DFC

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Byzantine Fault Tolerant consensus with confidential quorum certificate for a Central Bank DLT
Byzantine Fault Tolerant consensus with confidential quorum certificate for a Central Bank DLT
Banca d'Italia published a paper on the FROSTed Byzantine Fault Tolerance (FBFT) protocol, an approach to DLT proof of authority (PoA) validation meant to strengthen the security of the ledger, its tolerance to faults or attacks, and the confidentiality of validators. It combines the practical byzantine fault tolerance (PBFT) algorithm with the flexible round-optimized Schnorr threshold (FROST) signature scheme. The resulting system is an alternative platform for a distributed, resilient transactional system. Operated by a set of trusted actors, distributed at geographic scale, it holds potential for mission-critical applications, such as wholesale and retail CBDC, and asset tokenization schemes.
#Fintech#BFT#DLT#CBDC#Italy#ProofOfAuthority#DFC
·bancaditalia.it·
Byzantine Fault Tolerant consensus with confidential quorum certificate for a Central Bank DLT
Bank of England seeks feedback for wholesale CBDC trials
Bank of England seeks feedback for wholesale CBDC trials
The Bank of England (BOE) published a discussion paper on innovation in money and payments. While it covers payments across the board, it aims to gather feedback for planned wholesale central bank digital currency (CBDC) trials. These will include a synchronization (or "trigger") solution that settles transactions involving assets that are tokenized on distributed ledger technology (DLT) platforms using the real time gross settlement (RTGS) system. The BOE also wants to trial a digital securities transaction in which an end user makes a tokenized deposit payment. Finally, it will test interoperability with global initiatives like the Bank for International Settlements (BIS) Project Agorá for cross-border payments. Comments are due by October 31, 2024. https://www.bankofengland.co.uk/paper/2024/dp/the-boes-approach-to-innovation-in-money-and-payments
#Fintech#CBDC#wCBDC#Settlement#Payments#CrossBorder#UnitedKingdom#DFC
·ledgerinsights.com·
Bank of England seeks feedback for wholesale CBDC trials
Donald Trump Backs ‘Strategic Bitcoin Stockpile’
Donald Trump Backs ‘Strategic Bitcoin Stockpile’
U.S. Presidential hopeful Donald Trump announced that if elected, he would create a strategic bitcoin reserve in the United States. “It will be the policy of my administration to keep 100 percent of all bitcoin the US government currently holds or acquires in the future … as a core of the strategic national bitcoin stockpile,” he said. Right now, the U.S. government owns more than 210,000 bitcoin that were seized via illegal operations. Trump also pledged to create a framework for ensuring the safe expansion of stablecoins, and doubled down on his vow to scrap any effort to issue central bank digital currency (CBDC). He also defended the right to crypto-asset self custody and promised to fire Securities and Exchange Commission (SEC) Chair Gary Gensler.
#Fintech#CryptoAssets#Stablecoins#CBDC#Regulation#UnitedStates#DFC
·wired.com·
Donald Trump Backs ‘Strategic Bitcoin Stockpile’
FINMA publishes guidance on stablecoins
FINMA publishes guidance on stablecoins
The Swiss Financial Market Supervisory Authority (FINMA) published guidance on the issuance of stablecoins. It provides information on aspects of financial market law that arise in relation to stablecoin projects and the impact of such projects on the supervised institutions. The guidance also draws attention to the increased risks in the areas of money laundering, terrorist financing and the circumvention of sanctions. In particular, the identity of all persons holding the stablecoins must be adequately verified by the issuing institution or by appropriately supervised financial intermediaries. In other words anonymous transfers are prohibited.
#Fintech#CryptoAssets#Stablecoins#Regulation#Switzerland#DFC
·finma.ch·
FINMA publishes guidance on stablecoins
Stablecoins’ impact on banks’ balance sheets and prudential ratios
Stablecoins’ impact on banks’ balance sheets and prudential ratios
The European Central Bank (ECB) published a paper that explores the relationship between banks, and stablecoins and their issuers, focusing on the mechanical effects on banks’ capital and liquidity ratios when issuing stablecoins or collecting deposits from stablecoin issuers. The analysis reveals that converting retail deposits into stablecoin issuers’ deposits weakens a bank’s liquidity coverage ratio (LCR), turning a retail deposit into a wholesale deposit, even when these funds are reinvested in high-quality liquid assets (HQLA). If a credit institution issues its own stablecoins, the impact on its LCR depends on whether it can identify the stablecoin holders; unknown holders weaken the LCR which could incentivize banks to issue stablecoins where they can continually identify the holders to benefit from more favorable liquidity treatment. The study also finds that when retail customers of bank A buy a stablecoin issued by a non-bank that keeps reserves at bank B, both banks could see an unexpected decline in their liquidity ratios, as bank A loses stable retail deposits and bank B gains volatile wholesale deposits.
#Fintech#CryptoAssets#Stablecoins#DepositTokens#Regulation#DFC
·ecb.europa.eu·
Stablecoins’ impact on banks’ balance sheets and prudential ratios
ERPB technical session on digital euro
ERPB technical session on digital euro
The European Central Bank (ECB) published two documents discussed at the June 28, 2024 meeting of the European Retail Payments Board (ERPB) technical session of the digital euro. One was a summary of inputs on the methodology for calibrating holding limits, and the other was on the strategies for conducting euro user research and engaging with market participants (payment service providers and merchants). https://www.ecb.europa.eu/euro/digital_euro/timeline/profuse/shared/pdf/ecb.deprep240723_item4_feedback_holding_limit_factors.en.pdf https://www.ecb.europa.eu/euro/digital_euro/timeline/profuse/shared/pdf/ecb.deprep240723_item2_user_research_experimentation.en.pdf
#Fintech#CBDC#Eurozone#ECB#DFC
·ecb.europa.eu·
ERPB technical session on digital euro
German banks share tokenized deposit trial results
German banks share tokenized deposit trial results
The German Banking Industry Committee (GBIC) published the results of a proof of concept (POC) for its distributed ledger technology (DLT) based commercial bank money token (CBMT) project. CBMT is focused on serving large corporates, especially industrial companies, allowing them to hold tokens from multiple banks and to make P2P (B2B) transactions 24/7/365. Results confirmed that the CBMT is viable and offers considerable potential, enabling the realization of a variety of use cases across corporate functions. Results also showed that the CBMT works across a variety of DLT platforms, has the potential to scale and should present no barrier to integration into existing systems via application programming interfaces (APIs). https://die-dk.de/media/files/240716_DKBDI_position_CBMT_final.pdf
#Fintech#DLT#Blockchain#Tokenization#DepositTokens#Germany#DFC
·ledgerinsights.com·
German banks share tokenized deposit trial results
Payment behavior in Germany in 2023
Payment behavior in Germany in 2023
The Deutsche Bundesbank (BuBa) published an analysis of how people pay in Germany, based on approximately 5,700 randomly selected members of the public aged 18 and over between September and November 2023. Of payment volumes, debit cards accounted for 32%, cash for 26%, transfers and direct debits 20%, credit cards 10%, and mobile payments 6%. In general, 44% of respondents prefer to pay with electronic payment methods, but 24% still prefer cash, and 94% of merchants accept cash at point of sale. The perceived benefits of cash include privacy preservation (63%), immediate and reliable settlement of payments (47%), and easy expense overview (41%).
#Fintech#Payments#Cash#Germany#DFC
·bundesbank.de·
Payment behavior in Germany in 2023
Global Developments in Central Bank Digital Currency ($$$$)
Global Developments in Central Bank Digital Currency ($$$$)
IFI Global's "Global Developments in Central Bank Digital Currency" offers a holistic view of CBDC initiatives, unraveling the intricate web of motivations, challenges, and implications. From Africa to Asia, from Europe to Oceania, the book delves into country-specific developments, shedding light on the role of politics, culture, and informal institutions in shaping CBDC adoption.
#Fintech#CBDC#DFC
·igi-global.com·
Global Developments in Central Bank Digital Currency ($$$$)
CBDC and Transmission of Monetary Policy
CBDC and Transmission of Monetary Policy
The Bank of Canada (BOC) published a paper on how a central bank digital currency (CBDC) changes monetary policy transmission in a general equilibrium model with nominal rigidities, liquidity frictions, and a banking sector where commercial banks face a leverage constraint. It finds that the effects of a shock to the Taylor rule that governs interest on central bank reserves, is magnified with the introduction of a fixed-interest-rate CBDC. More generally, whether CBDC magnifies or abates the response of the economy depends on the type of shock (e.g., interest rate or quantity of reserves shock). The paper also finds that the response of the economy depends on the monetary policy framework—whether the central bank implements monetary policy through reserves or through CBDC—as well as central bank balance sheet rules that govern the quantity of CBDC and reserves.
#Fintech#CBDC#Canada#DFC
·bankofcanada.ca·
CBDC and Transmission of Monetary Policy
Thailand distributing stimulus payments in digital currency
Thailand distributing stimulus payments in digital currency
Thailand’s finance ministry is going ahead with a plan to pay a social benefit in digital currency. Up to 45 million Thais will be eligible to receive 10,000 baht (about $280) in digital money on August 1, 2024, about two-thirds of the average monthly income in the country. There are numerous restrictions on usage, including know your customer (KYC) verification that will exclude prisoners and people and businesses with records of economic abuse. There are also restrictions on the items that can be purchased with the digital currency.
#Fintech#CBDC#GovCoins#Thailand#DFC
·cointelegraph.com·
Thailand distributing stimulus payments in digital currency
BSP wholesale CBDC proof-of-concept nearing completion
BSP wholesale CBDC proof-of-concept nearing completion
The Bangko Sentral ng Pilipinas (BSP) is reportedly progressing towards issuing its own wholesale central bank digital currency (CBDC), codenamed Project Agila, sooner than anticipated, with the proof-of-concept (POC) phase expected to conclude by the end of 2024. Deputy Governor Mamerto E. Tangonan confirmed that the CBDC could likely be launched in the earlier part of BSP Governor Eli M. Remolona Jr.'s six-year term, which runs from 2023 until 2029. Three uses cases mentioned; interbank settlement on weekends and holidays, securities settlement and cross border payments. With regards to the latter, the BSP is an observer of Project mBridge involving the BIS Innovation Hub and the central banks of China, Hong Kong, Thailand, the United Arab Emirates and Saudi Arabia. HyperLedger Fabric's distributed ledger technology (DLT) is being used for BSP's sandbox experiments.
#Fintech#CBDC#wCBDC#Philippines#HyperLedger#DLT#DFC
·fintechnews.ph·
BSP wholesale CBDC proof-of-concept nearing completion
Minimum Viable Offline CBDC using Groth-Sahai proofs
Minimum Viable Offline CBDC using Groth-Sahai proofs
This paper proposes a design and a first implementation for an offline-first digital euro. The protocol offers complete privacy during transactions using zero-knowledge proofs. Furthermore, transactions can be executed offline without third parties and retroactive double-spending detection is facilitated. To protect the users’ privacy, but also guard against money laundering, bank and trusted third parties for law enforcement must collaborate to decrypt transactions, revealing the digital pseudonym used in the transaction. Importantly, the transaction can be decrypted without decrypting prior transactions attached to the digital euro. The protocol has a working initial implementation showcasing its usability and demonstrating functionality.
#Fintech#CBDC#Offline#DFC
·arxiv.org·
Minimum Viable Offline CBDC using Groth-Sahai proofs
Simulating the Adoption of a Retail CBDC
Simulating the Adoption of a Retail CBDC
Jahrbücher für Nationalökonomie und Statistik (JNS) published a paper by two Financial Network Analytics (FNA) staff that uses agent-based modelling to simulate retail central bank digital currency (CBDC) adoption, calibrated to Spain’s retail payment ecosystem. Results suggest that the distribution of government subsidies via CBDC creates incentives to reduce the use of cash. Also, reverse waterfall functionality (automatic transfer of funds from bank deposits to CBDC wallets) and a positive remuneration spread to bank deposits are effective in fostering adoption. However, the model did not model banks as adaptive decision makers that would include their ability to counter CBDC remuneration.
#Fintech#CBDC#DFC
·degruyter.com·
Simulating the Adoption of a Retail CBDC
Central Bank of Papua New Guinea launches CBDC proof-of-concept
Central Bank of Papua New Guinea launches CBDC proof-of-concept
The Central Bank of Papua New Guinea (CBPNG) is working with Soramitsu on a central bank digital currency (CBDC) proof-of-concept (POC) aimed at building a common payment platform across the Pacific Island region. Also, some areas of Papua New Guinea are plagued by instability, violence, and frequent occurrences of robberies and muggings, so the POC will explore digital technologies that will allow recovery of funds after such incidents. The project is being funded by the Government of Japan's Ministry of Economy, Trade and Industry’s 2023 supplementary budget “Subsidy for Global South Future-Oriented Co-Creation Projects (Indirect Subsidy Project Related to the Survey on the Overseas Deployment of Infrastructure by Japanese Companies).”
#Fintech#CBDC#Soramitsu#PapuaNewGuinea#DFC
·soramitsu.co.jp·
Central Bank of Papua New Guinea launches CBDC proof-of-concept
FCA finalises access to cash rules
FCA finalises access to cash rules
Under new rules from the U.K. Financial Conduct Authority (FCA), banks and building societies will need to weigh up if local communities lack access to cash services, like branches and ATMs, and plug significant gaps. Under the new rules banks will need to respond to local residents and community organizations when closing branches and ATMs and provide an assessment of whether there are gaps in local cash access. Where significant gaps are found, banks will be obliged to retain branches and ATMs until alternative solutions are found. https://www.fca.org.uk/news/press-releases/fca-confirms-plan-protect-access-cash-consumers-and-small-businesses
#Fintech#Cash#UnitedKingdom#Regulation#DFC
·finextra.com·
FCA finalises access to cash rules
Bank of Israel selects 14 teams to present use cases for digital shekel
Bank of Israel selects 14 teams to present use cases for digital shekel
The Bank of Israel (BOI) has chosen 14 teams from the private and public sectors, and academia to study potential use cases for a digital shekel. The use cases that were selected by the BOI deal with a variety of functions: connectivity between the digital shekel, other payment systems, and cash; use of the advanced functionalities offered by the digital shekel, such as subwallets, conditional payments, and split payments; and the implementation of various technologies while using the digital shekel as a means of payment. Participant proposals will be tested in a digital sandbox in August 2024, with products developed to be showcased at a concluding conference at the end of October 2024.
#Fintech#CBDC#Israel#Sandboxes#DFC
·boi.org.il·
Bank of Israel selects 14 teams to present use cases for digital shekel
UAE Central Bank introduces new Stablecoin regulations
UAE Central Bank introduces new Stablecoin regulations
The UAE Central Bank (CBUAE) approved a framework for stablecoin regulation on June 14, 2024, which allows only dirham-backed stablecoins to be used for payments. Other crypto-assets will be restricted to trading, investment, and corporate treasury purposes while foreign stablecoins will only be permitted for purchasing specific virtual assets like non-fungible tokens (NFTs). The new law mandates that no entity can issue a payment token without submitting a white paper to the central bank for approval. Banks are not directly permitted to issue payment tokens but can do so through subsidiaries or affiliates, provided they meet licensing and regulatory requirements. The new framework is set to commence in June 2025. https://rulebook.centralbank.ae/en/rulebook/payment-token-services-regulation#:~:text=No%20Person%20shall%20perform%20any,perform%20such%20Payment%20Token%20Service
#Fintech#CryptoAssets#Stablecoins#Regulation#UAE#DFC
·coinjournal.net·
UAE Central Bank introduces new Stablecoin regulations
Worldpay Global Payments Report 2024
Worldpay Global Payments Report 2024
WorldPay published the 2024 edition of its Global Payment Report. It reports that the ubiquitous acceptance of digital wallets is enabling greater consumer choice and control in this era of payments innovation. According to the findings, digital wallets accounted for $13.9 trillion in global transaction value in 2023, representing half of all online and 30% of consumer spend at point-of-sale (POS). In markets where credit and debit cards already had strong consumer attachment, the data suggests consumers remain loyal to these cards, choosing to connect them to their digital wallets. Although cash usage continues to decline, cash accounted for 16% of global transaction value, including double-digit share in 30 of 40 markets in this report.
#Fintech#Payments#Cash#DFC
·corporate.worldpay.com·
Worldpay Global Payments Report 2024
Cross-border Regulatory and Supervisory Issues of Global Stablecoin Arrangements in EMDEs - Financial Stability Board
Cross-border Regulatory and Supervisory Issues of Global Stablecoin Arrangements in EMDEs - Financial Stability Board
The Financial Stability Board (FSB) published a report that explores potential factors driving the higher level of activities related to foreign currency-pegged stablecoins in emerging market and developing economies (EMDEs), the associated financial stability risks and regulatory challenges, and provides considerations to address them. EMDEs may be exposed to macro-financial risks arising from the use of foreign currency pegged global stablecoins, which can increase financial stability risks by destabilizing financial flows and straining fiscal resources.
#Fintech#CryptoAssets#Stablecoins#Macrofinancial#EMDEs#FSB#DFC
·fsb.org·
Cross-border Regulatory and Supervisory Issues of Global Stablecoin Arrangements in EMDEs - Financial Stability Board
Peru awards contract for first retail CBDC pilot
Peru awards contract for first retail CBDC pilot
Banco Central de Reserva del Perú (BCRP) has awarded its first contract for the development of its retail central bank digital currency (CBDC) pilot. The winner is telecom firm Viettel Perú. The contract will run for one year, which may be extended for up to one additional year at the justified request of Viettel Peru. No further details have been made available. https://www.bcrp.gob.pe/docs/Transparencia/Notas-Informativas/2024/nota-informativa-2024-07-17.pdf
#Fintech#CBDC#Peru#DFC
·ledgerinsights.com·
Peru awards contract for first retail CBDC pilot
Interoperability Between CBDC and Fast Payment Systems : A Technical Perspective
Interoperability Between CBDC and Fast Payment Systems : A Technical Perspective
The World Bank published a technical paper on on its practical experiments on fast payments system (FPS) interoperability with central bank digital currency (CBDC) systems. The first experiment investigated the option of settling FPS obligations in a wholesale CBDC system, including the option to reserve funds to guarantee the settlement of FPS net obligations. The second experiment investigated the interoperability between users within the FPS and retail CBDC users, including the transfer of funds among both types of users, using common services such as address resolution services. This experiment illustrated how CBDC systems could interoperate with retail payment systems through an interlinking bridge that was used to route messages and application programming interface (API) calls among different systems. The programmability features of distributed ledger technology (DLT) were used to link the settlement in CBDC to the transfer of funds in the FPS.
#Fintech#CBDC#wCBDC#FastPayments#Interoperability#WorldBank#DFC
·documents.worldbank.org·
Interoperability Between CBDC and Fast Payment Systems : A Technical Perspective
Putin wants to speed up deployment of Russia’s CBDC
Putin wants to speed up deployment of Russia’s CBDC
Russian President Vladimir Putin expressed an interest in accelerating the Bank of Russia's digital ruble CBDC pilots. At a meeting on economic issues on July 17, 2024, he called for a "broader, full-scale implementation of the digital ruble in the economy, in economic activity and in the field of finance". The pilot, which launched in August 2023, involved 12 banks, 600 individuals and 22 trade and service enterprises from 11 cities. As of July 1, 2024, 27,000 transfers and over 7,000 payments for goods and services have been done, which "the digital ruble platform showed its performance and functionality" and justifying taking the next step to "full implementation". http://kremlin.ru/events/president/news/74566
#Fintech#CBDC#Russia#DFC
·ledgerinsights.com·
Putin wants to speed up deployment of Russia’s CBDC
Kazakhstan pays for rail line to China using programmable CBDC
Kazakhstan pays for rail line to China using programmable CBDC
The National Bank of Kazakhstan (NBK) launched a pilot project to use its digital tenge CBDC to pay for the construction of a rail line to China. The project uses programmable digital tenge to see that allocated funds reach the intended recipients at the right time. The money allocated to finance the project was "marked" so it is paid only to organizations that have fully fulfilled the required obligations. The marked CBDC was used to enlarge the rail line between Moyynty in central Kazakhstan and Dostyk on the Chinese border across from Xinjiang. https://nationalbank.kz/ru/news/informacionnye-soobshcheniya/16879
#Fintech#CBDC#Kazakhstan#Programmability#DFC
·cointelegraph.com·
Kazakhstan pays for rail line to China using programmable CBDC
Relevance and risks of issuing CBDC in Colombia
Relevance and risks of issuing CBDC in Colombia
Banco de la República de Colombia (BRC) published a report outlining its cautious stance on issuing a central bank digital currency (CBDC). It underscores the BRC's concerns over potential financial risks and policy challenges associated with CBDC adoption, and potential financial stability threats and monetary policy transmission channel disruptions. Hence, the BRC does not see reasons for CBDC issuance in the short term, but it will continue investigating the possible advantages, risks and costs of its issuance in the future. (In Spanish) English version: https://www.banrep.gov.co/en/node/63225/printable/print
#Fintech#CBDC#Colombia#DFC
·banrep.gov.co·
Relevance and risks of issuing CBDC in Colombia
Preventing financial crime in crypto-assets: Identifying evolving criminal behavior
Preventing financial crime in crypto-assets: Identifying evolving criminal behavior
Elliptic published its 2024 typologies report on the nexus between crypto-assets and financial crime. This year’s report is designed to equip compliance teams and law enforcement with the practical insights needed to continue to detect new financial crime risks with success. The report includes case studies and insights on the convergence of AI and crypto-assets and how it is impacting criminal activity, the increasing use of stablecoins in financial crime typologies including pig butchering scams and sanctions evasion activity, and major law enforcement and regulatory actions with additional case studies.
#Fintech#CryptoAssets#Stablecoins#CyberCrime#Elliptic#DFC
·elliptic.co·
Preventing financial crime in crypto-assets: Identifying evolving criminal behavior
HKMA Proposes Rules for 'Fiat-Referenced' Stablecoins
HKMA Proposes Rules for 'Fiat-Referenced' Stablecoins
The Hong Kong Monetary Authority (HKMA) is looking to roll out a comprehensive regulatory framework for fiat-referenced stablecoin (FRS) issuers. This comes alongside a proposal for legislation. The new regime would require foreign FRS issuers to establish a physical presence in Hong Kong, require that issuers custody reserves at Hong Kong banks, and prohibit issuers from paying interest to holders. https://www.hkma.gov.hk/eng/news-and-media/press-releases/2024/07/20240717-3/
#Fintech#CryptoAssets#Stablecoins#Regulation#HongKong#DFC
·decrypt.co·
HKMA Proposes Rules for 'Fiat-Referenced' Stablecoins
Basel Committee publishes final disclosure framework for banks' cryptoasset exposures and targeted amendments to its cryptoasset standard
Basel Committee publishes final disclosure framework for banks' cryptoasset exposures and targeted amendments to its cryptoasset standard
The Basel Committee on Banking Supervision published its final disclosure framework for banks' crypto-asset exposures and targeted amendments to its crypto-asset standard published in December 2022. The disclosure framework includes a set of standardized tables and templates covering banks' crypto-asset exposures to enhance information availability and support market discipline. The targeted amendments include clarified criteria for stablecoins to receive a preferential regulatory treatment. https://www.ledgerinsights.com/basel-crypto-rules-receive-minor-updates-no-permissionless-blockchain-changes/
#Fintech#CryptoAssets#Stablecoins#Regulation#BIS#DFC
·bis.org·
Basel Committee publishes final disclosure framework for banks' cryptoasset exposures and targeted amendments to its cryptoasset standard