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What the underserved need are not banks but new kinds of regulated financial institutions that deliver the modern services needed to support a 24/7 always-on economy. What are these services? As the economist John Kay noted in his recent paper on “A Robust and Resilient Finance” for the Korean Institute of Finance, while “many aspects of the modern financial system are designed to give an impression of overwhelming urgency… only its most boring part – the payments system – is an essential utility on whose continuous functioning the modern economy depends”.

In similar vein, in their new book “The Pay Off-How Changing the Way we Pay Changes Everything” Gottfriend Leibrandt (who was CEO of SWIFT from 2012 until 2019) and Natasha de Teran write that “while access to a banking system is seen as a crucial part of a country’s development and necessary for lifting people out of poverty, it is not as basic a need as the ability to pay”.

In other words, the fundamental need and the basis for inclusion in society is not a bank account or anything like it, but a safe and secure way to get paid and to pay for goods and services. And this is not a revelation! It seems to me that great many people would be well served by a simple digital wallet that might be provided by any of range of organisations from Facebook to Square. The goal of a modern and forward-looking strategy should be not to bank the unbanked but to unbank the banked.

From: (3) Unbank the banked – by David G.W. Birch.

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Although most banks became more profitable as the Federal Reserve raised rates in 2022–23, a smaller group of banks saw consistent decreases in their net interest margins (NIMs). The distribution of bank NIMs widened over this period, largely due to differences in banks’ business models: “margin-decreasing” banks were more involved in capital markets, with higher shares of trading assets and non-deposit funding even prior to the rate hike cycle.

From: Why Do Net Interest Margins Behave Differently across Banks as Interest Rates Rise? – Federal Reserve Bank of Kansas City.

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Scammers are using AI technology to fake videos of famous TV doctors like Hilary Jones, Michael Mosley and Rangan Chatterjee to push their products to the unsuspecting public on social media.

A new report, published in the prestigious British Medical Journal (BMJ), warned of the growing rise of so-called ‘deepfakes’ as research suggests up to half of us can no longer tell them apart from the real thing.

From: Can YOU spot the fake? Warning as scammers use computer generated images and voices of TV medics including GMB’s Hilary Jones and late Doctor Michael Mosley to promote health scams | Daily Mail Online.

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The United States is the only country in the world in which both federal and state governments possess independent and yet overlapping authority for bank chartering, regulation, and supervision. This system is now under stress. The source of this stress is a new breed of technology-driven financial institutions, licensed and regulated almost entirely at the state level, that provide money and payments outside the perimeter of both conventional bank regulation and the financial safety net.

From: Money and Federalism by Dan Awrey :: SSRN.

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Chase told customers that it will stop allowing its credit cards to be used to pay for third-party buy now, pay later (BNPL) plans. This change comes at a time when Chase offers its own BNPL option — Chase Pay Over Time — and was likely made to boost customers’ interest in its own offering, Newsweek reported Tuesday (July 16).

From: Chase to Decline Credit Card Payments for Third-Party BNPL Plans.

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Transactional data shows the exploiter is actively selling the stolen holding using the onchain exchange Uniswap.

From: North-Korea Behind WazirX’s $230M Hack, Says Elliptic as SHIB, WRX Tumble.

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Indian crypto exchange WazirX experienced a security breach in one of its multisig wallets, leading to the loss of user funds and over $230 million in withdrawals.

From: North-Korea Behind WazirX’s $230M Hack, Says Elliptic as SHIB, WRX Tumble.

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There are three related reasons why a financial system composed of a large number of relatively small and diverse financial institutions is more stable and prosperous than one with few large and similar institutions.
First, when financial institutions differ from one another, excessive systemwide risk-taking is less likely because, at any given time, the actions of some institutions inflate bubbles while others do the opposite.
Second, when faced with shocks, relatively homogeneous institutions will respond similarly, buying and selling the same assets at the same time. This leads to disastrous selling spirals. In contrast, when they are diverse, some institutions will buy and others will sell, dissipating shocks. In other words, a system with relatively homogeneous institutions acts as a shock amplifier, whereas a more diversified system absorbs and dissipates shocks and, hence, is more stable.
Finally, a system with many small and diverse institutions will be more prosperous. It allows better tailoring of financial services to the needs of the economy while also requiring lower buffers against systemic risk. This means it offers the cheaper provision of financial services.

From: Why so many crises happen when we know why they happen and how to prevent them | CEPR.

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The reason it is so difficult to regulate finance is that the financial system is one of the most complicated of all human constructs. In effect, it is infinitely complex. And when a system is infinitely complex, there are infinite areas where excessive risk and misbehaviour can emerge. When market participants optimise, they are actively searching for overlooked areas in which to take risk, so it is almost axiomatic that crises happen where nobody is looking. How can we regulate something we have yet to see?

From: Why so many crises happen when we know why they happen and how to prevent them | CEPR.

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The startup, Seattle-based Interlune, said it will use the $346,000 NASA grant to test a critical part of its technology that it will ultimately use to prepare lunar soil, known as regolith, for the extraction of helium-3, an isotope scarce on Earth but abundant on the moon.

From: A Space Startup’s Moon Mining Plans Get a Boost With NASA Grant — The Information.

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