Re: DBS, Privacy, Money Laundering nonsense.

[Robert Hettinga <rah@shipwright.com>]

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From: "Michael Alexander" <mfa@alpha.univie.ac.at>
To: <dcsb@ai.mit.edu>
Subject: Re: DBS, Privacy, Money Laundering nonsense.
Date: Sat, 14 Nov 1998 20:52:53 +0100
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Reply-To: "Michael Alexander" <mfa@alpha.univie.ac.at>

>From: "Black Unicorn" <unicorn@schloss.li>
> That's on the order of $600
>trillion per year, just in SWIFT.  (Add another $1.3 billion for CHIPS and
>$989 million for Fedwire daily.  Oh, don't forget the foreign exchange

as a minor correction, SWIFT 's main service is to exchange payment
messages to feed into e.g. Fedwire or CHIPS so that would be double
counting

>The payment system today eats up over 1.5% of the GNP primarily because of
>nonsense regulations like CTR's and other transaction reporting
...
>1% of the GNP.  Instant 1% growth for changing a system of clearing.  Think
>about that for awhile.

slowly on that: payment systems costs represent what economists call
'specific taxes' that is they inflict deadweight losses on the economy. More
efficient payment instruments such as some being based on bearer
certificates would per se lower GDP but lead to higher demand in theory.
Its effect would be as instant as a cut in other broad ones such as income
or capital gains that is it involves lag.

On the actual percentage of payment systems costs as % of GDP my
estimates are way higher. By simply taking clearing float days of the major
retail, business and interbank instruments, the figure is more like >2%
with current (low) interest for the U.S. and even higher for Europe. This
does
not take into account that a more efficient payment system with a higher
money velocity would lower the demand for transaction money among other
effects.

Michael






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-----------------
Robert A. Hettinga <mailto: rah@philodox.com>
Philodox Financial Technology Evangelism <http://www.philodox.com/>
44 Farquhar Street, Boston, MA 02131 USA
"... however it may deserve respect for its usefulness and antiquity,
[predicting the end of the world] has not been found agreeable to
experience." -- Edward Gibbon, 'Decline and Fall of the Roman Empire'