Kiffmeister’s FinTech Daily Digest (06/24/2020)

Brazil central bank bars Visa and Mastercard from WhatsApp payments
Banco Central do Brasil’s ruled that Visa and Mastercard must suspend launching payments and transfers on Facebook’s WhatsApp in the country, or must cease such operations immediately. Facebook rolled out WhatsApp payments service in Brazil on June 16. The central bank is concerned about an “adequate competitive environment” in the Brazilian mobile payments market with the entrance of a giant like Facebook. The Administrative Council for Economic Defense, Brazil’s antitrust regulator, also blocked Facebook’s partnership with Cielo, citing the market dominance of the two “which can guarantee significant market power upon its entry.” Cielo is the largest Brazilian credit and debit card operator, and the biggest payment system company in Latin America by revenue and market value.

Bafin says it did not supervise scandal-hit Wirecard
Senior officials at Germany’s Federal Financial Supervisory Authority (BaFin) say the institution is not responsible for supervising Wirecard, the financial services firm accused of major fraud. Although in 2019 Bafin imposed a two-month ban on shorting Wirecard shares, and fined Wirecard €1.52 million for failing to file annual accounts on time they were measures under the Securities Trading Act. However, BaFin’s website implies the regulator would have responsibility for a firm with Wirecard’s involvement in financial services, and according to the Bundesbank, Germany’s “payment services supervision act”, makes BaFin responsible for companies like Wirecard.

Central Banks and Payments in the Digital Era
According to a special chapter of the BIS Annual Economic Report, digital innovation is radically reshaping the provision of payment services, and central banks are embracing this innovation. They promote interoperability, support competition and innovation, and operate public infrastructures – all essential for easily accessible, low-cost and high-quality payment services. And central bank digital currencies (CBDCs) can foster competition among private sector intermediaries, set high standards for safety and risk management, and serve as a basis for sound innovation in payments.

Thinking Big on Fed Accounts, Digital Dollars and Financial Inclusion
Chris Brummer gets the sense that most financial experts and economists support the release of a digital dollar, at least of some sort, that would comprise a liability of the Federal Reserve carrying the full faith and credit of the U.S. government. The disagreements appear to lie in what kind of technology should support it. For Chris Giancarlo and Dan Gorfine, a digital dollar would be tokenized, meaning that digital dollars would operate as bearer instruments that could be transferred instantaneously. Meanwhile Morgan Ricks supports an account-based path for digitization that would comprise just one component of a larger, explicit strategy of enabling financial inclusion through the buildout of digital individual accounts at the Fed.

Former U.S. CFTC Timothy Massad weighs in on Facebook’s Libra 2.0.
Former U.S. CFTC Timothy Massad finds that Libra’s 2nd white paper deals with many of the concerns previously raised. While Libra may not succeed in improving access to financial services for the underserved, he believes we should let it try. That is, we should create a reasonable regulatory framework under which the Libra proposal can be developed and implemented. The competition in payments will be a good thing, but regulators around the world need to work together to construct the proper framework for Libra. The financial regulatory challenge in the United States would be best addressed if Congress created a comprehensive framework for the regulation of payment systems, but that seems unlikely to happen in the short term. He belives that for many the potential benefits Libra might bring to our payment options outweigh the risks associated with an increase in Facebook’s power and its collection of data.

How Covid-19 has reframed the war on cash
The public still has great trust and appreciation for banknotes, especially when times get tough. But the data suggests people may be turning to digital transactions not because of convenience but because the crisis has made online purchases compulsory for many. But digital versions of cash are something far more abstract than banknote money. In almost all modern monetary systems it equates to the central bank managed real-time gross settlement (RTGS) clearing system. The key incentive banks have to be part of that circular intangible system, however, is the risk their customers will at some point demand to be cashed out with banknote cash whose supply banks do not control. If that risk is removed (say because there are no more vendors who accept cash) public digital cash will become entirely substitutable — and very hard to differentiate — from privately issued alternatives, undermining the control of the central bank on the money supply.

Circle Announces Support for USDC Stablecoin on Algorand Blockchain
The Algorand Foundation has announced that the USD Coin (USDC) stablecoin will be launched on the Algorand (ALGO) blockchain. The integration will allow customers using Circle APIs or Circle Business Accounts to convert funds from their bank account or card network into stable tokens on the Algorand blockchain.

Posted from Diigo: https://www.diigo.com/user/kiffmeister/Fintech