Fintech Daily Digest

"Once Libra becomes well established in some countries, governments will lose control of their money supply and lose monetary policy as a tool of economic expansion or contraction... They will also lose the capacity, in times of severe uncertainty, to impose capital controls to prevent capital flight."

The Telegram Open Network, or TON, is Telegram's upcoming Proof-of-Stake network that promises to integrate blockchain payments into its messaging app that serves some 365 million users. If it delivers on promises of high speeds and decentralization, it will be the largest blockchain launch in history.

Blockchain real estate investment firm AssetBlock partnered with luxury hotel asset manager Lodging Capital Partners to tokenize $60 million of exclusive hotel properties.

A series of PBoC rulings in 2017 and 2018 have stopped bigtech payment operators profiting from interest income earned by depositing customers' surplus payment funds. Instead, surplus payment funds now need to be placed with the PBoC and secure no interest in return - it had previously mandated that only certain percentages needed to be held with the central bank. The PBoC asked payment companies to deposit 100% of customer funds with the central bank by January 2019.

"As a new technology, stablecoins are largely untested, especially on the scale required to run a global payment system," said Mr Cœuré. "They give rise to a number of serious risks related to public policy priorities. The bar for regulatory approval will be high."

This BIS paper argues that asset tokenisation and underlying distributed ledger technology (DLT) open up new ways of supervising financial risks. It then puts the case for "embedded supervision", ie a framework that allows compliance with regulatory goals to be automatically monitored by reading the market's ledger, thus reducing the need for firms to actively collect, verify and deliver data.

ECB board member Benoit Coeure said Libra has revived efforts to widen the uptake of the ECB-backed TIPs fast cash project, and that the ECB needs to step up its thinking on a central bank digital currency.

The Ethereum network has become congested with users complaining transactions are taking hours or in some rare instances, even days, and the culprit appears to be Tether.

Moody's warns that reliance on retrocession capital is growing but that it considers increased reliance on retrocession to sustain a normal reinsurance underwriting business to be risky and weaken the capital quality of those dependent on it for support.

The ECB's Benoît Coeuré will chair a meeting on September 16 at the BIS headquarters in Basel between Libra and the Committee on Payments and Market Infrastructure. The CPMI side will be represented by officials from 26 central banks, including the Federal Reserve and the Bank of England.

The JPMorgan Chase-led Interbank Information Network (IIN) will this week announce Deutsche as a new recruit to a network of 320 banks which have agreed to swap information on global payments over blockchain, the mutually distributed ledger technology behind cryptocurrencies.

"The ICE/Bakkt initiative will prove to be a fascinating case study in inter-exchange competition. Crypto is sufficiently distinctive, and the double-barrel ICE initiative sufficiently innovative, that the traditional betting form (go with the incumbent) could well fail."

The VERDAD Act (Senate Bill 1025) will ban US citizens, permanent residents and organizations from buying, holding, trading or spending the Venezualan Petro. The implications for this could be huge because any crypto-asset could be inserted into this language.

Central Bank of Chile Governor Mario Marcel: "CBDC does not necessarily need blockchain... When a Central Bank issues its currency,either in physical or digital format, trust should be a given. Also is far from obvious that all market participants should have access to sensitive information such as all transactions in which the CBDC was used.

With the right legal framework, Committed Settlement can give you the ability to create, record, notify and/or perfect security interests (depending on the jurisdiction) in a fraction of a millisecond - and with minimal cost. With these efficiencies, it may change the way we approach bankruptcy proceedings, collateral and risk management - if not all financial transactions in general

"If Libra follows the route of many stablecoins -- including the dominant market player, Tether -- and backs itself with dollar assets (and, it is difficult to see what else it can do but go down that route), then it is nothing but dollarisation by proxy. "

French Finance Minister Le Maire said "a common framework" on digital currencies was needed for the 28 EU countries and urged the creation of a European "public digital currency", without giving more details.

The Chicago Mercantile Exchange (CME) Group is petitioning United States regulators to allow its clients to double their open Bitcoin futures positions.

"Did Libra hire an economist who'd worked at a central bank, or for a government, on serious macroeconomics - someone who could talk to regulators in their own language - at any point since Facebook started looking into cryptocurrencies in 2017? ...You might think "someone who knows how economies tend to work" would have been a useful sort of person to have on the team before the big announcement."