In light of recent events Thomas J. Curry, head of the Office of Comptroller of the Currency, has published a speech of significant importance for the whole bitcoin industry. The main topic of the conference – ‘Leading towards the future; ideas and insights for a new era’ – reflects the main idea of supporting new technologies. The importance of leveraging all possible innovations went through the whole discussion.
Curry talked about digital currencies as a possibility to change the way we think about money. Its potential can deprive banks of the traditional role of intermediaries. It can become a matter of time when traditional financial systems will be replaced by automated ones.
Despite the obvious attractiveness and usefulness of innovations for the society, they shouldn’t be treated blindly. Curry looks back of the financial crisis when such ideas as Adjustable rate Mortgages, Structured Investment Vehicles and quite a number of complex securities came both institutions and consumers at a cost. Mistakes shouldn’t be repeated and in this regard reasonable regulation is a key.
A concern was expressed during the discussion that many ideas don’t find real application due to complicated regulatory approval process. At the OCC they see developing a framework to evaluate new financial products and services as chief goal. The whole team of specialists from different sectors – lawyers, policy experts and others – is working on the problem.
In the part devoted to bitcoin Curry underlined the importance of finding a rational balance between encouraging innovations and managing risks. Current interest in digital currencies and bitcoin in particular, is undeniable. Curry shares the opinion that one of the main advantages of new payment option is absence of double spending. People are offered less expensive way to settle transactions.
Curry says: “That’s not objectionable in and of itself, but one of the attractions of virtual currency is anonymity, and so we need to be sure that federal banks and thrifts that participate are adhering to requirements of laws aimed at deterring money laundering and terrorist financing. Again, this is basic risk management, and it’s no different from the diligence we expect from traditional account management.”
In his speech Curry didn’t deny the importance of traditional banks existence: “That’s an important piece of the American economic fabric when bankers who know the businesses and families they serve are willing to lend money and stand by borrowers in good times and bad because they know the character of those customers.” However the society should welcome innovative approaches to traditional services and here regulators step forward. Only in case of reasonable regulation people will leverage innovations to the full.