After the euro, the digital euro

Hello. It looks as if the number of currencies in the world is set to go up again. Across the English Channel, satisfaction with supra-national monetary arrangements is waning.

[Marine le Pen] said she could see the EU setting up another currency like the ECU, or European Currency Unit, which the bloc used for internal accounting purposes before the euro was introduced in 1999.

From China Media Warn Trump of ‘Big Sticks’ If He Seeks Trade War

Now, younger readers may be unfamiliar with the ECU, but I’ve written about it more than once on this blog. The idea of restoring the Franc while simultaneously creating a new pan-European currency actually makes sense and I’m rather in favour of it. Which makes we wonder how she got hold of the draft manuscript for my forthcoming book “Before Babylon, Beyond Bitcoin: From Money We Understand to Money That Understands Us” that the good people at the London Publishing Partnership have agreed to publish in June? Oh well, since the cat is out of the bag, I may as well give you a sneak preview…

I remember hearing the Chancellor of the Exchequer talking on the radio during the great financial crisis. He referred to the difficulties of currency union and spoke about the problems in Ireland, Greece, Portugal and Cyprus. He spoke about the problems of maintaining monetary policy across currency unions between economies with different fundamentals. All true. But he didn’t explain why this is different for the UK. How is the insanity of trying to maintain a currency union between Germany, Luxembourg and Greece any different to the insanity of trying to maintain a currency union between England, Wales and Scotland? The fact that they are in a political union does not alter the facts on the ground: they have fundamentally different economies. The Chancellor was arguing that if Scotland opted for independence, it would be impossible to maintain a currency union between England and Scotland. But surely that is true now! The best monetary policy for England is not necessarily the best monetary policy for Scotland, and technology means that what was optimal for commerce at the time of the Napoleonic Wars may no longer best for the modern economy.

If the argument for currency union is only about transaction costs within economic zones, then former Chancellor of the Exchequer John Major set out a potential way forward in 1990 (although the idea dates from 1983) with his alternative to the euro, which was at the time was labelled the “hard ECU”. The ECU was the “European Currency Unit”, a unit of account set using a basket of currencies, that was intended to help international business by minimising foreign exchange fluctuations. Major’s idea for the hard ECU was a fully-fledged currency with a “no devaluation” guarantee (Hasse and Koch 1991). Whereas the ECU reflected the weighted average of inflation rates in the countries concerned, the hard ECU would be linked to the strongest currency (which would have been the Deutschmark, of course). This guarantee would be backed by a commitment from participating central to buy back their own currency or make good exchange losses in the event of devaluations.

Imagine what that kind of parallel currency might look like today. It would be an electronic currency that would never exist in physical form but still be legal tender (put to one side what that means in practice) in all EU member states. Thus, businesses could keep accounts in hard ECUs, even in a post-EU England, and trade them cross-border with minimal transaction costs. Tourists could have hard ECU payment cards that they could use through the Union without penalty and so on. But each state would continue with its own national currency (you would still able use Sterling notes and coins in British shops) and the cost of replacing them would have been saved.

The reason for doing this is to minimise the costs of doing business across Europe while giving each country control over its own currency. But the more general point that I want to make is that the advance of technology gives us new choices in the way that money works. The way that money works now is not a law of physics: it is a set of institutional arrangements that could be changed at any time. Thus, if anything, Ms. le Pen is not being radical at all. Why have nation-state control over money? Why not allow regions to have their own currencies? Why not use Google Money? Or Islamic e-Dinars?

I’m not the only one who thinks this, by the way. Check this out from “The Futurist Magazine” in September 2012, where as part of a compilation of pieces envisioning life in 2100, the article asks if we will still have money in 2100, and speculates on what form it may take if we do:

It is quite likely that we will still have money in 2100, but it may not be issued by governments any longer.

[From European Futures Observatory]

I couldn’t agree more. But if not governments, then who? One of the things I discuss in my book is my “5Cs” model for thinking about future issuers: central banks, commercial banks, companies, cryptography and communities. My good friend Rob Allen from PwC was kind enough to use this model in Sydney this week and, frankly, if people like Rob are taking it seriously then I know I’m on the right track.

It’s time to start thinking about the future of money and not just because I have a book about it coming out in June (did I mention that before?) but because the current industrial age monetary arrangements do not support the post-industrial economy.

Book review: Demystifying communications risk

Demystifying Communications Risk: A guide to revenue risk management in the communications sector.
Mark Johnson (Gower: 2012).

In telecommunications, just as in banking and retailing and most other businesses as far as I can tell, fraud is an ever present cost of staying in business and managing that fraud down to acceptable levels is one of the most important roles of operational management. That’s easy to say, but hard to execute. I picked up Mark Johnson’s “Demystifying Communications Risk” (recently published by our friends at Gower) by Mark Johnson from The Risk Management Group hoping for a few ideas on this front and I wasn’t disappointed. I’m not an expert on the operational management side of telecommuncations, but I think for someone entering the field Mark’s layout, examples and checklists combine to make the book a very useful starting point.

The overall message of the book, for me, was (as always) isn’t hackers who are the problem, but the staff. Here I found Chapter Four the most relevant. It is fascinating discussion on managing insider fraud, written by Nick Mann of Nick Mann Associates, which shows just how hard this is, partly because of the variety of the frauds and partly because of the statistics. Basically, most employees are potential fraudsters! He gives a case study of an internal fraud that was uncovered after $6 million in losses, yet not a penny was recovered., highlight the point that prevention is better than cure. Actually, I thought Michael’s use of specific case studies was very helpful throughout the book and in some cases very surprising (for example, the clock drift on a switch leading to incorrect rating). I found his discussion of prepaid frauds especially interesting, partly because they are so simple and partly because I think the growth in prepaid will continue over the coming years.

I rather liked Michael suggestion of a risk management “dashboard” of relevant key performance indicators. We do a lot of risk management work in the digital money and digital identity fields, and help clients to devise and implement appropriate countermeasures, and I will be certainly using the dashboard idea in the future.

Mark covers many of the areas that will be familiar to risk management practitioners including computer and communications security, countermeasure return on investment and revenue assurance control points but he also introduces management techniques that strike me as being pretty helpful to newcomers (looking at risk strategy as the interconnection between risk management cycles, for example). I think he will open many people’s eyes to some wholly new categories of risk that will need managing in the modern communications service provider. He gives over a whole chapter to the specific headache of dealing with anti-money-laundering and anti corruption controls that are unfortunately part of the customer billing and management world now: a very valuable summary.

All in all, this book distills a great many years of practical experience in a presentable and practical form and is sure to be useful to those entering the realm of revenue management.

In the future, everyone will be famous for fifteen megabytes

Guidelines

Barclays have started a new service whereby you can upload your own image and get a personalised debit card. This sounded like a really fun idea, so I thought I’d give it a try. Unfortunately, Barclays rejected my chosen image because it “has not met our image guidelines”. So I thought I’d better read them before I send another image. The guidelines are that the image must not contain any of the following:

  • Trademarks or company names (e.g., images marked with ® or ™ signs);
  • Images or text protected by copyright (e.g., images marked with © or other watermarks or notations);
  • Slogans, tag lines, branding, marketing or promotional products, services or images of companies;
  • Images of, or the name or nickname of, celebrities, musicians, sportspersons, entertainers, public-figures, film stars, cartoon characters, members of the Royal Family or other famous people;
  • Contact information (e.g., telephone numbers, online usernames, account numbers, addresses or e-mail addresses);
  • Political statements, or images relating to ethnicity or religion;
  • Images of flags;
  • Images, signs, symbols or text relating to money, currency, drugs, tobacco, alcohol, gangs, hatred, graffiti, betting, gambling, or financial products or services;
  • Provocative, lewd or sexual images or content;
  • Nudity;
  • Offensive material (e.g., images, signs, symbols or text relating to violence, death, injury, racism, cruelty, profanity, obscenity, weapons, firearms, ammunition or terrorism);
  • Anti-social or obscene behaviour, or socially unacceptable groups;
  • Content where drinking (or being drunk), smoking or gambling is the focus;
  • Text unless benign and in the English language;
  • Any image that might reflect poorly or might engender hostility toward company brands (including MasterCard®, Visa® or Barclays);
  • Any reference to the Olympic Games, World Cup or any other international branded event;
  • Reference to any bank, building society or other monetary institution;
  • Any inappropriate content;
  • Weapons may only be included if they are being shown in a ceremonial context.

Having scoured the contents of my hard disk I’ve been unable to locate a single image that doesn’t fall foul of these guidelines, so I’ve had to abandon the experiment.

Interestingly, my existing Barclays debit card appears to fall foul of these guidelines because it makes reference to a bank and shows my account number. I will call the help desk to warn them.

 

In the future, everyone will be famous for fifteen megabytes

Mobile data paradox

My chum Tony Poulos interviewed an analyst from Ovum about mobile data pricing recently. I was listening to this, and it reminded me about a huge telecommunications conference that I attended a couple of months ago. There were hundreds of people and operators from all around the world. At one point during the event, the wifi went down. At this point, not only did people stop blogging, twittering and otherwise recording what was going on but actually stopped looking at and listening to the speaker. Basically, at an event full of people from telcos, no-one had data roaming turned on.

The mobile operators have priced mobile data roaming so insanely that they are encouraging their customers and their own employees to seek alternatives. Instead of making a reasonable amount of money from them, they make none, and are actively training the customers to reduce future revenues. I don’t need my e-mail every second – it’s not like I’m a heart surgeon waiting to hear about a transplant – and people can text me if there’s anything urgent. So I leave roaming turned off and wait until I walk part Starbucks or wherever.

If they keep this up, they may be able to persuade to turn off mobile data completely.

 

In the future, everyone will be famous for fifteen megabytes

Which emergency service? Digital Champion please.

Yet more speed camera misery in our house. 50 in a 40 at 12.30pm on a deserted stretch of well-lit road near Guildford. But hurrah! A form arrives saying that as a means to rachet up middle-class motoring taxation a notch further, my good lady wife can opt to go to on speed awareness course and thus get off of the points. We fill out the form — name, address, driving licence number and so on (every single field on the form was something that they already knew) — and send it back.

A couple of weeks later, we get another letter, saying that they have not yet heard from us and that if they don’t hear from us then my good lady wife will be fined and “pointed”. So I set about filling in the same form yet again. Why can’t I do this online? The missive from the “Safety Camera Partnership” has a unique reference number, after all. There’s no phone number on either the form or the covering letter, so they clearly don’t want us to phone up, but there is a URL at the bottom of the letter so, hurrah, I assume I can deal with the issue online.

But, of course, there is nothing remotely transactional about the site. You can’t fill out the form online (and I’ll bet a pound to a penny that on the twentieth anniversary of the founding of Netscape on 4th April 2014, you still won’t be able to) although you can, in a nod to the 21st century, download the forms to fill out. Digital Britain at its finest: a pretty web site that cost zillions to build and but unable to execute any useful work at all. Isn’t this the sort of thing our Digital Champion is supposed to be doing when she’s finished teaching a fifth of the population to read so that they can use websites?

 

In the future, everyone will be famous for fifteen megabytes

Business banking

[Dave Birch] I see that Essex council has abandoned its plans to start its own bank to fund local businesses and the First Bank of Billericay, or whatever they were going to call it, will now never get off the drawing board. How this insane plan ever got to the drawing board in the first place is a complete mystery. Or, at least, it was until I read that the council spent £372,000 on management consultants

In the future, everyone will be famous for fifteen megabytes

Extra shots

[Dave Birch] The number of times I’ve found myself enraged by the expense of wifi — in a hotel, at a train station, wherever — is huge, but I think becoming slightly rarer. Apart from hotels, where the wifi charges are absolutely ridiculous, the situation is improving. I’m still curious, though, why free wifi isn’t more widespread.

I usually go to Starbucks because the company offers free, unlimited Wi-Fi

[From Tech Leaders: Google, Apple, and…Starbucks? — Datamation.com]

I tend to do this too. I think I prefer Caffe Nero coffee at the moment, and they have contactless payment terminals too (which ought to work faster than cash, but don’t, because of the way they are configured), but because I have a Starbucks card I can sit and get some work done using the free wifi. I really don’t understand why all coffee shops don’t just provide free wifi and be done with it and then get back to competing on coffee. Although I suppose there are other things to compete on still.

At my own local Starbucks, they’ve recently remodeled the store to add more and bigger desks, and dozens of outlets. Rather than encourage people to pay and leave, as have many big chains, Starbucks clearly encourages loitering

[From Tech Leaders: Google, Apple, and…Starbucks? — Datamation.com]

The theory, presumably, is that other than at peak times there is always room to sell another cup, a piece of cake, a biscuit for people who want to stop and work/read/relax. The next logical step would be to have iPads built in to the tables for people who want to read the news and browse around. Presumably it would be cheaper to negotiate a global deal with News International instead of messing about printing, delivering and returning copies of the The Times. (Like many people, I’m sure, I pick up my copy to read in the queue and while I’m waiting for my coffee, but I never buy it and leave it at the pick-up point.).

In the future, everyone will be famous for fifteen megabytes

Music and business

[Dave Birch] Here’s an example. I just paid £17.38 for “Bernie Plays Rory” by Bernie Marsden. Why? Because I wanted it and couldn’t find it on iTunes. There was no need to try and find a pirate version to see if I played it a few times because I already knew that I wanted it. Why? Because there’s a track on there that I love and often play in the car. Why? Because I have it on a recording of the Paul Jones show on BBC Radio 2 that I downloaded. Why? Because I often listen to Paul Jones to find new music, but I listen to him when I’m cycling to work or in the car. If you subscribe to the BBC podcast of the show, it doesn’t have the music in (hilariously). I assume this is something to do with Big Content. So instead I found a piece of shareware that lets you download from iPlayer instead of having to listen on the computer. For months I have been using this to download the Paul Jones show to my iPhone. But now it doesn’t work any more, presumably because the BBC have changed iPlayer in some way.

Well, there we are. I won’t be buying any more CDs from musicians like Bernie because I can’t listen to the Paul Jones show any more. Who does this benefit, exactly?

In the future, everyone will be famous for fifteen megabytes

A bunch of bankers

[Dave Birch] A fascinating research paper shows that

male chess players choose significantly riskier strategies when playing against an attractive female opponent, even though this does not improve their performance. Women’s strategies are not affected by the attractiveness of the opponent.

This seems to me to be as reasonable explanation as any as to why the banksters (bankster = banker who works for a privately-held bank that is “too big to fail”) took such absurd risks with other people’s money. As soon as women began appearing on trading floors, the male bankers were unable to control themselves and began putting ever-larger bets on ever-more absurd propositions that they didn’t really understand, confident in the knowledge that they had no downside. In the old days, when bankers were generally rather dull (but rather rich) men, the risks they took were proportionate. Now that bankers include attractive women, it’s all gone pear-shaped. I suggest that it is only a matter of time before the first lawsuit is filed by an out-of-pocket customer against a bank for employing women who are too attractive: perhaps this is what UBS has in mind with its new dress code that prohibits tight blouses, short skirts and black underwear.

In the future, everyone will be famous for fifteen megabytes

Twansparency

[Dave Birch] There’s an interesting post over at Virtual Economics. I’ve been thinking about it quite a bit about it since I read it. It’s about adding a new convention to Twittering to help when people tweet about companies:

There’s already an agreed taxonomy for doing so – you take the ticker of the company, and precede it with a dollar sign. Thus Google is $GOOG, Apple is $AAPL, Microsoft is $MSFT. Search for postings about Google by sticking $GOOG into the search box and you get a page like this… So we need a way to add disclosures to tweets about companies, preferably one that doesn’t take up too much space and allows for some nuance.

[From virtualeconomics: Proposing a disclosure taxonomy for Twitter]

The post is asking for a similarly simple taxonomy for letting readers know if you are posting about a company that you have an interest in and it proposes a logical, but too complicated set.

I commented: Actually, I think you’re probably right, although we need something simpler. I’ve got two ideas. There certainly ought to be a common mark for “my company provides paid services or products to the company that is the subject of this tweet”. Perhaps “@$”? So I might write “I see that @$VISA has announced their in2Pay product today” as distinct from “I see that $VISA has announced…”. There also needs to be a simple taxonomy for “I have a financial interest in the company that is the subject of this tweet. So perhaps “%” followed by the twitter name of the company. Thus I might write that %@chyppings is doing some ground-breaking work on mass-market NFC services, instead of the more neural @chyppings.

This seems like a simple and desirable element of transparency that would add to the twitter experience.

In the future, everyone will be famous for fifteen megabytes