#ECASH – Federal Financial Analytics

14 09, 2023

DAILY091423

Eliza Allen2023-09-14T16:47:09-04:00September 14th, 2023|2- Daily Briefing|

IOSCO Proposes Leveraged Loan, CLO Best Practices

IOSCO today released a consultation report proposing best practices for leveraged loans and CLOs that address origination and refinancing, EBITDA and documentation transparency, aligning interests from loan origination to end investors, managing conflicts of interest throughout the intermediation chain, and disclosures.

Durbin, Marshall Press Credit-Card Interchange Bill

Reiterating concerns expressed last month and comments yesterday on the Senate floor, Senate Whip and Judiciary Chairman Durbin (D-IL) and Sen. Marshall (R-KS) were joined this time by Sen. Welch (D-VT) and four House Members calling on Visa and Mastercard to reverse planned fee hikes.

GAO Presses for FSOC Power to Regulate, Not Just Designate

The GAO today issued a report recommending that Congress consider legislation allowing FSOC to compel regulatory action, arguing that this would better accomplish the Council’s mission because FSOC currently has limited power to respond to systemic risk.

HFSC GOP Highlight CBDC Privacy Concerns

As anticipated, HFSC Digital Assets GOP Members continued their staunch opposition to a U.S. CBDC, with Subcommittee Chairman Hill (R-AR) and Majority Whip Emmer (R-MN) asserting that private innovation can modernize payments without the risk of government surveillance.

Brown Doubles Down on Opposition to House Crypto Bill

Making it still more clear that he is not supportive of pending House cryptoasset legislation, Senate Banking Chairman Brown (D-OH) today sent a letter to Treasury Secretary Yellen, SEC Chairman Gensler, and CFTC Chairman Benham asking for views on where new authority may be needed.

Daily091423.pdf…

28 04, 2022

Daily042822

Eliza Allen2023-03-01T14:51:33-05:00April 28th, 2022|2- Daily Briefing|

FinCEN Head Pleads for Funding to Advance Rulemaking, Sanctions

Acting Director of FinCEN Himamauli Das testified at a poorly attended HFSC hearing today, calling for more funding to handle not only the challenges created by the invasion of Ukraine, but also the many standards required by the 2021 AML Act (see FSM Report AML133). Under questioning, Mr. Das agreed that the agency is falling behind on the beneficial ownership rules, promising to do better as quickly as resources will allow.

Fraudulent-Authorization Payment Bill Advances

At today’s HFSC’s Task Force on Financial Technology hearing, Chair Lynch (D-MA) advanced draft legislation stipulating bank accountability for fraudulent authorizations under the Electronic Funds Transfer Act. This measure builds on complaints voiced earlier this week detailed by Sens. Warren (D-MA) and Menendez (D-NJ) attacking Zelle, with Rep. Lynch saying that protecting consumers is an immediate priority.

Daily042822.pdf…

18 04, 2022

m041822

Arezou Rafikian2023-03-02T10:55:38-05:00April 18th, 2022|6- Client Memo|

Starry-Eyed Kids Stumbling in the Cryptoverse

One of the really sort-of sweet things about many who espouse the inevitability of digital assets is boundless hope for crypto domination derived from little knowledge of how the financial system actually works. Last week, a prime example surfaced on Reuters, which touted a plan by which $10 billion of bitcoins would supplant the dollar as the global reserve currency. Here’s to hoping, but the total USD money supply clocks in at close to $22 trillion, suggesting one might need more than a few billion to make even a bit of a dent. Digital currency may well reign supreme, but it won’t be much more than a speculative bet until someone figures out how to integrate it into legacy systems and market, policy, and regulatory realities.

m041822.pdf…

18 04, 2022

Karen Petrou: Starry-Eyed Kids Stumbling in the Cryptoverse

Arezou Rafikian2023-03-02T10:55:51-05:00April 18th, 2022|The Vault|

One of the really sort-of sweet things about many who espouse the inevitability of digital assets is boundless hope for crypto domination derived from little knowledge of how the financial system actually works. Last week, a prime example surfaced on Reuters, which touted a plan by which $10 billion of bitcoins would supplant the dollar as the global reserve currency. Here’s to hoping, but the total USD money supply clocks in at close to $22 trillion, suggesting one might need more than a few billion to make even a bit of a dent. Digital currency may well reign supreme, but it won’t be much more than a speculative bet until someone figures out how to integrate it into legacy systems and market, policy, and regulatory realities.

One might say that using M3 as the measure of the dollar’s power is unfair. So, let’s use just currency in circulation. That’s a lot less, but still a formidable $2.3 trillion, a number not only humbling to entrepreneurs, but also progressive Democrats crafting a new form of digital currency via the U.S. Treasury.

Our in-depth analysis assesses this “e-cash” legislation. The idea here is to create a digital asset that is identical to physical dollars in all but physicality. This may be a worthy effort, but it won’t be easy.

Take just one issue: the bill mandates that e-cash be fully private and anonymous but also ensures effective AML enforcement. Quite simply, that can’t happen.

Still, as physical-cash transactions shrink, the absence …

11 04, 2022

CBDC11

Arezou Rafikian2023-03-02T11:28:47-05:00April 11th, 2022|1- Financial Services Management|

Treasury Digital Dollar

Progressive Democrats in the House have introduced an alternative digital-dollar proposal (“e-cash”) to the “FedAccount” construct urged by Senate progressives that mandates an electronic currency created by the Treasury Department to devise an electronic substitute for physical fiat currency. The measure acknowledges at least some of the challenges in doing so (e.g., obstacles for those with disabilities or limited broadband access), but nonetheless mandates a very fast-paced implementation schedule that is governed by a new Treasury office with senior status and considerable independence. While a new inter-agency council would be established to address issues such as conflicts between e-cash issuance and monetary policy, the bill itself otherwise fails to address this fundamental question, as well as many others such as how it achieves privacy and anonymity goals….

CBDC11.pdf…

28 03, 2022

DAILY032822

Eliza Allen2023-03-27T15:53:58-04:00March 28th, 2022|2- Daily Briefing|

Hsu Open to New Merger Policy on Inter-Agency Basis

As noted on Friday, the FDIC has now officially released a controversial RFI on bank-merger policy (see FSM Report MERGER9). Press included a statement from Acting Comptroller Hsu indicating that he supports this public-comment effort, especially with regard to reconsidering financial stability at larger banks.

Progressives Propose a Treasury, not Central Bank, Digital Dollar

As anticipated when we reviewed a Brookings proposal for a “Treasury dollar“, legislation (H. R. 7231) has now been introduced to create what its sponsors call “ECASH” – that is, a digital currency issued by the U.S. Treasury, not the Federal Reserve. Introduced by Rep. Stephen Lynch (D-MA) and several progressives, the ECASH program would launch three Treasury pilots under a new high-level Treasury office to create a digital dollar with physical cash’s privacy and anonymity.

House Panel Presses CS on Sanctions Compliance

Signaling a new source of sanctions-related reputational risk, the House Oversight Committee today demanded information from Credit Suisse following assertions that the bank had ordered counterparties to destroy Russia-related documentation.

Chopra Goes after Charters, Activities, Officers for Repeat Enforcement Violations

CFPB Director Chopra today expanded his attack on large financial-services firms, arguing that those who repeatedly violate consumer-protection or other core standards should lose their charters.

Daily032822.pdf…