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Stablecoins' Multiple Investment Risks
Stablecoins' Multiple Investment Risks
Moody's published a paper on the multiple risks of fiat-backed/pegged stablecoins. "As the number of stablecoins grows, they are more frequently being used in traditional finance, where they have the potential to lower transaction fees and make cross-border payments more efficient. Moreover, stablecoins are increasingly used to buy and sell securities, filling the void caused by the current absence of wholesale central bank digital currencies (CBDCs) compatible with distributed ledger technology (DLT). However, stablecoins are subject to multiple risks and have therefore not always lived up to their promised stability."
#Fintech#CryptoAssets#Stablecoins#Moodys#DFC
·moodys.com·
Stablecoins' Multiple Investment Risks
Kyrgyzstan central bank posts CBDC-related legislative amendments
Kyrgyzstan central bank posts CBDC-related legislative amendments
The National Bank of the Kyrgyz Republic (NBKR) published a draft of proposed amendments to the country's central banking legislation to firm up the legal status of a digital som central bank digital currency (CBDC). These amendments affect eight key legislative acts, including the Civil Code, Budget Code, Code of Offenses, Tax Code, Law on Consumer Protection, Law on Payment Systems, and Law on Banks and Banking Activity. Public feedback, comments and suggestions must be submitted by September 7, 2024. https://www.nbkr.kg/newsout.jsp?item=31&lang=ENG&material=120922
#Fintech#CBDC#Kyrgyzstan#DFC
·linkedin.com·
Kyrgyzstan central bank posts CBDC-related legislative amendments
Google, Amazon, Walmart seek to join e-rupee pilot
Google, Amazon, Walmart seek to join e-rupee pilot
GooglePay, Walmart-backed PhonePe and AmazonPay, plus Indian fintech firms Cred and Mobikwikare, are reportedly seeking to join the Reserve Bank of India (RBI) e-rupee central bank digital currency (CBDC). Initially, the RBI had permitted only banks to offer e-rupee via their mobile applications, but in April 2024 it said payment firms could also offer e-rupee transactions via their platform once approved by the RBI.
#Fintech#Payments#CBDC#India#DFC
·reuters.com·
Google, Amazon, Walmart seek to join e-rupee pilot
Cambodia’s Bakong digital currency helps address dollarization
Cambodia’s Bakong digital currency helps address dollarization
A key aim of the National Bank of Cambodia's Bakong digital currency payment system, launched in 2020, was to encourage a higher proportion of transactions in the local riel rather than dollars. Cambodia is a heavily dollarized country with roughly 80% of transactions taking place in US dollars. However, during the first half of 2024 the riel was used in 43% of Bakong transactions, versus 34.2% in 2023. One of the key tactics to encourage use of the local currency is to only support cross-border payments using riel. According to Leger Insights, while often described incorrectly as a central bank digital currency (CBDC), "Bakong is closer to a tokenized deposit initiative with the Bakong currency backed by balances at commercial banks".
#Fintech#Cambodia#Payment#CrossBorder#CBDC#DFC
·ledgerinsights.com·
Cambodia’s Bakong digital currency helps address dollarization
BOJ presentation on the future of wholesale payments
BOJ presentation on the future of wholesale payments
The Bank of Japan (BOJ) published an executive summary of a presentation and panel session on the "future of wholesale payments at the FIN/SUM 2024 on March 6, 2024. Three consecutive sessions the course of developments in this area, the emergence of new forms of money, and challenges of the current practice. Of these sessions, the panel discussions brought together business leaders, industry experts, and academics to illustrate the future landscape of the wholesale payments ecosystem.
Bank of Japan Presentation and Panel Session at the FIN/SUM 2024 Executive Summary of "Future of Wholesale Payments"
#Fintech#PaymentSystems#CBDC#wCBDC#Japan#DFC
·boj.or.jp·
BOJ presentation on the future of wholesale payments
Indonesia preps second stage of wholesale CBDC trials
Indonesia preps second stage of wholesale CBDC trials
Bank Indonesia (BI) published its Indonesian Payment System Blueprint (BSPI) 2030, in which it provides an update on its digital rupiah central bank digital currency (CBDC) work. The central bank completed the first of three proof of concept phases CBDC work during the first half of 2024, the basic issuance and redemption of a distributed ledger technology (DLT) based wholesale CBDC . The BI is now readying to start the second phase in which it plans to explore the integration of a wCBDC with a digital securities ledger to test issuing, transferring and redeeming digital securities, conduct central bank operations, and extending the functionality of digital securities, including programmability, composability and tokenization. https://www.bi.go.id/id/publikasi/kajian/Pages/Blueprint-Sistem-Pembayaran-Indonesia-2030.aspx
#Fintech#CBDC#wCBDC#Tokenization#Settlement#Indonesia#DFC
·ledgerinsights.com·
Indonesia preps second stage of wholesale CBDC trials
Central Bank of Azerbaijan holds back on CBDC
Central Bank of Azerbaijan holds back on CBDC
The Central Bank of Azerbaijan (CBA) reportedly has no plans to issue a digital currency (CBDC), as it currently sees no prospects for its successful implementation. Governor Taleh Kazimov cited "challenges related to operations and financial sector stability".
#Fintech#CBDC#Azerbaijan#DFC
·en.trend.az·
Central Bank of Azerbaijan holds back on CBDC
eSIM Management to Digitize Processes
eSIM Management to Digitize Processes
The eSIM ecosystem offers an equivalent level of security and protection to that provided by the removable SIM card. The protocols are based on state-of-the-art cryptographic mechanisms and secure the privacy of the end user. A public key infrastructure (PKI) governed by the Global System for Mobile Communications Association (GSMA) provides a secure authentication of the entities of the ecosystem. Manufacturers or providers of eSIM solutions have to undergo GSMA certification in order to be admitted into the ecosystem.
#Fintech#Offline#G+D#CBDC#DFC
·gi-de.com·
eSIM Management to Digitize Processes
Offline digital euro: ECB seeks input from experts
Offline digital euro: ECB seeks input from experts
The European Central Bank (ECB) is inviting experts in offline payments to participate in conversations to explore options for an offline digital euro as part of its retail central bank digital currency (CBDC) work. It wants to understand the marketplace for using embedded secure elements (eSEs) and embedded SIMs (eSIMs) in user devices. Secure elements are standard-compliant chips that ensure safe data storage embedded in most smartphones and many wearables, typically for payments. eSIMs facilitate user network switches via software updates, instead of swapping physical SIM cards. Both could play roles in offline payment functionality. The experts are to be drawn from original equipment manufacturers (OEMs), mobile network operators (MNOs) and specialized trusted service managers, but none that are participating in any of the ECB public tenders on digital euro components. https://www.ecb.europa.eu/press/intro/news/html/ecb.mipnews240801.en.html
#Fintech#CBDC#Payments#Offline#Eurozone#ECB#DFC
·ledgerinsights.com·
Offline digital euro: ECB seeks input from experts
Cash Bill Pay in the US. What is it?
Cash Bill Pay in the US. What is it?
Cash Bill Pay is a way to pay bills (like utilities, toll charges, etc.) in cash at a local retailer. With Walk-Up, a customer goes to a retailer's customer service desk with their biller's name and their account number. This info is entered into some software, the customer hands over cash to pay the bill, and gets a receipt as proof of payment. CheckFreePay, Western Union, and MoneyGram are some of the Walk-Up Cash Bill Pay providers. With Barcode, a customer presents a barcode either on a document or on a mobile phone to a retailer's cashier who scans it with a POS device. This barcode provides the needed information for the transaction. The customer hands over cash to pay the bill and gets a receipt as proof of payment. VanillaDirect, PayNearMe, KUBRA EZ-PAY are some of the Barcode Cash Bill Pay providers. The importance of Cash Bill Pay is that it provides a bridge for cash-preferred customers to make digital payments. It allows them to use cash and have face to face transactions. The usual fee charged the customer per transaction in the US is between $1 and $4. The rise of Cash Bill Providers also points to the growing trend of businesses not to accept cash directly but of farming cash payments out to third parties. [Franklin Noll on LinkedIn]
However, the rise of Cash Bill Providers also points to the growing trend of businesses not to accept cash directly but of farming cash payments out to third parties.
#Fintech#Cash#CashTech#FinancialInclusion#UnitedStates#DFC
·linkedin.com·
Cash Bill Pay in the US. What is it?
Birri Gubba Nation to launch a sovereign digital currency
Birri Gubba Nation to launch a sovereign digital currency
The Birri Gubba Nation, an Australian indigenous sovereign nation, has signed a memorandum of understanding (MOU) with Sovereign Wallet, to establish a comprehensive national digital identity system to serve as account addresses for sovereign digital currency. Sovereign Wallet is a blockchain technology company that developed the MetaMUI CBDC Cloud Service for creating digital currencies, which the Yidinji Nation, another Australian indigenous nation, used to launch its Yidindji Dollar (SYD) in 2022. The Birri Gubba Nation national identity and digital currency systems are set to go live in September 2024. If it is structured like the Yidindji Dollar, it will be pegged to the Australian dollar (AUD), although the mechanism hasn’t been revealed.
#Fintech#CBDC#Subsovereign#Stablecoins#Australia#MetaMUI#DFC
·coindesk.com·
Birri Gubba Nation to launch a sovereign digital currency
Project Pyxtrial: monitoring the backing of stablecoins
Project Pyxtrial: monitoring the backing of stablecoins
The BIS and the Bank of England have have developed a prototype data analytics pipeline which includes data collection, storage and analysis, that can provide supervisors with near real-time data about stablecoins' liabilities and their backing assets. Pyxtrial can provide insight into whether the backing assets exceed their liabilities at all times, and enhance the efficiency and responsiveness of the monitoring process, which helps supervisors to respond faster to potential risks.
#Fintech#CryptoAssets#Stablecoins#Supervision#BIS#DFC
·bis.org·
Project Pyxtrial: monitoring the backing of stablecoins
CBDCs in Latin America and the Caribbean
CBDCs in Latin America and the Caribbean
The Latin American (LATAM) Journal of Central Banking published a paper on central bank digital currencies (CBDCs) in Latin America and the Caribbean, by staff from the Bank for International Settlements (BIS), Central Bank of Colombia, and American Enterprise Institute (AEI). The paper draws heavily from the Committee on Payments and Infrastructures (CPMI) annual survey of central banks regarding interest in, and motivations for, exploring CBDC in their jurisdiction.
#Fintech#CBDC#LATAM#Caribbean#BIS#DFC
·sciencedirect.com·
CBDCs in Latin America and the Caribbean
E-Rupee pilot customers grow to 5 million
E-Rupee pilot customers grow to 5 million
The Reserve Bank of India (RBI) published its annual report on currency and Finance in which it reported that as of June 2024, 5 million users (versus 1.3 million a year earlier) and 0.4 million merchants (versus 0.3 million) were participating in e-Rupee CBDC retail pilot. https://rbi.org.in/Scripts/AnnualPublications.aspx?head=Report%20on%20Currency%20and%20Finance
#Fintech#CBDC#India#DFC
·business-standard.com·
E-Rupee pilot customers grow to 5 million
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