Snippings

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If all a CBDC did was to substitute for cash – if it bore no interest and came without any of the extra services we get with bank accounts – people would proba bly still want to keep most of their money in commercial banks

From Speech by Ben Broadbent at the London School of Economics, London, on Wednesday 2 March 2016 – speech886.pdf

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The deal will incorporate Chase Pay into the Starbucks mobile app for payments at more than 7,500 Starbucks locations, starting in the fall. Starbucks’ mobile app, which is largely developed and maintained in-house, is used for over 10% of its U.S. in-store sales.

From Chase Pay Deal with Starbucks Strengthens the Bank s Mobile Muscle | PaymentsSource

Integrating a new payment mechanism into physical stores is a hassle. POS systems need upgrading, staff need training, deals need making. But adding a new payment mechanism into a retailer’s app is, by comparison, trivial.

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In effect, he offers an elegant refinement of the concept of “narrow banking”, which seeks to ensure that all deposits are covered by safe, liquid assets.

From Uncertainty principles: ‘The End of Alchemy’, by Mervyn King – FT.com

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Chargebacks for card-present transactions increased 50% following the Oct. 1 EMV liability shift,

From EMV Chargebacks Proving To Be a Card-Present Merchant Problem

You understand why this, I assume. It’s because before 1st October, if you spotted a $3.95 charge at Starbucks on your statement and you knew that you couldn’t possibly have made that transaction, then you would call up your issuer and complain and they would just eat the charge because it would have been more trouble than it’s worth to go back to Starbucks, pull the receipt, check the signature if there was one etc etc. However, after 1st October, if you spot a bogus $3.95 charge on your account and call up, the issuer will check the transaction codes and, if you had a chip card but it was swiped by a merchant who didn’t have (or didn’t use) a chip reader, then the $3.95 is charged back to the merchant. The net result is — entirely as expected and as it should be — that merchants see big increases in card-present chargebacks as previously hidden magnetic stripe fraud is revealed.

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Essential information for the ASPSP to make an informed authorisation decision when prompted with a payment or account information request from a TPP consists of:

What is the functional scope of the transaction? (what payment needs to be executed or what account information needs to be provided and to whom?); Did the person requesting the transaction, actually consent to exactly this functional scope? and Who is the person requesting this transaction? (and is he actually a mandated ‘controller’ of the respective account?)

Of

From Banks taking liability for XS2A transactions: ‘Just because a TPP says so?’

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The European Central Bank (ECB) interest rate for bank deposits is currently minus 0.3% and economic theory would predict that at a minus rate, depositors (and this includes companies as well as banks and individuals) would prefer to hold cash rather than pay the central bank to look after their money for them. It has to be said that this doesn’t appear to have happened on a large scale yet, but clearly one of the reasons why economists are interested in getting rid of cash is in order to allow the interest rates to go further into negative territory in order to stimulate economic activity over hoarding. Now, it clearly costs something to manage cash over and above the cost of managing an electronic deposit hence it is interesting to speculate what the crossover rate might be, the modern version of the old “specie point” at which it was cheaper to hold bullion for monetary purposes rather than paper instruments.

In Germany, this calculation is being made. The Bavarian Savings Bank Association sent around a circular to their members setting out their version of the calculation. On this basis, the crossover rate is actually about half of the current negative rate: we’ve already crossed the crossover point.

With 1.50 euros plus insurance tax for 1000 Euro, the value would be at 0.1785 percent, below the ECB’s deposit penalty rate of 0.3 percent, it said. Additional costs for CIT or additional burglary protection are not taken into account.

From Penalty interest: Unions want money rather stash in the vault – SPIEGEL ONLINE

 This isn’t really a serious calculation because, as it says at the end, it doesn’t take into account the significant costs of cash in transit (CIT) or the additional security expenditure that would be needed to guard cash hoards. But it does make a fun point, at least to me, which is that the existence of the €500 notes has an impact on that crossover rate. Clearly, if the maximum denomination banknote in Europe was (as it should be) €50 then you will need 10 times as many of them to create a horde of the same value and that means higher costs for storage and transport. Now that the ECB has decided stop printing the 500s, banks would have to store masses of 200s, so the cost of storage and transport will be even higher.

Nevertheless, the calculation does make an interesting point, which is that we appear to past the crossover point already, yet no banks have to date decided to store their squillions under the mattress rather than leave them on deposit. Oh, wait…

Commerzbank, one of Germany’s biggest lenders, is examining the possibility of hoarding billions of euro in vaults rather than paying a penalty charge for parking it with the European Central Bank, according to sources familiar with the matter.

From RTÉ Mobile – Commerzbank may hoard cash to avoid ECB charges

Why on Earth would they want to do this? Does it really make any sense?

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I posted a screenshot of the email, and a few lines about how I would not be using Twitter until they figured out how to stop making incidents like this one (gross, but comparatively benign) a less constant component of my Twitter experience.

From Twitter Has Become a Park Filled With Bats — Following: How We Live Online

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[Money] may become as David Birch has suggested synonymous with identity itself. The value of such personalized forms of currency- which is really just a measure of individual power- will be in a state of constant flux.

From The Future of Money is Liquid Robots

This does not seem an unreasonable prediction.

With everyone liked to some form of artificial intelligence prices will be in a constant state of permanent and rarely seen negotiation between bots.

From The Future of Money is Liquid Robots

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[Venmo] noted that it just doesn’t have the resources to support the API anymore, as it’s too busy working on its new peer-to-peer platform and its in-app payment service

From Mobile App Reviews: Venmo Kills Off API for New Developers

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The market for media of exchange will gravitate towards those systems with the lowest transaction costs, and in the case of proof-of-work digital currencies, that means those protocols that forever subsidise hashing costs with the coin’s seigniorage

From Some Crypto Quibbles with Threadneedle Street | cryptonomics

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