Receiving Wide Coverage ...
United by the Blockchain: Nine of the world’s largest banks are joining forces to bring blockchain technology into the financial services fold. Banks including JPMorgan Chase, Goldman Sachs and Credit Suisse will back a start-up called R3CEV with the goal of establishing protocols and standards for blockchain use. The consortium will also work to develop “a platform that could handle the billions of dollars worth of transactions that occur in the financial industry,” according to the Wall Street Journal. The Financial Times raises the question of whether the banks will be willing to set aside their rivalries to work together on the effort, noting they’re unlikely to give up their in-house experiments with blockchain technology. “You don’t put all your eggs in one basket—you hope one of the bets pays off,” an anonymous chief information officer tells the paper.
All Fed All the Time: As speculation swells about whether the Federal Reserve will opt to raise interest rates at its meeting this week, the papers appear determined to explore every possible angle. The Wall Street Journal reports how banks are trying to prepare bright-eyed young traders for a strange new world of interest-rate increases. Meanwhile, John Carney of “Heard on the Street” suggests bank shares could dip if the Fed decides to raise rates but simultaneously vows to delay further increases until inflation is at its target level. That’s because banks’ net interest margins are impacted not by “the timing of the rate increase but the pace of subsequent rises.”
An op-ed in the Journal by Sen. Rand Paul and his economic advisor Mark Spitznagel argues the Fed should stop its “artificial monetary injections and let interest rates rise to their natural level set by free markets rather than government decree.” But the New York Times’ Neil Irwin says recent history shows there’s a big downside to raising interest rates too soon, pointing to the experiences of the European Central Bank in 2011 and Sweden, Norway, Australia and Israel between 2010 and 2011.
Wall Street Journal
Cybersecurity firms are staffing up on former spies and deploying classic intelligence tricks in an effort to combat hackers, the paper reports. The article describes how a firm called Black Cube used a bank client’s internal HR and payroll data (with the bank’s permission) to gain entry into a group of cyber thieves, a tactic of which John le Carré would no doubt approve.
The Manhattan district attorney’s office is using a portion of its $447 million sanctions settlement with BNP Paribas to start a nonprofit that aims to help banks ward off cyberattacks.
Looks like there’s a lively debate about the revolving door between banking and government across the pond as well as in the U.S. Thomas Piketty has joined 100 French academics in protesting the nomination of former BNP Paribas banker François Villeroy de Galhau to serve as head of France’s central bank. The academics argue in an op-ed published in the French newspaper Le Monde that it is “totally illusory to assert that one can serve the banking industry and then, several months later, exert control of it with impartiality and independence.”
The paper wonders whether Wall Street’s new messaging platform Symphony can overtake Bloomberg terminals as the industry’s chat service of choice. Bloomberg’s got the advantage of being pretty well-entrenched, but Symphony could offer banks a cheaper means of communicating internally.
New York Times
The credit default swap market is cleaning up nicely, according to a Breakingviews column by Dominic Elliott and Neil Unmack. They credit the Dodd-Frank Act for shifting “a lot of trading through clearing houses and onto electronic trading platforms, meaning less risk and more transparency.” These changes mean we’re less likely to see settlements last week’s $1.9 billion deal between 12 banks and the U.S. government going forward, they write.