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FTX promoted its exchange in Africa by signaling that investing in crypto could help stop people’s money being devalued by high inflation… International customers lost all their money when the exchange collapsed in November, with disgraced former CEO Sam Bankman-Fried arrested in the Bahamas and extradited to the US on eight counts of fraud the following month.

From FTX Promoted Crypto As an Inflation Hedge in Africa, Report Says.

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“In terms of underlying techniques, ChatGPT is not particularly innovative,” said Yann LeCun, Meta’s chief AI scientist, in a small gathering of press and executives on Zoom last week.

From ChatGPT is ‘not particularly innovative,’ and ‘nothing revolutionary’, says Meta’s chief AI scientist | ZDNET:

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Clubgoers wanting to try it out needed to download the app and register with a scan of a credential and a selfie. At the club door, they open the app, tap the ‘Scan QR’ button which opens the camera to then scan the venue’s unique QR code printed on a lanyard around the neck of door staff.
A biometric check of the user, e.g. via smartphone camera, to open or activate the app is not required. Ben Keirle, CEO of 1account, explained that this is not necessary for this use case and the process maintains GPG45 Level 4 standard.
Each venue also has a unique four-digit code. Scanning the QR updates the app screen to display the user’s name, photo (from the moment of app registration), age status (YES/NO to being over 18) and the venue’s code. This screen has the current time ticking away and only lasts for 15 seconds. At present, this time setting is not configurable.

From Digital ID for nightclub entry: 1account trial results at odds with Home Office findings | Biometric Update:

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A significant theft of public safety-related biometric data in the United States this weekend will not slow the adoption of facial recognition by law enforcement.
That is despite repeated and rote assurances that any biometric data collected by police is by definition safe from theft or misuse.
There are a number of reports about the servers of police IT contractor Odin Intelligence being hacked over the weekend. It is possible that a facial recognition algorithm called AFR Engine was being used by the police whose information was hacked.
According to technology news publisher Vice, 15GB of data, including biometrics involving unhoused people and criminals, have been stolen and shared. A group Vice described as a transparency organization – Distributed Denial of Secrets – reportedly was given the files and shared them with another Vice Media Group publication.
The data included mugshots and fingerprint biometrics, according to TechCrunch. At least some of the data is reportedly unencrypted.
A leak of biometric data from police was not unexpected.

From Leak of police biometric data won’t change America’s regulation debate | Biometric Update:

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Putative class action number 22CV40791 is being heard in Portland, in the U.S. District Court for the District of Oregon. The class action seeks a cease-and-desist judgment and compensatory or statutory damages of $1,000 for each day the company is found to be in violation of the law but no less than $10 million.
Jacksons, which is based in Idaho, has been a focal point in the local debate about facial recognition.
The successful campaign to largely ban surveillance and identification often turned to Jacksons’ signs telling people who intend to enter one of the stores to look at a camera so that their face can be compared to a persona non grata database. The door does not open for anyone matched by the software with a photo on the database.

From Biometric data privacy cases expand beyond BIPA with new filing in Oregon | Biometric Update:

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Red Date Technology is also known as the developer of the Blockchain-based Service Network (BSN), the China state-backed blockchain network.

From The Universal Digital Payments Network launches at WEF.

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we find that, regardless of income, sophisticated individuals profit from reward credit cards at the expense of naive consumers

From DP17733 Who Pays For Your Rewards? Redistribution in the Credit Card Market | CEPR.

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You might remember this November tidbit from Payments Journal, as reported by CNBC:

While competitors like Bank of America enjoy repayment rates at or near record levels, Goldman’s loss rate on credit card loans hit 2.93% in the second quarter. That is the worst among big U.S. card issuers and “well above subprime lenders,” according to a Sept. 6 note from JPMorgan.

From Goldman Sachs: An Expensive Lesson in Credit Cards:

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If you don’t like their money, start your own

Is the future of money a world of more currencies or fewer? After all, there are four currency unions in the world right now — not only the Euro but also the Central African Economic and Monetary Community, the Eastern Caribbean Currency Union  and the West African Economic and Monetary Union — and perhaps more currency unions just around the corner.

There has been talk about a common currency for Gulf states for decades and who knows if this might be revived in the context of digital currency. Meanwhile, Brazil and Argentina are about to start work on a common currency. That’s pretty interesting because it could be the progenitor of what would in fact be the second biggest currency union in the world. At the same time, Russia and Iran are working together on a similar common currency, a “token of the Persian region”, backed by gold to replace the dollar for payments in international trade.

Countries benefit in various ways from belonging to a currency union—a group of countries that share a single currency. Businesses can trade and invest across borders more easily. Member countries gain access to larger markets without facing currency risk. And in some circumstances, currency unions can help support their members when they are hit by external shocks. Such unions usually go hand in hand with deeper economic integration. But does that automatically mean more international trade? It seems so. Research shows that since the end of WWII, currency unions have on average been associated with 40% more trade between member countries. The gain is not spread evenly though: the ‘thin’ relationships between countries who do not trade much with each other benefit the most from currency unions, with little in the way of a boost for more established trading relationships.

So: More trade and more prosperity. But there are also costs to membership: countries relinquish the independence to formulate monetary policy, which can complicate a country’s adjustment to a shock. At the same time, currency union institutions face their own constraints. Currency unions have a responsibility to serve the interests of all of their members; accordingly, changes to policies with a union-wide impact, like monetary policy, are guided by the needs of the union rather than any one single member.

All of this is background to why I was so interested to read that during his first visit to Argentina as Brazil’s new President, Luis Ignacio Lula da Silva, raised the possibility of his country and Argentina pursuing a joint trading currency called the ‘Sur’ (or ‘South’). The stated purpose would be to promote bilateral trade rather than seeking a monetary union such as exists in the EU, and would involve state-backed loans from Brazilian banks active in Argentina and Argentina in turn collateralising this borrowing with commodities such as grains or natural gas. As in the case of the token of the Persian region, the purpose is not to replace fiat currency in domestic circulation. The executive director of the Russian Association of the crypto industry and blockchain, Alexander Brazhnikov says that their gold-backed token will be used as a means of payment in transactions involving international trade.

(Astrakhan is a free-trade zone where Russia has started accepting Iranian merchandise; therefore, the coin would be usable there, for example.)

The Sur is not the only new currency on the drawing board in South America.  Argentina wants to introduce a preferential exchange rate (the “tech dollar”) for freelancers selling their services overseas so that they are not exposed to the local currency, which does not have a history of stability. They already had a “soy dollar” (Argentina is the world’s third-biggest producer of soybeans, behind Brazil and the United States) which meant that farmers could exchange their dollars earned from soybean sales at a preferential rate (as opposed to at the official exchange rate).

People sometimes talk about the dollar being overthrown as the global reserve currency and replaced by, for example, Chinese digital currency.

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Establishing a reputation as an international currency issuer, like the US, is a slow and arduous process (Eichengreen et al. 2017). Throughout modern history, many would-be contenders, like Japan or the euro area, have failed to displace the dominance of the dollar. In his Nobel Prize lecture, Sargent (2012) stressed the importance and difficulty in building a reputation for the newly created US in the 1780s and the newly created euro area in the 2000s. Whether or not the Renminbi will become an international currency is also uncertain. Our model offers a cautionary tale to optimistic views that China might quickly or straightforwardly emerge as an international currency provider.

From Internationalising like China | CEPR.

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This leads me to speculate once again about the direction of travel. Is it possible that it might be despite currency unions, are we on the way to more, not fewer currencies because there will be different digital currencies designed for different purposes? The technologies of cryptocurrency mean that literally anyone can create money. But who will create money that others want to use?  At one level, supranational currency blocs, but within those blocs there will arise local, indeed hyperlocal, currencies to serve specific communities.

In his book “Sapiens — A Brief History of Humankind”, the historian Yuval Noah Harari writes about  the “cognitive revolution” and human beings gaining the ability to communicate information about relationships and therefore reputation (or, as I might simplistically label the basket of concepts linked together here, “identity”). He talks about the ability of the neolithic clan to remember the mutual obligations that bind people together when they can grasp the idea of a future, and how memory does not scale into the settlements of the agricultural revolution, thus necessitating the invention of money. He writes that “When trust depends on anonymous coins and cowrie shells, it corrodes local traditions, intimate relations and human values.”

Trade cannot exist without trust, and it is hard to trust strangers (but easy to trust their money, hence Harari’s comment). As society scales beyond the ability of individuals the local (including the money) is given up to the global. But what if the internet, social media and mobile hones means that we are returning to Harari’s “local traditions, intimate relations and human values” as the basis for trade because we can recreate the clan’s diffuse memory of obligations but at population scale.

If this is true, then it is not implausible to imagine that new forms of money will arise that map more closely to the values of the communities they serve. Those communities will not be limited to people, of course. Much if not most trade will be between machines, between my car and your garage door, between my flying car and your Amazon drone. We might see communities of robots developing their own money to reflect their own values. Will we be allowed to use it? I don’t see anyone in Star Trek using money, but something must be going on in the background to allow my starship to use your scarce crystals for power. I don’t claim to have all, or indeed any, of the answers but I hope that my framing of the questions will help you to think more clearly about an inevitable future of more identities and more monies.

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Traditional finance has remained insulated from crypto contagion thus far, though FHLB lending to crypto-exposed banks threatens to amplify that risk. Home-loan bank advances are superior to all other debt, meaning that in the event of a member bank’s bankruptcy, an FHLB bank would be first in the collection pecking order, even ahead of the Federal Deposit Insurance Corp.

From Crypto Banks Borrow Billions From Home-Loan Banks to Plug Shortfalls – WSJ:

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