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the Payment Systems Regulator (PSR) outline that it has not seen evidence that the costs of operating payment services have increased for card issuers to warrant the recent increases in fees.
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New Zealand banks reject home loans over spending on Christmas gifts and pets as tighter rules hit | New Zealand | The Guardian
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Banks in New Zealand are rejecting home-loans over minor frivolous spending, including a $187 Kmart Christmas shop and a daily drink bought at a corner store, and money spent on pets or petrol, pushing the government to investigate whether banks are overreacting to new finance rules designed to protect vulnerable borrowers from predatory lenders.
The Credit Contracts and Consumer Finance Act (CCCFA), updated in early December, requires all lenders to complete thorough checks to ensure loans are suitable and affordable for their customers.
But finance leaders and opposition politicians say the rules have compelled banks to take an ultra-conservative approach to lending, pushing homeownership further out of reach for many as the country battles a housing crisis.
There has been a sharp dip in home-loan approvals since the new rules were introduced – from about 30,000 a month to 23,000 in December – according to Centrix, a credit reporting agency.
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Coming up – Protocol — The people, power and politics of tech
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After months of delay, the Federal Reserve’s much-awaited report on a digital dollar could be out soon. Federal Reserve Chairman Jerome Powell told the Senate Banking Committee Tuesday that the white paper on a planned central bank digital currency is “ready to go,” possibly in weeks.
But don’t expect a detailed blueprint for an American CBDC. The white paper will be more of “an exercise in asking questions” about how the digital dollar should work, Powell said.
From Coming up – Protocol — The people, power and politics of tech.
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POST anonymity from 2012
Way back in 2012 I wrote about the lack of understanding of the issues around online privacy. The reason was that the head of internet security at the Cabinet Office (the administration department of the British government), Andy Smith, had commented (accurately) that demanding real names and addresses in online transactions might actually make security worse. Indeed, he advised people to use fake details in Facebook at this was a “sensible thing to do”. He was apparently unaware that providing fake details was in direct violation of Facebook’s policy, which is why Simon Milner, Facebook’s head of policy in the UK and Ireland at the time, was not particularly happy with Andy and had a “vigorous chat” with him to persuade him to revise his view.
My view has always been that, however vigorous Mr. Milner’s chat might have been, there are almost no circumstances where it is necessary to use real names and we only use them now because we lack a proper identity infrastructure. By and large, we use the real name as a proxy to the attributes that are actually needed to execute a transaction. Internet security expert Andy’s 2012 comments elicited an immediate and vituperative response from internet security expert Helen Goodman MP, formerly Chief Executive of the National Association of Toy and Leisure Libraries, who said that “I was genuinely shocked that a public official could say such a thing”. She said that she had been contacted by constituents who have been the victims of cyber-bullying on major social networking sites by people hiding behind fake names and I don’t doubt that this is true. But so what? People bully under their real names too, and it doesn’t make any difference.
If people have broken the law, they can easily be traced, since the interweb tubes will lead the plod directly to them. Or, indeed, directly to the plod as in the case of the serving police officer arrested over claims that he tormented a mother with abusive online messages. I wasn’t cyberbullying Ms. Goodman, just using her to illustrate a point. After all, her fellow Oxford graduate and internet security expert Edward Vaizey MP agreed with her and said he “wouldn’t encourage people to put false identities on the internet”.
I wasn’t writing all of that to shill for Andy Smith. Andy and I disagreed about things from time and time, and while I make notcomment on whether he is an
Epic F***ing Secure Hero or not, he certainly is an actual internet security expert. His comments were informed and relevant and exposed a lack of policy integrity. I don’t know why politicians don’t take the time to think this through. They always reach for the same knee-jerk response: some sort of internet passport or driving licence so that you can tell who is posting abuse about the government on The Daily Telegraph web site (hint: me).
As has been clear from the earliest days of the web, if there was an Internet Driving License that you had to use to log in to web sites, that would almost certainly make the situation far worse, since these website would now know exactly who you are, and this information would then be freely obtained by perverts, the secret police, News International or whoever else wants to pry.
We don’t have to guess about whether this is true or not because there are plenty of real examples to look at. Consider the experience of South Korea as a case study. In 2007, South Korea temporarily mandated that all websites with over 100,000 viewers require “real names”, but rescinded the law after it was found to be ineffective at cleaning up abusive and malicious comments. In fact the results of the “real names” law were predictably perverse. While unwanted comments fell by an estimated .09%, identity theft went up, because real identities were stolen from the thousands of web sites that now had to ask for them and store them. And since people became used to be asked for their real identity all the time, it was easier for dodgy web sites to get them to hand them over!
If you make people smear their “real” identities all over the internet because of such a policy, thus delivering the “over–identification” noted above, then that will make identity theft worse. I wonder if we will have learn this lesson all over again when driving licences are stored in Apple wallets?
We need a better-informed public discussion and debate to determine public policy and the balancing of interests between competing pressures needs to be made explicit. How should we determine whether Mumsnet or the EFF are right? In back rooms or in public consultation? Incidentally, “public consultation” I mean consultation in public, not with the public – I don’t really care what the public think since they are almost completely uninformed. Anyway, we (ie, the public) have no idea what we want. We want anonymity for dissidents but not for pedophiles. We want anonymity for hospital nurses blowing the whistle on incompetent surgeons but not for looters. We want anonymity for celebrities in some circumstances but not others. Most of all, and most paradoxically, we want the authorities to spy on other people but not on us.
So what should the government’s policy be? What should regulators demand?
Amazon Stock Is A Strong Buy On Fintech Growth (NASDAQ:AMZN) | Seeking Alpha
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Now, Amazon is focused on adding its digital wallet, Amazon Pay, to its long list of profit centers, as it has with AWS, Amazon Video, Kindle, etc. Amazon is known for its ability to capture its customers and their wallets before the customer even makes its way to the checkout page.
From Amazon Stock Is A Strong Buy On Fintech Growth (NASDAQ:AMZN) | Seeking Alpha.
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Europe’s Open Finance push is more than Open Banking with a broader scope – Open Banking Excellence
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Request to Pay (R2P) is a messaging system in the UK that allows a payee, such as a mortgage provider or utility company, to send a payment request to a payer irrespective of banking app and with all payment information pre-confirmed. It exists independently of open banking but can thrive on push payments made through transaction initiation services enabled by open banking. The shared framework that R2P provides to otherwise independent transaction initiations combines the same functionality across all participants in what is verging on open finance.
Success for R2P, along the lines of what’s emerging with its counterpart Request for Payment (RfP) in the US, will depend on broad industry uptake. Outside the UK, the European Payments Council published its implementation guidelines for a request-to-pay framework in the Single Euro Payments Area (SEPA) in June 2021 under the acronym SRTP. One distinction is a possible application within the retail space—a concept not dissimilar to the request-to-pay functionality built into Thailand’s PromptPay real-time payment network. Open banking need not—and, in the case of Thailand, does not currently—play a role. But, as with the UK, real potential lies in combining open banking functionality across the shared framework.
From Europe’s Open Finance push is more than Open Banking with a broader scope – Open Banking Excellence.
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POST Rubes
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In his experience, OKHotshot said, law enforcement has been all but useless. “I’ve spoken with a couple of people that actually went to the police,” he said. “In some cases, the police just laughed at them.”
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The 19-year-old student made three payments worth a combined Rmb20,000 (£2,332). Shortly afterwards, the man blocked her on social media and stopped taking her calls. Jenny went to the police, only to be told she was “too silly” for buying the scam. “They told me the money was gone for good, as online fraudsters were difficult to track down,” she said. “What I should do is only pick up phone calls from people I know.”
From China fights a financial fraud explosion | Financial Times:
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What is the responsibility of intermediaries her? Should Discord be responsible for facilitating rampant NFT scamming? Should WeChat have stopped the payment to the boyfriend? Should a bank stop me from sending money to someone claiming to be from the bank?
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But she had willingly handed over her seed phrase, and there was little anyone could do to actually get her art back.
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You see the same problem with authorised push payment (APP) fraud here in the UK.
There are people on the crypto frontier who think all of this is fine and that “caveat emptor” should be the banner under which the future is forged.
They are wrong. I am sure many readers will be familiar with the landmark case of FTC vs. Standard Education Society in 1937. The facts of the case are not relevant, except to note that they relate to some sharp business practice taking advantage of fact that a great many citizens are not that bright. What happened was that after a lower court had found that if hopeless rubes ignored tell-tale signs then the courts had no business protecting them (an opinion that echoed the 19th-century jurists who marvelled at the stupidity of some Americans), Supreme Court Justice Black rejected the decision and found that
The fact that a full statement may be obviously false to those who are trained and experienced… does not change its character, nor take away its power to deceive others less experienced. There is no duty resting upon a citizen to suspect the honesty of those with whom he transacts business. Laws are made to protect the trusting as well as the suspicious. The best element of business has long decided that honesty should govern competitive enterprises, and that the rule of caveat emptor should not be relied upon to reward fraud and deception.
Hell yeah. We live in civilised society governed by the rule of law and the general public are not cattle to be herded at the whims of cyberwarlords.
But what can actually be done? I hate to sound like a broken record (vinyl is back, man) but it’s all about identity. Or, more specifically, it’s all about credentials.
Amazon One: The Future Of Contactless Payments (NASDAQ:AMZN) | Seeking Alpha
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Amazon continues to expand its revenue streams by going after other companies’ margins. In this case, Amazon’s started to enter the physical retailer space and build an innovative payment processor that only accepts someone’s palm to potentially match them with a variety of payment methods. This has the opportunity to directly integrate with many types of payment solutions, while Amazon will then capitalize on this development by distributing Amazon One to third parties. Amazon One is a great opportunity for Amazon to bring its customer experience to merchants that partner with Amazon for this solution.
From Amazon One: The Future Of Contactless Payments (NASDAQ:AMZN) | Seeking Alpha.
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POST It’s all about identity, again
The House of Lords Economic Affairs Committee recently published its report on a UK central bank digital currency (CBDC). The report, called “Central Bank Digital Currencies: A Solution in Search of Problem?”, broadly concludes that there is no “convincing case” for a British retail CBDC. Or, as I said in my evidence to the committee, “we do not have what you might call a burning platform”.
The fact that there is no burning platform, however, doesn’t mean that we should ignore the topic. Quite the contrary. It means that we have time to think the issue through and to make sure that when we do have a digital currency backed by Bank of England reserves, it will work to the benefit of all stakeholders. And for a variety of reasons, that is more difficult to achieve that it might seem at first glance.
Retail CBDC
There’s one particular aspect of CBDC that I think should propel us forward. The Committee said that is recognised that consumer preferences, changing technology and “the choices of other countries” may shift their view in the future and so given that it will take forever to sort out the demands of the various stakeholders, the Bank of England and Treasury Joint Taskforce should continue their preparations for some future retail CBDC. While I agree with the Committee that there is no immediate requirement, as noted, I think that work should nevertheless press ahead with some urgency: not because of what consumers want or what other countries want, but because I think that the need for some sort of “Britcoin” is primarily to drive new products and services.
Other witnesses agreed on the potential for a CBDC to foster private-sector innovation. David Birch, an adviser and commentator on digital financial
services, said this was the best single reason for introducing a CBDC and the Atlantic Council said a CBDC could help level the playing field for new
market entrants. Innovate Finance thought CBDC would help the UK to develop world leading expertise.
I think this is an important element of the calculation about when to introduce a UK CBDC.
We also heard that a CBDC could help increase the overall resilience of the payments system, which was another potential advantage set out by the Bank of England. David Birch said a CBDC should be “constructed as a parallel system” to the existing payments system so that overall resilience increased.”
Indeed I did and I stand by it.
Professor Eswar Prasad, Senior Professor of Trade Policy and Professor of Economics at Cornell University, New York, agreed that the UK has an
effective payments system and said there was not a strong consumer case for introducing a CBDC: “One could still make the user case in terms of the
CBDC catalysing additional innovation…
That innovation agenda is important, and it dovetails with the new five-year (ie, to 2027) strategic plan set out by the UK’s Payment Systems Regulator (PSR). This four strategic priorities: ensure access, consumer protection, promote competition and “foster innovation and competition” in payments. This gives us a sensible timescale, I think. The Bank of England have already said that the introduction of retail CBDC will be sometime beyond 2025 and the Federal Reserve exhibit similar caution. The Federal Reserve’s report on a digital dollar has just been released but it is not any sort of blueprint, more of “an exercise in asking questions” about how the digital dollar should work.
But the Fed emphasized it would not create one without a clear directive from Congress and the White House
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Wholesale CBDC
The report also covered the issue of wholesale CBDC, noting that prioritising a wholesale CBDC (irrespective of retail CBDC timescales) would have advantages. UK Finance, for example, are quoted say that “an initial pilot of a CBDC for wholesale use cases could provide the opportunity for the industry and regulators to test and learn ahead of a retail roll out”. I disagree somewhat with this, since I think retail and wholesale CBDCs are not correlated, but I take the point that learning about the technologies may be helpful. I am in favour of moving ahead in this direction and am not aware of any particular cause for caution here.
David Birch, an adviser and commentator on digital financial services, said that what makes the City of London attractive is the cost of doing business, and “a significant way to reduce the cost of financial intermediation is through the use of wholesale digital currencies, which allow people to exchange financial instruments without the clearing and settlement risks associated with it.” He said the Bank of England and the private sector had already started work in this area.
John Glen MP [ex-Accenture Economic Secretary to the Treasury] told us that he is confident that the Bank of England’s ongoing work to improve the RTGS wholesale system is “moving forward in the right direction.” He said he did not think the UK would gain any significant competitive advantage by being an early adopter of a wholesale CBDC.
Sir Jon Cunliffe [Deputy Governor of the Bank of England] said it was not quite right to say the Bank was not examining CBDC technology for wholesale purposes: “The Bank published a paper on omnibus accounts, which would enable the banks that currently have access to central bank digital wholesale to use a digital coin between themselves and then the omnibus account would settle with the Bank of England.”
If you are interested in omnibus accounts and the like, here’s something I wrote about it last year: https://www.forbes.com/sites/davidbirch/2021/08/02/a-post-industrial-economy-needs-post-industrial-money/
Digital ID
Finally, one of the most important and least-discussed points made made by the Committee was nothing to do with payments or money at all.
“Witnesses said a CBDC would need to be attached to a digital identification system as the only reliable way to ensure that payments were legally compliant”.
Those witnesses, including me, were wholly correct to point out that an appropriate digital identity infrastructure is a precursor to a functional CBDC.
Andrew Bailey said a digital ID would be needed but it was to be determined whether it would be unique to a platform or “broader in terms of your identity”. This is clearly correct and an obvious priority. However, the Bank of England’s Discussion Paper mentioned the possibility of digital ID only in passing and the Department for Digital, Culture, Media and Sport’s recent consultation on digital ID does not mention CBDCs at all.
In fact what I told the committee at the beginning of my evidence was that “I would be against rushing into retail digital currency. I am a very strong supporter of retail digital currency, but I am acutely aware of the potential for a colossal privacy catastrophe”.
So, in
Their First Rodeo: Why Are DAOs Suddenly Leaping Into Wyoming Real Estate? — The Information
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Both Kitchen Lands DAO member Max Gravitt and CityDAO “citizen” Justin Kalland described their DAO’s respective purchases as a “proof of concept”—a way to experiment with what it means to own real estate “on chain.” Gravitt said it lets real estate ownership on chain be “highly liquid and global,” allowing him to transfer his tokenized shares of the land easily.
From Their First Rodeo: Why Are DAOs Suddenly Leaping Into Wyoming Real Estate? — The Information.
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But unlike real estate in the metaverse, CityDAO’s dreams are restricted by laws and permits and local government (even in famously hands-off Wyoming). If the members vote to build something on the land that produces any sort of revenue, Kalland said, they stumble into the “tricky world” of securities laws. While their LLC designation theoretically protects them, some of the proposals for CityDAO’s fortune are ambitious, and as the DAO is challenged to actually build out its “city,” members will often find themselves in uncharted territory. “How is that actually gonna play out?” Kalland asks. “Nobody really knows. Like, it’s just a lot of good faith right now.”
There are other unanswered questions: For instance, what happens if a DAO gets sued by a neighbor or another business? How protected are its members in reality?
From Their First Rodeo: Why Are DAOs Suddenly Leaping Into Wyoming Real Estate? — The Information.
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Snippings 