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FSB warns stablecoins aren't 'stable', recommend action around crypto assets
FSB warns stablecoins aren't 'stable', recommend action around crypto assets
The Financial Stability Board (FSB) released two crypto-related reports, one on high-level recommendations for crypto-asset regulation that prescribes a “same activity, same risk, same regulation,” approach to digital assets, and the other an assessment of how broadly stablecoin issuers would meet the “high-standard” criteria set by the group in 2020. Citing limits on redemptions, including the ability to delay or deny them, the FSB found that most users have to sell stablecoins on exchanges in order to liquidate them, and the price could drop below the value of the currency that the coin is pegged to. The FSB also cast doubt on how most stablecoins would be able to maintain their pricing under market stress.
#Fintech#CryptoAssets#Stablecoins#Regulation#FSB#DFC
·fsb.org·
FSB warns stablecoins aren't 'stable', recommend action around crypto assets
ECB seeks scheme rulebook manager for the digital euro
ECB seeks scheme rulebook manager for the digital euro
The European Central Bank (ECB) Directorate General Market Infrastructure and Payments is looking for a senior expert from the payments industry to coordinate the group that will draft a potential digital euro scheme rulebook, i.e. a set of rules for payment transactions with a digital euro.
#Fintech#CBDC#Eurozone#DFC
·ecb.europa.eu·
ECB seeks scheme rulebook manager for the digital euro
Stablecoin Technology and Related Security Considerations
Stablecoin Technology and Related Security Considerations
The US National Institute of Standards and Technology (NIST) published a technical paper on the ways in which stablecoins are architected and implemented. This includes a descriptive definition, commonly found properties, and distinguishing characteristics, as well as an exploration of stablecoin taxonomies, descriptions of the most common types, and examples from a list of top stablecoins by market capitalization. This document also explores related security, safety, and trust issues with an analysis conducted from a computer science and information technology security perspective as opposed to the financial analysis and economics focus of much of the stablecoin literature
#Fintech#CryptoAssets#Stablecoins#NIST#DFC
·csrc.nist.gov·
Stablecoin Technology and Related Security Considerations
India's Central Bank Crystalizes CBDC Vision in Concept Note
India's Central Bank Crystalizes CBDC Vision in Concept Note
The Reserve Bank of India (RBI) published a report on its central bank digital currency (CBDC) plans, indicating that a digital rupee pilot will be launched "soon". Motivations include reducing physical cash management operational costs, fostering financial inclusion, payments system resilience and efficiency, and cross-border payments. A key requirement will be to offer availability and resilience benefits when electrical power or mobile network is not available in remote locations. https://rbi.org.in/Scripts/PublicationReportDetails.aspx?ID=1218
#Fintech#CBDC#Asia#India#DFC
·coindesk.com·
India's Central Bank Crystalizes CBDC Vision in Concept Note
Archetypes for a retail CBDC
Archetypes for a retail CBDC
The Bank of Canada published a paper that proposes a common framework to analyze and compare the different possible retail CBDC designs, independent of vendor, platform and technology. It is based on five archetypes—common patterns that recur in system designs—and discuss their trade-offs from the perspective of privacy, compliance, visibility, scalability, resilience, extensibility, online and offline payments. The five archetypes are centralized, leaderless, macro-partitioned (money service businesses (MSBs) own and operate partitions), micro-partitioned (users maintain the different partitions) and direct (users directly provide their own oversight). The analysis suggests that a design based on a single archetype is unlikely to achieve all policy goals.
#Fintech#CBDC#Canada#DFC
·bankofcanada.ca·
Archetypes for a retail CBDC
Central Bank Digital Currency (CBDC): identifying appropriate policy goals and design for Nepal
Central Bank Digital Currency (CBDC): identifying appropriate policy goals and design for Nepal
Nepal Rastra Bank (NRB) published a concept report on central bank digital currency (CBDC) for public consultation. The report recommends that the NRB move forward in with CBDC issuance plans, with design focusing on four policy goals; improving access to payments, enhancing payment system resilience, reducing currency management costs, and promoting financial inclusion. It suggests that a retail, intermediated, semi-centralized infrastructure-based CBDC that is interoperable with other domestic payment systems, is most suitable for Nepal. Also, it should be unremunerated, available 24/7 hours, quantity restrictive, and programmable for broader usage options. The next steps is to set up a cross-functional dedicated team, to carry out the exhaustive and rigorous next steps.
#Fintech#CBDC#Asia#Nepal#DFC
·web.archive.org·
Central Bank Digital Currency (CBDC): identifying appropriate policy goals and design for Nepal
SWIFT innovation paves way for global use of CBDCs and tokenised assets
SWIFT innovation paves way for global use of CBDCs and tokenised assets
SWIFT has successfully shown that central bank digital currencies (CBDCs) and tokenized assets can move seamlessly on existing financial infrastructure. The findings, from two separate experiments, bridged between different distributed ledger technology (DLT) networks and existing payment systems, allowing digital currencies and assets to flow smoothly alongside, and interact with, their traditional counterparts.
#Fintech#CBDC#CrossBorder#SWIFT#DFC
·swift.com·
SWIFT innovation paves way for global use of CBDCs and tokenised assets
Privacy in cross-border digital currency: A transatlantic approach
Privacy in cross-border digital currency: A transatlantic approach
The Atlantic Council published an article illustrating how various technical design choices can affect the privacy and transparency of cross-border central bank digital currencies (CBDCs). Many of the cross-border CBDC pilot studies to date have adopted the technical designs provided by enterprise distributed ledger (DLT) platforms. However, some of these designs make tradeoffs regarding privacy, efficiency, and/or security. Whether these tradeoffs are acceptable is a matter of policy, and requires coordination between different regulators and central banks.
#Fintech#CBDC#CrossBorder#Privacy#DFC
·atlanticcouncil.org·
Privacy in cross-border digital currency: A transatlantic approach
Tether Increases US Treasury Portfolio, Cuts Commercial Paper Holdings to Below $50M
Tether Increases US Treasury Portfolio, Cuts Commercial Paper Holdings to Below $50M
Tether has cut its commercial paper holding to less than $50 million, as of September 30, and increased its holding of U.S. Treasuries to 58.1% of its total portfolio from 43.5% of its total portfolio as of June 30, according to a Tweet by its Chief Technology Officer, Paolo Ardoino.
#Fintech#CryptoAssets#Stablecoins#Tether#DFC
·coindesk.com·
Tether Increases US Treasury Portfolio, Cuts Commercial Paper Holdings to Below $50M
Digital Cash Is Not Physical Cash
Digital Cash Is Not Physical Cash
"We now have zero-knowledge proofs, blinding, homomorphic encryption and many other tried and tested techniques that we can use to keep data private in normal circumstances but that can reveal it in special circumstances, such as the production of a court order. Let’s be optimistic about the privacy apples and put the anonymous oranges to one side."
#Fintech#CBDC#Privacy#Offline#DFC
·forbes.com·
Digital Cash Is Not Physical Cash
Why CBDC stands to benefit banks
Why CBDC stands to benefit banks
"The argument that national currencies are already digital is a valid one. However, the innovation with CBDC is not that it is digital but that it is a digital token on a distributed ledger. Digital tokens enable instant settlement, reducing open positions and risk exposures. That gives them unique functions, including programmability, that conventional monies do not hold and that unlock new possibilities in payments. Further, the deferred settlement embedded in several current payment methods requires financial institutions to hold additional liquidity in various accounts like nostro/vostro. This could be significantly optimised using wholesale CBDC schemes."
#Fintech#CBDC#DFC
·bankingblog.accenture.com·
Why CBDC stands to benefit banks
AML by design: Designing a CBDC to stifle money laundering
AML by design: Designing a CBDC to stifle money laundering
This article explores how technical CBDC design choices can be used to make a CBDC inherently resistant to money laundering. These design choices not only further anti-money laundering (AML), but they can also help to better balance AML priorities with other goals including financial inclusion, privacy and compliance costs. Moreover, CBDCs provide an opportunity to measure the effectiveness of different design choices in real time. These measurements can facilitate the iterative redesign of CBDCs to identify optimal approaches to meeting regulatory objectives.
#Fintech#CBDC#AMLCFT#FinancialIntegrity#DFC
·sciencepolicyreview.org·
AML by design: Designing a CBDC to stifle money laundering
Central Bank Unveils RamzRial, an 'Iranian National Cryptocurrency'
Central Bank Unveils RamzRial, an 'Iranian National Cryptocurrency'
More details are being reported on the CBDC pilot reportedly launched by Iran's central bank. It's reportedly a partnership with two local banks (Bank Melli and Mellat Bank) that have have given 1 billion tomans ($311,000) to a limited number of people, and two shops have been designated for the use of the currency.
#Fintech#CBDC#MiddleEast#Iran#DFC
·iranwire.com·
Central Bank Unveils RamzRial, an 'Iranian National Cryptocurrency'
SORAMITSU to Lead Feasibility Study on Digital Currency in Oceania
SORAMITSU to Lead Feasibility Study on Digital Currency in Oceania
On January 10, 2022 Soramitsu was selected by the NTT Data Institute of Management Consulting to evaluate the potential risks and benefits of introducing CBDC in Fiji, Solomon Islands, Tonga, and Vanuatu. Confirmed by the IMF in September 2022: https://www.imf.org/en/Publications/fintech-notes/Issues/2022/09/27/Towards-Central-Bank-Digital-Currencies-in-Asia-and-the-Pacific-Results-of-a-Regional-Survey-523914
#Fintech#CBDC#Asia-Pacific#DFC
·soramitsu.co.jp·
SORAMITSU to Lead Feasibility Study on Digital Currency in Oceania
SORAMITSU, JICA, and Bank of the Lao PDR to Inaugurate CBDC Research
SORAMITSU, JICA, and Bank of the Lao PDR to Inaugurate CBDC Research
On October 4, 2021, Soramitsu was selected by the Japan International Cooperation Agency to explore with the Bank of the Lao PDR the potential contribution of CBDC to the inclusive development of the financial system of the Lao People's Democratic Republic. Confirmed: https://www.imf.org/en/Publications/fintech-notes/Issues/2022/09/27/Towards-Central-Bank-Digital-Currencies-in-Asia-and-the-Pacific-Results-of-a-Regional-Survey-523914
#Fintech#CBDC#Asia-Pacific#DFC
·soramitsu.co.jp·
SORAMITSU, JICA, and Bank of the Lao PDR to Inaugurate CBDC Research
The digital euro progress report key takeaways
The digital euro progress report key takeaways

The digital euro project has just published a new progress report. Here are the Bank of Finland's Aleksi Grym's key takeaways: 1/ A key objective for the digital euro would be to preserve public money as a monetary anchor for the economy, a role now played by cash. Perhaps, in the future, cash will no longer be used, therefore a digital anchor is needed. 2/ Another key objective would be to strengthen Europe's strategic autonomy and economic efficiency when it comes to retail payments. This market is now too dependent on non-European infrastructures. 3/ Privacy is considered important, but full anonymity will not be possible. Intermediaries would have visibility on their own customers for compliance purposes. The central bank would have minimal visibility on data. 4/ Mechanics would be built in to prevent hoarding. These could be a combination of holding limits and tiered remuneration. Building these mechanics into the product does not imply how and when they would be used. That would require a separate policy decision. https://www.ecb.europa.eu/paym/digital_euro/investigation/profuse/shared/files/dedocs/ecb.dedocs220929.en.pdf

#Fintech#CBDC#Eurozone#DFC
·twitter.com·
The digital euro progress report key takeaways
A successful CBDC implementation depends on solving the “CBDC Design Trilemma”
A successful CBDC implementation depends on solving the “CBDC Design Trilemma”
The “Blockchain Trilemma” is a term used to describe the challenge of increasing performance, security, and decentralisation at the same time. Current enterprise blockchains are not truly decentralised. They may be structurally decentralised, but are operationally centralised. By reversing this, having structurally centralised, but operationally decentralised architecture, a CBDC can achieve a high-performance blockchain. However, any blockchain-based CBDC should not only solve the blockchain trilemma, but also the CBDC design trilemma, which notes that identity, privacy, and programmability cannot be easily enhanced at the same time. A CBDC cannot ignore privacy for the sake of achieving legal compliance and implementing programmable money. From an expertise point of view, the answer to this trilemma is the use of a decentralized identity system such as self-sovereign identity (SSID) to find the perfect equilibrium for the CBDC design trilemma. Self-sovereign identity is very popular for its advanced privacy protection. By having an SSID-based blockchain system, a CBDC can incorporate both privacy and transparency into the blockchain-based CBDC system. Additionally, a use of zero-knowledge encryption to protect the transaction privacy of blockchain data is highly recommended for any CBDC implementation.
#Fintech#CBDC#DFC
·blog.digital-euro-association.de·
A successful CBDC implementation depends on solving the “CBDC Design Trilemma”
Macroprudential Considerations for Tokenized Cash
Macroprudential Considerations for Tokenized Cash
"This paper examines the financial stability risks associated with tokenized cash, a subset of stablecoins fully reserved with cash and cash equivalents. Using a combination of on-chain data together with uniquely collected wallet address labels, we construct empirical measures of liquidity ratios and run off rates on the largest cash token and characterize its users and their behavior. The overall circulation of tokenized cash is largely insulated from crypto price movements, though price changes correlate with re-balancing between smart contracts and private wallets. A liquidity ratio calculation, similar in concept to Liquidity Coverage Ratio (LCR), indicates that tokenized cash has at least two times the amount of High-Quality Liquid Assets (HQLA) when compared to the worst observed gross outflow over 30-day ahead periods. We discuss the implications of tokenized cash on safe asset creation, credit supply, and monetary policy transmission. The adoption of tokenized cash can reduce moral hazard risks from public guarantees and expand credit provision through market-based lending enabled by smart contracts."
#Fintech#CryptoAssets#Stablecoins#MacroPru#DFC
·papers.ssrn.com·
Macroprudential Considerations for Tokenized Cash
Towards CBDCs in Asia and the Pacific: Results of a Regional Survey
Towards CBDCs in Asia and the Pacific: Results of a Regional Survey
"Drawing on survey responses from 34 Asian economies and country case studies, this note takes stock of recent developments related to central bank digital currencies (CBDCs) and crypto assets in Asia. The survey finds that there is significant heterogeneity in terms of stage of development, but the emergence of private crypto assets has created an impetus to consider CBDCs. While most countries are engaged in research and development, with some at advanced stages of testing and pilots, very few countries are likely to issue CBDCs in the near-to-medium term, reflecting the still considerable uncertainties. Still, country experiences so far provide some key insights for others in their journey in this area."
#Fintech#CBDC#Asia-Pacific#IMF#DFC
·imf.org·
Towards CBDCs in Asia and the Pacific: Results of a Regional Survey
ECB provides update on its digital euro work
ECB provides update on its digital euro work
The European Central Bank (ECB) provided a status report on its central bank digital currency (CBDC) work. It confirmed that a digital euro would incorporate individual user holding limits to slow the possible conversion of bank deposits into digital euro  (disintermediation risk). A digital euro would also bear interest calibrated to make digital holdings above a certain threshold unattractive compared to other highly liquid low-risk assets.  Offline payments will only be allowed for low value, low risk, close proximity transactions. [Read the report here] In addition, ECB board member Fabio Panetta set out a plan for a digital euro scheme involving a set of rules, practices and standards with plans to start working on a rulebook. https://www.ecb.europa.eu/press/key/date/2022/html/ecb.sp220929~91a3775a2a.en.html
#Fintech#CBDC#Eurozone#DFC
·ecb.europa.eu·
ECB provides update on its digital euro work
Yuan: Digital Currency: Yuan comes with an expiry date: Spend or it will vanish
Yuan: Digital Currency: Yuan comes with an expiry date: Spend or it will vanish
China is reportedly exploring putting expiration dates on its e-CNY retail central bank digital currency (CBDC), which could force holders to use it up by a certain date. This idea has most recently been explored in a Celo working paper that advocated using expiration dates to increase the "velocity" of money, based on an an unconventional monetary policy instrument known as a Gesell money.
#Fintech#CBDC#Gesell#China#DFC
·bfsi.economictimes.indiatimes.com·
Yuan: Digital Currency: Yuan comes with an expiry date: Spend or it will vanish
Non-euro stablecoin transaction cap revived in MiCA
Non-euro stablecoin transaction cap revived in MiCA
"A daily transaction cap for non-euro stablecoins has been reinserted into the European Union’s draft rules for cryptocurrencies. The cap will limit transactions using stablecoins denominated in other currencies, like the U.S. dollar, to €200 million transacted per day,  multiple sources confirmed to The Block. "
#Fintech#CryptoAssets#Stablecoins#Europe#Regulation#DFC
·theblock.co·
Non-euro stablecoin transaction cap revived in MiCA
Project Icebreaker: Central banks of Israel, Norway and Sweden team up with the BIS to explore retail CBDC for international payments
Project Icebreaker: Central banks of Israel, Norway and Sweden team up with the BIS to explore retail CBDC for international payments
The Bank for International Settlements (BIS) and the central banks of Israel, Norway and Sweden are launching Project Icebreaker, a joint exploration of how central bank digital currencies (CBDCs) can be used for international retail and remittance payments. using a hub-and-spoke model. The project will run through the end of the year, with a final report expected in the first quarter of 2023.
#Fintech#CBDC#CrossBorder#Payments#BIS#DFC
·bis.org·
Project Icebreaker: Central banks of Israel, Norway and Sweden team up with the BIS to explore retail CBDC for international payments
Russia plans to use digital rouble in settlements with China, says lawmaker
Russia plans to use digital rouble in settlements with China, says lawmaker
After launching a digital rouble early next year, Russia plans to use the currency in mutual settlements with China as it seeks to reduce Washington's global financial hegemony, according to Anatoly Aksakov, head of the financial committee in Russia's lower house of parliament.
#Fintech#CBDC#CrossBorder#Payments#Russia#China#DFC
·reuters.com·
Russia plans to use digital rouble in settlements with China, says lawmaker
France’s CBDC Projects to Manage DeFi Liquidity, Settle Tokenized Assets
France’s CBDC Projects to Manage DeFi Liquidity, Settle Tokenized Assets
The Banque de France reportedly announced two new wholesale CBDC projects. The first will look at improving CBDC market liquidity management in decentralized finance (DeFi), such as via automated market makers. The second will focus on issuing and distributing tokenized bonds on a blockchain.
#Fintech#CBDC#wCBDC#Settlement#Tokenization#Eurozone#DFC
·blockchain.news·
France’s CBDC Projects to Manage DeFi Liquidity, Settle Tokenized Assets
CBDC pilots and research, lessons for the digital euro
CBDC pilots and research, lessons for the digital euro
The Digital Euro Association published a very nice summary of the current state of play in the central bank digital currency (CBDC) space. It's part of a series of articles, this first one providing a general overview of global CBDC projects, motivations, with a particular focus on the Bahamas, China, Eastern Caribbean, Nigeria and Russia. The subsequent articles in this series will provide a deeper understanding of CBDC research and development in countries with different challenges and policy objectives. The articles will highlight that there is no one-size-fits-all approach to CBDC, but that CBDC solutions must be based on the needs and challenges of each country.
#Fintech#CBDC#DFC
·blog.digital-euro-association.de·
CBDC pilots and research, lessons for the digital euro
Former IMF official believes CBDCs need to function offline to gain mass adoption
Former IMF official believes CBDCs need to function offline to gain mass adoption
"A former International Monetary Fund (IMF) official, John Kiff, believes that CBDCs need to function offline and that such technology already exists in the form of stored-value cards, which were introduced in the 1990s, according to a blog post published on the IMF website on Sept. 26."
#Fintech#CBDC#IMF#Offline#Kiffmeister#DFC
·cryptoslate.com·
Former IMF official believes CBDCs need to function offline to gain mass adoption
Project mCBDC Bridge Pilot Complete
Project mCBDC Bridge Pilot Complete
Project mBridge is a prototype real-time cross-border payments platform based distributed ledger technology (DLT) and multiple central bank digital currencies (CBDCs) developed by the Bank for International Settlements Innovation Hub and four central banks. The first pilot is now complete, with over $12 million in value issued onto the platform facilitating over 160 cross-border payments and FX transactions totaling more than $22 million in value between 20 participating commercial banks over the course of a month. A detailed report will be released in October. https://www.bis.org/about/bisih/topics/cbdc/mcbdc_bridge.htm
#Fintech#CBDC#mCBDC#wCBDC#CrossBorder#Payments#BIS#DFC
·linkedin.com·
Project mCBDC Bridge Pilot Complete