After debating how Facebook’s Libra was energising the blockchain and fintech scene on the first day of Fintech Week in London, the second day featured another panel also called The Future of Money, which took a broader, more political perspective.
To understand the discussion, you needed to be familiar with the unpronounceable acronym FATF—the Financial Action Task Force—an inter-governmental body set up way back in 1989 to coordinate international action to prevent money laundering and other nefarious financial activities. Crypto has presented FATF with a whole new set of challenges and the body has brought out a number of reports and recommendations. The latest, only last month, warns starkly that:
“The threat of criminal and terrorist misuse of virtual assets is serious and urgent, and the FATF expects all countries to take prompt action to implement the FATF Recommendations in the context of virtual asset activities and service providers.”
That may sound like something everyone could get behind, but in introducing the panel that he was moderating, Barry James suggested that FATF “is in danger of killing crypto.” He hinted that “the banking lobby” had undue influence in FATF. There was general agreement amongst his panelists that bankers would not welcome any kind of fintech revolution with open arms.
Thomas Power of Team Blockchain recommended an article in the Financial Times (‘Banks in no rush to join Facebook’s crypto project’) which supported James’ view. Its writer notes that in relation to Libra, “There has been silence from the banks about a project that threatens to break down their role as gatekeepers of the global financial system.”
Power himself was firmly on the side of the revolutionaries: “Money itself now has a competitor,” he said, “we haven’t absorbed that.” One consequence, he hoped, would be to put ordinary users in control, selling their attention to big tech companies instead of having information about them sold to advertisers: “Power is moving back to us.”
David Palmer, an economist, was another panellist who questioned the role of the FATF: “the global population are sleepwalking into a new era of regulated cryptocurrencies …We saw a change with crypto but the FATF is just bringing us back to the status quo.” Whilst FATF may be “paving the way for mass adoption” the problem is that the new systems may be run by the same players as the current financial establishment. “It’s going to be a bumpy ride,” Palmer predicted.
The most radical views came from Marianne Haahr of the Sustainable Digital Finance Alliance. For her, even if initiatives like Libra could wrest power from the banking establishment, that wouldn’t necessarily be good. It would simply be handing it to “white males in California.” And in doing so, the central banks of developing countries would be in danger of losing what leverage they have over their own economies.
To promote sustainability, Hahr wanted to see “green intent” as a requirement of regulatory structures and other financial systems. We could even be offered tax breaks for taking exercise, she suggested. We can’t just think in terms of the market: sustainability is so urgent that we need “all hands on deck” to deal with the crisis.
Questions from the audience revealed some radical thinking there too. One person said that for all the talk of projects like Libra helping the unbanked, because Libra was to be backed by a mix of established fiat currencies, in effect, the unbanked would be supporting the established financial world. A second questioner dismissed Libra as a cryptocurrency altogether. It’s really just a “corporocurrency” he said, and possibly the first of many.
The power of the FATF to control fin tech regulation was reaffirmed at the Osaka meeting of the G20 last month. In the agreed final declaration, the participants agreed that “while crypto-assets do not pose a threat to global financial stability at this point, we are closely monitoring developments and remain vigilant to existing and emerging risks.”
No mention of “emerging opportunities” then?
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