#CFT – Page 2 – Federal Financial Analytics

14 12, 2021

Daily121421

Arezou Rafikian2023-05-23T12:27:52-04:00December 14th, 2021|2- Daily Briefing|

Thompson Takes the Prize
As we anticipated, President Biden today nominated Acting FHFA Director Sandra Thompson to a full term. We expect this appointment to be roundly praised by Democrats and community-advocacy groups. It will draw GOP fire, but likely not serious enough to deter her confirmation next year absent any new facts.

RFI in Limbo, Substantive FDIC Decisions Up in Air
Although fireworks were anticipated at today’s FDIC open meeting, Board members kept discussion regarding the merger RFI to procedure before moving into an executive session at which the matter was surely debated.

OCC Restores Prior CRA Framework Over Industry Objections
Largely as proposed, the OCC today finalized its rule rescinding its controversial 2020 CRA rewrite (see Client Report CRA28) and reverting to the prior CRA framework. The agency generally rejected industry arguments that recission is burdensome given that banks have already implemented the revised framework and expect soon to implement yet another revised interagency framework (see FSM Report CRA30).

FinCEN Slow Walks Structural AML/CFT Rewrite
As required by law earlier this year (see FSM Report AML133), FinCEN today issued an RFI seeking views on ways to enhance AML/CFT regulation. We will shortly provide clients with an in-depth analysis of this RFI, which highlights the importance of a risk-based U.S. system that adapts to emerging illicit-finance trends.

IMF Demands Tough Rules for Stablecoin, Other E-Money
A new IMF blog post calls for comprehensive standards akin to those Democrats today demanded (see …

8 12, 2021

Daily120821

Arezou Rafikian2023-05-23T13:00:59-04:00December 8th, 2021|2- Daily Briefing|

BIS Staff: DeFi Demands Tough Prudential, Governance Standards
As noted on Monday, the BIS has published several policy-making papers targeting different facets of nonbank financial intermediation that are sure to guide both U.S. and global action.

BIS CBDC Experiment Successfully Settles Wholesale FX Transactions
The BIS today ended its joint wholesale CBDC experiment with the French and Swiss central banks, concluding that CBDC can be effectively deployed for international settlements. This is a significant finding and one that surely puts still more pressure on the Fed to issue its discussion draft and then proceed to determine the U.S. role as other major central banks ramp up operations with major market and even reserve-currency impact.

OCC Defines a “Good-Overdraft” Construct
Acting Comptroller Hsu today advanced the anti-overdraft campaign launched last week by CFPB Director Chopra, arguing that overdrafts disadvantage lower-income households and thus erode the trust essential to an industry success.

Daily120821.pdf…

8 12, 2021

CRYPTO23

Arezou Rafikian2023-05-23T13:06:42-04:00December 8th, 2021|5- Client Report|

HFSC Begins Political Taxonomy of Crypto-Asset Policy

As anticipated, today’s HFSC hearing was a marathon session at which industry witnesses defended their business model, Republicans liked it fine, and Democrats worried about a wide array of policy challenges. While both sides of the aisle agreed that cryptoassets might well enhance financial inclusion, partisan battle lines formed over issues such as the extent to which stablecoins are fully reserved, covered by the securities laws, and if a single regulator for this sector is either desirable or feasible. Industry witnesses strongly rejected the PWG’s stablecoin conclusions (see Client Report CRYPTO21), suggesting for example that stablecoins are safer than bank deposits because they are fully – not fractionally – reserved. Although Chairwoman Waters (D-CA) made it clear that this hearing is the start of committee action without indicating its direction, we expect HFSC to proceed to hearing from academics and then from regulators before deciding which legislation – if any – to bring to mark-up.

CRYPTO23.pdf…

8 12, 2021

FedFin: HFSC Begins Political Taxonomy of Crypto-Asset Policy

Arezou Rafikian2023-05-23T13:06:52-04:00December 8th, 2021|The Vault|

As anticipated, today’s HFSC hearing was a marathon session at which industry witnesses defended their business model, Republicans liked it fine, and Democrats worried about a wide array of policy challenges. While both sides of the aisle agreed that cryptoassets might well enhance financial inclusion, partisan battle lines formed over issues such as the extent to which stablecoins are fully reserved, covered by the securities laws, and if a single regulator for this sector is either desirable or feasible. Industry witnesses strongly rejected the PWG’s stablecoin conclusions (see Client Report CRYPTO21), suggesting for example that stablecoins are safer than bank deposits because they are fully – not fractionally – reserved.

The full report is available to retainer clients. To find out how you can sign up for the service, click here.…

20 10, 2021

FedFin on: Global CBDC Policy

Arezou Rafikian2023-06-07T15:35:08-04:00October 20th, 2021|The Vault|

Shortly after the BIS and a group of central banks endorsed a construct for retail-facing central-bank digital currency (CBDC), the Group of Seven (G7) finance ministerial issued these public-policy principles to establish a still broader framework for future action. No G7 nation, including the U.S., has decided on CBDC, but their governments have generally developed these documents to ready themselves, enhance the odds of CBDC better suited to cross-border clearing and settlement, anticipate private stablecoins and the risks they raise, as well as counter China’s efforts to build a CBDC that enhances its global macroeconomic might.

The full report is available to retainer clients. To find out how you can sign up for the service, click here.…

20 10, 2021

CBDC9

Arezou Rafikian2023-06-07T15:35:02-04:00October 20th, 2021|1- Financial Services Management|

Global CBDC Policy

Shortly after the BIS and a group of central banks endorsed a construct for retail-facing central-bank digital currency (CBDC), the Group of Seven (G7) finance ministerial issued these public-policy principles to establish a still broader framework for future action. No G7 nation, including the U.S., has decided on CBDC, but their governments have generally developed these documents to ready themselves, enhance the odds of CBDC better suited to cross-border clearing and settlement, anticipate private stablecoins and the risks they raise, as well as counter China’s efforts to build a CBDC that enhances its global macroeconomic might.

CBDC9.pdf…

4 10, 2021

CBDC8

Arezou Rafikian2023-07-05T15:49:42-04:00October 4th, 2021|5- Client Report|

Central Banks “Envision the CBDC Ecosystem,” Like It a Lot

As we noted last week, the BIS and seven major central banks have advanced global CBDC policy with three new reports evaluating key design features. None of these central banks, including the Fed, has agreed to CBDC, but each has accepted conclusions which appear bound to propel most if not all of them soon to active CBDC development. This FedFin analysis thus assesses each of the BIS reports, all of which focus on retail-facing CBDC, which faces the most challenging operational, policy, and social-welfare questions. All of the reports not only assess critical policy questions ranging from consumer impact to systemic risk, but also reach conclusions that often reject suggestions that CBDC is unnecessary in friction-free banking systems or poses undue intermediation, bank-profitability, illiquidity, or financial-stability risk. Where problems are identified, the reports often proffer solutions to them, noting that risk analysis must not only consider the risks posed by CBDC, but also those that would result without it given the certain evolution of private digital currency.

CBDC8.pdf…