The demise of cash has been predicted for many years. There is evidence for and against this everywhere. An article in The Financial Times by Rebecca Spang professor of history at Indiana University, The smart money: are we on the cusp of a cashless society?, reviewed three recent books on the subject:
- Before Babylon, Beyond Bitcoin: From Money that We Understand to Money that Understands Us, by David Birch, London Publishing Partnership
- Money Talks: Explaining How Money Really Works, edited by Nina Bandelj, Frederick Wherry and Viviana Zelizer, Princeton University Press
- Paid: Tales of Dongles, Checks, and Other Money Stuff, edited by Bill Maurer and Lana Swartz, MIT Press.
Sprang queries Birch’s idea that, “we would then leave it to our devices to sort the conversion rates is techno-utopianism.” She applauds, “The individual chapters in Money Talks deserve the attention of specialists and the book’s central message — that the management and regulation of money should not be left to economists or bankers alone — is one we should all take to heart.”
Spang’s overall conclusion is that “Predictions of a shift to virtual currencies have technology on their side but ignore the politics behind our payment systems.”
NACHA to develop API standards
In the USA NACHA has set up a working group made up of payment system and financial service leaders to develop an ‘API Playbook’ for banks, businesses and fintech companies to create a standardised API ecosystem.
Finextra report that, “The playbook will be made up of API standards but also a library of use cases and corresponding APIs, with an initial focus on three areas: payment access, fraud and risk reduction, and data sharing.”
Arab states plan regional payment and settlement system
Arab countries are finalising plans to create a regional cross-border payments and settlements system as an alternative to the current arrangement that mainly uses correspondent banks - banks in one country acting as agents to foreign financial institutions that do not have a local presence.
The Arab Regional Payments System (ARPS) will act as a correspondent for its participants such as banks and financial institutions, through a single, centralised platform for cross-border payments. One of the aims will be to boost the use of local currencies in cross-border money flows replacing U.S dollars.
The Arab Monetary Fund, the driver behind the system, has invited central banks and banks of all member countries, including Qatar, which is facing a diplomatic and economic boycott by four Arab states led by Saudi Arabia.
The AMF expects the ARPS to be in operation by 2020.
EBA publishes Final Guidelines on Professional Indemnity Insurance under PSD2
The European Banking Authority have published their final Guidelines under the revised Payment Services Directive (PSD2), on the criteria on how to stipulate the minimum monetary amount of the professional indemnity insurance (PII) or other comparable guarantee for payment initiation services (PIS) and account information services (AIS). Undertakings intending to carry out these services will need PII cover or a comparable guarantee as a prerequisite to be granted authorisation. The Guidelines, therefore, contribute to the overall objectives of PSD2, by strengthening the liability regime governing the interactions between the different actors involved in electronic payment transactions.
The EBA mapped market practices in the European Union with regard to the provision of PIS and AIS and applicable insurance policies. Based on the findings of the mapping exercise, the EBA elaborated on the criteria and indicators set out in PSD2, identified additional indicators, developed a calculation method for the indicators, and established a formula for the calculation of the minimum monetary amount of the PII or comparable guarantee.
The EBA believe that the Guidelines require the minimum monetary amount of PII or comparable guarantee to be calculated by adding up the amounts that are reflective of the risk profile criterion, the type of activity criterion, and the size of activity criterion respectively.
The Guidelines will apply from 13 January 2018.
CTMfile take: As new technologies and new players enter the payment systems space, it is clear that: payment systems are far too important to be just left to bankers and economists or technologists alone.
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