DFC

The U.S. Federal Reserve Board (FRB) has proposed two rules to implement the Guiding and Establishing National Innovation for U.S. Stablecoins (GENIUS) Act for FRB-supervised payment stablecoin issuers: one governing issuance, reserves and supervision, and another governing applications by supervised banks. The first would require full backing with eligible liquid assets, including short-term Treasury bills, and set capital and risk-management standards; it would also regulate reserve-asset safekeeping and clarify permissible bank activities. The second would require applicants to provide a business plan and financial information and establish procedures for appeals and final decisions. Their final terms remain subject to comment, due 60 days after Federal Register publication. [Fed]

The Hong Kong Monetary Authority (HKMA) is planning to make a wholesale central bank digital currency (CBDC) available for interbank settlement of tokenized deposits as part of Project EnsembleTX, enabling 24/7 payments by around the end of 2026, and will continue to explore more use cases for tokenized deposits. The pilot, launched in November 2025, initially used the HKD real-time gross settlement (RTGS) system to settle the transactions. [HKMA]

Six Canadian banks are jointly exploring the development of Canadian dollar based digital money solutions, starting with a tokenized deposits initiative. The project seeks to deliver faster, more efficient and programmable payments to Canadian customers while preserving safety, stability, and effective regulatory oversight. The first phase aims to move tokenized deposits efficiently across Canadian financial institutions with a longer term goal to connect with other emerging digital assets initiatives. The participants are Bank of Montreal (BMO), Canadian Imperial Bank of Commerce (CIBC), National Bank of Canada (NBC), Royal Bank of Canada (RBC), The Bank of Nova Scotia (Scotiabank), and TD Bank Group (TD). The participants anticipate the inclusion of other deposit-taking institutions at the appropriate time. [CIBC]

The South Korean Ministry of Science and Information and Communication Technology (MSIT) has authorized a regulatory-sandbox pilot allowing public officials to use commercial-bank deposit tokens, settled with Bank of Korea wholesale central bank digital currency (CBDC), for eligible government operating expenses. The pilot bypasses statutory restrictions that otherwise limit such payments to government cards and bank transfers, using smartphone QR codes and pre-programmed spending controls. It extends Project Hangang from consumer and subsidy use cases into public-sector disbursement while preserving a two-tier model: banks issue the customer-facing tokenized deposits and the central bank provides interbank settlement. [MSIT]

The European Central Bank (ECB) is initiating investments of its own funds in tokenized, euro-denominated public sector securities to build institutional expertise in distributed ledger technology (DLT). Transactions will settle in central bank money via the Eurosystem's newly launched Pontes solution, supporting the broader Appia initiative for a European tokenized financial ecosystem. [ECB]

The Financial Times (FT) reported that the Saudi Arabian Monetary Authority (SAMA) withdrew from the blockchain-based mBridge cross-border payments platform on May 13, 2025. SAMA joined the project as an observing member in 2023, and became an active participant in 2024, joining China, Hong Kong, Thailand, the United Arab Emirates and the Bank for International Settlements (BIS). The BIS "graduated out" of the project in October 2024. SAMA said in a statement provided to the FT that “as planned, SAMA successfully completed its mBridge [proof of concept (PoC)] on 13 May 2025 [and] following the completion of the PoC, SAMA is no longer a participating member of mBridge.” [FT]

In an Oracle Blockchain Blog post, Mark Rakhmilevich discusses four interbank coordination approaches to make tokenized deposits interoperable: a shared multi-bank ledger (Partior), federated bank tokens (CBMT), shared orchestration across bank-operated ledgers (Swift Ledger), and cross-border settlement via central-bank reserve ledgers (BIS Project Agorá). Examining these emerging architectures objectively, the text cautions that these theoretical patterns frequently overlap and differ notably in their developmental maturity. The analysis questions the overarching viability of a singular solution by highlighting that each model imposes divergent structural implications for liquidity positioning, settlement finality, and counterparty exposure. Consequently, the post frames this portability challenge as an unresolved integration issue, where varying technical mechanics necessitate complex, distinct economic trade-offs for participating financial institutions. [Oracle]

[November 2022] The Central Bank of Bahrain (CBB) is working towards providing a digital version of the Bahraini Dinar that would help support customers making peer-to-peer payments, without the need of any intermediaries. It will mimic cash in every aspect whilst remaining intangible and virtual in nature, and will be operating on distributed ledger technology (DLT). [CBB]

[September 18, 2023] The IMF published a selected issues paper that analyzed the financial system effects of introducing a retail central bank digital currency (CBDC) in Bahrain. The Central Bank of Bahrain (CBB) interest in CBDC dates back to 2018, with the launch of the Digital Dinar (EDinar) project. The CBB’s motivations in considering CBDC lie in alleviating payment system pressure points and in meeting the growing demand for digital payments by all market segments at reduced cost and enhanced speed. A technical committee was set up to assess the design options and technology features that would support the CBB’s objectives. In February 2022, the CBB prepared a concept note formulating its objectives and desired characteristics of a retail/wholesale CBDC, a potential architecture and technological design, as well as a roadmap for piloting and implementation. [IMF]

[January 12, 2024] The Eastern Caribbean Central Bank (ECCB) DCash Pilot platform operations were brought to a close on January 12, 2024. All pilot participants could either cash out (for value-based wallets) or have their linked bank accounts credited for their DCash wallet balances (for registered-based and merchant wallets) post-closure date. DCash 2.0 was anticipated to be launched in 2025. The new version was expected to be a more advanced and user-friendly iteration, enhancing utility for customers, developers, businesses, and financial institutions. [DCash]

[February 3, 2022] Myanmar’s military government reportedly plans to establish a digital currency to support domestic payments and boost the economy within the year and is assessing how to move forward, according to Major General Zaw Min Tun, Deputy Information Minister of the State Administration Council. “We are undecided whether we should do it as a joint venture with local companies or by the government alone... A digital currency will help improve financial activities in Myanmar.” [Bloomberg]

External member of the Bank of England (BOE) Financial Policy Committee Carolyn Wilkins concludes that while private digital currencies could theoretically scale, their stability remains highly conditional on credible convertibility, uniform regulation, and robust crisis-management frameworks. Probing the implications of expanding U.S. dollar stablecoins, she notes potential benefits for dollar settlement but questions their resilience during panics, warning that ostensibly liquid reserve assets may suffer severe liquidity deficits under systemic stress. Furthermore, Wilkins identifies regulatory heterogeneity across jurisdictions as a critical vulnerability complicating cross-border enforcement. She ultimately cautions against assuming technology guarantees dominance, asserting that enduring international monetary power depends strictly on fundamental fiscal capacity, institutional credibility, and the rule of law rather than mere network effects. [BOE]

[March 10, 2025] The National Bank of the Kyrgyz Republic (NBKR) laid out its plans to issue a blockchain-based Digital Som central bank digital currency (CBDC) to enhance financial inclusion, payment security, and digital economy infrastructure. Following the the IMF’s "5P" methodology, the project will progress sequentially from initial proof-of-concept functional testing to limited-user prototyping, followed by a live pilot before fully launch (“production”). Over the 2027–2030 horizon, the central bank aims to incorporate smart contracts for programmable payments, establish cross-border interoperability with foreign platforms, and optimize throughput and cyber resilience, supported in parallel by a dedicated regulatory framework governing platform operators and participant connectivity. [NBKR]

CertiK, a US-based firm specializing in blockchain security and smart contract auditing, announced that it had entered into a memorandum of understanding with the National Bank of the Kyrgyz Republic (NBKR) focused on technical security assessments, continuous monitoring, and financial integrity regulatory advisory for the Digital Som central bank digital currency (CBDC) project and broader virtual-asset oversight. However, the arrangement is purely an exploratory framework for dialogue, and it commits to no software deployment or procurement award. [CertiK]

A BIS paper by Aerts, Heijmans, Paulick, and Vuletic concludes that widely used indicators of crypto-asset and decentralized finance (DeFi) activity are highly dependent on methodological choices, rendering them noisy approximations rather than direct economic measures. Although blockchain data is transparent, underlying protocol complexities obscure true economic signals. Bitcoin's transaction model conflates actual transfers with technical change outputs, drastically altering volume estimates based on applied heuristics. Similarly, programmable smart contracts on Ethereum generate spurious activity that complicates reliable classification. The text highlights severe data heterogeneity across blockchains, demonstrating that identical stablecoins fulfill distinct economic functions on different infrastructures. Consequently, accurately assessing DeFi dynamics demands bounded estimates and rigorous technical disaggregation rather than naive data aggregation. [BIS]

The European Central Bank (ECB) has launched a call for expression of interest inviting e-commerce and mobile commerce merchants operating in the euro area to take part in the 12-month digital euro pilot expected to start in the second half of 2027. The call follows the selection of payment service providers (PSPs) to participate in the pilot. Selected merchants will test a beta instrument—without legal-tender status—in remote-commerce payment journeys, operational processes, and integration with acquiring payment service providers (PSPs), and their feedback will inform technical specifications and merchant-facing design. Participation is voluntary and unpaid, requires an agreement with the ECB and an acquiring PSP, and applicants will be assessed on market reach, readiness, and suitability. Applications close October 27, 2026. (ECB)

The Bank of Japan (BoJ) published an English version of the progress report on its retail central bank digital currency (CBDC) experiments published in Japanese in June 2026. It finds that no fatal technical barriers preclude a full-scale launch, yet severe scalability and resource challenges remain unresolved in the current prototyping phase. The architecture is based on a two-layered model that decouples a centralized core ledger for basic accounting from a peripheral layer of privately managed overlay services. By linking application programming interfaces on the central bank's core to diverse external systems, private intermediaries tested various innovations, including distributed ledger technology platforms for purpose-bound money and tokenized securities settlement. Although simulations processed 50,000 transactions per second, they were significantly simplified compared to real-world demands. The proposed record-splitting solution for single-account transaction concentration exhibited diminishing returns, as excessive splitting degraded performance. Furthermore, the application sandbox operated separately from the centralized high-load pilot system, leaving unresolved how cross-layer latency, asynchronous transaction failures, and ledger synchronization between the core and external systems will perform under live retail market stress. Also, despite the simplified architecture, resource consumption proved substantial, raising critical questions about the feasibility of the massive system resources required for national deployment. [BoJ]

Drawing on remarks delivered at the recent Currency Research Central Bank Payments Conference, Ashley Lannquist (Glenbrook Partners) set out a decision framework for policymakers weighing which form of settlement asset should support safe large-scale tokenized financial markets — settled on distributed ledger technology (DLT). ("Large-scale" denotes markets that would ordinarily settle on a systemically important financial market infrastructure such as a central securities depository or securities settlement system.) Once such activity migrates onto DLT, safety concerns compel a choice governed by whether the asset (1) should be central bank money and (2) should be "on-chain." The resulting matrix maps to wholesale central bank digital currency (CBDC) (yes/yes), real-time gross settlement (RTGS) synchronization (yes/no), regulated asset-backed stablecoins, tokenized e-money, or tokenized bank deposits (no/yes), and bank deposits (no/no). The framework is not prescriptive, being conditional on country context and acknowledging unresolved empirical questions about benefits and risks. [LinkedIn]

The Securities and Exchange Board of India (SEBI) launched the "Demat 2.0" pilot project, introducing tokenized corporate bonds natively recorded on a distributed ledger. It utilizes the Reserve Bank of India’s wholesale central bank digital currency (CBDC) and Unified Market Interface to enable instantaneous atomic settlement, using smart contracts to automate interest and redemption payments. Unlike global precedents—which largely involve individual issuers on isolated platforms—Demat 2.0 natively embeds tokenized bonds and CBDC settlement directly within India's existing regulated market infrastructure. Following an initial ₹1,025 crore issuance by three companies, the pilot aims to reduce costs and settlement risks. While the technology changes, investor safeguards, legal rights, and regulatory frameworks remain identical to conventional bonds, with future phases planned for retail access. [SEBI]

[February 2026] A Harvard Business School (HBS) working paper by Du, Huang and Scharfstein, evaluates the costs of cross-border payments across traditional banks, fintech money transfer operators, and stablecoin rails. The authors find that high retail bank wire costs stem from architectural frictions and market power rather than foreign exchange illiquidity. Fintech providers significantly reduce these costs through internal flow netting and digitized compliance. Meanwhile, stablecoin transfers minimize settlement frictions but do not eliminate intermediation, as crypto exchanges introduce new fees and act similarly to correspondent banks. Furthermore, stablecoins primarily exhibit cost advantages in emerging markets with capital controls due to a premium for dollar exposure. Ultimately, severe liquidity constraints currently limit the scalability of stablecoin rails, preventing them from fully displacing traditional systems. [HBS]

A Société Universitaire Européenne de Recherches Financières (SUERF) paper by Jan Camenisch and the Swiss National Bank's Thomas Moser evaluates the privacy architecture of the Bank for International Settlements Project Agorá, a distributed ledger initiative for wholesale cross-border payments, against five design objectives. The authors note that Agorá utilizes the Paladin framework to achieve selective disclosure, regulatory access, and multijurisdictional configurability with low computational overhead. However, the assessment highlights significant architectural trade-offs. By relying on issuer-delegated verification rather than trustless systems, the design concentrates information and trust within issuing entities. Additionally, keeping private state off-ledger introduces resilience challenges, and the network remains vulnerable to metadata leakage. Ultimately, the paper concludes that while Agorá is operationally pragmatic, future phases must address off-chain state management and metadata vulnerabilities. [SUERF]

In its third quarter 2026 Digital Assets Executive Industry Update Al-Mabrook Financial questions the reliability of headline stablecoin transfer volume metrics, challenging the oft-cited $62 trillion transfer volume for 2025 as a true measure of adoption. The data suggests it is not, filtering gross volume down to just $350–$550 billion in genuine real-economy payments. Business-to-business transactions ($150 to $230 billion) dominate this legitimate flow because traditional rails remain inefficient, followed by consumer-to-consumer remittances and consumer-to-business payments ($90 to $130 billion each). Business-to-consumer flow, largely payroll and marketplace payouts, accounts for the remainder. [AI-Mabrook]

A Centre for Economic Policy Research (CEPR) paper by Martino, Monnet, and Perotti critically examines the systemic risks posed by multi-country issuance of USD-denominated stablecoins. The authors argue that because the European Union (EU) Markets in Crypto-Assets (MiCA) regulations guarantees unconditional, par-value redemptions—unlike proposed U.S. regulations that permit fees and gates—technologically fungible tokens create dangerous avenues for cross-border redemption arbitrage. In times of stress, this regulatory asymmetry incentivizes rational holders to offload dollar-run risks entirely onto EU-based issuers. Conceding that structural bans on multi-country issuance are politically unlikely, the authors propose a pragmatic mitigation strategy to achieve "functional redemption equivalence." They advocate mandating automatic, smart-contract-embedded contingent measures, specifically sequencing redemption fees ahead of hard gates, to deter self-fulfilling runs. Furthermore, the paper recommends granting the European Central Bank powers to suspend non-euro stablecoin redemptions during severe crises, aiming to safeguard EU monetary sovereignty against unhedgeable USD stablecoin market contagion. [CEPR]

A paper posted by Ulrich Bindseil and others critically examines the viability under European Union (EU) Markets in Crypto-Assets (MiCA) regulations, of stablecoin arrangements in which entities inside and outside the EU issue and redeem a single fungible stablecoin, each backing only the tokens it has itself issued. The authors use a financial accounts framework covering the two issuing entities, their custodian banks, holders, and an arbitrageur, to argue that token fungibility could inadvertently concentrate redemption pressure on EU-based issuers during stress events, potentially depleting local reserves. Furthermore, they question the efficacy of localized reserve mandates, positing that such requirements are either redundant if foreign frameworks are robust, or structurally flawed if they force dollar-denominated tokens into inferior offshore accounts. Ultimately, the paper advocates for an equivalence regime that allows direct EU distribution of foreign-issued stablecoins, despite reliance on foreign regulatory parity not completely safeguarding the EU against cross-border contagion. [SSRN]