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govcoins could cut the operating expenses of the global financial industry, which amount to over $350 a year for every person on Earth. That could make finance accessible for the 1.7bn people who lack bank accounts.

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In contrast to many technology companies that think about regulatory risk, fintechs have to think about regulatory opportunity.

From The Future of Fintech is Regtech | PaymentsJournal:

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What CBDC research and experimentation appears to be showing is that it will be nigh on impossible to issue such currencies outside of a comprehensive national digital ID management system.

From Why CBDCs will likely be ID-based | Financial Times:

Izabella is probably right about this.

Meaning: CBDCs will likely be tied to personal accounts that include personal data, credit history and other forms of relevant information.

From Why CBDCs will likely be ID-based | Financial Times:

Izabella is probably wrong about this (depending on what you mean by “tied”).

The practical steps needed to accelerate a UK digital identity ecosystem https://buff.ly/3aZ58je

“Using open banking APIs to build a digital ID system presents a fast and low-cost route, enabling broad adoption and inclusion through its wide availability.”

This is essence correct, but we must be sure to build a system that leverages bank identities to deliver a national entitlement service, based on verifiable credentials, not a national identity service based on outdated post-war notions of digitising the identity infrastructure created in Edwardian times as a bureaucratic response the the urban anonymity of industrial revolution-era Europe.

Spoiler alert: while this would be in their best interests, the banks show no sign of getting their act together to do this, so the government (if it takes the Kalifa report seriously and wants the UK to become a more competitive financial services jurisdiction) will have to make them.

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One such addition to be taken from the private sector is the leveraging of existing private sector standards and infrastructure – such as anti-money laundering (AML) and open banking – to minimise the cost of implementation.

There is no need for the creation of new identities – existing identities authenticated to AML standards are already established with banks and can be reused. What’s more, using such systems means almost entire market coverage from day one, with 97% of the adult UK population immediately having access through their own bank account.

From The practical steps needed to accelerate a UK digital identity ecosystem.

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One such addition to be taken from the private sector is the leveraging of existing private sector standards and infrastructure – such as anti-money laundering (AML) and open banking – to minimise the cost of implementation.

There is no need for the creation of new identities – existing identities authenticated to AML standards are already established with banks and can be reused. What’s more, using such systems means almost entire market coverage from day one, with 97% of the adult UK population immediately having access through their own bank account.

From The practical steps needed to accelerate a UK digital identity ecosystem.

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According to the Federal Deposit Insurance Corporation’s (FDIC’s) most recent report, 7.1 million households (5.4%) in the United States fit the definition of unbanked. The same holds true for 14 million individuals, or 5.5% of the adult population.

While these numbers are staggering, they actually reflect a downward trend in the number of unbanked households and individuals in the U.S. In fact, they represent the lowest level of individuals and households without a checking or savings account since the FDIC initiated its unbanked study over a decade ago.

From Banking the Unbanked: How to Become Part of the Solution.

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The federal government struggled to get stimulus funds into the pockets of the nation’s unbanked during the pandemic. In a recent PaymentsJournal article, Mercator Advisory Group Director of Debit and Alternative Products Advisory Service, Sarah Grotta, discussed this issue.

“Much has been written in the popular media about how difficult it has been to distribute stimulus funds to all eligible recipients quickly. There are two central reasons for this: a) individuals do not trust the federal government with their checking account credentials that could facilitate a fast and safe direct deposit of funds, and b) they don’t have an account,” she wrote.

From Banking the Unbanked: How to Become Part of the Solution.

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Opening of new cryptocurrency accounts may slow in the second half of this year as the Anti-Money Laundering Office (Amlo) announced local digital exchanges must verify their customers’ identities through a “dip-chip” machine that requires clients to be physically present.

From ID check required for new crypto accounts.

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Testimony before the US-China Economic and Security Review Commission

Panel 4: China’s Pursuit of Leadership in Digital Currency

A Statement by
Martin Chorzempa
Senior Fellow, Peter G. Peterson Institute for International Economics

 

Martin, who kindly references my book “Before Babylon, Beyond Bitcoin” in his testimony, wisely presents

Finally, Congress should discourage overuse of financial sanctions in a way that might convince
not only pariah states like Venezuela and North Korea, but US allies like the European Union, to
undergo the massive international effort, cost, and inefficiency involved in creating an
alternative, sanctions-proof set of financial infrastructure and currency arrangements. My
colleagues have found that US sanctions have historically only had even partial success at
achieving the US’ foreign policy goals (Hufbauer et al 2009). Overuse of sanctions would
“weaken the international role of the dollar” (Schott 2021) and likely represent a much greater
risk to the dollar’s dominance than any new form of the already digital RMB.

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Beijing also hopes, analysts say, to use the digital renminbi as a means to reassert state control over its fintech industry and a vast e-payments market that is dominated by two huge private companies, Ant Group and Tencent. The technology could in effect become a rival to their cashless payments platforms.

From Virtual control: the agenda behind China’s new digital currency | Financial Times.

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A forward-leaning digital identity framework is necessary to support robust and inclusive economic infrastructure. It is important to anchor national efforts around common principles and coordinate disparate efforts, which might include: sharing information derived from specific initiatives; researching and promoting standards; organizing information and education campaigns to drive adoption; hosting techsprints or other events that leverage private sector innovation; and recommending specific legislative or regulatory change. A national framework can help organize and catalyze an otherwise fragmented digital identity effort subject to collective action challenges.

The importance of this effort cannot be overstated. As we emerge from the COVID-19 pandemic, we have an opportunity to rebuild the economy by reshaping our identity framework in ways that give us access to better and more equitable financial technology innovations.

From The U.S. Digital Identity Crisis | The Regulatory Review.

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