Coppola Comment

Dear friends, this is my last post on this site. Coppola Comment has moved to Substack. You can find the new site here .  Why the move? Well, Blogger has become increasingly difficult to use. The code generator is buggy and I constantly have to mess around with the HTML to make posts look half decent. I don't have the time for this nonsense. I just need a nice straightforward CMS that doesn't make my life difficult.  Also, those of you who subscribed by email will know that for some time now you have not been receiving email notifications. This is because Google turned off Feedburner. Google helpfully said I could download the email list and do notifications myself using something like mailchimp, but I don't have the time for this, either. I want a platform that manages my subscribers and notifications for me.  I did consider moving to Wordpress, but I've never really got on with that (it's why I used Blogger). And I also considered Patreon for the subscriber side.

This is a slightly amended version of a keynote speech I gave on 14th April 2023 at the University of Ghent, for the Workshop on Fintech 2023.  The crisis that has engulfed crypto in the last year is a crisis of fractional reserve banking. Silvergate Bank and Signature Bank NY were fractional reserve banks. So too were Celsius Network, Voyager, BlockFi, Babel Finance and FTX. And still standing are the crypto fractional reserve banks Coinbase, Gemini, Binance, Nexo, MakerDAO, Tether, Circle, and, I would argue, every one of the DeFi staking pools. All of these are doing some variety of fractional reserve banking. Custodia Bank and Kraken Finance claim to be full-reserve banks – but 100% reserve backing for deposits is both hard to prove and not a guarantee of safety. What do I mean by “fractional reserve banking”? My definition might surprise you. For me, fractional reserve banking simply means that the composition of a bank’s assets is less liquid than that of its liabilities. Fra

  As the world reeled in shock at the sudden collapse of Silicon Valley Bank (SVB), another bank quietly went under. On Sunday 12th March, the U.S. Treasury, Federal Reserve and FDIC announced that all SVB depositors, whether insured or not, would have access to their funds from Monday. And then they added:  We are also announcing a similar systemic risk exception for Signature Bank, New York, which was closed today by its state chartering authority. Signature Bank NY's state chartering authority was the New York State Department of Financial Services (NY DFS). It posted this on its website :  On Sunday, March 12, 2023, the New York State Department of Financial Services (DFS) took possession of Signature Bank in order to protect depositors. All depositors will be made whole.  DFS has appointed the Federal Deposit Insurance Corporation (FDIC) as receiver, and the FDIC has transferred all of the deposits and substantially all of the assets of Signature Bank to Signature Bridge B

The last week or so has seen some of the worst bank communications since 2007, when the Bank of England started a bank run by leaking news of Northern Rock's emergency liquidity request to the journalist Robert Peston. Then as now, awful communications have frightened the horses, triggered stampedes and caused banks to fail. Three banks in particular have shown an extraordinary insensitivity to popular fears: Silicon Valley Bank, Credit Suisse, and Wells Fargo. Two of these have paid a heavy price for their management's inept handling of vital communications. But the third seems to have got away with it - this time. Next time, it might not be so lucky.  Exhibit 1: Silicon Valley Bank (SVB) In the wake of Silvergate Bank's failure, Silicon Valley Bank decided to restructure its balance sheet.  SVB's full-year accounts released in February revealed that it was backing highly volatile uninsured deposits with long-dated government securities that were falling in value and,

Silvergate Bank died yesterday. Its parent, Silvergate Capital Corporation, posted an obituary notice   (click for larger image): Silvergate Bank bled to death after announcing significant delay to its 10-K full-year accounts and warning that it might not be able to continue as a going concern. We will never know whether it could have recovered from the bank run after the failure of FTX. The bank run after the announcement was far, far worse. The exit of its major crypto customers sealed Silvergate's fate.  But the agent of death was a government agency. On 7th March, Bloomberg reported that Silvergate Bank had been in talks with FDIC about a potential resolution "since last week". Many of us had expected FDIC to go into the bank last Friday with a view to resolving it over the weekend. We now know that FDIC did indeed go into the bank, but a resolution over the weekend wasn't possible. Presumably, this means there was no buyer.  Why do I say there was no buyer? Beca

This is the story of a bank that put all its eggs into an emerging digital basket, believing that providing non-interest-bearing deposit and payment services to crypto exchanges and platforms would be a nice little earner, while completely failing to understand the extraordinary risks involved with such a venture.  On 1st March, Silvergate Capital Corporation announced that filing of its audited full-year accounts would be significantly delayed , and warned that its financial position had materially changed for the worse since the publication of its provisional results on January 17th, when it reported a full-year loss of nearly $1bn. The stock price promptly tanked, falling 60% during the day:   Platforms, exchanges and other banks halted or re-routed transactions on Silvergate's SEN payments network, and customers that had other banking relationships removed their deposits. In response, Silvergate halted the SEN network. A banner on its website now reads: Effective immediately

I haven't written a post about WASPI for a very long time. I felt I had said everything I wanted to say, and it had become evident that the WASPI campaign and its offshoots had neither the widespread support nor the legal arguments that they claimed. Labour's proposed £58bn payment to WASPI women contributed to its disastrous defeat at the 2019 General Election. And in 2020, the hardline Back to 60 group's bid to overturn their state pension age rises failed in the Court of Appeal. The Government had no intention of compensating WASPI women for their lost pensions, and there was neither legal nor political means to force it to do so. The campaign seemed, in short, dead in the water.  But it seems it isn't, quite. Some years ago, WASPI campaign received legal advice that a challenge to the legislation would almost certainly fail but that there might be a case for maladministration on the part of the DWP. Women would have to make individual maladministration claims and