Snippings

The Swedish central bank’s April 2021 report on their experiments with CBDC agrees with this perspective, noting that a “a parallel network makes the payment system more robust“.

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The financial crisis of 2008 led to the creation of a global panel of regulators, now called the Financial Stability Board. A similar outfit should be built for global digital assets, again made possible by digital IDs. This is based on an idea of data-sharing floated by Carlos Torres Vila, Chairman of BBVA.

This outfit would develop data model standards, regulations and policies, and build on the General Data Protection Regulation in Europe by fostering better data-sharing legislation across the world (something European regulators are still struggling to achieve).

This “digital stability board” would give members the platform to share best practices and monitor risks in digital commerce and health care, for instance. With this board in place, data trusts could be built to manage individuals’ and SMBs’ data. This would make the sharing of vital information easier and more fluid.

From Digital identity can help advance inclusive financial services | World Economic Forum:

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Data trusts are a relatively new concept, but their popularity has grown quickly. In 2017, the UK government first proposed them as a way to make larger data sets available for training artificial intelligence. A European Commission proposal in early 2020 floated data trusts as a way to make more data available for research and innovation. And in July 2020, India’s government came out with a plan that prominently featured them as a mechanism to give communities greater control over their data.

In a legal setting, trusts are entities in which some people (trustees) look after an asset on behalf of other people (beneficiaries) who own it. In a data trust, trustees would look after the data or data rights of groups of individuals. And just as doctors have a duty to act in the interest of their patients, data trustees would have a legal duty to act in the interest of the beneficiaries.

From We need data trusts to help manage our data | MIT Technology Review.

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This might call for the development of new governance models such as data trusts

From The EU must be bold and defend its digital sovereignty | Financial Times:

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“That we need, but currently lack, institutions that are good at thinking through, discussing, and explaining the often complex trade-offs that need to be made about data.
That the task of creating trust is different in different fields. Overly generic solutions will be likely to fail.
That trusts need to be accountable—in some cases to individual members where there is a direct relationship with individuals giving consent, in other cases to the broader public.
That we should expect a variety of types of data trust to form—some sharing data; some managing synthetic data; some providing a research capability; some using commercial data and so on. The best analogy is finance which over time has developed a very wide range of types of institution and governance.”

From “The new ecosystem of trust: how data trusts, collaboratives and coops can help govern data for the maximum public benefit | Nesta”.

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“We would expect a nested series of new entities (national and local Health Data Trusts) to be charged with maximising the public benefit from health data while respecting privacy and consent, for example around linking patient records, diagnoses, genomic and socio-economic and behavioural data.”

From “The new ecosystem of trust: how data trusts, collaboratives and coops can help govern data for the maximum public benefit | Nesta”.

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Apple counters, however, that while data such as location information is “claimed to be anonymous”, a whole industry of “obscure third-party data brokers” exist who can match this data with other information and figure out who the individuals are.

From Apple takes on the internet: the Big Tech battle over privacy | Financial Times:

Actually, this data is dangerous even when it cannot be matched to individuals. If North Korean data miners note that phone XYZ is in Fort Bragg for a few months and then in Turkey for a couple of days and then in an abandoned factory in North Syria then it might belong to a US Special Forces solider and be a good target for a drone attack. And if you think I made that example up just to be scary, well… I didn’t. It’s a real example of the dangers of location tracking taken from X.

The Document Checking Service (DCS) pilot enables private companies to authenticate British passports provided that, according to the UK Government, the checks are necessary to “prevent crime”. DCS checks submitted passport details against the HM Passport Office database and returns a simple ‘yes’ or ‘no’ response to say whether the passport is valid.

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Scotland already has its own currency it would have been possible to run a dual currency system for some time before independence. The Scottish government should have created a new Scottish Financial Authority to take over production of Scottish notes from the banks that would be re-registering in England, and provided incentives for people to use Scottish rather than English notes and Scottish rather than English banks.

From What Scotland Should Have Done (And Still Should Do):

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In the beginning Scotland will have a dual currency regime. It will maintain the sterling but at the same time issue Scots pounds at a local level. It will do this by paying part of local public sector workers’ salaries in Scots pounds and also accepting these Scots pounds in payment of local taxes (I am open to the idea of accepting these for payments of national taxes too).

From The Scottish Currency Question – A Solution:

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So how do we balance added security and optimum customer experience? Enter delegated authentication. In the traditional payment flow, authentication is carried out by the issuer. Delegated authentication means that the merchant can directly authenticate the customer, skipping the redirection to the issuer and facilitating the ‘one-click purchase’ experience. It is logical that customers would make purchases more often when the payment process is simplified using delegated authentication, leading to higher conversion rates.

It seems like such an obvious solution that one wonders why it was not in use before. There were, however, significant barriers to putting it into practice. Since issuers were the only parties able to authenticate customers and authorise transactions in the past, this new form of authentication requires agreements between the respective merchant and issuers. Depending on where customers are located, this could be a laborious process involving many (international) issuers or banks. Recently however, major card networks such as Visa and Mastercard have started offering a brokerage programme where merchants who partner with them only need to have bilateral agreement instead of concluding contracts with a long list of issuers. This greatly simplifies the process for merchants, while increasing trust between them and issuers, as Visa and Mastercard provide credibility and validity to the authentication.

From Delegated authentication: Boost your conversion rates while complying with PSD2 SCA – ThePaypers.

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A massive new report from 65 organizations — the Ransomware Task Fore (which includes Microsoft, Amazon, FireEye, the FBI, and Europol ) — identifies cryptocurrency is as a key vector for cybercriminals to secure ransoms, and the task force calls on governments to step up their efforts to monitor and regulate blockchain payments.

Anne Boden, the founder of the UK “challenger” bank Starling thinks we are a decade away from cash vanishing. She told an FT podcast that she though that that cash could disappear as soon as 2030, but more likely “by 2033 or 2034”.

I popped in to “Key priorities for UK Fintech – next steps for policy, regulation and innovation” which had keynote sessions from my good friend Ron Kalifa, who chaired the UK’s fintech review, and Katharine Braddick (DG Financial Services, HM Treasury) and Charlotte Crosswell (CEO of Innovate Finance).

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How come if I want to change a £50 note at Starbucks they have to get the manager, but this guy can trade half a billion dollars worth of oil and no-one notices till the next day?

From Barclays ‘fat-finger trade’: can a typo error wipe £3bn off? | Evening Standard:

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