2013-06-03 WSJ Fed Studying Risks at Online Payment Providers

[Paul Troon]

http://online.wsj.com/article/SB10001424127887324063304578522773030115546.html

By LINGLING WEI

SHANGHAI—The U.S. Federal Reserve is examining potential risks associated with online payment providers such as PayPal and Bitcoin, a top Fed official said at an international monetary conference on Monday.

Federal Reserve Vice Chairwoman Janet Yellen speaking at an international monetary conference in Shanghai on Monday.

"We have been talking at the Fed and with banking organizations, trying to understand what the concerns are with these new payment mechanisms," Fed Vice Chairwoman Janet Yellen said at a panel discussion, in response to a question about regulatory scrutiny over online payment providers such as PayPal, a unit of eBay Inc. EBAY -1.10% of the U.S.

[kjlimo]

Bummer have to pay to read that article.

Glad to hear the Fed is studying risks of systems that have been in place for years...  Almost like they are doing their job

[Paul Troon]

Access from an incognito window (that's the term in Chrome) and you should be able to read it.

[aigeezer]

Bummer have to pay to read that article.

Glad to hear the Fed is studying risks of systems that have been in place for years...  Almost like they are doing their job

Forgive me if you already know what follows. Most people don't.

The Federal Reserve is not a government regulatory agency. It is a coalition of banks. The name makes it sound like something different from what it is and many people assume it is a branch of the federal government. The Fed is studying the risks to its members in the banking industry, which is to be expected. We can also expect them to use their influence with government to push back any risks they perceive - such pushback may or may not be in the public interest.

From the FAQ on the Fed's site: "It is considered an independent central bank because its monetary policy decisions do not have to be approved by the President or anyone else in the executive or legislative branches of government, it does not receive funding appropriated by the Congress, and the terms of the members of the Board of Governors span multiple presidential and congressional terms."

http://www.federalreserve.gov/faqs/about_14986.htm

My paraphrase of that is "You can't touch us - and nobody else can either."

The fact that the Fed has a dot-gov domain name for the very site in which it asserts its independence from government adds to the murkiness of the situation.

Lest we forget what they are about, here's that famous quote from Bernanke: “It’s not tax money. The banks have accounts with the Fed, much the same way that you have an account in a commercial bank. So, to lend to a bank, we simply use the computer to mark up the size of the account that they have with the Fed. It’s much more akin to printing money than it is to borrowing,”

http://blogs.wsj.com/economics/2010/12/22/is-the-fed-printing-money/

[giszmo]

WSJ Fed Studying Risks at Online Payment Providers

Oh, that would be great news if only it would mean what it reads like. So they evaluate the chargeback risks? The identity theft risks? The third party risks? The devaluation risks? Sounds like soon the FED will abandon the Dollar for some superior kind of money.

[n8rwJeTt8TrrLKPa55eU]

Of course, the "potential risks" of alternative systems are always emphasized, never the benefits.  Authorities must always keep the river of fear flowing.

Perhaps some fearless reporter should've pointed out to Mrs. Yellen that central banks themselves are pretty much the greatest systemic risk generators in the history of mankind.  I think many people worldwide would prefer to see the Fed actually start "studying" the risks of its own eternally-debasing, moral-hazard-inducing, serial-bubble-blowing monetary policies before it goes off and starts looking at "risks" in other systems.

[kiba]

The Feds being independent means that they don't have to play politics, which we all know sucks.

However, it does not mean that the Feds will do a good job of managing monetary policy.

[cypherdoc]

Of course, the "potential risks" of alternative systems are always emphasized, never the benefits.  Authorities must always keep the river of fear flowing.

Perhaps some fearless reporter should've pointed out to Mrs. Yellen that central banks themselves are pretty much the greatest systemic risk generators in the history of mankind.  I think many people worldwide would prefer to see the Fed actually start "studying" the risks of its own eternally-debasing, moral-hazard-inducing, serial-bubble-blowing monetary policies before it goes off and starts looking at "risks" in other systems.

you'd have to be honest to do that.

[ArticMine]

Bummer have to pay to read that article.
...

Copy and paste the article title into Google works. These pay-wall publishers want their content indexed by the search engines for free so that is the price they have to pay.

[marcus_of_augustus]

Bummer have to pay to read that article.

Glad to hear the Fed is studying risks of systems that have been in place for years...  Almost like they are doing their job

No it is absolutely NOT their job. Their job was simply the stability of the US dollar FRN (and secondarily the banking system) ... and at that simple task they have abjectly failed, it has lost 99% of its value since 1913.

[cypherdoc]

Bummer have to pay to read that article.

Glad to hear the Fed is studying risks of systems that have been in place for years...  Almost like they are doing their job

No it is absolutely NOT their job. Their job was simply the stability of the US dollar FRN (and secondarily the banking system) ... and at that simple task they have abjectly failed, it has lost 99% of its value since 1913.

you're looking at this from the wrong viewpoint.

as far as corporations, banks, and gov't are concerned, they've done a stupendous, bang up job since 1913.

you have to learn to think positive.

[aigeezer]

Bummer have to pay to read that article.

Glad to hear the Fed is studying risks of systems that have been in place for years...  Almost like they are doing their job

No it is absolutely NOT their job. Their job was simply the stability of the US dollar FRN (and secondarily the banking system) ... and at that simple task they have abjectly failed, it has lost 99% of its value since 1913.

you're looking at this from the wrong viewpoint.

as far as corporations, banks, and gov't are concerned, they've done a stupendous, bang up job since 1913.

you have to learn to think positive.

Irony noted, but there is some wry truth to it because of the Fed's other self-declared mandate to keep employment high. One way to interpret that is 100 years of wage-slaves chasing ever-retreating rewards - much too busy to think of much else. Mission accomplished.