmeister’s #Fintech Daily Digest (20220603)

Japan Passes Stablecoin Bill That Enshrines Investor Protection

Japan’s parliament passed a bill that classifies stablecoins as digital money that must be linked to a currency that is legal tender and guarantee holders the right to redeem them at face value. The legal definition means stablecoins can only be issued by licensed banks, registered money transfer agents and trust companies. The new legal framework will take effect in a year, and Japan’s Financial Services Agency will introduce regulations governing stablecoin issuers in coming months. [Read more]

Central African Republic announces plan to tokenize country’s minerals

The Central African Republic (CAR) announced plans to offer tokenized access to mineral resources to crypto and digital asset projects that establish a presence in the country. The natural resource tokenization drive will come under the auspices of Project Sango. In addition to petroleum, CAR possesses cobalt, copper, diamonds, gold, limestone, manganese and rhodium. [Read more]

Upcoming events I’m affiliated with:

The CBDC Think Tank is hosting a CBDC Papers Lecture Series on June 17 and 24 starting at 7am EST and running for 4 hours each day. [View list of papers and register here]