DFC

The Bank of Israel of Israel (BOI) launched the technological consultation process for the digital shekel. Technology experts, academics, potential vendors are invited to help the BOI deepen its understanding of the technological feasibility and potential implementation of key components of the digital shekel system. It outlined six technological consultations, each focusing on a different component derived from preliminary design white paper published in March 2025; backend layer, secure transaction messages and communication, offline capabilities, payment authorization (secure containers and cryptographic key management), alias management, and fraud monitoring. Submissions are due by June 30, 2025.

This article provides an overview on how a digital euro is intended to work. An examination of the prospective design features and architecture of the digital euro reveals the complexity of the project and the challenges associated with integrating the digital euro into the existing payment landscape. In order to justify the huge investments from both the Eurosystem and the private sector, a high adoption rate by users is essential. Therefore, a digital euro needs to offer a competitive advantage over existing electronic payment instruments, which could refer to the unique scope comprising online and offline transactions as well as the trust of retail customers in the Eurosystem. Hence, a convincing communication strategy is needed to convey these benefits of a digital euro. Moreover, banks and other payment service providers need to have sufficient economic incentives to distribute the digital euro to their customers and to provide acquiring services to merchants.

David Birch argues that, contrary to popular belief, cash is not always the most resilient payment method during disasters such as fires, floods, or wars. Drawing on real-world examples-from Japanese tsunamis and Nigerian market fires to the ongoing war in Ukraine-the author shows that people relying on physical cash often suffer greater losses, while digital payment systems, especially those with offline capabilities, tend to be more robust as long as power and communications can be maintained. In Ukraine, for instance, the resilience of the payment system has been bolstered by widespread adoption of softPOS (mobile-based point-of-sale) and contactless technologies, even amid blackouts and cyberattacks. The article concludes that future-proofing payments should focus on enabling device-to-device digital transactions that work without network connectivity, such as offline central bank digital currencies (CBDCs), rather than simply stockpiling cash.

Makan Rafiee and Lars Hupel posted a paper that discusses the design requirements for a robust and scalable Public Key Infrastructure (PKI) for Central Bank Digital Currencies (CBDCs). The authors argue that CBDC systems need dedicated PKI solutions rather than relying on existing infrastructure due to their unique security requirements. The proposed PKI design features a hierarchical certificate structure with the central bank as the trust anchor operating the Root Certificate Authority (CA). Three main certificate categories are introduced: Financial CA (for financial service providers), Hardware CA (for wallet manufacturers), and Operational CA (for central bank functions like minting and transaction validation). A key innovation is the rollover concept that addresses the challenge of certificate renewal for offline hardware wallets that may not connect to online services regularly. The solution uses a time-based approach with defined phases (ramp-up, active, and passive) to ensure continuous system operation despite regular certificate expirations. The paper emphasizes that this design accommodates the specific needs of CBDC ecosystems while maintaining high security standards and enabling seamless certificate management throughout the system's lifecycle.

The Linux Foundation published an updated report on how its open-source distributed ledger technologies (DLTs) are powering central bank digital currency (CBDC) initiatives globally. It explains the advantages of open source development for CBDC projects, emphasizing transparency, collaboration, and the adaptability of community-driven solutions. The paper also showcases projects using Hyperledger Fabric, Besu, Iroha, and other tools across various implementation stages—from research (European Central Bank, France, Norway) to pilots (India, Brazil, Philippines) to live deployments (Nigeria, Eastern Caribbean). These implementations demonstrate how open-source blockchain technologies can improve payment efficiency, enhance security, enable programmability through smart contracts, and support financial inclusion.

Forbes published an article by Christian Catalini that examines the intensifying competition in the stablecoin market, where companies like PayPal, Coinbase, Circle, Tether, and even traditional financial giants like Visa and Mastercard are vying for dominance. Drawing an analogy to the commoditization of electricity, Catalini argues that stablecoins risk becoming undifferentiated utilities, with margins squeezed by competition and regulatory pressures. The two primary revenue levers for issuers -- reserve yields and transaction fees -- are both under threat as users demand higher returns and payment rails become commoditized. The "stablecoin sandwich" model (converting local currency to stablecoins for cross-border transfers, then back to local currency) represents current momentum, but Catalini predicts that only institutions closest to central banking, like banks themselves, will ultimately have the cost advantage in minting stablecoins. He concludes that the real winners won't necessarily be those creating the best stablecoins, but rather those controlling the distribution channels—the wallets, apps, and merchant relationships—through which these digital currencies flow.

Ripple has reportedly bid up to $5 billion in an effort to acquire stablecoin issuer Circle, but the offer was rejected because it was too low. The reported attempt came less than 30 days after Circle applied for an initial public offering (IPO) in the US. Ripple reportedly had an $11 billion valuation in 2024, an estimate CEO Brad Garlinghouse called “outdated” as of January. The blockchain company purchased prime broker Hidden Road for roughly $1.2 billion in April, claiming the move would help scale activity for XRP and XRP Ledger.

[January 2025] Banque Centrale du Luxembourg (BCL) published a paper that simulated consumer adoption of CBDC based on data from the 2022 Study on the Payment Attitudes of Consumers in the Euro area (SPACE) survey of payment habits. The micro-simulation classified 1% of consumers as cash-only, 22% as cash-preferring, 29% as cashless-preferring and 47% as cashless-only. Our theoretical results suggest that if CBDC is accepted by all retailers, then cashless-preferring consumers will adopt it instead of cash, but adoption by other consumers would also depend on CBDC design, cost, security and their use of credit cards. If CBDC transactions can be funded by drawing cash directly from the user’s bank payment account (i.e., via a "a waterfall" mechanism), 24% of the value of total payments will be in CBDC. If CBDC transactions can be funded via a direct link to consumer credit (e.g. drawing on the user’s credit card) 92% of total payment values will be made in CBDC.

[October 12, 2024] The National Bank of Slovakia (NBS) surveyed 1200 people, asking about people’s awareness and willingness to use the digital euro. 34% of respondents have heard of the digital euro; 26% intend to use it. They found that the likelihood of its usage depends on trust in institutions such as the central bank, and preferences for cash payments, in addition to standard socio-economic factors. They also investigated whether respondent’s answers are linked to political preferences and trust in the central bank. To quote: “liberals are more inclined to consider using the digital euro, while EU skeptics are significantly less likely to do so”. The survey also reveals that privacy and transaction security are among the top concerns for potential users. The majority of respondents plan to allocate nearly 20% of their net monthly income to digital euro holdings.

The New York Federal Reserve Bank (NY Fed) published an article that discusses the evolution and growth of stablecoins, noting their significant increase in market capitalization since 2019, primarily concentrated in Tether and USDCoin. It highlights a shift in collateral towards U.S. Treasury securities and reverse repurchase agreements and finds that stablecoins, especially riskier ones, experience capital inflows following large increases in bitcoin prices, reflecting a link between stablecoin demand and overall crypto ecosystem activity, which updates previous findings about outflows during negative bitcoin price shocks for riskier stablecoins.

"Mastercard is advancing the future of payments, finance and technology with new, global end-to-end stablecoin acceptance and payments capabilities, to ensure that people and businesses can make and receive stablecoin payments – anytime, anywhere. While banks and fintechs are increasingly engaging with solutions built on stablecoins, global ubiquity and scale is contingent on everyday utility, seamless integration into existing financial systems, and an intuitive user experience. To allow consumers and businesses to use stablecoins as easily as the money in their bank accounts, Mastercard is providing an integrated, 360-degree approach..."The company has partnered with a host of crypto natives such as MetaMask, Kraken, Gemini, Bybit, Crypto.com and Binance on wallet enablement and card issuance and acceptance. Now it is working with OKX to launch the OKX Card.

"Last year Stripe spent $1.1 billion acquiring Bridge, the company that provides cross border API infrastructure for stablecoin payments. On April 25, 2025 a member of Stripe’s crypto product team, Jennifer Lee, announced on X that the company is starting to test its Bridge-based product and invited companies outside the US, UK and EU who want to access dollars. She didn’t mention which stablecoins solutions would be offered initially."

The U.S. Federal Reserve Board (FRB) rescinded its 2022 supervisory letter establishing an expectation that the banks it regulates and supervises provide advance notification of planned or current crypto-asset activities. As a result, the FRB will no longer expect banks to provide notification and will instead monitor banks' crypto-asset activities through the normal supervisory process. The FRB is also rescinding its 2023 supervisory letter regarding the supervisory nonobjection process for state member bank engagement in dollar token activities.

The East African Community (EAC) Draft Cross-Border Payment System Masterplan was validated by its eight member countries (Burundi, the Democratic Republic of Congo, Kenya, Rwanda, Somalia, South Sudan, Uganda and Tanzania). The Masterplan aims to enhance the speed, security, affordability and integration of payment systems across the region. It tackles key obstacles such as fragmented regulations, high transaction costs, and limited interoperability by outlining twenty targeted initiatives. These include a regional instant retail payment switch, and exploring using central bank digital currencies (CBDCs) for regional transactions.

At a briefing held at the Bank of Korea on April 21, 2025, Deputy Governor Lee Jong-ryul reportedly pointed out that the "Project Hangang River" three-month pilot that started on April 1, 2025, is more about experimenting with "deposit tokens," a stablecoin issued by domestic commercial banks, than the central bank digital currency (CBDC) issued by the Bank of Korea. As of April 20, 51,766 electronic wallets capable of using deposit tokens had been opened, and a cumulative total of 29,251 transactions had occurred from April 1 to April 20.

Starting in Summer 2025, PayPal will pay U.S. users 3.7% annually in rewards on holdings of PayPal USD (PYUSD) in their PayPal or Venmo wallets. Users will be able to immediately use any rewards received to send to other users, fund international transfers, exchange for fiat, or make purchases at millions of merchants with PayPal Checkout.

Circle will be launching the Circle Payments Network (CPN) to connect financial institutions to enable real-time settlement of cross-border payments using regulated stablecoins. CPN will require participants to meet strict eligibility standards, including licensing, AML/CFT compliance, financial risk management, and cybersecurity protocols. By leveraging USDC, EURC, and other regulated stablecoins, CPN will enable seamless connectivity to domestic real-time payment systems worldwide, while upholding the compliance, security, and trust required for financial institutions to meet their regulatory obligations. Powered by smart contract infrastructure and modular APIs, the network will enable third-party developers to build advanced modules, app services, and automated financial workflows directly on top of CPN.

The Bank of Korea (BOK) “Project Hangang River" wholesale central bank digital currency (CBDC) backed tokenized deposit pilot is reportedly preparing to launch a second phase as early as October. The current three-month (April 1 to June 30, 2025) phase involves about 100,000 participants, and is limited to person-to-business (P2B) payments (for goods and services at online and offline merchants). In the next phase, person-to-person (P2P) transfers will be added, along with expanded use cases and a full rollout of a digital voucher program for welfare payments by local governments.

[March 11, 2025] Banque des États de l'Afrique Centrale (BEAC) has requested IMF technical assistance to explore the feasibility of introducing a central bank digital currency (CBDC). BEAC serves six central African countries which form the Economic and Monetary Community of Central Africa (CEMAC - Cameroon, Central African Republic, Chad, Equatorial Guinea, Gabon, and the Republic of the Congo) all of whom use the CFA franc which is pegged to the euro (€1 = CFA 655.957). The BEAC has set up a CBDC working group that will coordinate with the other subregional institutions with the aim of developing a coherent and appropriate regulatory framework to monitor and manage the new risks associated with the emergence of digital payment methods.

[December 10, 2024] The Bank of the Republic of Haiti (BRH) conveyed to IMF staff, in the context of its 2024 Article IV consultation, that it does not plan to immediately implement central bank digital currency (CBDC). However, it stressed the importance of having put a placeholder in the central bank framework, in anticipation of future implementation. IMF staff argued that devoting time and resources to considering a digital money is premature at this stage, given other pending priorities and indicated that if the BRH decides to proceed it should consider all aspects of the project’s desirability and feasibility, including a robust evaluation of costs and risks, before proceeding.

The BIS's Jon Frost co-authored a paper that explores the emerging regulatory landscape for stablecoins. It outlines their rapid growth and potential systemic risks they pose, especially as they become more integrated into payment systems and financial markets. The paper advocates for a balanced regulatory approach that ensures financial stability, consumer protection, and innovation. It examines existing regulatory frameworks, including banking, securities, and payments laws, and suggest that a tailored regulatory regime may be necessary to effectively oversee stablecoin issuers and related service providers. The paper also highlights international efforts and the importance of global coordination in regulating stablecoins.

Kyrgyz Republic President Sadyr Japarov signed the constitutional law that will enable the country's central bank to launch a digital som pilot project and create a legal basis for the central bank digital currency (CBDC). The law was adopted by the Parliament on March 20, 2025. The law defines the digital som as the national currency of the Kyrgyz Republic in digital form, which is legal tender in the country. The central bank is granted the exclusive right to issue the digital som, and will establish the procedure for its issue and circulation, as well as organize and ensure functioning of the digital som platform.

The National Bank of Belarus (NBB) reportedly plans to launch a digital ruble in the second half of 2026, starting with "economic agents" and expanding to government agencies and individuals in 2027. The central bank is cooperating very closely with Russian central bank and its central bank digital currency (CBDC) efforts to facilitate digital ruble cross-border transactions. Also, the NBB is working closely with government authorities to ensure that CBDC transactions can be tracked along the entire chain.