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In March 2019 the U.S. Fed proposed amendments to its Regulation D (Reserve Requirements of Depository Institutions) to lower the rate of interest paid on excess balances ("IOER") maintained at Reserve Banks by "pass-through investment entities" (eligible institutions that hold a very large proportion of their assets in the form of balances at Reserve Banks). The Fed claims that PTIEs-could compromise its ability to conduct monetary policy by interrupting the transmission of IOER and Overnight Reverse Repurchase Agreement Facility rates to the federal funds rate. Also, a shift in deposits away from commercial banks could substantially reduce funding for loans, and that in times of financial stress, PTIEs could be procyclical in draining liquidity from the banking system.

Cryptocurrency lending startup BlockFi is almost halving the interest rates it offers on ether (ETH) deposits, while some bitcoin (BTC) rates will increase slightly.

Derivatives platform FTX launched a futures product which tracks Bitcoin's hash rate. The contracts track the average difficulty of the Bitcoin network each day from the start to the end of each quarter. The difficulty is used because measuring hash rate accurately is impossible, but given that difficulty adjustments attempt to maintain 10m block times, over long periods of time the average hashrate will be proportional to the average difficulty. https://help.ftx.com/hc/en-us/articles/360043631671-Hashrate-Futures-Specs

This Banque de France paper lists the main options central banks would be faced with when defining their policies regarding the remuneration of retail central bank digital currency (CBDC). It assesses qualitatively the impacts of the choices made on the likely areas of interest for central banks, showing that whether the policy rate and/or the rate on CBDC is positive or null or strictly negative matters. Eventually, the two main policies that stand out are to issue a "banknote-like" CBDC, i.e. not to remunerate it, or to do so following a rule derived from the central bank's interest rate policy for excess reserves.

"A CBDC not only has domestic macroeconomic and financial implications for the issuing economy; it has also implications for the rest of the world.  Our simulations suggest that if a CBDC is available to non-residents, additional volatility in capital flows, exchange rates and interest rates resulting from its presence can be mitigated through holdings limits on transactions by foreigners or through flexibility in the CBDC's remuneration rate.  Of the two policy tools, our simulations show the latter is the most powerful - price flexibility dominates quantitative restrictions.  That a CBDC increases asymmetries in the international monetary system by reducing monetary policy autonomy in foreign economies, but not domestically, suggests in addition that introducing a CBDC sooner, rather than later, could give rise to a significant first-mover advantage."

Ukraine and Russia lead the list of countries with higher crypto adoption rates, with 12.73% and nearly 12%, respectively, according to DappRadar. And even though Bitcoin and other crypto-assets remain highly volatile and strongly correlated with the capital markets, they pointed to a recent study by Gemini showing that countries with higher inflation rates are most likely to adopt cryptocurrencies.

The Global System for Mobile Communications (GSMA) is exploring of low mobile money activity rates. Despite high sign-up rates, only 26% of accounts are active on a monthly basis, while 38% are active on a 90-day basis. Findings from the annual GSMA Consumer Survey run in ten countries in 2021 shed light on perceived reasons for low activity. The main barriers were found to be a preference for cash, lacking sufficient funds for mobile money to be useful and not needing mobile money due to alternative electronic financial services. Other important barriers include users having a limited ability in using a phone, and mobile money transaction costs being too high.

Demand for euro banknotes dwindled after the European Central Bank concluded an eight-year experiment with negative interest rates, suggesting households, businesses and banks are dissolving cash piles created to circumvent deposit charges. Banknotes in circulation started falling in the week through July 22, when policy makers raised rates. Since then, notes worth 16.8 billion euros ($17.1 billion) have left the system -- the biggest drop since early 2020.

The National Bureau of Economic Research (NBER) published a paper that questions Fintech lending's ability to spot good credit risks missed by big banks and traditional lenders, providing people with affordable loans they might not otherwise be able to access. Using a comprehensive dataset of FinTech personal loans, the paper shows that Fintech lender loan rates continue to rely heavily on conventional credit scores, including 45% higher rates for nonprime borrowers. Other known default predictors are often neglected. Within each segment (prime/nonprime) loan rates are not very responsive to default risk, resulting in realized loan-level returns decreasing with risk.

"Pegged to the US dollar for nearly four decades, the currency in the Asian financial center is a stablecoin, albeit of the paper variety. Most days it relies - just like UST - on arbitrage to hold its value at 7.8 to the dollar. But there are two key differences. The Hong Kong Monetary Authority runs a pure currency board. All of HKMA's monetary base is backed 110% by US dollar assets. Second, while fixing the exchange rate, the authority deliberately lets interest rates float freely to absorb pressures on the peg. When the local currency gets sold off, there's a capital flight from Hong Kong. But that automatically raises interest rates enough to lure buyers back."

The Bank for International Settlements (BIS) Innovation Hub and the and the central banks of Israel, Norway and Sweden,  concluded Project Icebreaker, which studied the potential benefits and challenges of using retail central bank digital currencies (CBDCs) for cross-border payments. In the Icebreaker model, a cross-border transaction is broken up into two domestic payments, one in each domestic system, so the CBDC never leaves its own domestic system. Foreign exchange (FX) providers buy one currency in one system and sell the other currency in the other system. Settlement is via a coordinated payment-versus-payment (PvP) arrangement using hash time locked contracts (HTLC), going a long way towards eliminating counterparty risk in the FX transaction. FX providers submit FX rates to the Icebreaker hub, which selects the best rate to be presented to the payer for each payment request. The number of connections between retail CBDC systems are kept to a minimum by the hub-and-spoke approach. The Icebreaker hub only routes payment messages and does not act upon them. The only information it acts upon is the data from FX providers, which are used when identifying and selecting the best FX rates for the payer.

"One way to think of this is that US banks - especially SVB, but not only SVB - have had huge mark-to-market losses on their bond portfolios as interest rates go up, but it is traditional for banks to ignore those losses. In traditional banking, rising interest rates are a matter of opportunity costs and net interest margin, not of large mark-to-market losses. But in the modern world - of more pervasive financial markets and more sophisticated accounting and faster-moving information - the banks and their customers were unable to ignore those losses. So the Fed stepped in and said: Look, we are best positioned to ignore those losses, so we will. The service that the Fed is providing to the banking system here is ignoring that rates went up when it values banks' bonds. That service is incredibly valuable. Historically banks' retail depositors provided it, but now only the Fed can."

"The current interest rate environment has had dramatic effects on the profitability and risk profile of banks' funding and investment strategies. First, as a result of the higher interest rates, longer term maturity assets acquired by banks when interest rates were lower are now worth less than their face values. The result is that most banks have some amount of unrealized losses on securities. The total of these unrealized losses, including securities that are available for sale or held to maturity, was about $620 billion at yearend 2022. Unrealized losses on securities have meaningfully reduced the reported equity capital of the banking industry. The good news about this issue is that banks are generally in a strong financial condition, and have not been forced to realize losses by selling depreciated securities. On the other hand, unrealized losses weaken a bank's future ability to meet unexpected liquidity needs. That is because the securities will generate less cash when sold than was originally anticipated, and because the sale often causes a reduction of regulatory capital."

A paper by a couple of San Francisco Federal Reserve Bank staff (Pascal Paul and Mauricio Ulate) published a paper that uses a New Keynesian DSGE model to study the introduction of a remunerated retail central bank digital currency (CBDC). At the heart of the model are monopolistic banks with market power in deposit and loan markets. When a remunerated retail CBDC is introduced, households benefit from an expansion of liquidity services and higher deposit rates as bank deposit market power is curtailed. However, even though deposits also flow out of the banking system and bank lending contracts, the paper finds substantial welfare gains as long as the CBDC interest rate doesn't exceed the policy rate minus 1%.

The IMF published a paper that uses a two-way fixed effect estimator using 2001-2019 panel data, on both monthly (covering 21 countries) and annual (covering 47 countries) frequencies, to estimate the causal effects of e-money development on monetary policy transmission. It finds that e-money development has accompanied stronger monetary policy transmission (measured by the responsiveness of interest rates to the policy rate), growth in bank deposits and credit, and efficiency gains in financial intermediation (measured by the lending-to-deposit rate spread). Evidence is more pronounced in countries where e-money development takes off in a context of limited financial inclusion.

MV Index Solutions GmbH and CryptoCompare launch the MVIS CryptoCompare Bitcoin Benchmark Rate (BBR), an index designed to offer a robust hourly price for Bitcoin in USD. The raw data powering the index is derived from transaction prices across five top exchanges: Bitstamp, Coinbase, Gemini, itBit, and Kraken. https://www.mvis-indices.com/indices/digital-assets/mvis-cryptocompare-bitcoin-benchmark-rate

"Since February, MKR holders have agreed on three different raises of Dai's "stability fees," which are essentially interest rates people have to pay for borrowing Dai. First came two separate fee hikes of 0.5 percent. When those didn't work, the community enacted an additional 2.5 percent increase. That didn't quite stabilize Dai either, so the MakerDAO community is currently debating adding another two percent to the coin's borrowing rate."

Rating agency Moody's has warned of several risks of private, centralized blockchains, inclusing that consensus mechanisms in private chains may not be as strong as those seen in public chains, or may be absent altogether.

The central message of this IMF paper is that with readily available tools a central bank can enable deep negative rates whenever needed-thus maintaining the power of monetary policy in the future to end recessions within a short time.

MakerDAO emerged as a clear market leader in part for its rock-bottom interest rates of 0.5 percent, which are a technological necessity for keeping its DAI stablecoin worth $1. With interest rates rising to 19.5 percent, some early borrowers are angry.