DFC

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PBOC to Permit Banks to Pay Interest on Digital Yuan Deposits (Weixin)
PBOC to Permit Banks to Pay Interest on Digital Yuan Deposits (Weixin)
On January 1, 2026, the People's Bank of China (PBOC) implemented its "Action Plan on Further Strengthening the Digital Yuan Management Service System and Related Financial Infrastructure Construction," transitioning the e-CNY from an M0 instrument — digital cash — to a deposit-based instrument classified within M1 or M2 depending on liquidity. Under the new framework, commercial bank e-CNY wallet balances are reclassified as commercial bank liabilities, subject to the standard fractional reserve requirement rather than the previous 100% reserve obligation that applied to all operating institutions. Banks are required to pay interest on verified (real-name) wallet balances at demand deposit rates, with quarterly settlement beginning March 2026, and those balances are covered by deposit insurance on the same terms as ordinary deposits. Anonymous (fourth-category) wallets remain excluded from interest accrual. Non-bank payment institutions retain the 100% reserve requirement, reflecting their lack of deposit-taking authorization. [Weixin] (See also: https://claude.ai/chat/c24e40c8-772f-411d-82bc-52b4048cbaaa)
#CBDC#China#DFC#Fintech#FinancialStability
·mp.weixin.qq.com·
PBOC to Permit Banks to Pay Interest on Digital Yuan Deposits (Weixin)
Stablecoin Devaluation Risk (European Journal of Finance)
Stablecoin Devaluation Risk (European Journal of Finance)
A paper co-authored by Barry Eichengreen published in the European Journal of Finance (EJF) contends that reliance of stablecoin issuers on centralized custodians introduces devaluation risk similar to that observed in traditional currencies under pegged exchange rate regimes. The authors construct market-based measures of stablecoin devaluation risk using spot and futures prices for Tether. Conditional on full default, their estimates suggest an average devaluation probability of 60 basis points annually, rising to over 200 basis points during the 2022 Terra-Luna crash. In contrast, the probability of a partial default, defined as a 5% devaluation (trading at 95 cents), is approximately 12 percentage points on an annualized basis. Key risk factors include market volatility and transaction velocity. While elevated interest rates suggest heightened devaluation risk, deviations from covered interest parity indicate segmentation between traditional and stablecoin markets, reflecting the effects of leverage trading and arbitrage costs. To mitigate these risks, their findings suggest the importance of greater transparency and regulatory oversight. For example, the authors suggest implementing proof-of-reserve systems powered by smart contracts which would allow new tokens to be minted only when verified reserve balances increase, providing real-time detection of custodial issues rather than relying on quarterly attestations. [Source: EJF]
#Stablecoins#FinancialStability#Fintech#DFC
·tandfonline.com·
Stablecoin Devaluation Risk (European Journal of Finance)
Stablecoin Devaluation Risk (European Journal of Finance)
Stablecoin Devaluation Risk (European Journal of Finance)
A paper co-authored by Barry Eichengreen published in the European Journal of Finance (EJF) contends that reliance of stablecoin issuers on centralized custodians introduces devaluation risk similar to that observed in traditional currencies under pegged exchange rate regimes. The authors construct market-based measures of stablecoin devaluation risk using spot and futures prices for Tether. Conditional on full default, their estimates suggest an average devaluation probability of 60 basis points annually, rising to over 200 basis points during the 2022 Terra-Luna crash. In contrast, the probability of a partial default, defined as a 5% devaluation (trading at 95 cents), is approximately 12 percentage points on an annualized basis. Key risk factors include market volatility and transaction velocity. While elevated interest rates suggest heightened devaluation risk, deviations from covered interest parity indicate segmentation between traditional and stablecoin markets, reflecting the effects of leverage trading and arbitrage costs. To mitigate these risks, their findings suggest the importance of greater transparency and regulatory oversight. For example, the authors suggest implementing proof-of-reserve systems powered by smart contracts which would allow new tokens to be minted only when verified reserve balances increase, providing real-time detection of custodial issues rather than relying on quarterly attestations. [Source: EJF]
#Stablecoins#CryptoAssets#Fintech#Financial Stability
·tandfonline.com·
Stablecoin Devaluation Risk (European Journal of Finance)
H.R.3074 - 119th Congress: Common Cents Act (Congress.gov)
H.R.3074 - 119th Congress: Common Cents Act (Congress.gov)
The Common Cents Act is proposed legislation introduced in 2025 that seeks to eliminate the production of the penny and mandates that cash transactions be rounded to the nearest five cents. The act aims to address the financial inefficiencies associated with minting pennies, as their production costs exceed their actual value. [Source: Congress.gov]
#Cash#UnitedStates#DFC
·congress.gov·
H.R.3074 - 119th Congress: Common Cents Act (Congress.gov)
Operationalizing Tokenized Funds (MAS)
Operationalizing Tokenized Funds (MAS)
The Monetary Authority of Singapore (MAS) published areport by the Guardian Asset and Wealth Management Industry Group that provides a comprehensive playbook for operationalizing tokenized funds, particularly tokenized money market funds (tMMFs). It covers critical legal structures and regulatory considerations across different tokenization models (Digital Mirror, Digital Twin, and Digital Native), examines settlement assets including stablecoins and tokenized deposits, and presents real-world use cases from major institutions like Franklin Templeton, Phillip Securities, Fidelity, Citi, Swift, and Deutsche Bank. The report addresses key challenges including cross-chain interoperability, settlement finality, compliance requirements, and operational risks, while identifying essential enablers for scalable adoption such as streamlined onboarding, robust risk controls, technical standards, and improved user experience. It concludes that the foundational elements for successful tokenization—robust legal frameworks, proven technology solutions, and clear operational models—are now practical realities rather than theoretical constructs, with the main question being how quickly market participants can adapt to capture the benefits of this transformative technology. [Source: MAS]
#Fintech#Tokenization#MMFs
·mas.gov.sg·
Operationalizing Tokenized Funds (MAS)
The Digital Euro: Awareness, Adoption and Household Portfolios (ECB)
The Digital Euro: Awareness, Adoption and Household Portfolios (ECB)
The European Central Bank (ECB) published a summary of a research paper uses survey data from the ECB’s Consumer Expectations Survey covering the 11 largest euro-area countries to assess public awareness of and willingness to adopt a digital euro and to evaluate how its introduction might affect household financial portfolios. Awareness of the digital euro has risen significantly in recent years, and a substantial share of consumers indicate they would be willing to use it for everyday transactions, particularly retail payments. Under plausible holding limits (e.g., €1,000–€10,000), the digital euro is estimated to cause only minor and statistically insignificant shifts in households’ allocation of liquid assets away from traditional bank deposits, suggesting limited risk of widespread financial disintermediation under normal conditions. The study also highlights the importance of effective communication about the digital euro’s key features to increase consumer adoption. [Source: ECB]
#CBDC#Eurozone#ECB#FinancialStability#Fintech#DFC
·ecb.europa.eu·
The Digital Euro: Awareness, Adoption and Household Portfolios (ECB)
How Can Repurchase Agreements be Settled on a Distributed Ledger? (SNB)
How Can Repurchase Agreements be Settled on a Distributed Ledger? (SNB)
The Swiss National Bank (SNB) conducted test transactions using repurchase agreements (repos) settled on distributed ledger technology (DLT) as part of the Helvetia pilot project. These "digital repos" involved tokenised assets and wholesale central bank digital currency settled on the SIX Digital Exchange (SDX) platform, while maintaining traditional trading and administration processes through the existing Swiss Money Market Value Chain. The tests demonstrated that DLT-based repo settlement is technically feasible and offers advantages like atomic settlement (simultaneous transfer of cash and assets), but revealed significant challenges including potential market fragmentation from participants' varying preferences for settlement methods, the need for enhanced cross-platform collateral management capabilities, and requirements for harmonized communication standards across different systems. While the pilot provided valuable insights into integrating DLT infrastructure with existing monetary policy operations, the SNB emphasized these tests don't indicate plans to actually implement such systems, as DLT-based markets remain niche for now.
#Fintech#Tokenization#Repo#DLT
·snb.ch·
How Can Repurchase Agreements be Settled on a Distributed Ledger? (SNB)
Russian Ministry of Finance Approves Some Digital Ruble Payments for Government Budget Expenditures (MoF)
Russian Ministry of Finance Approves Some Digital Ruble Payments for Government Budget Expenditures (MoF)
[December 18, 2025] The Russian government has approved a list of budget expenditures using the digital ruble starting January 1, 2026, reported on the website of the Ministry of Finance (MoF). The list includes social security payments, and salaries and other payments to staff, as well as expenses for capital construction, repair and maintenance of state-owned facilities. Also, the use of the digital ruble will become available for transfers to budgets and transfers of funds to federal institutions. Furthermore, from July 1, 2027, corresponding transactions with regional and local budgets, as well as transactions with extra-budgetary funds and recipients of funds, will become available. Payments from the budget will be made in digital rubles only if the recipients wish. [Source: MoF]
#CBDC#Russia#Payments#DFC#Fintech
·minfin.gov.ru·
Russian Ministry of Finance Approves Some Digital Ruble Payments for Government Budget Expenditures (MoF)
European Council Agrees Position on the Digital Euro and on Strengthening the Role of Cash (European Council)
European Council Agrees Position on the Digital Euro and on Strengthening the Role of Cash (European Council)
[December 19, 2025] The European Council released a 157-page document outlining its position on digital euro legislation, rejecting a proposal for an offline-only approach and insisting on both online and offline versions of the central bank digital currency (CBDC). While the digital euro is primarily intended for peer-to-peer and retail payments to reduce dependence on Visa and Mastercard, the Council envisions a broader scope including machine-to-machine payments for Industry 4.0, Web3 applications, and business-to-business conditional payments from the outset. The proposal also aims to safeguard acceptance of cash as a payment method throughout the euro area, and guarantee that people have access to cash and are free to choose their preferred payment method. It proposes to effectively ban non-acceptance of cash by retailers or service providers with a few exceptions, notably for payments for goods or services purchased at a distance, including online, and unmanned points of sale. [Source: European Council]
#CBDC#Cash#Eurozone#ECB#Regulation#DFC#Fintech
·consilium.europa.eu·
European Council Agrees Position on the Digital Euro and on Strengthening the Role of Cash (European Council)
South Korea to Test Distributing Government Subsidies in New CBDC Test Phase (Decenter)
South Korea to Test Distributing Government Subsidies in New CBDC Test Phase (Decenter)
The South Korean press is reporting that the Bank of Korea (BoK) is preparing to launch a new phase of its "Project Hangang River" wholesale central bank digital currency (CBDC) project, focusing on distributing government subsidies. A first three-month proof-of-concept phase with commercial banks, during which central bank authorities made it clear that it was actually testing tokenized deposits, reportedly ended in June 2025. Unfortunately the central bank itself has been silent on the project so we have to rely on press reports that are often short on details, like whether the purported second test will really be about wholesale CBDC or perhaps tokenized deposits again, or a hybrid in which tokenized deposits are settled in wholesale CBDC. [Source: Decenter]
#CBDC#DepositTokens#Fintech#DFC#Korea#wCBDC
·decenter.kr·
South Korea to Test Distributing Government Subsidies in New CBDC Test Phase (Decenter)
How New Regulations May Impact the Future of Stablecoins (CBPN)
How New Regulations May Impact the Future of Stablecoins (CBPN)
Central Bank Payments News (CBPN) published an article by Zeke Copic that examines how new stablecoin regulations in the U.S. (GENIUS Act) and EU (MiCA) may impact the business models of stablecoin issuers. Both regulatory frameworks require 1:1 backing with high-quality liquid assets and prohibit interest payments to holders, but differ in prescribed asset allocations—the EU mandates 30-60% in bank deposits while the U.S. sets no specific limits. The analysis shows that while stablecoin issuers like Circle currently generate 95-99% of revenue from interest on reserve assets (primarily Treasury bills and reverse repos), they face significant interest rate risk as rates are expected to decline. However, projected growth in stablecoin supply to $1.4 trillion by 2030 could offset revenue losses from lower rates, resulting in modest revenue increases. The article concludes that Europe's more prescriptive MiCA regulations may hinder stablecoin growth compared to the U.S. approach, and issuers may need to develop alternative revenue sources beyond reserve asset yields to maintain viable business models. [Source: CBPN]
#Stablecoins#Regulation#Fintech#UnitedStates#Europe
·cbpn.currencyresearch.com·
How New Regulations May Impact the Future of Stablecoins (CBPN)
An Empirical Analysis of Stablecoin Payment Usage on Ethereum (Artemis Analytics)
An Empirical Analysis of Stablecoin Payment Usage on Ethereum (Artemis Analytics)
Artemis Analytics published an examination of stablecoin usage for payments on Ethereum by analyzing USDT and USDC transactions from August 2024 to August 2025. The authors employ a filtering methodology that distinguishes between externally-owned account (EOA) to EOA transfers, classified as payments, and smart contract interactions, primarily DeFi activity. Using wallet metadata to categorize transactions as person-to-person, business-to-business, or person-to-business transfers, they find that payments constitute approximately 47% of total stablecoin volume (or 35% excluding internal business transfers). While P2P transactions represent 67% of payment transaction counts, they account for only 24% of payment volume, suggesting retail transfers are substantially smaller than institutional flows. The analysis reveals considerable concentration, with the top 1,000 wallets contributing roughly 84% of transaction volume. The authors acknowledge methodological limitations, including potential misclassification of transactions and the inability to capture payments routed through intermediaries. Their estimates should be considered upper bounds given the relatively permissive criteria for classifying transactions as payments. [Source: Artemis Analytics]
An Empirical Analysis of Stablecoin Payment Usage on Ethereum
#Stablecoins#Ethereum#Payments#DeFi#CryptoAssets#Fintech#USDC#USDT#DFC
·artemisanalytics.com·
An Empirical Analysis of Stablecoin Payment Usage on Ethereum (Artemis Analytics)
Central Bank of Peru Prepares to Launch CBDC Pilot (BCRP)
Central Bank of Peru Prepares to Launch CBDC Pilot (BCRP)

[October 14, 2024] The Central Reserve Bank of Peru (BCRP) and Bitel signed a framework agreement on October 14, 2024, to launch the country's first Central Bank Digital Currency (CBDC) pilot program. This initiative, formalized through regulations published in April 2024 and Bitel's selection in July 2024, aims to improve financial inclusion by providing digital payment services to unbanked populations in rural and underserved areas. During the pilot, Bitel will distribute the CBDC through its Bipay digital wallet, allowing users to make payments and transfers with this sovereign digital money issued by the central bank. The program will assess whether CBDCs can effectively replace cash and foster a digital payments ecosystem in regions with limited financial services. [Source: BCRP] https://www.bcrp.gob.pe/docs/Transparencia/Notas-Informativas/2024/nota-informativa-2024-10-14.pdf

#Peru#CBDC#Fintech#DFC
·bcrp.gob.pe·
Central Bank of Peru Prepares to Launch CBDC Pilot (BCRP)
Central Bank of Peru Launches CBDC Pilot (BCRP)
Central Bank of Peru Launches CBDC Pilot (BCRP)

[March 10, 2025] The Central Reserve Bank of Peru (BCRP) launched an evaluation phase on March 10, 2025, for its first digital currency innovation pilot in partnership with Bitel, following a successful trial period that began in 2024. By February 2025, Bitel's BiPay wallet had enrolled 67,000 active users processing an average of 91,000 daily transactions, with S/ 4.2 million in BCRP digital currency in circulation. The three-month pilot aims to assess whether a central bank digital currency (CBDC) can effectively complement cash in regions with low financial inclusion and limited digital payment infrastructure, with the wallet accessible even to users without smartphones through USSD text messaging technology. [Source: BCRP]

#Fintech#CBDC#Peru#DFC
·bcrp.gob.pe·
Central Bank of Peru Launches CBDC Pilot (BCRP)
Digital Euro Technical Preparations Completed (ECB)
Digital Euro Technical Preparations Completed (ECB)

According to Christine Lagarde, President of the European Central Bank (ECB) technical preparations for a digital euro, including system architecture and safeguards, are now complete, with further progress now awaiting legislative action from the European Council and European Parliament. [Source: ECB]

#Fintech#CBDC#Eurozone#ECB#DFC
·ecb.europa.eu·
Digital Euro Technical Preparations Completed (ECB)
U.S. Banks in the Age of Stablecoins: Some Possible Implications for Deposits, Credit, and Financial Intermediation (FRB)
U.S. Banks in the Age of Stablecoins: Some Possible Implications for Deposits, Credit, and Financial Intermediation (FRB)
The U.S. Federal Reserve (FRB) published a paper that examines how the growth of stablecoins could reshape traditional banking across three key dimensions. First, stablecoin adoption may displace bank deposits, though the net effect depends on whether issuers hold reserves as bank deposits (which would maintain system size but shift composition toward volatile wholesale deposits) or in other assets like Treasury bills. The impact also depends critically on Federal Reserve Bank master account access: if issuers have no access, they remain dependent on banks; if they gain limited purpose "skinny" master accounts, they can bypass banks for payment settlement while keeping some deposits out of the system; but if they receive full interest-paying master accounts, they could bypass banks entirely, creating maximum disintermediation. Second, deposit outflows could significantly constrain bank lending, with empirical estimates suggesting each $100 billion in net deposit drain could reduce lending by $60-126 billion, with effects varying by bank size and disproportionately impacting small businesses and commercial real estate borrowers. Third, stablecoins could fundamentally alter banks' role in payments and accelerate the unbundling of traditional banking services. [Source: FRB]
#Stablecoins#FinancialStability#Fintech#UnitedStates
·federalreserve.gov·
U.S. Banks in the Age of Stablecoins: Some Possible Implications for Deposits, Credit, and Financial Intermediation (FRB)
Stablecoins and Banking: Deposit Dynamics, Financial Stability, andRegulatory Design (Cornell University)
Stablecoins and Banking: Deposit Dynamics, Financial Stability, andRegulatory Design (Cornell University)
A paper by Lin William Cong examines the impact of regulated stablecoins on banking and financial stability under the GENIUS Act framework. He argues that, contrary to popular concerns about deposit erosion and systemic risk, well-regulated stablecoins backed by high-quality liquid assets are more likely to complement rather than disrupt traditional banking. Using theoretical models and empirical evidence, Cong demonstrates that under realistic yield environments consistent with the GENIUS Act's requirements (full reserve backing, enforceable redemption rights, and transparent disclosures) stablecoins may actually enhance competition, encourage more efficient deposit pricing, and improve payment infrastructure. The analysis suggests that stablecoins can strengthen safe-asset markets, reduce settlement risk through on-chain transactions, and provide banks with strategic opportunities through custody services and tokenized assets. While acknowledging residual risks similar to those in traditional finance, he concludes that with prudent oversight and clear regulatory standards, stablecoins can serve as a durable payment instrument that advances financial system efficiency, inclusion, and stability. [Source: Cornell University]
#Stablecoins#FinancialStability#Regulation#Fintech#DFC#UnitedStates
·cornell.app.box.com·
Stablecoins and Banking: Deposit Dynamics, Financial Stability, andRegulatory Design (Cornell University)
VISA Launches Stablecoin Settlement in the United States (VISA)
VISA Launches Stablecoin Settlement in the United States (VISA)
VISA has launched USDC stablecoin settlement in the United States, allowing U.S. issuer and acquirer partners to settle transactions using Circle's USDC for the first time. The initiative offers benefits including faster funds movement via blockchain, seven-day availability, and enhanced operational resilience during weekends and holidays. Initial U.S. banking participants include Cross River Bank and Lead Bank, which are settling with Visa using USDC over the Solana blockchain, with broader U.S. availability planned through 2026. This marks a significant expansion of VISA's stablecoin settlement pilot program that has been operating in other regions since 2023, and the company is also partnering with Circle on Arc, a new Layer 1 blockchain designed to support VISA's global commercial activity. [Source: VISA]
#VISA#Stablecoins#USDC#Payments#Fintech#CryptoAssets#Solana#DFC
·usa.visa.com·
VISA Launches Stablecoin Settlement in the United States (VISA)
CFTC Tokenized Collateral Guidance (CFTC)
CFTC Tokenized Collateral Guidance (CFTC)
[December 8, 2025] The U.S. Commodity Futures Trading Commission (CFTC) issued staff guidance that establishes the regulatory framework for using tokenized assets as collateral in futures and swaps markets. The guidance defines tokenized assets as blockchain-recorded digital representations of traditional securities (Treasuries, corporate bonds, money market fund shares, equities) and addresses five regulatory areas: (1) eligible assets must meet existing liquidity, maturity, and credit-quality standards applicable to their underlying forms; (2) legal enforceability requires compliance with existing frameworks governing netting, collateral interests, and settlement finality; (3) segregation and custody arrangements must satisfy current requirements for futures commission merchants (FCMs), derivatives clearing organizations (DCOs), and swap entities; (4) haircuts should apply the same risk-based methodology used for underlying assets, adjusted for any settlement-time or liquidity differences; and (5) operational risk management must address technology-specific concerns including cybersecurity and network threats. The document emphasizes that tokenization does not fundamentally alter an asset's characteristics for regulatory purposes, though each implementation requires individual analysis, and notes that the guidance may be updated as the GENIUS Act implementation and other regulatory developments progress. [Source: CFTC]
#Fintech#Regulation#Tokenization#UnitedStates
·cftc.gov·
CFTC Tokenized Collateral Guidance (CFTC)
Ethiopia's Central Bank Eyes Digital Birr (Capital Ethiopia)
Ethiopia's Central Bank Eyes Digital Birr (Capital Ethiopia)
The National Bank of Ethiopia (NBE) has reportedly initiated an exploratory review of potential central bank digital currency (CBDC) frameworks, aimed at understanding global digital currency developments rather than representing a commitment to implementation. The assessment is situated within Ethiopia's draft National Digital Payments Strategy and Digital Ethiopia 2025 framework, though the central bank anticipates continued primacy of cash given the country's substantial rural and informal economy. In February 2025, the Ethiopian Parliament passed into law National Bank of Ethiopia (NBE) Proclamation No. 1359/2025, establishing a legal framework that permits the NBE to issue CBDC as legal tender. [Source: Capital Ethiopia]
#CBDC#Ethiopia#Fintech
·capitalethiopia.com·
Ethiopia's Central Bank Eyes Digital Birr (Capital Ethiopia)
When Money Wakes Up (Substack)
When Money Wakes Up (Substack)
Timo Totti proposes, as an alternative to stablecoins and tokenized deposits, banks equip existing bank deposits with a "sub-contract agent" software layer that acts as an intelligent intermediary between the bank's core ledger and digital transactions. Instead of moving money as a token, the agent issues cryptographically signed "verifiable claims" that prove funds are available and locked for a specific transaction (like a digitized, instant letter of credit). When a deal occurs, the buyer's bank agent, seller's agent, and other participants (like asset registries) meet in a temporary "context agent" to verify each other's claims and execute an atomic swap—simultaneously exchanging ownership and payment in an all-or-nothing operation. The money never leaves the regulated banking system or becomes a bearer instrument; instead, the bank guarantees execution through binding cryptographic proofs, enabling instant, private settlement while maintaining full compliance and audit trails. [Source: Substack]
#Fintech#DFC#DepositTokens#Stablecoins
·timohotti.substack.com·
When Money Wakes Up (Substack)
Norges Bank does not Recommend CBDC Introduction (Norges Bank)
Norges Bank does not Recommend CBDC Introduction (Norges Bank)

Norges Bank has decided not to recommend introducing a central bank digital currency (CBDC) at this time, as Norway's current payment system is already efficient, secure, and stable. The bank examined both retail and wholesale CBDC, but found no immediate need for either variant. However, Norges Bank acknowledges that circumstances may change due to rapid technological advances, tokenization trends, and the potential introduction of a digital euro by the Eurosystem. The bank will continue researching CBDCs and tokenization through experimental testing and international collaboration to ensure it can implement a CBDC if necessary in the future, with a detailed report planned for Q1 2026. [Source: Norges Bank]

#CBDC#Norway#Fintech#DFC
·norges-bank.no·
Norges Bank does not Recommend CBDC Introduction (Norges Bank)
Project Rialto: Improving Instant Cross-Border Payments using Central Bank Money Settlement (BIS)
Project Rialto: Improving Instant Cross-Border Payments using Central Bank Money Settlement (BIS)
The BIS Innovation Hub wrapped up Project Rialto, a collaboration with central banks from France, Italy, Malaysia, and Singapore to improve instant cross-border payments. The project successfully demonstrated the technical feasibility of connecting traditional instant payment systems with an automated foreign exchange (FX) market using tokenized central bank money (CeBM) as a settlement asset. The architecture combined two functional blocks: domestic instant payment systems linked through a hub mechanism, and a cross-border distributed ledger network (XDN) for automated FX conversion via automated market makers (AMMs). The proof of concept tested both direct currency transactions and those requiring a vehicle currency for low-liquidity corridors, achieving payment-versus-payment settlement with minimal changes to existing systems. While technically successful, the report identifies key economic considerations for operational viability, including fee structures, performance under different market conditions, transparency impacts, and liquidity requirements, noting that AMMs require pre-funding which introduces costs and that further research is needed on the interaction between traditional intermediaries and decentralized exchanges in currency markets. [Source: BIS]
#BIS#CBDC#Fintech#DFC#FastPayments#CrossBorder#Payments#AMMs#wCBDC#CeBM
·bis.org·
Project Rialto: Improving Instant Cross-Border Payments using Central Bank Money Settlement (BIS)
Banning Stablecoin Remuneration will not Protect Banks’ Deposits (OMFIF)
Banning Stablecoin Remuneration will not Protect Banks’ Deposits (OMFIF)
OMFIF published a summary of a recent paper by Ulrich Bindseil that argues that regulators' current approach to stablecoins—particularly banning interest payments to holders—is counterproductive and destabilizing. The paper contends that prohibiting stablecoin remuneration doesn't make them safer but instead creates cyclical instability, as their attractiveness relative to bank deposits fluctuates with interest rates. The paper proposes an alternative framework where stablecoin issuers could hold reserves at central banks and earn interest (though at lower rates than banks), which would both maximize stablecoin safety and give regulators a tool to control their relative attractiveness and prevent bank runs. The paper suggests that the current zero-remuneration policy stems more from banking industry lobbying than sound financial stability concerns, and that a more nuanced approach with differential interest rates would better address legitimate regulatory concerns while avoiding unintended market distortions. [Source: OMFIF] https://papers.ssrn.com/sol3/papers.cfm?abstract_id=5710762
#Stablecoins#Regulation#OMFIF#DFC#FinancialStability
·omfif.org·
Banning Stablecoin Remuneration will not Protect Banks’ Deposits (OMFIF)
Digital Pound – Case Studies (BOE)
Digital Pound – Case Studies (BOE)
The Bank of England (BOE) is looking for participants to help it explore how the digital pound could impact existing companies who choose to integrate it alongside traditional payment methods in the future. This project will consist of a series of bilateral conversations with each of the different participants based the BOE's previously published information. The aim of the study is to provide insight into where a retail digital pound could add value to different businesses, and what features are expected to be the most/least valuable for different kinds of businesses. The BOE is particularly keen to engage with companies that are interested in the digital pound, but have not yet been involved in the Digital Pound Lab. Applications are open until January 9, 2026. [Source: BOE]
#CBDC#UnitedKingdom#Fintech#DFC
·bankofengland.co.uk·
Digital Pound – Case Studies (BOE)
Marshall Islands Launches Crypto-Based Universal Basic Income (Hauzen)
Marshall Islands Launches Crypto-Based Universal Basic Income (Hauzen)
[April 12, 2025] The Republic of the Marshall Islands has launched the world's first blockchain-based Universal Basic Income (UBI) program, providing citizens with an annual payment of $800 funded by the country's Compact Trust Fund. The initiative uses a U.S. Treasury Bill-backed interest-bearing stablecoin called USDM1 and the "Lomalo" digital wallet to deliver payments, particularly targeting financial inclusion for remote island populations affected by the withdrawal of traditional banking services due to "de-risking" in the Pacific region. While the program represents an innovative approach to economic sovereignty and welfare distribution, the IMF is cautioning that the UBI could drive inflation and recommending a more targeted social safety net. Also, the shift to digital wallets introduces complex regulatory risks, requiring robust anti-money laundering (AML) and know your customer (KYC) protocols. [Source: Hauzen LLP] https://www.imf.org/en/publications/cr/issues/2025/12/04/republic-of-marshall-islands-2025-article-iv-consultation-press-release-staff-report-and-572270
#Fintech#Govtech#Marshall_Islands#CryptoAssets#Blockchain#Stablecoins#DFC
·hauzen.hk·
Marshall Islands Launches Crypto-Based Universal Basic Income (Hauzen)
Immediate vs. Deferred Offline Modes for Digital Payment Ecosystems (Crunchfish)
Immediate vs. Deferred Offline Modes for Digital Payment Ecosystems (Crunchfish)
Crunchfish published a paper that compares two approaches to offline digital payments for central bank digital currency(CBDC): "immediate offline mode" that transfers digital value tokens like "digital banknotes" between devices, and "deferred offline mode" that transfers signed payment instructions (IOUs) that settle later online. The paper argues that deferred offline mode is more secure (ledger remains authoritative), more scalable (software-based, no special hardware required), easier to integrate with existing payment systems (aligns with EMV and ISO 20022), and preserves banking system liquidity since funds stay in accounts until settlement. In contrast, immediate offline mode exposes the ecosystem to double-spending risks, dependence on tamper-resistant hardware, complex reconciliation, and potential destabilization of bank lending capacity. The paper recommends that central banks adopt deferred offline mode as the baseline standard for offline CBDC payments. [Source: Crunchfish]
#Fintech#CBDC#Offline#Crunchfish#Payments
·crunchfish.com·
Immediate vs. Deferred Offline Modes for Digital Payment Ecosystems (Crunchfish)
Understanding Stablecoins (IMF)
Understanding Stablecoins (IMF)
The IMF published a paper that examines stablecoins' potential benefits and risks while surveying emerging international regulatory frameworks. While they offer promising benefits such as faster and cheaper cross-border payments, increased financial inclusion, and reduced remittance costs (which can reach 20% in traditional systems), they also pose substantial risks including potential runs on reserves, currency substitution that undermines national monetary policy, circumvention of capital controls, and facilitation of illicit activities. The paper emphasizes that realizing stablecoins' potential while mitigating these risks requires coordinated international regulation and cooperation, as current regulatory approaches vary significantly across jurisdictions, creating opportunities for regulatory arbitrage and complicating efforts to monitor cross-border flows and maintain financial stability. [Source: IMF]
#Stablecoins#Regulation#CryptoAssets#DFC#IMF
·imf.org·
Understanding Stablecoins (IMF)
The Case for a New Floating Rate Treasury Note (Brookings)
The Case for a New Floating Rate Treasury Note (Brookings)
Stanford University Graduate School of Business’s Darrell Duffie is proposing that the U.S. Treasury issue a new security called Perpetual Overnight Rate Treasury Securities (PORTS) to address liquidity demands arising from the digitization of financial markets and the growth of tokenized dollar instruments such as stablecoins. PORTS would be daily redeemable at par, pay interest at rates determined through daily uniform-price auctions, and yield below the Secured Overnight Financing Rate (SOFR) given anticipated demand for their use as collateral and settlement medium. The authors argue that PORTS would provide stablecoin issuers and other market participants with a risk-free, transparent instrument for same-day liquidity, potentially reducing systemic risks associated with runs on tokenized dollar proxies backed by longer-duration assets. Additionally, if demand for PORTS materializes as expected, the Treasury could reduce longer-dated issuance, resulting in taxpayer savings through lower borrowing costs. The proposal acknowledges operational challenges, particularly regarding the infrastructure needed for same-day settlement and selective redemption mechanisms, which would require substantial modifications to existing Treasury market procedures.​​​​​​​​​​​​​​​​ [Source: Brookings]
#CryptoAssets#Stablecoins#DFC
·brookings.edu·
The Case for a New Floating Rate Treasury Note (Brookings)
Under the GENIUS Act Stablecoin Holders Have Only Fifth Priority in an Issuer Bankruptcy – Credit Slips
Under the GENIUS Act Stablecoin Holders Have Only Fifth Priority in an Issuer Bankruptcy – Credit Slips
According to Georgetown Law's Professor Adam Levitin, despite its intentions, the GENIUS Act fails to adequately protect stablecoin holders in an issuer bankruptcy. While the Act claims to give stablecoin holders "first priority" over an issuer's reserves, Levitin explains that they actually rank fifth in practice, behind: (1) repo and margin lenders, (2) debtor-in-possession (DIP) lenders, (3) bankruptcy professionals via carve-outs, and (4) setoff claims from depositaries and brokers. This is because the Bankruptcy Code's priority provisions only apply to unsecured debt, while secured claims (which these other parties hold) are paid first under separate rules. Additionally, the Act's promise of rapid payment within 14 days is unrealistic—distributions will likely take months or years due to procedural requirements and DIP lender restrictions. Levitin concludes that stablecoin holders will face significant losses and delays in bankruptcy, making stablecoins fundamentally unstable without government backing like deposit insurance. [Source: Credit Slips]
#Stablecoins#CryptoAssets#Regulation#Bankruptcy#UnitedStates#DFC#Fintech
·creditslips.org·
Under the GENIUS Act Stablecoin Holders Have Only Fifth Priority in an Issuer Bankruptcy – Credit Slips