DFC

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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
DLT Options for CBDC
DLT Options for CBDC
The Swiss National Bank's Thomas Moser was one of the authors of a paper on the options for designing CBDCs using distributed ledger technology (DLT). It analyzes the various structures for implementation offered by DLT - public, permissioned and private - and the implications that each has for the central bank and the existing financial system. While a CBDC built on an open, permissionless system would provide the full functionality offered by DLT, it is also far more disruptive to the existing financial system and consequently requires more new infrastructure on the part of the central bank. Within the current DLT landscape, public-private partnerships offer the most practical and efficient means of building a DLT-based CBDC. A selection of existing DLT providers able to support a CBDC is also discussed.
#Fintech#CBDC#Blockchain#DLT#DFC
·papers.ssrn.com·
DLT Options for CBDC
Regulating the Crypto Ecosystem: The Case of Stablecoins
Regulating the Crypto Ecosystem: The Case of Stablecoins
The International Monetary Fund (IMF) published a Fintech Note that provides key elements that should feature in any stablecoin regulatory arrangement. Stablecoins have experienced periods of rapid growth, accelerated links with traditional finance. Without proper regulation, contagion risks to wider financial sector will increase. Global regulation for stablecoins should be comprehensive, consistent, risk-based, flexible, and focus on their structural features and use. Requirements on stablecoins should cover the entire ecosystem and all its key functions, and there should be additional oversight for systemic stablecoin arrangements. In markets where risks are growing quickly, authorities should take immediate action by using all the tools at their disposal. For effective implementation, domestic and international collaboration are key.
#Fintech#CryptoAssets#Stablecoins#Regulation#IMF#DFC
·imf.org·
Regulating the Crypto Ecosystem: The Case of Stablecoins
Central Bank Digital Currency: Financial Inclusion vs. Disintermediation
Central Bank Digital Currency: Financial Inclusion vs. Disintermediation
The Dallas Fed published a working paper that analyzes the impact of introducing a central bank digital currency (CBDC) on financial inclusion, and its potential adverse effect on bank funding. We highlight the role of two design parameters: the fixed cost of CBDC usage and the interest rate it pays, and derive principles for maximum inclusion and for mitigating the inclusion-intermediation trade-off. Agents’ choice of money instrument is endogenously driven by income heterogeneity. Pre-CBDC, wealthier agents adopt deposits, while poorer agents adopt cash and remain unbanked. CBDCs with low fixed costs (and low interest rates) are adopted by cash holders and directly increase inclusion. CBDCs with high fixed costs (and high interest rates) are adopted by deposit holders and increase inclusion by raising deposit rates. The former allows for more favorable inclusion-intermediation trade-offs.
#Fintech#CBDC#DFC
·dallasfed.org·
Central Bank Digital Currency: Financial Inclusion vs. Disintermediation
Demystifying wholesale central bank digital currency
Demystifying wholesale central bank digital currency
According to European Central Bank (ECB) executive board member Fabio Panetta, the ECB is looking at the potential of DLT in improving the efficiency of interbank settlements. However, after listing the many benefits of DLT, Panetta highlighted some drawbacks, and made a case for a system that builds on the ECB's existing infrastructure for wholesale settlements, instead of building a new one based entirely on DLT. Panetta also makes the point that, since central bank money has been available in digital form for wholesale transactions between banks for decades, wholesale CBDC is nothing new. The misconception that it is new "is fueled by the commonly held assumption that wholesale CBDC needs to be operated using DLT. But wholesale CBDC is not synonymous with DLT, as it can be based on any digital technology. In the euro area, the Eurosystem offers banks the possibility of settling wholesale digital transactions through its TARGET Services using a centralized ledger."
#Fintech#CBDC#DLT#Blockchain#PaymentSystems#Europe#wCBDC#DFC
·ecb.europa.eu·
Demystifying wholesale central bank digital currency
Nomura invests in Fnality institutional blockchain payments platform
Nomura invests in Fnality institutional blockchain payments platform
Nomura is investing in Fnality, the interbank payment and settlement platform that uses "synthetic" wholesale central bank digital currency (CBDC) to settle transactions on distributed ledger technology (DLT) based financial market infrastructures (FMIs). (A "synthetic CBDC" is essentially a stablecoin backed by central bank deposits.) Fnality is expected to launch its first such synthetic CBDC in October 2022, pegged to the British Pound and backed by deposits at the Bank of England.
#Fintech#CryptoAssets#Stablecoins#CBDC#sCBDC#Fnality#UnitedKingdom#DFC
·ledgerinsights.com·
Nomura invests in Fnality institutional blockchain payments platform
The European Union is stifling stablecoin adoption
The European Union is stifling stablecoin adoption
Europe's Markets in Crypto-Assets (MiCA) regulation framework, as of the latest draft, limits the volume for stablecoin payments to $200 million per day. This is too low of a cap to gauge its success and is ultimately only helpful in stifling innovation and hindering what these assets can offer. Take the perspective from Belgium, where, as of July 1, 2022, all merchants must offer at least one digital payment solution. But, here’s the catch — cryptocurrency and stablecoins are not accepted as valid forms of digital payment under this provision.
#Fintech#CryptoAssets#Stablecoins#Europe#Regulation#DFC
·cointelegraph.com·
The European Union is stifling stablecoin adoption
White Paper on RBA CBDC Research Project
White Paper on RBA CBDC Research Project
The Reserve Bank of Australia (RBA) and the Digital Finance Cooperative Research Centre (DFCRC) published a white paper that explains in detail the objectives and approach of their central bank digital currency (CBDC) project. They also invited interested industry participants to make submissions on CBDC use cases that have the potential to deliver benefits to the functioning of the Australian economy and financial system. Participants can also express interest in operating their use case in a pilot project to test and demonstrate the value proposition.
#Fintech#CBDC#Australia#DFC
·rba.gov.au·
White Paper on RBA CBDC Research Project
Financial Inclusion and Central Bank Digital Currency in The Bahamas
Financial Inclusion and Central Bank Digital Currency in The Bahamas
The Central Bank of the Bahamas (CBOB) published a paper that attempts to assess the introduction of central bank digital currency (CBDC) in the Bahamas. It uses a theoretical model that assumes that CBDC will lead to a decrease in the number of unbanked. As these individuals acquire access to financial institutions, the fraction of hand-to-mouth agents in the economy falls. If the number of unbanked individuals is cut in half, the economic benefits include: a reduction in the volatility of all shocks; monetary policy is more effective at controlling inflation and contributes less to the volatility of the overall economy; fiscal policy becomes more Ricardian, mitigating the size of fiscal shocks.
#Fintech#CBDC#DFC
·centralbankbahamas.com·
Financial Inclusion and Central Bank Digital Currency in The Bahamas
How we can regulate stablecoins now—without congressional action
How we can regulate stablecoins now—without congressional action
The Brookings Institution published a paper that proposes a US federal framework for the issuance of stablecoins within the existing regulatory framework for insured depository institutions, a structure that would not require any new legislation. Under current law, the Comptroller of the Currency could authorize a national trust bank charter, organized as an operating subsidiary of an insured depository institution, to create stablecoins through the use of a dedicated trust vehicle. The Comptroller would adopt standards limiting the investment of stablecoin reserves to high quality liquid assets and address redemptions and operational resilience, among other matters. The proposed framework guarantees that holders of a failed stablecoin are paid out rapidly and in full, because it uses the same resolution process by which failed banks are wound up.
#Fintech#CryptoAssets#Stablecoins#Regulation#UnitedStates#DFC
·brookings.edu·
How we can regulate stablecoins now—without congressional action
Privacy and Central Bank Digital Currency in the Digital Economy
Privacy and Central Bank Digital Currency in the Digital Economy
A paper by European Central Bank (ECB) staff studies how the choice of payment instruments affects privacy and welfare in the digital economy. Cash allows merchants to preserve their anonymity but cannot be used for online transactions that generate higher sales from more efficient distribution. By contrast, bank deposits can be used online but do not preserve anonymity: the merchant’s bank learns from payment flows and exploits the underlying information to extract rents. Payment tokens issued by digital platforms allow merchants to hide from the bank but also enable platforms to stifle competition (e.g. by limiting the entry of more efficient competitors by creating a walled garden). An independent digital payment instrument that allows agents to share their payment data with selected parties—a privacy-enhancing CBDC—can overcome all frictions and achieves the efficient allocation.
#Fintech#CBDC#Privacy#DFC
·suerf.org·
Privacy and Central Bank Digital Currency in the Digital Economy
Beijing to expand e-CNY trials to four entire provinces
Beijing to expand e-CNY trials to four entire provinces
The People’s Bank of China (PBOC) will reportedly expand its e-CNY trials to Guangdong, Jiangsu, Hebei and Sichuan provinces. Deputy Governor Fan Yifei, reportedly said the number of users, merchants and transactions is “steadily growing”, but he did not provide details.
#Fintech#CBDC#Asia#China#DFC
·scmp.com·
Beijing to expand e-CNY trials to four entire provinces
Why is Iran turning to a new 'digital rial'?
Why is Iran turning to a new 'digital rial'?
Yesterday I reported that the Central Bank of Iran (CBI) was reported to be launching a central bank digital currency (#CBDC) pilot today (September 22, 2022). The news isn't coming directly from the CBI, but from the Iran Chamber of Commerce. Now Al Jazeera is reporting that the digital rial will run on a platform called Borna, which was developed using Hyperledger Fabric, an open-source permissioned distributed ledger technology (DLT) blockchain platform
#Fintech#CBDC#MiddleEast#Iran#DFC
·aljazeera.com·
Why is Iran turning to a new 'digital rial'?
House Stablecoin Bill Would Put Two-Year Ban on Terra-Like Coins
House Stablecoin Bill Would Put Two-Year Ban on Terra-Like Coins
Legislation to regulate stablecoins being drafted in the U.S. House of Representatives would place a two-year ban on coins similar to TerraUSD, the algorithmic stablecoin that collapsed earlier this year. It would be illegal to issue or create new “endogenously collateralized stablecoins." The definition would kick in for stablecoins marketed as being able to be converted, redeemed or repurchased for a fixed amount of monetary value, and that rely solely on the value of another digital asset from the same creator to maintain their fixed price.
#Fintech#CryptoAssets#Stablecoins#Terra#Regulation#UnitedStates#DFC
·bloomberg.com·
House Stablecoin Bill Would Put Two-Year Ban on Terra-Like Coins
Iran to Start Testing a Digital Rial This Week
Iran to Start Testing a Digital Rial This Week
The Central Bank of Iran (CBI) will reportedly start a central bank digital currency (CBDC) pilot on September 22, 2022. The bank published a draft document outlining the "goals, dimensions, threats and opportunities for the development" of a digital rial in August 2022. The CBI's current head, Ali Salehabadi, said earlier this month that the bank had the necessary infrastructure and rules in place for a launch. https://en.otaghiranonline.ir/news/34069
#Fintech#CBDC#MiddleEast#Iran#DFC
·coindesk.com·
Iran to Start Testing a Digital Rial This Week
When The Revolution Comes, It Won’t Be On The Blockchain
When The Revolution Comes, It Won’t Be On The Blockchain
"All things considered, then, it seems that blockchains are neither necessary nor desirable for a retail digital currency and since — according to Bank of England, the Fed, the Bank of Japan and others — there is no “burning platform” for retail CBDCs and it will take time for them to reach the general public, there is plenty of time to explore other architectures more suited to an electronic fiat alternative."
#Fintech#CBDC#Blockchain#DFC
·dgwbirch.substack.com·
When The Revolution Comes, It Won’t Be On The Blockchain
Final Decision on Digital Tenge Still Pending in Kazakhstan, Says Project’s Head
Final Decision on Digital Tenge Still Pending in Kazakhstan, Says Project’s Head
The final decision on the National Bank of Kazakhstan's Digital Tenge project has reportedly not yet been made, but is expected to be announced by the end of 2022, the project’s head Ainur Kenzhayeva said in an interview with The Astana Times. The team is working now to expand the platform’s functionality. A pilot project with the participation of real users in a limited loop is also planned for this fall.
#Fintech#CBDC#Asia#Kazakhstan#DFC
·astanatimes.com·
Final Decision on Digital Tenge Still Pending in Kazakhstan, Says Project’s Head
The Hong Kong Monetary Authority e-HKD policy stance
The Hong Kong Monetary Authority e-HKD policy stance
The Hong Kong Monetary Authority (HKMA) released a position paper that sets out its policy stance on retail central bank digital currency (CBDC) and outlines its next steps. It was informed by two rounds of market consultation, one on high-level technical design and one on key policy and design issues. Taking into account the feedback received and further study by the central bank's staff, the HKMA will start paving the way for possible implementation of e-HKD in the future. A three-rail approach will be adopted, one of which will be a pilot involving selected banks, payment companies and other technology firms, plus their staff and a small number of clients.
#Fintech#CBDC#Asia#HongKong#DFC
·hkma.gov.hk·
The Hong Kong Monetary Authority e-HKD policy stance
Are interest rate swaps the next frontier of decentralized finance (DeFi)?
Are interest rate swaps the next frontier of decentralized finance (DeFi)?
Decentralized finance (DeFi) is expanding into the world of interest rate swaps (IRS), a derivative instrument for exchanging fixed and variable interest rates, which account for more than $1 quadrillion in exchanged value per annum in traditional finance. DeFi firm Voltz Labs has launched a non-custodial automated market making (AMM) IRS trading platform based on the Aave and Compound DeFi USDT, USDC, DAI and ETH lending markets. However, IRS AMMs are challenged by DeFi markets' lack of fixed-rate products off which to price swaps. (Traditional markets offer both variable- and fixed-rate products.)
#Fintech#CryptoAssets#Stablecoins#DeFi#AMMs#Derivatives#DFC
·voltz.xyz·
Are interest rate swaps the next frontier of decentralized finance (DeFi)?
BIS Innovation Center at the NY Fed is looking into wholesale CBDC
BIS Innovation Center at the NY Fed is looking into wholesale CBDC
Project Cedar, which is being run out of the BIS Innovation Center at the New York Fed, is looking into wholesale central bank digital currency (CBDC) from a research standpoint. It's led by Per von Zelowitz, and what they're trying to do, according to the Boston Fed's Robert Bench, is "understand what are the requirements, or what are the things they need to think about, for the obligations of New York, which is the world's leading capital market center?"
#Fintech#CBDC#wCBDC#UnitedStates#DFC
·atlantafed.org·
BIS Innovation Center at the NY Fed is looking into wholesale CBDC
Framework for Responsible Development of Digital Assets
Framework for Responsible Development of Digital Assets
The U.S. Treasury published a report on the Future of Money and Payments that reviews the current U.S. system of money and payments, including developments in instant payments and stablecoins. It describes design choices for a potential U.S. central bank digital currency (CBDC) and recommends that the Fed advance work on it, in case one is determined to be in the national interest. Among other things, the report also encourages use of instant payment systems to support a more competitive, efficient, and inclusive U.S. payment landscape, the establishment of a federal framework for payments regulation to protect users and the financial system, while supporting responsible innovations in payments, and prioritizing efforts to improve cross-border payments, both to enhance payment system efficiency and protect national security.
#Fintech#CryptoAssets#Stablecoins#CBDC#Payments#UnitedStates#DFC
·home.treasury.gov·
Framework for Responsible Development of Digital Assets
ECB selects external companies for joint prototyping of user interfaces for a digital euro
ECB selects external companies for joint prototyping of user interfaces for a digital euro
The European Central Bank (ECB) will collaborate with five companies to develop potential user interfaces for the digital euro. The aim of this prototyping exercise is to test how well the technology behind a digital euro integrates with prototypes developed by companies. Simulated transactions will be initiated using the front-end prototypes developed by the five companies and processed through the Eurosystem’s interface and back-end infrastructure. The selected companies will each focus on one specific use case of a digital euro; peer-to-peer online payments (CaixaBank), peer-to-peer offline payments (Worldline), point of sale payments initiated by the payer (EPI), point of sale payments initiated by the payee (Nexi) and e-commerce payments (Amazon).
#Fintech#CBDC#Eurozone#ECB#DFC
·ecb.europa.eu·
ECB selects external companies for joint prototyping of user interfaces for a digital euro
Project Dynamo: financing small and medium enterprises in the digital age
Project Dynamo: financing small and medium enterprises in the digital age
The BIS Innovation Hub's Hong Kong Centre and the Hong Kong Monetary Authority have launched Project Dynamo, which aims to deliver a prototype for the compliant use of decentralised finance (DeFi) tools, such as blockchain and smart contracts, to improve access to finance for unfunded and underfunded small and medium enterprises (SMEs). The research will extend into related topics such as decentralised identifiers and the interoperability of digital payment methods such as stablecoins and central bank digital currencies.
#Fintech#CryptoAssets#Stablecoins#CBDC#Blockchain#SME#BIS#DFC
·bis.org·
Project Dynamo: financing small and medium enterprises in the digital age