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.

Policy Research Assistant:   Detail-oriented self-starter for our bank regulatory and legislative analytical services.  Candidates should be able to utilize quantitative and qualitative research methods and analytical skills to assist senior staff in preparing both high-level and in-depth reports assessing regulatory, legislative, and political developments across a wide range of banking and financial services issues.  A college degree is required, and candidates must have excellent writing and analytical skills as well as the ability to work in a fast-paced environment.

Responsibilities

• Track financial services policy developments in Congress and at relevant Federal regulatory agencies
• Assist in preparation of client-facing analyses, reports, and papers assessing regulatory and legislative developments and associated impacts
• Monitor Congressional hearings and Agency meetings and prepare reports summarizing these
• Gather and analyze data from public sources
• Conduct literature/document reviews and present findings to senior staff
• Assist in preparation of Managing Partner’s articles and op-eds published in major outlets (e.g., New York Times, Wall Street Journal, Financial Times)
• Perform other duties as assigned

Requirements

• Bachelor’s degree in a relevant field of study (e.g., finance, economics, political science)
• Excellent writing and communications skills
• Advanced qualitative and quantitative data analysis abilities
• Ability to perform under pressure, meet time-sensitive deadlines, prioritize, and multi-task
• Knowledge of Congressional/regulatory processes and procedure
• Strong research skills and attention to detail
• Proficiency with Microsoft Office products, particularly Word, Excel, and Outlook
• Previous Capitol Hill, banking agency, or similar experience preferred

Please e-mail resume and salary requirements to info@fedfin.com

Today’s Senate Banking hearing with Treasury Deputy Secretary Wally Adeyemo showed bipartisan concern that the Administration is failing to implement sanctions required by law, especially when it comes to China, North Korea, and Russia.  Senators also stated that they will not tolerate what they call continued defiance of Congressional mandates without making clear what they intend to do to enforce their will should Treasury fail to act.

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

Global regulators have now finalized a framework on which national regulators may base the reforms they deemed necessary after the pandemic sparked profound disruptions in this sector.  However, as with the FSB’s proposed approach, the final framework sets few parameters for jurisdictional action beyond a strong plea for action of some sort that would meaningfully address the redemption and/or liquidity risk the FSB continues to believe presents a threat to national and even global financial stability.

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

In all of the reports on all of stablecoin’s risks that so frighten central bankers and global finance ministers, none is as terrifying as whether the assets backing hundreds of billions of dollar-equivalent transactions are to be had when needed.  And needed they will be – see not just all the ministerials on high, but also Gillian Tett’s latest, compelling FT column.  Without a meaningful reserve-currency reference, stablecoins are the equivalent of monopoly money without even the teeny little plastic hotels providing an illusion of wealth.  Making stablecoins matter as real money requires meaningful reserves but meaningful reserves mean that stablecoin’s gung-ho promoters won’t get anywhere near as rich.  The business model changes for the way-better, but the construct of stablecoins may be so altered as to make this looming systemic phenomenon only a passing fancy.

The set of difficult choices needed to realize stablecoin’s promise to anyone but profiteers is detailed in our latest report on critical policy issues.  In it, we analyze a set of systemic-risk principles recently proposed by the BIS’s Committee on Payment and Market Infrastructures (CPMI) and the International Organization of Securities Commissions (IOSCO).  As is usually the case with global-regulatory pronouncements, this proposal defines wide parameters for jurisdiction action, stating most clearly what’s wanted, not what will happen if one were actually to get it.

The CPMI/IOSCO paper is even more hesitant than usual because reserve assets aren’t stablecoin’s only tricky bit.  For example, the paper describes a governance conundrum of formidable proportions due to the combination of decentralized transaction points, opaque and often inflexible software, dodgy domiciles, and complex interactions between a stablecoin’s transfer and operational functions.

These governance risks make solving the reserve-asset question even harder.  Without knowing who’s in charge over what and when and where, ensuring that reserve assets are […]

Responding to requests from the G7, G20, and FSB, this report addresses market-infrastructure considerations related to systemically-important stablecoins that do not involve multi-currency baskets (e.g., Facebook’s Diem).  The report builds on the FSB’s current principles and those on cross-border payments, but generally does not propose specific standards.  Instead, it lays out how current global principles in this area should guide both stablecoin developers and regulators.

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