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Before Congress, federal regulators dispute US pace on national digital currency

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Amid a global race toward central bank digital currencies, or CBDCs, the United States needs to focus on the private sector, says Acting Comptroller of the Currency Brian Brooks. 

“We have built private stablecoins in this country that already have a market cap in the tens of billions of dollars,” Brooks said in a U.S. House Committee on Financial Services hearing on Thursday. Formerly head of Coinbase’s legal department, Brooks currently leads the Office of the Comptroller of the Currency, or OCC, which is the Treasury office that regulates federal banks. “These things are transacting daily, they are growing rapidly, and they are used for broad commercial purposes,” he explained, adding:

“I don’t think in this country we need to wait to build a command and control government solution. I think the private sector is on it, and I think the role of the regulators on this panel is to provide a framework to make sure there aren’t bank runs or other problems that consumers would be affected by.”

The congressional committee gathered digitally today, questioning four witnesses from leading financial regulators.

Brook’s comments came in response to questions from Minnesota representative Tom Emmer. Emmer noted the fintech sector’s promise and regulatory bodies, persons and actions that have fostered the sector’s growth.

Emmer also pointed toward the OCC and its recent actions, which include clarity on crypto custody by banks. Under Brooks’ purview, the OCC provided two key clarities for banks in the crypto space this year, allowing crypto custody by banks, as well as approving banks to custody stablecoin reserves.

Leading into his main question for Brooks, Emmer referenced Federal Reserve Chairman Jerome Powell’s antipathy toward private development of digital assets. “Chairman Powell informed us in a previous committee hearing that private sector individuals and innovations may not have a place in the Fed’s consideration of a digital dollar,” Emmer said. “This is concerning.”

“As a country, we haven’t yet recognized the important competitiveness aspect of this,” Brooks told Emmer of digital asset growth. He cited China’s current work and experimentation on its CBDC:

“In this country we’re still years away from a national, real-time payment system. I come to the conclusion that you come to, which is that the best solution is to win the way America has always won, which is by unleashing the power of our innovative, dynamic, risk-taking private sector.”

Before Congress, federal regulators dispute US pace on national digital currency

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Despite Reduced Cash Usage, Norway Won’t Forge Ahead With a CBDC

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With countries lining up to research their need for Central Bank Digital Currencies (CBDCs) and proofs-of-concept for digitizing their currencies, it’s becoming a question of who will join the train next. For Norway, however, uncertainty exists on CBDCS and how viable they are.

Beneficial, but Not Compulsory 

Last Thursday, Ida Wolden Bache, the Deputy Governor at Norway’s central bank, touched on the subject of CBCs and confirmed that the bank was aware of their increasing prominence. In a speech at Finance Norway’s payments conference, Bache highlighted that the use of cash in the country had declined, giving some credibility to the need for a CBDC. 

Norway uses the kroner, and like most countries in the world, the Scandanavian nation witnessed a decline in cash usage due to the coronavirus pandemic. Shedding more light on the trend, Bache explained: 

“Only 4% of payments are now made using cash. This share is approximately the same as in spring, and considerably lower than before the pandemic. To our knowledge, the share of cash payments is lower in Norway than in any other country.”

However, she also confirmed that traditional fiat has several benefits over a possible CBDC. For one, Bache pointed out that cash’s greater ubiquity makes it a better legal tender than any digital asset. The policymaker further pondered: 

“The question is whether something important will be lost if cash dies out and we do not introduce CBDC? Is central bank money crucial to confidence in the monetary system? Could CBDC provide more than cash can offer, in the form of a greater range of uses and more innovation?”

Summarizing, Bache explained that the Norwegian central bank’s lack of pace in delivering a CBDC reflected their belief that there is no “acute” need for one at the moment. The policymaker added that while CBDCs have become more common, Norway shouldn’t merely jump on the bandwagon. The country will need to make a well-informed decision concerning this issue, and that will take some time. 

The Philippines Takes a Step Back

Norway is the second developed country to announce its conservative approach to a CBDC in the past few weeks. Last month, Philippine central bank governor Benjamin Diokno said at a press briefing that the bank was stepping back to learn from private-sector digital currencies as it works to launch its asset. 

While the country has confirmed a desire to launch a CBDC, Diokno explained that studies had shown a need to do more research on these assets. Most notably, he explained that they needed to understand how best to create networks between the country’s central bank and constituent commercial banks. 

So far, the central bank’s tests have covered several issues surrounding CBDC development. These include legal frameworks, monetary policy, settlements and payments, regulatory oversight, and financial inclusion. However, as Diokno explained, the bank could benefit from studying several private-sector digital currencies’ business models.  

As such, the country won’t be launching its CBDC anytime soon. Of course, this isn’t to mean that the hope is dead.

Despite Reduced Cash Usage, Norway Won’t Forge Ahead With a CBDC

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Australian SME Banking Challenger Judo Bank to Use Cloud based Bank Operating System Developed by nCino

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Australia-based SME challenger bank Judo Bank has chosen nCino (NASDAQ: NCNO) to help streamline its lending processes. Judo Bank will be using nCino’s Cloud-powered platform to enhance its services which are mainly intended for small businesses.

nCino, Inc. is an established cloud banking and digital transformation solutions provider for the financial services sector. nCino’s Banking Operating System will be used by Judo Bank to improve its lending operations.

Judo Bank will be working cooperatively with nCino so that the digital challenger can automate key aspects of its banking processes.

As mentioned in a release:

“As part of the nCino Bank Operating System, Judo will implement nCino’s Commercial Banking Solution, which automates workflows and provides real-time reporting, elements of the credit analysis process and digital document management capabilities to drive a transparent and fully digital end-to-end lending process.”

Tim Alexander, Chief Product Officer at Judo Bank, said that Judo’s goal is to help Australian SMEs by “bringing back the craft of relationship banking and delivering the funding that SMEs desperately need and deserve.”

Alexander added that his company shares some of the same views as nCino which is why they chose them “to help disrupt the industry and deliver differentiated services to better finance the growth ambitions of Australian SMEs.”

Mark Bernhardi, General Manager of APAC at nCino, noted that his company is looking forward to working with Judo Bank. They’ll be helping the digital challenger with “creating a more efficient banking experience that is tailored to [its] clients’ individual needs,” Bernhardi said.

He added:

“Judo was created to be fast and nimble and to provide new options to SMEs across Australia. We look forward to building upon our partnership to support Judo’s craft of relationship banking, enabling them with the latest technology from nCino as they help their clients capitalise on the right opportunities at the right time.”

In May 2020, Judo Bank had managed to secure $250 million through an equity round and also achieved Unicorn status (companies valued at $1 billion or more).

nCino is a Wilmington, North Carolina-based Fintech that offers a cloud banking platform built on the Salesforce platform. It launched its initial public offering (IPO) in July 2020. The firm’s shares had rocketed on the NASDAQ as soon as trading began earlier this year.

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