DFC

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Advances in the New York Fed's Digital Currency Experimentation
Advances in the New York Fed's Digital Currency Experimentation
The New York Fed provided an update on its Project Cedar,  the inaugural project of the New York Innovation Center (NYIC). It built and tested a working prototype distributed ledger technology (DLT) solution for wholesale FX settlement that results in instant and atomic settlement in which a wholesale central bank digital currency (CBDC) is the settlement asset. "Results from the experiment indicated that settlement could occur in fewer than 10 seconds on average and that horizontal scaling was possible. This indicates that a modular ecosystem of ledgers has the potential for continued scalability, and that DLT could enable settlement times well below the current industry standard of two days, with the added guarantee of atomic settlement." Download report here: https://www.newyorkfed.org/aboutthefed/nyic/project-cedar
#Fintech#CBDC#wCBDC#FX#Settlement#UnitedStates#DFC
·newyorkfed.org·
Advances in the New York Fed's Digital Currency Experimentation
HSBC, Visa, G+D winners of Hong Kong's Global Fast Track CBDC competition
HSBC, Visa, G+D winners of Hong Kong's Global Fast Track CBDC competition
The Hong Kong Monetary Authority (HKMA) reportedly announced the six winners of its Global Fast Track CBDC competition, who will now work with the HKMA on central bank digital currency (CBDC) research projects: ARTA TechFin Corporation Limited (technology), Bank of China (Hong Kong) (use case), Giesecke+Devrient (G+D Filia) (technology), Hang Seng Bank (use case), HSBC (ecosystem) and Visa (ecosystem).
#Fintech#CBDC#HongKong#DFC
·ledgerinsights.com·
HSBC, Visa, G+D winners of Hong Kong's Global Fast Track CBDC competition
EU Delays Vote on MiCA Crypto Legislation Until February
EU Delays Vote on MiCA Crypto Legislation Until February
"European Union (EU) lawmakers [reportedly] won’t vote on the Markets in Crypto Assets regulation (MiCA) until February, likely meaning further delays in the landmark licensing regime for crypto companies within the bloc. A previous tentative plan for the parliament to vote at its December plenary session has been abandoned given the length and complexity of the text. EU procedures require legal acts such as MiCA, which was negotiated in English, to be available in all the bloc's 24 official languages."
#Fintech#CryptoAssets#Stablecoins#Regulation#Europe#DFC
·coindesk.com·
EU Delays Vote on MiCA Crypto Legislation Until February
Call for interest: technical talks on programmable digital euro payments
Call for interest: technical talks on programmable digital euro payments
The European Central Bank (ECB) is inviting experts from the payment industry to take part in technical talks, in order to explore options for the provision of programmable payment services in digital euro. The talks will center around the questions regarding retail payments use cases, standards, and back-end IT architecture core payment settlement capabilities. The talks are expected to take place in December 2022. They will be held at expert level as closed sessions with members of the ECB’s digital euro project team, and observers from euro area national central banks.
#Fintech#CBDC#Eurozone#ECB#SmartContracts#Programmability#DFC
·ecb.europa.eu·
Call for interest: technical talks on programmable digital euro payments
MAS Launches Expanded Initiative to Advance Cross-Border Connectivity in Wholesale CBDCs
MAS Launches Expanded Initiative to Advance Cross-Border Connectivity in Wholesale CBDCs
The Monetary Authority of Singapore (MAS) launched Ubin+, an expanded collaboration with international partners on cross-border foreign exchange (FX) settlement using wholesale central bank digital currency (CBDC).  Ubin+ will develop technical standards and infrastructure to support cross-border connectivity, interoperability and atomic settlement of digital currency transactions across platforms using distributed ledger technology (DLT), and non-DLT based financial market infrastructures. It will also evaluate the efficiency and risk implications of such platforms, and establish the related policy frameworks. (The BIS Innovation Hub led Project Mariana that is investigating the use of decentralized finance (DeFi) protocols and automated market makers (AMMs) to automate FX trading and settlement, is part of Ubin+.)
#Fintech#CBDC#wCBDC#CrossBorder#Payments#BIS#Singapore#DFC
·mas.gov.sg·
MAS Launches Expanded Initiative to Advance Cross-Border Connectivity in Wholesale CBDCs
Automated market makers and decentralized exchanges: a DeFi primer
Automated market makers and decentralized exchanges: a DeFi primer
"Recent advancements in decentralized finance (DeFi) have resulted in a rapid increase in the use of Automated Market Makers (AMMs) for creating decentralized exchanges (DEXs). In this paper, we organize these developments by treating an AMM as a neoclassical black-box characterized by the conversion of inputs (tokens) to outputs (prices). The conversion is governed by the technology of the AMM summarized by an ‘exchange function’. Various types of AMMs are examined, including: Constant Product Market Makers; Constant Mean Market Makers; Constant Sum Market Makers; Hybrid Function Market Makers; and, Dynamic Automated Market Makers. The paper also looks at the impact of introducing concentrated liquidity in an AMM. Overall, the framework presented here provides an intuitive geometric representation of how an AMM operates, and a clear delineation of the similarities and differences across the various types of AMMs."
#Fintech#CryptoAssets#CBDC#AMMs#DeFi#DFC
·link.springer.com·
Automated market makers and decentralized exchanges: a DeFi primer
Zimbabwe Draws on Nigeria Lessons in Crypto Currency Plans
Zimbabwe Draws on Nigeria Lessons in Crypto Currency Plans
Reserve Bank of Zimbabwe (RBZ) Deputy Governor Innocent Matshe reportedly said the RBZ will proceed with plans to a central bank digital currency (CBDC), undeterred By the slow adoption of Nigeria's eNaira. In addition to sending a team to learn from the Central Bank of Nigeria’s experiences, the RBZ has also reportedly sent teams with a similar mission to countries like China and Ghana.
#Fintech#CBDC#Africa#Zimbabwe#DFC
·bloomberg.com·
Zimbabwe Draws on Nigeria Lessons in Crypto Currency Plans
Blockchain Powered Value Exchange | Partior
Blockchain Powered Value Exchange | Partior
A global, independent company borne from industry collaboration, Partior was founded in 2021 by Temasek Holdings, J.P. Morgan and DBS. In a world where money is moving faster than ever, our solutions address the growing demand for transparency, cost efficiency and liquidity optimisation.
#Fintech#CBDC#DFC
·partior.com·
Blockchain Powered Value Exchange | Partior
Digital Tenge on BNB Chain? Are you kidding me?
Digital Tenge on BNB Chain? Are you kidding me?
"Last week, Binance boss Changpeng Zhao (CZ) declared that after the exchange received a license in Kazakhstan, his team had persuaded Berik Sholpankulov, the First Deputy of the Governor of the National Bank of Kazakhstan, to test integrating the Digital Tenge with the BNB blockchain. While he stopped short of confirming integration, the tweets started a frenzy of rumors and digital currency media articles speculating that BNB Chain would be the home of Kazakh CBDC."
#Fintech#CBDC#Asia#Kazakhstan#DFC
·coingeek.com·
Digital Tenge on BNB Chain? Are you kidding me?
Project Mariana: CBDCs in automated market makers
Project Mariana: CBDCs in automated market makers
The Bank for International Settlements (BIS) Innovation Hub, Banque de France, Monetary Authority of Singapore (MAS) and Swiss National Bank launched Project Mariana, to investigate the use of decentralized finance (DeFi) protocols to automate FX trading and settlement. The project will explore the use of automated market makers (AMMs) for the cross-border exchange of hypothetical CHF, EUR and S$ wholesale central bank digital currency (CBDC). AMM protocols combine smart contracts with pooled liquidity to price and transfer digital assets automatically.
#Fintech#CBDC#DeFi#CrossBorder#Payments#BIS#AMMs#wCBDC#Switzerland#DFC
·bis.org·
Project Mariana: CBDCs in automated market makers
Anti-money laundering: The world's least effective policy experiment?
Anti-money laundering: The world's least effective policy experiment?
"This paper uses anti-money laundering as a case study to illustrate the benefits of cross-disciplinary engagement when major policymaking functions develop separately from public policy design principles. It finds that the anti-money laundering policy intervention has less than 0.1 percent impact on criminal finances, compliance costs exceed recovered criminal funds more than a hundred times over, and banks, taxpayers and ordinary citizens are penalized more than criminal enterprises. The data are poorly validated and methodological inconsistencies rife, so findings cannot be definitive, but there is a huge gap between policy intent and results. The scale of the problem not addressed by “solutions” repeatedly “fixing” the same perceived issues suggest that blaming banks for not “properly” implementing anti-money laundering laws is a convenient fiction. Fundamental problems may lie instead with the design of the core policy prescription itself. With an important policymaking function operating largely as an independent silo of specialist knowledge, this paper suggests that active engagement with critical, diverse perspectives, and deeper connections between the anti-money laundering movement and other disciplines (notably, policy effectiveness, outcomes and evaluation principles of public policy) should contribute to better results."
#Fintech#AMLCFT#FinancialIntegrity#Regulation#CBDC#DFC
·tandfonline.com·
Anti-money laundering: The world's least effective policy experiment?
Central Bank Digital Currency: When Price and Bank Stability Collide
Central Bank Digital Currency: When Price and Bank Stability Collide
We build a stylized, nominal Diamond-and-Dybvig (1983) model, a consolidated central bank conducts maturity transformation, issuing on-demand, nominal liabilities in the form of an account-based central bank digital currency (CBDC) to citizens and investing the funds in a real asset. We show, the central bank's classic role as the guardian of price stability is in fundamental conflict with its role as a financial intermediator. Implementation of the socially optimal allocation requires a commitment to inflation. Commitment to price stability jeopardizes the real return on currency, and causes runs. Central bank runs manifest themselves as a `run on the price level'.
#Fintech#CBDC#MonetaryPolicy#DFC
·papers.ssrn.com·
Central Bank Digital Currency: When Price and Bank Stability Collide
Understanding the Maker Protocol
Understanding the Maker Protocol
"This paper discusses a decentralized finance (DeFi) application called MakerDAO. The Maker Protocol, built on the Ethereum blockchain, enables users to create and hold currency. Current elements of the Maker Protocol are the Dai stable coin, Maker Vaults, and Voting. MakerDAO governs the Maker Protocol by deciding on key parameters (e.g., stability fees, collateral types and rates, etc.) through the voting power of Maker (MKR) holders. The Maker Protocol is one of the largest decentralized applications (DApps) on the Ethereum blockchain and is the first decentralized finance (DeFi) application to earn significant adoption. The objective of this paper is to analyze and discuss the significance, uses, and functions of this DeFi application."
#Fintech#CryptoAssets#Stablecoins#MakerDAO#DAI#DFC
·arxiv.org·
Understanding the Maker Protocol
Cold hard (digital) cash: the economics of central bank digital currency
Cold hard (digital) cash: the economics of central bank digital currency
The European Central Bank (ECB) published an article that provides an overview of the economics of central bank digital currency (CBDC). It first outlines the economic forces that shape the rise of digital money and motivate the current debate. It then looks at the implications for monetary policy and financial stability before discussing policy issues and challenges. Finally, it highlight several areas where the understanding of digital money could be improved by further research.
#Fintech#CBDC#Eurozone#DFC
·ecb.europa.eu·
Cold hard (digital) cash: the economics of central bank digital currency
New York Justice Department Probes Stablecoin Tether Bank-Fraud Claims
New York Justice Department Probes Stablecoin Tether Bank-Fraud Claims

"Last year, federal prosecutors in Washington warned top officials at Tether that they could be charged for allegedly deceiving banks they used to move cash, people familiar with the situation said at the time. But after months of legal wrangling, the case has been transferred within the department, according to people familiar with the matter.

US Attorney Damian Williams in Manhattan took over the inquiry in recent weeks, the people said, asking not to be named discussing the confidential case. His office, based in the Southern District of New York, has been one of the most aggressive in pursuing suspected cryptocurrency crimes and recently secured a guilty plea from a person affiliated with one of Tether’s payment processors."

#Fintech#CryptoAssets#Stablecoins#Tether#Regulation#UnitedStates#DFC
·bloomberg.com·
New York Justice Department Probes Stablecoin Tether Bank-Fraud Claims
Forget El Salvador, Scotland Could Show Us The Future Of Money
Forget El Salvador, Scotland Could Show Us The Future Of Money
"Surely it would be possible for Scotland to embrace the next wave of change in the technology of money (digital currency) and generate yet more innovation. The regulatory environment has been changing to encourage competition in Europe, the Scots could build on this. The European Commission’s Directive on Electronic Money, the Payment Services Directives have already created the institutions — the Electronic Money Institutions (ELMI) and the Payment Institution (PI) to allow Scotland to drive innovation forward."
#Fintech#CBDC#Scotland#UnitedKingdom#DFC
·forbes.com·
Forget El Salvador, Scotland Could Show Us The Future Of Money
India's Central Bank to Start Wholesale CBDC Pilot Nov. 1
India's Central Bank to Start Wholesale CBDC Pilot Nov. 1
The Reserve Bank of India [RBI] will launch a pilot wholesale central bank digital currency (CBDC) on November 1. The use case for the wholesale Digital Rupee is the "settlement of secondary market transactions in government securities" because it would reduce transaction costs. Nine prominent banks have been identified for participation in the pilot. A pilot of the retail version is planned for launch within a month in select locations in closed user groups comprising customers and merchants. https://rbi.org.in/Scripts/BS_PressReleaseDisplay.aspx?prid=54616
#Fintech#CBDC#Asia#India#DFC
·coindesk.com·
India's Central Bank to Start Wholesale CBDC Pilot Nov. 1
MAS Report on Potential Uses of a Purpose-Bound Digital Singapore Dollar
MAS Report on Potential Uses of a Purpose-Bound Digital Singapore Dollar
The Monetary Authority of Singapore (MAS) released a report detailing potential uses of a purpose-bound digital Singapore dollar (SGD) and the supporting infrastructure required, marking the successful completion of Phase 1 of Project Orchid. While MAS has assessed that the case for a retail CBDC in Singapore is not compelling for now, Project Orchid aims to build the technical capabilities and competencies necessary for MAS to issue a retail CBDC, should the need arise. Phase 1 explored the concept of purpose-bound digital SGD that enables senders to specify conditions, such as validity period and types of shops, when making transfers in digital SGD. Some of its use cases will be tested through trials with the public and private sector in 2022 and 2023. The next phase of Project Orchid will look at what the best ledger technology is and how this can be integrated with the existing infrastructure. https://www.mas.gov.sg/publications/monographs-or-information-paper/2022/project-orchid-whitepaper
#Fintech#CBDC#Asia#Singapore#Programmability#DFC
·mas.gov.sg·
MAS Report on Potential Uses of a Purpose-Bound Digital Singapore Dollar
Speech by PBOC Governor YI Gang at the Hong Kong FinTech Week 2022
Speech by PBOC Governor YI Gang at the Hong Kong FinTech Week 2022
In a Hong Kong Fintech Week 2022 speech, Yi Gang, Governor of the People’s Bank of China (PBOC), described the “delicate balance between protecting privacy and combating illicit activities" in developing its  e-CNY central bank digital currency (CBDC).  "The e-CNY operates on a two-tiered system. At tier one, the PBOC supplies e-CNY to the authorized operators and processes inter-institutional transaction information only. At tier two, the authorized operators only collect the personal information necessary for their exchange and circulation services to the public. Transaction-related data is encrypted for storage. Sensitive consumer information is de-identified to non-transacting parties. Entities and individuals are prohibited from arbitrary inquiry or information usage without rigorous legal authorization. There are small-amount soft wallets and hard wallets to meet the need for small-value anonymous transactions, both online and offline."
#Fintech#CBDC#Asia#China#Privacy#DFC
·pbc.gov.cn·
Speech by PBOC Governor YI Gang at the Hong Kong FinTech Week 2022
Latin America: Financial Inclusion and CashTech Solutions
Latin America: Financial Inclusion and CashTech Solutions
Most Latin American consumers remain conspicuous cash users. Thus, CashTech could be very successful as specialists are looking for ways to bridge the gap between the digital economy and the cash economy, and many incumbents and startups have launched CashTech solutions in the region. For examples, banks have implemented cardless cash withdrawals through their apps, Amazon allows users in the region to pay for goods with cash through Amazon PayCode and Amazon Cash, and retail chain OXXO, which provides cash and correspondent banking services in its more than 19,000 stores in Mexico, has partnered with BBVA and Santander to offer cash-withdrawal services and with Ria Money Transfer to delivers cash remittances.
#Fintech#Cash#CashTech#DFC
·cashessentials.org·
Latin America: Financial Inclusion and CashTech Solutions
Submission to the House of Commons Treasury Committee - Digital Currencies Inquiry
Submission to the House of Commons Treasury Committee - Digital Currencies Inquiry
"This paper was a joint a response from Martin Walker (Center for Evidence Based Management) and Izabella Kaminska (Financial Times) was a response to the inquiries request for information and analysis on the topic. The paper discusses the definitions of the term “Digital Currrencies”, the role of cryptocurrencies in the UK and explains the potential and the risks of more widespread adoption. It also provides an overview of Distributed ledger technology, its history, technical characteristics and potential applications in modern banking."
#Fintech#CryptoAssets#CBDC#Payments#Blockchain#DFC
·papers.ssrn.com·
Submission to the House of Commons Treasury Committee - Digital Currencies Inquiry
Knocked down during lockdown: the return of cash
Knocked down during lockdown: the return of cash
The Bank of England conducted surveys in 2021 to gain further insights into the store of value role of banknotes. They confirm that over the past decade, the fall in transactional cash use in the UK has been accompanied by a rise in the value of notes in circulation. Covid intensified this trend. As Covid restrictions have lifted, there has been a partial recovery in cash use, and more recently, a stabilization in cash use trends. The value of notes in circulation remains elevated, as people are holding more cash as a store of value.  And there remains a sizable share of the population who value cash and for whom cash remains their preferred means of payment. The Bank reiterated its commitment to  to ensure that cash remains available and accessible for those who want to use it.
#Fintech#CBDC#CryptoAssets#Stablecoins#DFC
·bankofengland.co.uk·
Knocked down during lockdown: the return of cash
Digital Money and Central Banks Balance Sheet
Digital Money and Central Banks Balance Sheet
The IMF published a paper by Adrian Armas and Manmohan Singh that examines the impact of digital money on central bank balance sheets and monetary policy. They show that the impact will depend on the type of substitution into digital money. For example, interest rate and credit monetary policy channels may become weakened by nonbank stablecoins backed by government securities, or if there is substitution out of bank deposits into central bank digital currency (CBDC). The common factor in these cases is a reduction of banking credit. However, when substitution is out of cash into private digital money backed by bank deposits, banking credit could expand.
#Fintech#CBDC#CryptoAssets#Stablecoins#CentralBanking#DFC
·imf.org·
Digital Money and Central Banks Balance Sheet
Custodia Bank's master account lawsuit against Fed likely to advance
Custodia Bank's master account lawsuit against Fed likely to advance
"Judge Scott Skavdahl of the U.S. District Court for the District of Wyoming said he likely would not dismiss the lawsuit Custodia Bank filed against the [Fed] earlier this year. Following oral arguments from all parties, Skavdahl declined to issue a ruling from the bench on the Fed's motion to dismiss the lawsuit. He noted that the scope of the suit might be adjusted but the matter would likely survive "in some form." Custodia, a Wyoming-chartered special-purpose depository, sued the Fed in June, hoping to compel it to make a decision on the company's roughly two-year-old application for a master account with the Kansas City Fed."
#Fintech#Custodia#Regulation#Stablecoins#UnitedStates#DFC
·americanbanker.com·
Custodia Bank's master account lawsuit against Fed likely to advance
Use of cash by companies in the euro area
Use of cash by companies in the euro area
In 2021 the European Central Bank (ECB) launched its first survey on the usage of cash among companies to understand their strategic view on the current and future use and acceptance of cash. It found that almost all businesses surveyed accept cash (even in cash-lite countries, like the Netherlands, 90% accept cash), most businesses prefer customers to pay with card but a quarter prefer cash, security and reliability are the top criteria when deciding on payment type, and very few that accept cash intend to stop accepting it in the future. The ECB concluded that the results provide further support for the Eurosystem’s cash strategy to continue to ensure that cash remains widely available and accepted as a means of payment and store of value.
#Fintech#CBDC#Cash#Eurozone#DFC
·ecb.europa.eu·
Use of cash by companies in the euro area
China’s Approach to Central Bank Digital Currency
China’s Approach to Central Bank Digital Currency
Heng Wang has written one of the most comprehensive summaries of China's CBDC approach I've seen recently. He argues that the role of the state, the potential cross-border use of e-CNY, and China’s proactiveness in international governance are the core features of China’s CBDC. These features contribute to China’s CBDC approach, a possible selective reshaping of international financial order. He adopts a multifactor analytical framework which explores major economic, political economy, legal and regulatory factors affecting the sustainability of China’s CBDC approach to promote a holistic understanding of e-CNY’s evolution.
#Fintech#CBDC#Asia#China#DFC
·papers.ssrn.com·
China’s Approach to Central Bank Digital Currency