Community

I am afraid I have to disagree with this report and the comments to date. The only aspect which can make the UK a good competitor is the anticipated high level of unemployment in the City - and the fall in the value of the pound to make it even cheaper to get staff. This is not sufficient to make up for being excluded, at some level, from the biggest market, particularly when that will be full of competitive cities feasting off the decline of the City.

While it is still too soon to know how abrasive the relationship may become with the EU (indeed, I believe there is still hope that MPs will act in the best interests of their constituents and reverse the ill-informed referendum vote), but I fail to see this being other than aggressively directed by Brussels. As such, investors will be cautious about support for the UK (or what is left of it) as the best place for fintech projects.        

If there is any good to come out of the Brexit disaster, it could be a move to a limitation in the UK (or what is left of it!) of any notes above ten pounds, so we can eventually achieve a fully digital currency. 

I find it difficult to see how the ECB can justify this continuance of assistance to tax evaders with high value notes; the Weimar Republic was a long time ago - just let it go.  

I agree with Bo; until we are ready to go cashless, the best interim path is to limt the maximum size of bills to 10 euros ... still enough for small business but too difficult to manage for bulk laundering.  

The possibilities are enormous for this, linking to UPI in India, ach in USA etc., but the element that can kill it (for ten years) can be the banks.... as they managed to delay SEPA for that long. 

There are some other issues regarding AML and security, as well as managing FX conversion in non-euro countries (or maybe the ECB is only interested in the euro area?), but the concept is well worth developing  .. if the banks don't put it on the 'development schedule' for 2035. 

One addition or option is to use post office accounts  .. if they still exist .. so everyone could have an account for this purpose?

This sounds like a verty good format, assuming the fees are kep low, and could be expanded into many other areas where a cohesive approach to EU banking could make for a far better market overall. 

It will be interesting to see whether this is restricted to euro countries, or available across the EU  .. and even further currency aspects such as USD, SFC and RMB. 

While the financial structure of the EU/ euro is subject to doubts, a positive approach, such as this, is important to show how value can be created from cohesion. 

The obvious question is whether this can be expanded to cover international transfers as well? With Android's strength in many parts of the world being far greater, this could be a valuable solution in lowering costs for many families, and earning brownie points for Google, by belatedly reaching the G20 target of 5% maximum.  

The basis of the BIS being involved is an excellent idea and one that could hopefully fit well with the development of fiat-based digital currencies. While there is still much to do in this regard, there are many advantages in such a structure, not least within the EU where any break-up of the Euro will require some format of electronic payments to quicklly replace it.

Similarly, the creation of an Asian alternative to the dollar, whether solely RMB-based, or reflecting a blend of AIIB currencies, would be far better in a doigital structure.

The BIS is the obvious body to assist in the creation of such units.

I would suggest that cutting interchange rates is not going to benefit consumers in any manner. As stated above, the processors often charge blended rates, linked to their highest costs for such as Amex and non-EU cards, at least to SME merchants, so the main beneficiary is the processor. In any event, the merchants are not going to hand on the improvement to consumers unless they see some real advantage in doing so.

That will mean the issuing banks will increase other fees to consumers, as seen in Australia when this cut in interchange happened, so the impact is going to be negative for the consumer overall.  (As with many EU initiatives, there is little external advice sought, but decisions made on what sounds good politically.)

There is, however, real change in the air on the payment front, with the big marketing companies (Apple, Google, Facebook etc.) all identifying the data value of completed transactions being far higher than links or eyeballs. As such, it is justifiable, indeed proftable, for them to cut processing fees to zero in order to get the data.

Of course, they would want to encourage the underlying settlement to be by bank transfer, as managed by PayPal, rather than paying the card association fees, no matter how low they become. So, expect more on that score, along with greater MNO interaction. But, one way or the other, the consumer will get to have much better value - and service - from the users of the data.  

The sooner we can move to digital currencies the better, not least as a way of reducing the use of cash as a major form of tax evasion. While there may remain a case for cash in denominations of maximum $5, for small purchases, the elimination of anything larger could reduce evasion in the EU by $200 Billion on VAT alone. 

The Bank of England could create an excellent example of how this may work, with some direct benefits in increasing the international appeal of sterling as a reserve currency (again). 

But the more important role would be to indicate to the ECB as to how the euro could be brought into a format whereby there is identification of country of issuance, country of use and country of depositary. Without being too negative, there should be a reasonable 'Plan B' element to any break-up of the national responsibilities within the Euro Group, hopefully enabling the euro to continue in an overall form, but under better reporting structure.

I have long believed that mobile payments are the answer for any developing country, partly to encourage small business development and cost-effective money transfers, but also to assist in moving the whole payments structure to an auditable, electronic format. That has the important additional benefit of greatly reducing the very high tax evasion which occurs in many such countries - including quite a lot of EU countries as well.

The question i would raise is whether the traditional banks can, or should, provide the basis for such services - my general feeling is they will normally not be the best, or most efficient, solution. Without my trying to be alarmist, I do think there are still many risks for banks in the market - the recent Greek election may have repercussions on banking credit, for instance - so i would favor a government involvement in any solution, but hopefully with technology partners to assist in delivering a reliable payment solution for all.  

Whether the optimum answer is for the governments to act as the secure banking provider or whether new technology companies can manage this better, that is the key.