Frauds, terrorism, and bathtub curve

Lessons from reliability and bathtub curve for busting crimes

Frauds and terrorism

Formidable military cantonments with awe-inspiring security have existed for centuries. Treasure, including notes and coins, have also moved for centuries. Banks have time-honoured systems and processes for internal control and audit.

Nevertheless, we hear of security breaches in military establishments. The choice of time, location, and other details point to a high level of planning. Daring and well-planned train robberies involving sovereign treasure make some Western flicks seem like minor pickpocketing. Bank frauds the size of several Satyam frauds point to governance failures from top to bottom. Investigations followed, and responsibility fixed. The immediate causes were familiar. System failures, noncompliance with laid down procedures, and ignoring established norms. One rarely identified root causes to see why noncompliance took place. And what actions could prevent them in the future. Continue reading “Frauds, terrorism, and bathtub curve”

Fintech and Financial Stability

A critical look at IMF recommendations on financial stability concerns from Fintech and DeFi

Decentralized Finance — Photo by Shubham Dhage on Unsplash

Fintech and financial stability

Fintech is technological innovation in financial activities, or in other words, financial innovation aided by technology. This by itself is not new. The ATMs which made their entry in the late 1960s was also in this sense, fintech. With the rapid growth in crypto assets in recent years, and that of decentralised ledger technology (DLT), fintech has evolved and grown rapidly in recent years to provide traditional banking functions, including deposit taking and lending. Referred to as Decentralized Finance, or DeFi for short, it threatens to disintermediate banks from savers and borrowers, transform the traditional banking landscape, and threaten financial stability. The IMF flagged its concerns in the third chapter of the April 2022 issue of its biannual Global Financial Stability Report (GFSR). Continue reading “Fintech and Financial Stability”

CBDC and the Future of Money

The growth of cryptocurrencies in the last decade has forced many central banks across the world to consider issuing their own version, called Central Bank Digital Currency (CBDC). There have been several studies, official and private, that examine the pros and cons of introducing CBDC. Eswar Prasad in his new book provides a comprehensive look at the entire gamut of issues relating to CBDC.

My review of Eswar Prasad’s new book on fintech, cryptos, and CBDC: Future of Money: How the Digital Revolution is Transforming Currencies and Finance. Continue reading “CBDC and the Future of Money”

Ten economic predictions for 2022

Predictions

“Prediction is very difficult, especially if it’s about the future” is a famous quote attributed in different forms to people ranging from Niels Bohr, the great physicist and Nobel Laureate, to Yogi Berra, the all-time great baseball catcher. But, that has never deterred predictions, especially economic predictions, as a universal beginning-of-the-year pastime. Continue reading “Ten economic predictions for 2022”

Alan Turing – The Madras Connection

What do the Bank of England, Benedict Cumberbatch, Nandan Nilekani, the Second World War, mathematical biology, Mettur Dam, the humble punkah, and Chatrapur have in common? For added measure, one might add the Madras Railway, Tungabhadra Bridge, Coonoor, the German U-Boats, cryptography, and Bletchley Park, once the top-secret home of British code breakers. The answer is Alan Turing, mathematician and philosopher. He contributed to cryptography and mathematical biology, among other subjects, and is the father of modern computer science. Continue reading “Alan Turing – The Madras Connection”

Governor Brainard on Digital Currencies

Governor Lael Brainard of the US Federal Reserve, speaking at the Federal Reserve Bank of San Francisco’s Innovation Office Hours, on 13 August 2020, gave an update on the work on Central Bank Digital Currencies in the US. She is a former Assistant and Associate Professor at MIT, and an Under Secretary in the Department of Treasury under the Obama administration. Continue reading “Governor Brainard on Digital Currencies”