Comments for The Global Fintech Intelligencer https://theglobalfintechintelligencer.com Fintech perspectives from a bunch of policy wonks. The views expressed herein are those of the authors and should not be attributed to the Bank for International Settlements or the International Monetary Fund Fri, 20 Jan 2023 17:02:52 +0000 hourly 1 http://wordpress.com/ Comment on Blockchain Service Network – Key to Digital Currency Interoperability? by Kiffmeister's #Fintech Daily Digest (20230120) - Kiffmeister Chronicles https://theglobalfintechintelligencer.com/2021/02/05/blockchain-service-network-key-to-digital-currency-interoperability/comment-page-1/#comment-450 Fri, 20 Jan 2023 17:02:52 +0000 http://theglobalfintechintelligencer.com/?p=62#comment-450 […] consortium led by Red Date Technology, the developer of the Chinese state-backed Blockchain Service Network, launched the Universal Digital Payments Network (UDPN) to provide interoperability between […]

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]]> Comment on USDC stablecoin as a backdoor central bank digital currency by kiffmeister https://theglobalfintechintelligencer.com/2023/01/07/usdc-stablecoin-as-a-backdoor-cbdc/comment-page-1/#comment-436 Mon, 09 Jan 2023 03:38:46 +0000 http://theglobalfintechintelligencer.com/?p=309#comment-436 In reply to kiffmeister.

JP Koning (20230108): Since then the proportion of USDC reserves invested in the Circle Reserve Fund have risen to around $28.6 billion, or 65%. I get this from BlackRock’s disclosure page, which is updated daily. https://www.blackrock.com/cash/en-us/products/329365/circle-reserve-fund

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]]> Comment on USDC stablecoin as a backdoor central bank digital currency by kiffmeister https://theglobalfintechintelligencer.com/2023/01/07/usdc-stablecoin-as-a-backdoor-cbdc/comment-page-1/#comment-435 Mon, 09 Jan 2023 03:37:06 +0000 http://theglobalfintechintelligencer.com/?p=309#comment-435 JP Koning (20230108): Circle’s most recent attestation report shows 30% of USDC’s reserves – or $12.79 billion – are invested in its government money market fund, the Circle Reserve Fund, managed by BlackRock. This is up from 0% in October. https://www.centre.io/hubfs/USDC%202022-Circle%20Examination%20Report%20November%202022.pdf

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]]> Comment on What’s the deal with the Grayscale Crypto Investment Trusts? by Nicola Cox https://theglobalfintechintelligencer.com/2021/02/12/whats-the-deal-with-the-grayscale-crypto-investment-trusts/comment-page-1/#comment-378 Sat, 26 Nov 2022 01:03:26 +0000 http://theglobalfintechintelligencer.com/?p=74#comment-378 Hii thanks for sharing this

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]]> Comment on Blockchain Service Network – Key to Digital Currency Interoperability? by Kiffmeister's #Fintech Daily Digest (20220524) - Kiffmeister https://theglobalfintechintelligencer.com/2021/02/05/blockchain-service-network-key-to-digital-currency-interoperability/comment-page-1/#comment-253 Tue, 24 May 2022 16:54:41 +0000 http://theglobalfintechintelligencer.com/?p=62#comment-253 […] of its open source Spartan Network for international markets on August 31, 2022. Launched in 2020, BSN’s mission is to develop a global public infrastructure to deploy and operate all types of distributed ledger […]

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]]> Comment on CBDC Operating Model: One- versus Multi-Tier by kiffmeister https://theglobalfintechintelligencer.com/2021/08/31/cbdc-operating-model-one-versus-multi-tier/comment-page-1/#comment-244 Sun, 08 May 2022 12:30:17 +0000 http://theglobalfintechintelligencer.com/?p=277#comment-244 Marcel Prates: Can’t we find a way to preserve the benefits of a direct CBDC while reducing its downside? Yes, we can. A good example is the platform model proposed by the Bank of England earlier this year (not the so-called hybrid model).
In this model you still find intermediaries between the central bank and the public. However, these intermediaries are not offering a balance sheet to hold people’s digital money. They provide instead technological tools to help any person or business connect with the central bank and access the digital money kept there.
In short: the platform model combines indirect connection to the central bank with direct access to the central bank balance sheet and the CBDCs.

This type of CBDC could promote innovation and boost public-private collaboration in the monetary system. The central bank would continue to be responsible for the monetary infrastructure, making the payment system work and setting money accounts for everyone, not just banks. This would also make the distinction between “wholesale” and “retail” CBDC redundant: it would be the same CBDC for all.

More than that, the central bank would have to ensure that this infrastructure is not only safe and resilient but neutral and open. The goal should be to allow different types of software that meet performance and security requirements, the “application programming interfaces” (APIs), to access the payment system’s data and functionality.

https://www.coindesk.com/policy/2020/10/26/the-big-choices-when-designing-central-bank-digital-currencies/

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]]> Comment on CBDC Operating Model: One- versus Multi-Tier by kiffmeister https://theglobalfintechintelligencer.com/2021/08/31/cbdc-operating-model-one-versus-multi-tier/comment-page-1/#comment-243 Sun, 08 May 2022 12:04:28 +0000 http://theglobalfintechintelligencer.com/?p=277#comment-243 Arturo Portilla: I don’t think existing antitrust doctrine and precedents support the following statement:
“For a new PSP, interoperability across PSPs could diminish the incentive of a startup to innovate […]. It could also restrict competition…”

Kiffmeister: Which part(s) of the statement would not be supported by antitrust laws and doctrine? (1) “Interoperability across PSPs could diminish the incentive of a startup to innovate since it could lower the value of a privately developed network.” or… (2) “It could also restrict competition by excluding certain technical innovations or restricting new business models and reduce the value and increase the costs to PSPs.” And how/why? (2/2)

Well, both, actually. Extensive antitrust and economic studies have concluded that increased competition leads to more innovation (including the need to create new business models). Regarding the first point, specifically, it has been widely concluded that the existence of Many players in any given market, is a signal showing that such market offers decent margins and profitability. So, the fact that there’s competition does not imply a market is less attractive.

Although it might lower the barriers to entry, wouldn’t forced interoperability diminish the incentives for new entrants by limiting the scope for new and profitable digital wallet platforms?

Not really. I understand why the possibility to become a walled garden monopolistic monolith is attractive, specially for VC investors, but not being a monopolistic monolith doesn’t mean there’s no opportunity to make money.

So what you’re saying is that there could still be opportunities for new entrants to offer new digital wallet platforms with improved user experiences that could profitably snatch business from incumbents.

Yes. To the extent barriers to entry are not overly burdensome, regulation is suitable for entrants and incumbents avoid engaging in monopolistic practices. — Entrants can always adopt new technology and test alternative business models faster than incumbents.

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]]> Comment on Retail Central Bank Digital Currency (CBDC) Technical Platform Criteria by kiffmeister https://theglobalfintechintelligencer.com/2021/08/11/retail-central-bank-digital-currency-cbdc-technical-platform-criteria/comment-page-1/#comment-127 Tue, 05 Oct 2021 20:36:59 +0000 http://theglobalfintechintelligencer.com/?p=175#comment-127 Samsung Electronics will reportedly participate in the Bank of Korea’s central bank digital currency (CBDC) proof-of-concept (PoC) work reportedly co-managed by Ground X, a blockchain affiliate of messenger platform, Kakao. Ground X has partnered with ConsenSys to create the Klaytn Ethereum-based public-permissioned blockchain that the PoC will be run on. Ground X will start work in August, with the first phase to be completed by December. https://m.koreatimes.co.kr/pages/article.asp?newsIdx=313360

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]]> Comment on Retail Central Bank Digital Currency (CBDC) Technical Platform Criteria by kiffmeister https://theglobalfintechintelligencer.com/2021/08/11/retail-central-bank-digital-currency-cbdc-technical-platform-criteria/comment-page-1/#comment-126 Sun, 03 Oct 2021 16:54:12 +0000 http://theglobalfintechintelligencer.com/?p=175#comment-126 The Celo Foundation launched Provo, a sandbox for public and official sector experimentation on Celo that’s designed to allow central banks to explore and experiment with central bank digital currency (CBDC) and other digital assets. Provo will enable financial and regulatory authorities to test CBDC designs and implementation mechanisms in permissioned and/or permissionless, risk-free environments on the Celo platform. https://medium.com/celoorg/introducing-provo-a-new-way-for-central-banks-to-safely-and-securely-explore-central-bank-digital-3390a577c6d4

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]]> Comment on What Is and Isn’t a *Wholesale* Central Bank Digital Currency? by kiffmeister https://theglobalfintechintelligencer.com/2021/08/10/what-is-and-isnt-a-wholesale-central-bank-digital-currency/comment-page-1/#comment-105 Mon, 23 Aug 2021 11:43:11 +0000 http://theglobalfintechintelligencer.com/?p=267#comment-105 In reply to Pascal Hügli.

A few weeks ago I updated the tabulation of wholesale CBDC projects that was at the back of the 2020 paper I referenced above, complete with links to the source material. Any of them will help you understand the rationale for wholesale CBDC. https://kiffmeister.blogspot.com/2021/08/dlt-based-wholesale-cbdc-experiments.html

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