A corvid is a bird.
(Copied from Twitter)
Been a while between posts. No apology for that. Lots of news to digest.
This week, I had the pleasure of attending a 'Breakfast Briefing'. Of course the topic that lured me was crypto. The panel was almost painful. I felt frustrated as they hopped between topics. To one observer, it looked like the crypto industry had made no progress in the last 2 years. I disagree. Crypto is great and crypto is here to stay. It is not when or if, it is how we will embrace it.
Last week-end, on a Sunday, I got a nice BIS email with an update on CBDC. (Central Bank Digital Currency).
https://www.bis.org/quarterlyreviews/index.htm
It takes an in-depth look at the world of payments, including CBDC (from p85, the report in total runs over a 100 pages).
I do like Central Bank papers, they are clear, argued, and outline their premises and assumptions. (The panel I attended, did not). With this clarity, this 'unpacking' of things, comes clear disambiguation. Clarity of terminology has been lacking in the crypto world from the outset, and in that regard, it is not much better today. Disambiguation is one of my crypto themes.
Given the current interest in Stable Coins, I gave it a read, but I confess, I didn't find it that great.
My problem was with the underlying assumptions. Do I really want access to CeBM (Central Bank Money v's CoBM, Commercial Bank Money?). Yes for high value / wholesale, no for retail. What I do want is certainty and finality. I want recourse and to have that, I expect a governance framework for dispute resolution. Hey, things go wrong. I don't really care, so long as we can put it right. It's when there is no recourse there is outrage and indignity.
I am also a big fan of Distribution. And one thing in the paper really resonated with me:
"When it comes to achieving resilience, neither a DLT-based system nor a
conventional one has a clear-cut advantage. The vulnerabilities are simply different.
The key vulnerability of a conventional architecture is the failure of the top node, for
example via a targeted hacking attack. The key vulnerability of DLT is the consensus
mechanism..."
p93.
Exactly this, crypto is new, but not to be feared. So often what we do is just a substitution or transfer of risk. CCPs do not eliminate counterparty risk from the system, they concentrate it and mitigate it. It is a transfer of risk and it works well. We understand it.
All is not lost however. There is a further article "On The Future of Securities Settlement" from p67, with a nice round up of the various Central Bank initiatives in the annex on p81.
FSB Chair’s letter to G20 Finance Ministers and Central Bank Governors: February 2020
There are a couple of important themes coming out of this (of interest to me):
1. So-called ‘stablecoins’. The FSB is resolved to quicken the pace of developing the necessary regulatory and supervisory responses to these new instruments. It will issue a draft report on regulatory issues and possible responses for public consultation in April.
2. Cross-border payments. Recognising the importance of efficient and inclusive payment services for global growth, the Saudi G20 Presidency has requested the FSB to coordinate the development of a roadmap for improving cross-border payments. The FSB will deliver this roadmap to the G20 in October.
I've been trying to get people into the mindset that Fiat, is just another piece of inventory. We DvP one thing versus another, IvI or Inventory v Inventory. This terminology is also TvT (Token v Token) or DvD (Delivery v Delivery). If we can get that T, to be a 'stablecoin' with CeBM backing, WooHoo! We're so much closer to DvD. (Ultimately, I'm a DvP model 3, hybrid guy, but very happy to start w/ DvP model 1).
I also firmly believe crypto has a major role to play in the facilitation of cross border payments.
I am still unsatisfied with the risk management of transactions while they're in the mem-pool awaiting the next block write, but I am very encouraged by some of the things to address that.
As a final generalisation I don't feel nearly enough is being made of "you see what I see" on a DL (Distributed Ledger), nor the ability to enrich a DL.
I think that's enough of a rant for today. Please welcome me back to your inboxes.
Whatever your leisure, may it be a pleasure!
We all love the Irish, and many of us rugby too.
Given the context of Covid, the Italians play on, but they cancel spectators (contagion risk).
The Irish, cancel the game, but welcome the spectators.
I expect Covid to jump 400% in Ireland next week.
Congrats to the Aquis Team.
https://www.thetradenews.com/aquis-gets-go-ahead-2-7-million-nex-exchange-takeover/
Indian Central Bank may seek to defer the inevitable
https://www.financemagnates.com/cryptocurrency/news/indian-central-bank-to-appeal-against-top-courts-decision-on-crypto/
EU Tax Havens.
This is a well laid out data set.
Delighted Spitting Image makes a return...
...with regular weather updates from our roving reporter Greta Thunberg
Brilliant.
Good old bats. The ultimate incubator.
https://www.sciencealert.com/deadly-viruses-always-seem-to-start-off-with-bats-here-s-why-they-re-patient-zero
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