#CBDC

2 02, 2024

DAILY020224

2024-02-02T16:21:33-05:00February 2nd, 2024|2- Daily Briefing|

Powell, Hsu Add to Pressure on SEC Crypto-Custody Standards

As we noted yesterday, Congressional Republicans are now mounting a Congressional Review Act effort to repeal the SEC’s staff accounting bulletin (see FSM Report CUSTODY5) requiring balance-sheet recognition of crypto-custody deposits at considerable cost to banking institutions.

Trump to Dump Powell

As we expected, Donald Trump today said that, if elected, he will not reappoint Jerome Powell.  This decision will not present itself to the next president until Mr. Powell’s term ends in January of 2026, but we do not think either of the candidates is likely to reappoint Mr. Powell should he seek a third term.

GOP Bill Challenges Capital Proposal

Echoing long-held concerns of other HFSC Republicans, Rep. Ogles (R-TN) along with Rep. Donalds (R-FL) have introduced legislation (H.R. 7143) forcing regulators to withdraw the capital proposal (see FSM Report CAPITAL230).

Senate Presses for Anti-Hungary Sanctions

In a statement that may lead financial institutions to review their exposures, Senate Foreign Relations Chair Cardin (D-MD) called on the Biden Administration to consider sanctions against Hungary due to its government’s refusal until late yesterday to support EU efforts for Ukraine and its broadly anti-democratic program in general and with specific regard to pressuring the U.S. and its ambassador to Hungary.

HFSC Republicans Take Another Shot at FDIC

Continuing their campaign against FDIC Chair Gruenberg, HFSC Chair McHenry (R-NC) along with Subcommittee Chairs Barr (R-KY) and Hill (R-AR) sent a letter today to the FDIC questioning …

17 01, 2024

DAILY011724

2024-01-17T16:21:16-05:00January 17th, 2024|2- Daily Briefing|

CFPB Tries to Bring Overdraft Fees Under New Benchmark

Arguing that overdraft fees are a big-bank “junk-fee harvesting machine,” CFPB Director Chopra today released a long-awaited proposal to cap fees to what the agency considers a reasonable threshold.

Bowman Expands Basel Critique, Key Dem Now Points to Problems

In remarks today, FRB Gov. Bowman did not go quite as far as her colleague Chris Waller yesterday, but she nonetheless urged that the end-game rules be re-proposed after comments are taken into account.

Senate Banking GOP Again Urges Capital Proposal Withdrawal

Senate Banking Ranking Member Scott (R-SC) along with all Committee Republicans late yesterday sent a letter to FRB Chair Powell, FDIC Chairman Gruenberg, and Acting Comptroller Hsu once again calling on the regulators to withdraw the capital proposal (see FSM Report CAPITAL230).

Biden, Brown Praise CFPB Overdraft Proposal

Following the CFPB’s announcement of its proposed rule regarding overdraft fees today, President Biden again denounced “junk fees” as “exploitation,” and included the CFPB’s proposal in his administration’s efforts to lower costs for American consumers.

FRB/FDIC Provide Limited-Time Resolution-Plan Filing Flexibility

Reflecting a problem we identified in our assessment of the resolution-plan proposal (see FSM Report LIVINGWILL22), the FRB and FDIC today extended the resolution plan submission deadline for categories II and III banks from July 1, 2024 to March 31, 2025.

Global Regulators Turn to OTC-Derivative Margin Improvement

Following yesterday’s release with the CPMI focused on CCPs and clearing members, the Basel Committee and IOSCO today …

4 01, 2024

DAILY010424

2024-01-04T16:28:33-05:00January 4th, 2024|2- Daily Briefing|

IMF Urges CBDC Caution

Taking a more cautious stand on CBDC and cross-border payments than often heard from international financial institutions, the IMF released a study recommending that policymakers ensure that CBDC or any other form of public digital money is carefully designed and interoperable with existing payment systems. Policymakers are also encouraged to enhance public-private policy coordination and regulate global stablecoins as well as other forms of private digital money. The analysis bases these recommendations on findings that efficient digital money could be broadly adopted for cross-border payment purposes and diversify reserve currencies – a concern Members of Congress have long expressed about the Fed’s reluctance to establish a dollar CBDC. However, the IMF also warns that digital money adoption could increase bank disintermediation, currency substitution, spillover risk, and capital-flow volatility. The study’s quantitative analysis examines the effects of digital-money efficiency on reserve currency holdings and international currency adoption, showing a positive correlation between these variables. The study also employs a modeling scenario of a digital money-induced shock on the potential demand for global financial safety net resources, noting here that a multipolar reserve configuration may require global reserve-currency issuers to expand liquidity backstops.

Daily010414.pdf

8 12, 2023

DAILY120823

2023-12-08T16:54:36-05:00December 8th, 2023|2- Daily Briefing|

Basel Study Concludes Banks at Climate Risk Despite Lit-Survey Conclusions

A new Basel Committee working paper provides a literature review of recent analyses of climate risk’s impact on financial institutions to assess the drivers key to establishing the scenario analyses recently outlined in the Committee’s final climate-risk principles (see FSM Report CLIMATE14) and those recently finalized by U.S. banking agencies (see FSM Report CLIMATE17).

EU Regulators Seek AT1 Certainty

Treasury and the EU today issued a joint statement summarizing topics discussed at this week’s U.S.-EU financial regulatory forum.  These included financial stability, bank-regulatory developments, AML, sustainable finance, supervisory coordination, and digital-finance operational resilience.

Senate GOP Tackles U.S. Participation in FSB Entities

Sens. Braun (R-IN), Hagerty (R-TN), and Marshall (R-KS) have introduced S. 3446, a bill to require the banking agencies to report on their interactions with nongovernmental international organizations.  This is part of the broader campaign to block U.S. agencies from adhering to edicts such as the end-game capital rules, reaching also insurance and securities standards.

HFSC Leadership Blast Hsu’s Competence, Agency Operations

HFSC Subcommittee Chairs Barr (R-KY), Huizenga (R-MI) and Hill (R-AR) sent a letter today to Acting Comptroller Michael Hsu continuing their attacks (see Client Report FINTECH33) against the OCC for its recently reported hiring of an individual with falsified credentials to oversee the OCC’s Office of Financial Technology.

Daily120823.pdf

5 12, 2023

FINTECH33

2023-12-05T15:39:20-05:00December 5th, 2023|5- Client Report|

HFSC GOP Grills Regulators Over Novel Activities, Third-Party Risk Management Guidance

At today’s HFSC Digital Assets Subcommittee hearing on banking agency financial innovation, Republicans raised concerns about the Fed’s novel activities guidance (see FSM Report FINTECH32), interagency guidance on third-party risk management (see FSM Report VENDOR10), and the SEC’s predictive data analytics proposal. Members on both sides of the aisle also focused on AI, crypto, and CBDC, with Republicans pressing for hands-off crypto policy while Democrats urged faster action to curb AI risk. Pointing to the OCC’s recent hiring scandal, Subcommittee Chairman Hill (R-AR) suggested that more oversight might be necessary.

FINTECH33.pdf

27 11, 2023

Daily112723

2023-11-27T16:53:58-05:00November 27th, 2023|2- Daily Briefing|

Global Regulators Unveil 2023 GSIB List Methodology

Following publication of the FSB’s updated 2023 GSIB list, the BCBS today published additional details of the assessment including denominators of the high-level indicators used to calculate bank scores, high-level indicators for each bank in the sample, cut-off scores, and thresholds used to allocate GSIBs to buckets for calculating higher loss-absorbency requirements.

Carstens Presses for Unified Ledger, CBDC

Pointing to the speed of AI adoption in sharp contrast to financial-system innovation, BIS General Manager Agustín Carstens has reiterated his call for central bank “unified ledgers.” These would serve as a “network of networks” digital infrastructure, with Mr. Carstens indicating that the result would enable instantaneous payment and settlement of any transaction, use of smart contracts and composability, and seamless integration and automation of digital asset payments.

SEC Finalizes Massive, Controversial ABS-Conflict Standards

Thirteen years after the Dodd-Frank Act demanded it (see FSM Report ABS17), the SEC today voted 4-1 to approve controversial conflict-of-interest standards for asset-backed securities (ABS). The final rule is significantly amended from the proposal, so much so that SEC Commissioner Peirce said that a new proposal was required prior to final adoption.

 

Daily112723.pdf

22 11, 2023

DAILY112223

2023-11-22T12:23:22-05:00November 22nd, 2023|2- Daily Briefing|

Fed Study: CBDC Analysis Needs Work, but Public-Welfare Benefits are Likely

A new FRB staff literature survey of CBDC analyses points to the wide variety of often-opposing findings relating to critical matters such as bank disintermediation and financial stability, attributing this in part to the different CBDC models under consideration in various nations.

Agencies Extend LTD Comment Period

As implied at a recent hearing (see Client Report REFORM229), the agencies have now delayed the comment deadline on long-term debt (see FSM Report TLAC9) until January 16 from November 30.

HFSC GOP Plans Immediate FDIC-Workplace Hearings

Clearly dissatisfied even though the FDIC’s new investigation will proceed without Chair Gruenberg’s involvement, HFSC Financial Institutions Subcommittee Chair Barr (R-KY) and Oversight Subcommittee Chair Huizenga (R-MI) wrote to Mr. Gruenberg demanding that he recuse himself from overseeing any independent investigation.

Daily112223.pdf

21 11, 2023

DAILY112023

2023-11-21T10:36:54-05:00November 21st, 2023|2- Daily Briefing|

Thompson: No Regulatory “Silos” in a Crisis

Reiterating much in FHFA’s sweeping FHLB report, FHFA Director Thompson today reinforced suggestions that FHLBs can avoid acting as lenders of last resort because there are no regulatory “silos” in a crisis.

IMF Reconsiders CBDC

On Friday, the IMF updated its CBDC work, concluding that it is prudent for most countries to consider CBDC implementation even though nations are increasingly hesitant to do so.

IMF: Nations Should Block Fintech Reg Arbitrage

A new IMF study finds that Fintechs adversely affect bank profitability, concluding that “well-designed” fintech regulations are necessary to foster a level bank-fintech playing field.

House Opens New Front vs. FDIC

Following an official HFSC investigation and a raft of letters from Democrats and Republicans, House Oversight Subcommittee on Health and Financial Services Chairwoman McClain (R-MI) along with Rep. Biggs (R-AZ) today sent a letter to Chairman Gruenberg requesting briefings, documents, and communications regarding harassment and workplace practices.

Daily112023.pdf

31 10, 2023

DAILY103123

2023-10-31T17:02:58-04:00October 31st, 2023|2- Daily Briefing|

HFSC GOP Turns to Merger-Policy Demands

Financial Institutions Subcommittee Chair Barr (R-KY) and Rep. Fitzgerald (R-WI) last night sent the federal banking-agency heads a stiff letter demanding to know when they plan finally to issue the long-promised bank-merger policy following public notice and comment.

China Leads New BIS CBDC Pilot

In a new CBDC project sponsored by the BIS’s Innovation Hub, central banks either directly associated with China or within its ambit will focus on multi-CBDC wholesale cross-border payments.

White House, Labor Turn to Retirement Advice “Junk Fees”

Building on its “junk-fee” initiative, the White House today expanded Obama-era “best-interest” standards to retirement advisers to close what it believes are loopholes in the SEC’s jurisdiction under its broker-dealer best-interest standard.

BIS CPMI: Even Sound Stablecoins May Not Be Worth the Effort

A new report from the BIS Committee on Payments and Market Infrastructures finds that properly designed and regulated stablecoins could improve cross-border payments by increasing speed and transparency while lowering costs, especially in emerging markets and developing economies.

GAO Vacates Key SEC Crypto Ruling

The GAO today released a report finding that the SEC’s staff accounting bulletin (SAB) 121 is a rule subject to the Congressional Review Act, throwing a key Gensler anti-crypto ruling into immediate ineffectiveness and an uncertain future.

Daily103123.pdf

27 10, 2023

DAILY102723

2023-10-27T17:02:18-04:00October 27th, 2023|2- Daily Briefing|

Barr Reiterates CBDC Slow-Go

FRB Vice Chair Barr today reiterated his recent comments that the Federal Reserve will only proceed with a CBDC if it gets express support from the executive branch and authorization from Congress.

Top BIS Official Questions Need for Higher Deposit-Insurance Coverage, Stronger Bank Regs

The BIS’s top bank supervisor, Fernando Restoy, today indirectly took sharp issue with several pending changes in U.S. deposit-insurance, regulation, and resolution standards.  Pointing to supervisory lapses as the principal cause of recent bank failures, Mr. Restoy argued that more stringent capital and liquidity requirements matter less to bank resilience than strengthened supervision.

Daily102723.pdf

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