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It's surprising that this is open in the public domain. Keeping it discreet would have allowed Modulr to work through ist issues with the FCA and customers, but making it public must make life for them ten times as difficult.

This is an admission of ignorance.

Talk to any senior exec responsible for an ISO20022 project or any pundit extolling its virtues and you are led to believe that adopting ISO20022 is a silver bullet for interoperability and global standardisation. They are unaware of details such as message formats, tooling, rules and technology protocols (e.g. XML) and their simplistic knowledge is exposed.

ISO20022 had its genesis in batch processing in the early 2000s. It has taken over 20 years for execs to catch up, meanwhile the market has moved on with open API standards, blockchain and instant messaging. ISO20022 is a good basis for defining and modelling payments data and securities data but as this proposal from the BIS suggests, standardisation is far from a given and requires a lot of effort and rule-making. 

At a recent web3 event there were some serious misgivings about the FCA approach and the cryptoasset promotion regime:

- any page on any website that mentions any cryptoasset can potentially run foul of the promotion regime
-  a cryptoasset trade by an organisation breaching the promotion regime may be treated as a financial crime, implicating all the organisation's service providers including accountants, lawyers etc
- the promotion regime goes far beyond any other jurisdiction's crypto regulations such as MiCA in Europe and may drive crypto business away from the UK

These are just points I heard from lawyers in the room, so check their accuracy, but there was a definite downbeat mood, nervousness and some bewilderment with a regulatory regime that is at odds with the UK government's vision for the UK to be a global hub for cryptoasset technology and investment.

Being able to see your bank balance when making a debit card payment is a great UX and will be immensely popular with consumers - it will be interesting to see if it makes any difference to unauthorised overdraft fee income, bounced direct debit debit income etc for banks which is why in the past they have been reluctant to provide such capability. My expectation is it will be a net benefit for banks in terms of customer retention, acquisition and engagement, so a win-win for banks and consumers (and Apple of course).

It would be logical for Carstens to make this call if the BIS were promoting wholesale CBDC - after all, their focus is the settlement of interbank liquidity flows which could benefit signfiicantly from wholesale CBDCs used programmatically to optimise liquidity and minimise settlement risks across borders.
However, he is arguing for retail CBDCs, which the BIS seems to be trying to coordinate and progress in central bank inititiatives around the world. The BIS and central banks have next to zero experience of retail beyond issuing notes and coins (distributed by commercial banks) and it shows.

To state 'The public rightly demands forms of money that meet their needs and expectations.' is sophistry as there is no compelling evidence of public demand anywhere for CBDCs - take up of retail CBDCs launched so far such as in Nigeria or the Bahamas has been lack lustre and there is considerable public opposition to them in countries such as the UK and USA.

It will be interesting to see how CBDCs develop, but with retail CBDCs driven by little more than international group-think my bet is it will be wholesale CBDCs driven by market demand that will succeed.

"the main reason for establishing a CBDC is demand from the public" - in which case all CBDC projects should stop immediately as there is no demand from the public. Most people have no idea what a CBDC is, or how it is different to cash or bank deposits, therefore to imply there is public demand is wishful thinking.   

In fact, where the public is aware of CBDCs there is considerable demand to prevent the introduction of a CBDC - witness the 50,000 responses to the BoE consultation on a CBDC, the majority expressing deep concerns with the project.

'eliminating the need to hold funds' could be a big issue for payment providers. With this model how can they make CBDCs commercially viable unless they charge high fees to compensate for the inability to collect interest?

Separating the operational provision of CBDC services from liquidity provision may reduce settlement risk (although there are other ways to mitigate it), but at scale it looks a non-starter commercially.

Also, privacy and surveillance are only one aspect of CBDC risk. Loss of control over funds is another big risk - an Access Enabler is a gateway to funds and could easily be used as an Access Disabler or blanket blocker i.e. the risk of financial exclusion in contrast to the goal of financial inclusion so often used to justify CBDCs.

There needs to be a focus on commercially viable business models using CBDCs that have cast iron solutions to their risks - this is best driven by the private sector.

Confirmation of Payee is a sending bank check but is advisory and the sending bank has no details of the beneficiary account at another bank other than on the CoP database.

With the banks I use, you can ignore the CoP warnings and send the payment without getting a match; and often, especially for business accounts, you get "unable to verify account, proceed anyway?". It is a step in the right direction but it is hardly a bullet-proof solution, particularly since some banks and PSPs have not implemented CoP.

Whereas the receiving bank has detailed knowledge of the beneficiary account - account holder name, KYC history, usage history etc and is in a much better position to identify fraud and take action if there is a mismatch between the beneficiary name on the payment and the name on the beneficiary account. The receiving bank is also in a better position to identify suspicious transactions in the event a legitimate account is taken over by fraudsters.

This the second CHAPS/RTGS outage in nine years, which actually is a fairly good record.

Resilient payment infrastructures though tend to impede or constrain change/innovation as there is a little need/impetus to change.

Card and ATM switches are an example, some are so resilient they have run continuously for decades and banks/processors are reluctant to replace them hindering their ability to innovate.

A little known issue with the current BoE RTGS system is that there are very few windows available each year to on-board non-banks for settlement accounts to participate directly in the Faster Payments system, thus limiting the number of non-bank direct participants and the innovation they bring using instant payments.

This should change with the introduction of the new BoE RTGS next year and we should see the number of non-banks with BoE settlement accounts accelerate.

Hopefully this latest incident with the old RTGS will spur the BoE into keeping to their current implementation schedule for the new RTGS or even accelearting it rather than, out of caution, causing it to be delayed still further. 

How does reimbursing fraud victims prevent fraud? It is more likely to increase it.

Much more focus is needed on preventing fraud, starting with regulation to force banks to check the beneficiary on an incoming payment matches the name on the beneficiary bank account. Sounds obvious, but it is neither a legal requirement in the UK nor a standard banking practice. Who/what is preventing this obvious measure?