Snippings

The last time that I bought a car, I paid for it this way. I went to look at the car, test drove it and then did a bit of online research. The price seemed fair for the condition, so I called the dealer back and agreed the sale. He told me his bank sort code and account number. I put these into my Barclays account and transferred £10 to the dealer. He texted me a minute or so later to confirm that the money had been received. So then I called my insurance company to add the car to my policy. Then I drove over to the dealership and to pick up the car and the documents. While I was there, I used the Barclays app on my phone to transfer a few thousands of quids to the dealer. About 30 seconds later he checked his account and saw that the money was there, so he gave me the keys and off I went.

(Meanwhile, my friend Simon told me that to pay his rent in New Jersey, he logs in to his American bank account to instruct the payment, then the bank prints out a paper cheque that it mails to his landlord. The landlord then takes the cheque to his bank to pay it in, and after a couple more days the money shows up in this account. This expensive and inconvenient payment mechanism sometimes takes 

Meanwhile, back in the UK, my friend Nick bought a boat a while ago. He saw that someone had the boat he wanted and went over to look at it. A sale was agreed, he transferred the money on the spot using the phone and drove away towing his new boat.

Now, you would think that this wouldn’t be much of a crime. After all, thanks our comprehensive and expensive know your customer (KYC) and anti-money laundering regulations, the police should find it very easy to arrest the criminals. If my Dad transfers money to someone who turns out not to be the fraud department of the NatWest, there are really on two possibilities: the recipient bank knows who the account belongs to (in which case the police can arrest the account holder) or they don’t know who the account belongs to (in which case the police can arrest the head of compliance at the bank for not doing proper KYC). And if the destination account is a “mule” then, well, they should be arrested.

The Treasury Select Committee takes a different view. If my Dad sends money from his Barclays to someone who turns out not to be the fraud department of the NatWest, then under the current guidelines that is Barclays’ fault and they have to compensate him. The compensation is paid for from an instant payments levy. To cut down on the amount of fraud, the Committee is now suggesting that all instant payment transfers to new payees be revocable for 24 hours. So in the future I will have to wait a day to pick up my new car and my friend Nick will have to wait a day to pick up his new boat.

So we are all going to be inconvenienced (and charged) because people send money to fraudsters.

The underlying problem here is that we have no working digital identity infrastructure for use by financial services. Bank customers who are tricked by fraudsters have no idea who they are actually sending the money to. 

The issue of social media accountability and anonymity continues front and centre. I was listening to the BBC’s popular radio show “Any Questions” recently when the panel was asked about the very serious topic of threats and abuse on social media that appears to be forcing some people out of politics and preventing worthy candidates from entering the public sphere. A couple of the panelists said that online anonymity needs to end. You can see their point. But requiring people to disclose their personally-identifiable information to unaccountable social media platforms is not the solution. It is , frankly, none of Twitter’s business who I actually am.

This sounds like a immovable object meeting an irresistible force, but it really isn’t. There is away through this, and it comes from understand how digital identity works (or, at least, should work). What we want is a system where people can have free speech (putting to one side what this really means for a moment) but where they cannot simply post hate speech in the best of cases and death threats etc in the worst of cases.

Here’s a tweet that illustrates the problem…

also cool how when hitler1488boy gets banned, twitter just lets the same person create hitler1488boy2 10 minutes later

— McVillain (@mcmillen)

October 27, 2019

https://platform.twitter.com/widgets.js

There are actually three problems here: the first is that nobody knows whether hitler1488boy is actually a real person or a bot operated by agents of a foreign power, the second is that if hitler1488boy is a real person nobody knows who that real person is and the third is that if hitler1488boy breaks the rules then nobody knows whether hitler1488boy2 is that same person as hitler1488boy. I think that, in the presence of a practical digital identity infrastructure, these are easy problems to solve.

How?

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On Friday (Oct. 18), the bank Credit Suisse said it was going to tack on a negative 0.75 percent interest rate for customers who have more than $2 million in the bank. For example, if a customer has a balance of $3 million for a year, that customer would get charged $7,600.

If a balance is above $10.1 million, the fee goes up to 0.85 percent. This starts for corporate bank members on Nov. 15 and for individual customers on Jan. 1 of next year.

Low Interest Rates Force Swiss Banks To Charge | PYMNTS.com:

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“The future in five years, if we don’t have a good answer, is basically China re-wiring [the rest of the world] with a digital renminbi running on their controlled blockchain,” Marcus said. This could mean the potential for “a whole part of the world completely blocked from U.S. sanctions and protected from U.S. sanctions and having a new digital reserve currency.”

Marcus: China Wins If Facebook’s Libra Fails | PYMNTS.com:

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There is an opportunity for digital currencies to support a transition away from the destabilising effects of US dollar dominance, Bank of England governor Mark Carney says.

In remarks on October 18, Carney called on policy-makers to consider whether they should be waiting for China’s renminbi to become a new reserve currency – “which doesn’t solve the problem” – or take matters into their own hands with the creation of a hegemonic digital currency.

‘Hegemonic digital currency’ could help fix global system – Carney – Central Banking:

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The Islamic State also demands a cut of the revenues earned by small businesses. “We either pay in olive oil or cash, it depends on the production,”

Predatory Islamic State Wrings Money From Those It Rules – The New York Times:

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Levchin said he first got comfortable with the regulations in the financial sector when he worked at PayPal. At Affirm, he has embraced them because they tend to discourage would-be rivals in the tech industry who don’t want to deal with the hassles of operating in a highly regulated industry, he said.

“I’m a big fan of regulation, actually,” Levchin said. “If you’re smart about it, it becomes a competitive advantage.”

Affirm’s Levchin Opposes Tech Breakup — The Information:

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“‘Assuming uptake is strong – and BPAY is a long game player – the new functionality is set to take a bite out of the credit card and direct debit segments of the payment industry that are ripe for disruption, especially on the domestic payments front”

From “BPAY Reveals API Push into Core Enterprise Software | PaymentsJournal”.

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“Central banks [are] chipping away at the dollar’s ‘exorbitant privilege’,” said Alan Ruskin, chief international strategist at Deutsche Bank in New York.

Why central banks are edging away from the dollar | Financial Times:

Now, economists are not the only people who are concerned about the dollar’s dominance and the consequent extension of American soft power. There are many other groups who think that it is time end the fiat dollar and it’s hegemonic power. Some people, such as Rand Paul and ISIS, think that it might be time to return to a new form of gold standard.

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The problem for ISIS was that all that trade was executed in U.S. dollars. So in spite of the group’s declared war on U.S. hegemony, its economy was actually facilitating U.S. dollar dominance.

Sharia Goldbugs: How ISIS Created a Currency for World Domination – CoinDesk:

 

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“So why the clamor for its return? Nostalgia, said economist Charles Wyplosz. ‘People long for a simpler age,’ when the U.S. ‘was the dominant economy and there were no financial markets to speak of.’”

From “Why Did the U.S. Abandon the Gold Standard? | Mental Floss”.

 

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Alex Benay is the chief client officer at MindBridge Ai in Ottawa and served as the chief information officer of Canada from 2017-19.

Opinion: Canada needs to assert its digital identity – The Globe and Mail:

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