#interoperability

21 04, 2023

DAILY042123

2023-04-21T17:02:12-04:00April 21st, 2023|2- Daily Briefing|

House Republicans Renew Anti-Woke Banking Battle

In the latest GOP-led action against “woke” finance, HFSC Financial Institutions Subcommittee Chairman Barr (R-KY) yesterday reintroduced the Fair Access to Banking Act (H.R. 2743), which would prevent large banks from limiting or refusing services to the fossil-fuel, digital-asset, and gun industries.

FRB Review Of CBDC Comments Leaves Open All Options

The Federal Reserve late yesterday released a summary of public comments received on its 2022 CBDC discussion draft (see FSM Report CBDC10), arraying comments in ways that make it difficult to judge who said what or where the preponderance of comments is to be found.

FSOC Advances Activity, Nonbank Systemic Designation, Regulation

As anticipated, all FSOC members today voted to advance two key proposals to redesign the U.S. systemic framework and speed action on two clear systemic designation priorities: hedge-fund interconnectedness with the banking system and nonbank mortgage companies.

Waters Praises FSOC, Presses for New Bank Standards

While commending FSOC’s action earlier today, HFSC Ranking Member Waters (D-CA) urged it to quickly go farther, pressing the Council to send the FRB and other banking agencies recommendations for post-SVB reforms.

BIS Paper: Fintech Innovation Amplifies Inequality

A new BIS working paper on fintech concludes that increased financial-technology innovation amplifies inequalities between sophisticated and unsophisticated investors and that bridging this gap will require policy focus on fintech accessibility and usability.

Daily042123.pdf

23 02, 2023

DAILY022323

2023-02-23T16:48:42-05:00February 23rd, 2023|2- Daily Briefing|

Agencies Strengthen Defenses vs. Crypto-Related Funding

As FedFin forecast when significant bank crypto-related deposit exposures came to light (see Client Report CRYPTO38), the banking agencies today issued guidance telling banks to monitor and mitigate risks related to resulting liquidity risk.

FSB Sets Out Key Cross-Border Payments Action Items

The Financial Stability Board today released a list of actions for implementing the G20’s Roadmap for Enhancing Cross-border Payments, including three priorities.  These are payment system interoperability and extension; legal, regulatory and supervisory finalizing frameworks; and cross-border data exchange and message standards.

IMF Presses CBDC, New “Unified Ledger”

A new IMF blog post advocates for public sector implementation of new payment technologies including tokenization, encryption, and programmability to improve cross-border payments, limit counterparty risk, and facilitate AML and other compliance.

FHFA Proposes GSE-Capital Revamp

FHFA today sought comment on several significant revisions to the regulatory-capital rules governing  Fannie and Freddie.  As we will detail in a forthcoming in-depth report, several of these changes concede to comments rejected as the current rules were finalized.

Daily022323.pdf

29 08, 2022

DAILY082922

2023-01-04T10:17:26-05:00August 29th, 2022|2- Daily Briefing|

FedNow Set for Soon

Vice Chair Brainard today announced that the Fed’s instant-payment “FedNow” system will achieve its hoped-for opening in mid-2023 (see FSM Report PAYMENT20).  Although this announcement covers only an expansion of the Fed’s pilot program rather than a complete launch, Ms. Brainard cautioned that, while the system is ready thanks to early adoption by some financial institutions, it remains to be seen if enough banks, core processors, software-developers, and other entities are willing to make the investments necessary to create the ubiquitous, equitable service sought by the central bank.  However, it is unclear if slow adoption is due to preference for the U.S.’s longstanding, private real-time system, continuing challenges to inter-operability, the fact that FedNow will be a pilot even when officially launched, or if simple lag time accounts for the delay of concern to the Fed.

Daily082922.pdf

11 07, 2022

DAILY071122

2023-01-24T15:11:32-05:00July 11th, 2022|2- Daily Briefing|

FSB Highlights Crypto, Stablecoin Risk

The FSB today issued an unusual statement warning of cryptoasset risk.  Rejecting the BIS’s more sanguine view that stablecoins and other digital assets have yet to prove, the FSB warns that inter-connectivity with the financial system already poses grave hazard.

HFSC to Consider CRA Reform, Rewrite

As noted, the HFSC Consumer Protection and Financial Institutions Subcommittee on Wednesday will consider the inter-agency CRA rule (see FSM Report CRA32).

Basel Committee Will Be Slow to Advance Climate-Risk Capital, Disclosure Standards

The head of the Basel Committee, Pablo Hernández de Cos, today reiterated that global bank regulators are dedicated to a cautious but determined set of climate-risk standards.

BIS Group Charts Course to Cross-Border CBDC

As part of the G20 cross-border payments roadmap, the BIS, IMF, and World Bank released a joint report today urging governments working on a CBDC to coordinate their designs and account for cross-border functionality early in their process.

FRB Atlanta Blog Refutes Dem’s Zelle Allegations

Coming in the wake of a letter sent by Senate Democrats alleging Zelle of mishandling fraud, FRB Atlanta today published a blog post defending the payments industry in cases where customers willingly authorize a fraudulent payment.

Chopra Promises to Promote Fierce Competition

CFPB director Chopra today reasserted his agency’s authority over ensuring financial-market competitiveness, describing recent actions against credit-card companies (see FSM Report CREDITCARD35), bigtech, and “junk fees” (see FSM Report CONSUMER38).

Daily071122.pdf

9 03, 2022

CRYPTO26

2023-04-04T10:50:56-04:00March 9th, 2022|5- Client Report|

Biden Administration Decides Crypto Here to Stay, Seeks CBDC

We follow our initial client alert here with an in-depth analysis of President Biden’s long-awaited executive order laying down steps intended quickly to construct a U.S. digital-asset policy construct. Although sparked in part by virtual currency’s role in the Ukraine crisis, the executive order (EO) is a watershed event establishing for the first time that the U.S. views digital assets as a fixture of future finance warranting a rapid, far-reaching, and stringent set of governance, law-enforcement, equity, inclusion, and technology policy intervention. In general, the EO establishes a U.S. principle akin to that set by global regulators in this area: same-business same rules. Nothing in the order thus threatens SEC Chairman Gensler’s assertion that current law addresses many investor-protection challenges (see Client Report INVESTOR19) indeed, the EO strengthens the SEC’s hand by validating the chairman’s concerns.

CRYPTO26.pdf

15 02, 2022

FedFin: Stablecoin Legislative Consensus in Sight, But from a Distance

2023-04-04T15:59:02-04:00February 15th, 2022|The Vault|

Despite fierce partisan fighting over pending Fed nominations, today’s Senate Banking hearing on stablecoin regulation was considerably more bipartisan that last week’s HFSC session (see Client Report CRYPTO24).  Both Chairman Brown (D-OH) and Ranking Member Toomey (R-PA) are in broad agreement on a two-tier structure in which stablecoins are issued either by banks or by nonbanks subject to strict reserve-asset, AML, and related regulation.

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

15 02, 2022

CRYPTO25

2023-04-04T15:58:50-04:00February 15th, 2022|5- Client Report|

Stablecoin Legislative Consensus in Sight, But from a Distance

Despite fierce partisan fighting over pending Fed nominations, today’s Senate Banking hearing on stablecoin regulation was considerably more bipartisan that last week’s HFSC session (see Client Report CRYPTO24).  Both Chairman Brown (D-OH) and Ranking Member Toomey (R-PA) are in broad agreement on a two-tier structure in which stablecoins are issued either by banks or by nonbanks subject to strict reserve-asset, AML, and related regulation.  That said, we think it may prove difficult for Democrats and Republicans to agree on key details in the construct of a U.S. private stablecoin regime, with the thorniest issue likely to prove the extent to which the federal construct preempts state regulation.  Further, Sen. Brown signaled that there will be more stablecoin hearings before any action occurs, making it unlikely that time will permit resolution of outstanding differences of opinion within the Senate and then with the House before the end of this session.

CRYPTO25.pdf

2 02, 2022

DAILY020222

2023-04-05T14:10:54-04:00February 2nd, 2022|2- Daily Briefing|

BIS Outlines Regulatory Goals for More Tech-Based Lending
A new BIS paper approaches fintech’s financial-inclusion impact from a new angle: the extent to which personal-information collateral backing consumer debt can be governed to ensure that innovation also advances inclusion without leading to undue market power and/or disintermediation.

BIS Chief Calls for CBDC ASAP
The BIS today released a speech late last month from Managing Director Carstens saying that the “soul of money” – i.e., its essence and purpose – is best entrusted to central banks, not DLT or private issuers.

CFPB Redoubles Effort Against “Junk” Fees
The CFPB today posted a note standing firmly behind its RFI seeking input on the “junk” fees the agency believes pervade consumer finance (see FSM Report CONSUMER38).

Senate GOP Heighten Objections to FDIC Democrats
Senate Republicans today strengthened their objections to the December effort by FDIC Democrats to release a bank-merger RFI (see FSM Report MERGER9), introducing legislation to strip the Board of the Comptroller of the Currency and CFPB director.

Daily020222.pdf

4 10, 2021

CBDC8

2023-07-05T15:49:42-04:00October 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

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