DFC

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.

The U.S. Bank Policy Institute (BPI), backed by several U.S. banking groups, implored Congress to close a loophole that could allow stablecoin holders to receive interest indirectly through affiliated exchanges, thereby evading the GENIUS Act’s ban on interest and yield. Because payment stablecoins neither fund loans like bank deposits nor operate as securities like money market funds, the BPI says they should not pay interest. They cite a Treasury estimate that up to $6.6 trillion of deposits could flow out of banks if stablecoins can offer yield, warning that such shifts would raise borrowing costs and reduce credit availability, especially during stress, unless the prohibition is extended to affiliates and distribution channels.

The Reserve Bank of Zimbabwe (RBZ) is reportedly again exploring the possibility of introducing a central bank digital currency (CBDC). The central bank is starting by conducting a CBDC consumer survey to solicit opinions on the design and nature of the CBDC and its overall acceptance by the public. In November 2021, the Cabinet mandated the RBZ to explore the feasibility of a CBDC. Since then, the RBZ has undertaken study tours to countries in the advanced stages of CBDC development, and has drawn up a roadmap for potential CBDC adoption in Zimbabwe.

Several G+D researchers published an evaluation of the use of threshold elliptic curve digital signature algorithm (ECDSA) signatures to harden key management in central bank digital currency (CBDC) systems, using G+D’s Filia as a case study. It motivates TSS to eliminate single points of failure in custodial wallets run by financial service providers (FSPs), and compares two integration options, selecting a separate key management network (KMN) that holds key shares and serves signing to Payment Processors for modularity and security. After defining CBDC-driven requirements (transparent coexistence with standard wallets, efficient DKG, high signing throughput, secure key export/import and key updates, compatibility with P-256 ECDSA, and strong composable security), the authors choose the CGGMP21 protocol (via the dfns Rust library) for its UC security, P-256 support, pre-signing, and one-round online signing. Benchmarks show DKG, pre-signing, and signing costs grow with threshold size; end-to-end tests integrating KMN into Filia reveal roughly an order-of-magnitude throughput drop versus non-threshold setups, especially for cross-FSP transfers, though performance is acceptable for smaller n and t. Identified bottlenecks include interactive signing when pre-signatures are unavailable after key updates; proposed mitigations include background pre-signing and persistent channels. The conclusion is that TSS meaningfully strengthens CBDC security and is feasible for real deployments with careful engineering and parameter choices.

Banco Central do Brasil (BCB) will reportedly launch its Drex central bank digital currency (CBDC) in 2026. Project lead Fabio Araujo said the rollout will come in two phases, with the initial phase dropping tokenization and the decentralized blockchain-based design it had piloted due to immature privacy solutions that failed to meet bank-grade confidentiality and verifiability standards. This shift means several programmable use cases tested in pilots won’t be available at launch, and there’s no guarantee Drex will continue using Hyperledger Besu, the Ethereum-compatible platform previously chosen. The first release will focus on a lien reconciliation solution to enable credit operations with various types of collateral, with details on supporting tools yet to be announced. Drex has been through several iterations, the first focusing on retail CBDC, the second on wholesale CBDC-backed tokenized deposits, and then this third iteration, which could be either retail or wholesale CBDC.

Paxos has filed an application to convert its New York Department of Financial Services (NYDFS) trust charter into a national trust charter under the supervision of the Office of the Comptroller of the Currency (OCC). Since 2015, the company has operated under oversight from the NYDFS when it became the first blockchain and tokenization company to be granted a limited purpose trust charter and issued the first regulated stablecoin in 2018. All Paxos-issued assets will remain fully backed by bankruptcy-remote reserves held in U.S. dollars, U.S. Treasuries, and cash equivalents, ensuring guaranteed 1:1 redemption.

The European Central Bank (ECB) published a blog by Executive Board Member Piero Cipollone that argues that cash remains essential in the euro area as both a means of payment and a store of value, and should continue to be widely available and accepted alongside a future digital euro. Despite a declining share of cash in point-of-sale transactions, overall demand for banknotes is strong, with 30.4 billion notes worth €1.6 trillion in circulation as of June 2025 and growth resuming after a pause. Ensuring access is a priority: the proposed Legal Tender of Cash Regulation would set common indicators to monitor ATM and branch availability, recognizing banks’ primary role while noting cashback cannot replace deposits/withdrawals. Legal tender status means merchants—and especially public entities—should generally accept cash, with only narrow, proportionate exceptions. Cash also underpins resilience in crises, so the ECB, Commission, and national central banks are strengthening preparedness. Looking ahead, the ECB is redesigning banknotes with updated themes and enhanced security, targeting final designs by end‑2026, and emphasizes that a digital euro would complement, not replace, physical cash.

The European Central Bank (ECB) published an article that analyzes why cash remains a vital means of payment in the euro area despite long-standing predictions of a cashless society. Using recent data (2019–2024), it finds that while digital payments are growing and the share of cash in transactions is declining—especially among younger and middle-aged people—cash continues to play important roles: older adults use it more for everyday purchases, younger people often keep cash at home for precautionary reasons, and all age groups increasingly view it as an important payment option. The resilience of cash is shaped by overlapping factors such as habit, limited substitutability of digital payments, privacy and crisis concerns, and demographic shifts—meaning future payment systems should ensure continued access to and acceptance of cash alongside digital options, supporting payment choice, inclusion, and economic stability.

A forthcoming Texas A&M University School of Law Legal Studies Research Paper compares the European Union’s MiCAR and the U.S. GENIUS Act approaches to regulating stablecoins. Both embody contrasting regulatory philosophies for stablecoin oversight. MiCAR establishes a dual categorization of stablecoins—asset-referenced tokens (ARTs) and e-money tokens (EMTs)—with tailored regimes for each, emphasizing comprehensive conduct obligations, strict liability for misleading disclosures, mandatory asset segregation, and strong, statutory redemption rights applicable to all holders. In contrast, the GENIUS Act defines a single “payment stablecoin” category, prioritizing operational requirements and, most distinctively, providing unprecedented legal protections in bankruptcy: it grants all holders statutory standing, excludes reserves from the bankruptcy estate, and gives stablecoin holder claims super-priority over all other creditors. While MiCAR relies on strict consumer protection rules and regulatory controls, the GENIUS Act centers its strongest protections around insolvency outcomes and allows for the development of additional consumer safeguards through future rulemaking, resulting in two robust but philosophically distinct approaches to stablecoin regulation.

The IMF published a Fintech Note that examines technology solutions for enabling central bank digital currency (CBDC) operations in environments with limited or no connectivity. The paper analyzes various technological approaches across a spectrum of connectivity scenarios, from complete offline functionality to SMS/USSD-based systems that work on basic cellular networks. Through interviews with payment platform providers, central banks, and industry experts, different form factors (smartphones, feature phones, stored-value cards, and custom devices) are evaluated against three key criteria: accessibility and usability, cybersecurity and operational risks, and privacy considerations. The research reveals that no single solution meets all requirements, necessitating tailored combinations of technologies based on local infrastructure and user needs. Key findings indicate that while fully secure offline solutions do not yet exist, effective risk mitigation strategies through transaction limits, secure elements, and staged reconciliation have been successfully tested in pilot environments. The paper concludes that successful offline CBDC deployment requires ongoing technological agility, diverse access channels, and proactive risk management over unattainable absolute security.

The U.S. Securities and Exchange Commission (SEC) has reportedly introduced updated staff guidance aimed at providing accounting clarity for stablecoins. It is expanding its initial crypto accounting rules, allowing certain U.S. dollar-pegged stablecoins to be treated as cash equivalents if they come with a guaranteed redemption right. This move is part of the SEC’s broader efforts, under Chair Paul Atkins, to relax previous restrictive policies and encourage traditional lenders to enter the crypto market, while the commission develops more comprehensive regulations for crypto securities.

A trio of Bank of Canada economists posted a paper on SSRN that analyzes how the introduction of a central bank digital currency (CBDC) could impact traditional bank deposits by developing a micro-founded model based on Canadian household data. The study finds that a non-interest-bearing CBDC without complementary financial products or an extensive physical service network would only minimally draw funds away from bank deposits (about 1% reduction), but expanding the CBDC’s physical presence (e.g., through Canada Post offices) could crowd out up to 7% of deposits, and only a very extensive network would reach around 12%. Placing holding limits on CBDC accounts (e.g., C$ 25,000 CAD) can significantly reduce this crowding-out effect while affecting the welfare of only a small fraction of households. The paper highlights that bank deposit choices are strongly influenced by complementary services (like mortgages and credit cards) and convenient access to branches.

[March 6, 2025] Article 53 of Serbia's Law on the National Bank of Serbia (NBS) was amended to give the central bank the right to issue the som in digital form (digital som). However, it's not entirely clear when the amendment was made, except that it was likely in either 2018 (RS Official Gazette, No. 44/2018 published on June 9, 2018) or 2025 (No. 19/2025 published on March 6, 2025). Those are the only two amendments to the Law that make sense from a review of the current consolidated version of the Law, because the next previous amendment (No. 40/2015) was published in 2015 which seems too early in the history of central bank digital currency (CBDC) to be plausible. Even 2018 seems to be on the verge of implausibility, so I'm guessing that the amendment was published on March 15, 2025.

The National Bank of Rwanda (NBR) in collaboration with Giesecke+Devrient (G+D), will host a retail central bank digital currency (CBDC) Ideathon. This event aims to engage local payment industry stakeholders, including individuals, startups, Fintechs, and other innovators, to validate ideas and use cases that foster the adoption of a potential e-Franc-Rwandais. The NBR’s CBDC work goes back to 2023 when it launched a feasibility study in collaboration with the Alliance for Financial Inclusion (AFI) that culminated in a research paper published in 2024. Registration of interest in the Ideathon closes on August 15, 2025, after which successful applicants will get access to the G+D Filia Wallet App to test the base functionalities of a potential eFranc-Rwandais. The idea is to create innovative use cases on top of the core CBDC functionalities (only conceptually, no need to do a prototype or any programming) and submit final idea by September 15, 2025. This will be followed by an event with final presentations in front of jury on the September 30, 2025. Selected use cases could potentially be developed further in future proof-of-concept work or a pilot.

The Banco Central de Timor-Leste (BCTL) has reportedly entered a new phase of its strategic partnership with Montran to drive modernization of the country’s payments ecosystem and advance development of a central bank digital currency (CBDC). As part of this initiative, Montran’s Instant Payments Solution (IPS) will be deployed across the country to enable secure, real-time payments and provide interoperability between financial institutions, businesses, and individuals. Montran is also working with BCTL to develop a national strategy for introduction of a CBDC, known as eCentavos.

The European Central Bank (ECB) published a preliminary draft version (version 0.9) of the digital euro scheme rulebook. It reflects the ECB's continuous effort to develop a draft rulebook in close cooperation with the Rulebook Development Group (RDG), comprising senior representatives from European associations representing both the supply and demand side of the retail payments market. Version 0.9 is generally based on the 2023 proposal for a regulation on the establishment of the digital euro (2023/0212/COD) and the Regulation on the provision of digital euro services by payment services providers incorporated in Member States whose currency is not the euro (2023/0211/COD). Version 0.9, which was shared with the RDG members on 30 June 2025, is non-binding and does not necessarily reflect the final views of the ECB, the Eurosystem, the RDG, or any of its members or their constituencies.

[April 18, 2025] The Atlantic Council published a critique by Timothy Assad and others of the GENIUS Act's foreign issuer loophole , as it fails to adequately regulate offshore stablecoin issuers like Tether, the largest issuer of dollar-pegged stablecoins. While both bills require domestic stablecoin issuers to obtain licenses and comply with strict prudential requirements including full reserve backing and capital requirements, the GENIUS Act imposes virtually no restrictions on offshore-issued stablecoins that flow back into the US market, requiring only that issuers maintain basic law enforcement cooperation powers that most already possess. This creates a regulatory arbitrage that disadvantages US issuers, incentivizes companies to incorporate offshore to avoid stricter US regulations, and undermines the administration's stated goals of promoting US financial technology leadership and protecting dollar dominance. The STABLE Act attempts to address this through an eighteen-month grace period requiring offshore issuers to be subject to comparable foreign supervision, but this approach lacks clear enforcement mechanisms and still permits stablecoin use without custodial intermediary involvement, making it inadequate to close the regulatory gap.

OMFIF published a critique of current stablecoin regulation by Ousmène Mandeng, focusing particularly on the U.S. Genius Act and Europe’s MiCA regime. The article argues that while these frameworks grant stablecoins legitimacy and encourage innovation, they risk undermining regulatory consistency by allowing fragmentation and regulatory arbitrage—particularly where ease of transfer mimics bearer instruments, potentially weakening compliance safeguards and bypassing traditional oversight regimes. Mandeng stresses that the true innovation of stablecoins lies in blockchain programmability and composability, rather than speed per se, since traditional banks already process payments rapidly. Yet new regulatory approaches may distort competition if stablecoins aren’t mapped into existing regulated categories like banks or e‑money institutions, thereby violating the principle of “same risk, same activity, same regulation”. The article concludes that regulation is necessary and foundational—but unless it adheres to established regulatory logic and is harmonized across jurisdictions, it may create new systemic risks, erode compliance frameworks, and breed unintended consequences.

Project Syndicate published an article by Hélène Rey that argues that the traditional foundations of monetary power are undergoing fundamental transformation as digital technologies become the primary infrastructure for money movement. While the US dollar has maintained global supremacy for over 80 years through America's economic scale, institutional credibility, liquid financial markets, geopolitical influence, and network effects, Rey contends that data integrity is emerging as a new critical variable that will reshape the global monetary order. The article suggests that as digital assets and technologies increasingly determine how currencies function and compete, the resilience and credibility of monetary systems will depend less on traditional economic factors and more on the integrity and security of underlying technological infrastructure, with significant implications for both financial stability and geopolitical power dynamics.

The Hong Kong Monetary Authority (HKMA) published various documents for the implementation of the regulatory regime for stablecoin issuers, which comes into effect on August 1, 2025. These include the finalized guidelines on supervision of licensed stablecoin issuers and on anti-money laundering and counter-financing of terrorism (AML/CFT) for licensed stablecoin issuers) plus explanatory notes on various aspects of the stablecoin issuer licensing regime and application process, and on transitional provisions for pre-existing stablecoin issuers. As of July 29, 2025, no license has been issued by the HKMA.

The U.S. NBER published a paper that examines the macro-financial implications of a growing digital economy, focusing on stablecoins. The authors develop a three-region model—comprising the U.S., the rest of the world (RoW), and a decentralized “digital economy"—to study how stablecoins affect global financial markets. While stablecoins may increase the demand for safe dollar-denominated reserves, they may also serve as substitutes, reducing the global demand for traditional reserve assets. The paper finds that in the long run, the reserve demand effect dominates: the proliferation of stablecoins leads to lower US interest rates and increased US foreign borrowing and reinforcement of the U.S.'s "exorbitant privilege." . The model also shows that this expansion raises idiosyncratic consumption volatility in the US while reducing it in the RoW. Key channels of influence include both increased financial demand for digital assets and substitution of traditional services with digital alternatives.

The BIS published a paper that examines central bank and media sentiments regarding central bank digital currencies (CBDCs) across 15 major economies from 2016 to 2022, using large language models to analyze over 1,200 central bank publications and nearly 29,000 news articles. The study reveals significant divergences between central bank and media sentiments, with notable variations over time and across jurisdictions, finding that central bank sentiment tends to exert a stronger influence on media sentiment than the reverse. The research identifies substantial cross-border sentiment spillovers, where sentiment in leading economies shapes sentiment in other regions. The findings suggest that while media generally express more positive views about CBDCs and focus on technological aspects, central banks concentrate more on payment system implications and financial stability concerns, with the sentiment gap having narrowed over time since the initial period when media sentiment significantly exceeded central bank sentiment.

The Cato Institute published a briefing paper by NicK Anthony that examines the implementation and adoption of central bank digital currency (CBDC) in Jamaica (JAM-DEX) and The Bahamas (SandDollar), concluding that both initiatives have fundamentally failed to achieve their stated objectives. The analysis demonstrates that CBDCs in both countries have failed to gain traction with consumers or businesses, instead becoming little more than vehicles for government handouts—distributed through limited-time giveaways and incentive programs, with little lasting use. The paper documents how virtually every increase in CBDC circulation corresponds directly to government interventions rather than organic adoption, with Jamaica's CBDC representing merely 0.1 percent of cash circulation despite extensive promotional efforts. Similarly, The Bahamas achieved a 30% sign-up rate but struggled with actual usage. Anthony argues that these Caribbean experiments reveal a fundamental flaw in CBDC policy: people are already well-served by existing payment options including cash, cards, and digital apps, making CBDC an unnecessary redundancy that requires artificial incentives to maintain even minimal usage levels.