FOR PRACTITIONERS

Industry studies and policy papers

BEFORE AND BEYOND BITCOIN, A SERIES

First Essay: The first fintech.

Private tokens and ledgers that have popped in and out of existence since the beginning of recorded history offer some important lessons for the future of cryptocurrency. Successful solutions needed to overcome distrust of private issuers and ledger-keepers to be scalable and widely-adopted among strangers. To understand what Bitcoin could be beyond the present, we need to understand what came before. What came before was always state re-monopolization of currency and/or banning of the private solution. What are the chances of repeat?

Also available as a Medium essay.

CHALLENGER DIGITAL BANKING IN CANADA: THE CASE OF EQ BANK

2020

This case documents the results of Equitable’s decision to establish a digital direct-to-consumer bank, EQ Bank, created totally in house, with a new team, a new culture and separate budget.

 

With a blank slate, partnerships with third party fintechs ensured that EQ was fully digital from day one, and not just another pretty Application Programming Interface (API) fronting legacy systems and legacy problems.

 

Equitable’s digital effort can already be judged a success, especially in an oligopolistic and heavily regulated market where the “Big Six” incumbents maintain significant market power. EQ Bank has successfully addressed its key initial drivers of “going digital”, improving their funding mix and cost, and now has the opportunity to cross sell the firm’s traditional products along with those of new mostly-digital partners.

GLOBAL CRYPTOASSET REGULATORY LANDSCAPE STUDY

Multiple co-authors. Cambridge Centre for Alternative Finance, 2019.

A comprehensive, systematic, and comparative analysis of the current regulatory landscape of cryptoassets and related activities.
The study covers 23 jurisdictions and is based on both desktop research and in-person interviews with regulators and policymakers. The report aims to compare and contrast various regulatory approaches and practices with regards to cryptoassets in a number of jurisdictions and shed light on current regulatory challenges and opportunities.

REGULATING SECURITIZED PRODUCTS, A POST-CRISIS GUIDE

Palgrave Macmillan, 2016

Securitization was one of the channels through which banks and investors applied vast amounts of leverage to take exposure to, for example, US subprime mortgages. The Global Financial Crisis provided a lesson in how dangerous such leverage can be, yet securitization is returning, in some cases to pre crisis levels, and is being touted by the banking industry and politicians as a key instrument for funding real economic growth. This book by a long time investor and recent academic provides a complete examination of the key issues to be considered when regulating securitized products that have been blamed for the Global Financial Crisis. By applying academic theories of regulation together with an insider’s understanding of the products, the author provides some guidelines for ensuring that securitization can help the real economy function without adding to financial instability.

Available here

TOWARDS AN ASSESSMENT OF THE BENEFITS OF UNLIMITED LIABILITY STRUCTURES IN INTERNATIONAL BANKING: THE CASE OF BERENBERG.

City University Working Paper Series, 2017.

This paper examines the implications of Berenberg Bank’s unlimited liability ownership structure for the Bank’s shareholders, other stakeholders, and society at large. It is a case study which draws on interviews with Berenberg Bank’s senior London management, Berenberg is one of the very few remaining financial institutions with an unlimited liability ownership structure. Berenberg prospered during the 2008-9 financial crisis, and has since thrived by expanding in several niche businesses. The paper argues that the Bank’s success during the downturn appears to have been a function of its particular ‘culture’, which in turn appears to be significantly influenced by its unlimited liability capital structure. The paper concludes with some discussion of the relevance of our findings on the debates surrounding the value of such structures and the degree to which they can provide an example to other banks as well as on the implications for the social costs of banking.

Available here

CAN REGULATION BUILD A BETTER MARKET FOR SECURITIZED BANK LOANS WITHOUT RISKING TAXPAYER BAILOUTS? NOT IF BANKS ARE THE ONLY BUYERS.

Risk & Regulation, 2016

The key questions to be answered when regulating esoteric markets such as those for securitization are not being answered. Can the risks to the financial system from allowing banks to hold other banks’ securitization with very low capital charges be justified?

Available here