Source: TierneyMJ – Shutterstock
- Ripple has shared an interview with the chairman of the US Office of the Comptroller of the Currency (OCC) via Twitter, in which he argues for a revolution of the current banking and payment system.
- According to Brian Brooks, in order to compete in the international race for instant payments, the US needs to adopt technologies by private companies.
Ripple retweeted a few hours ago a tweet by CNN’s Julia Chatterley, interviewing Brian Brooks, the chairman of the American Office of the Controller of Currency (OCC). As CNF reported, the OCC last drew attention under Brooks’ new leadership when it published a letter clarifying that all licensed banks in the US are allowed to offer cryptocurrency custody services.
In the new interview, which Ripple shared via its official Twitter channel, Brooks spoke with Chatterley about faster payments, cryptocurrencies and why SWIFT is outdated. Brooks first explained that the corona crisis and the shutdown exposed the weaknesses of the existing banking system.
We depended on the banks to deliver benefit payments in the form of Paycheck Protection Program, debt loans, check from the treasury department and the problem is, we were sending them across 19th century banking rails. […] My vision is that we need to get to a place in this country where payments can be transferred virtual, instantaneously, where errors can be eliminated and it turns out that technology exists that can help us do that.
Brooks also took a look back into history and discussed that there was a time when all payments were made through banks. With the advent of Fintech, Brooks said that this had changed in the last 10 to 15 years. Today, for example, even in the USA, large numbers of payments are processed via PayPal, Stripe and Square:
With the rise of fintech, largely dominated by a bunch of Silicon Valley firms, it turns out that technologies exist whether they are based on blockchains or other kinds of networks that allow payments to go much faster.
According to Brooks, it needs to be investigated whether this is a good or bad thing. The OCC’s main concern here is to be able to monitor payments to prevent fraud and protect customers. At the same time, according to Brooks, it is most likely that faster payments will be offered by private companies that the OCC monitors:
I think the best solution which you see in other parts of the world including the UK today is to have faster payments that are innovated by private companies and supervised by federal watchdogs like us. This is what I think the future will look like.
Asked about the existing system, and SWIFT in particular, Brooks said that the US needs to look elsewhere. SWIFT is outdated and needs to be replaced by new technologies, he said:
The UK, Singapore, China, many of our global competitors have adopted real-time payments. In the US this seems to be still years away we allow existing technologies to do it for us. And I think this is very possible.
Asked about the significant resistance from the US banking sector, Brooks said that the market will eventually prevail. His task, he said, is to remove the obstacles and explain fundamental regulatory issues, such as whether banks can hold cryptocurrencies:
In the world there is nothing more powerful than markets because markets represent what million users want every day and so my job is not to build new payment rails, my job is to identify impediments that make it harder for people to get what they want and need and at the OCC we have an ability to do that.
Among those include the questions like, should banks be allowed to participate in the cryptocurrency market at all, should banks be allowed to connect to blockchains, should we have central bank digital currencies, perhaps issued by private companies but backed by bank deposits.
Remarkably, Chris Larsen, co-founder of Ripple, said a few weeks ago that XRP can replace SWIFT as a cross-border payment system. Larsen explained that the lack of clarity regarding regulators and the legal framework is currently hampering development.
The OCC is currently working on a new “Payments Charter 1.0”, which should favor the fintech companies and their developments. The charter is intended to streamline licensing requirements, as licensed companies could act as a national platform regulated by the OCC rather than having to apply for 49 different state licenses.
While the first version of the Payments Charter is not supposed to include access to the Federal Reserve Payment System, eighteen months later, the Payments Charter 2.0 could include direct access to the payment system.
“We need to get to a place where payments can be transmitted virtually instantaneously, where errors can be eliminated,” says @BrianBrooksOCC of @USOCC who also explains why the #crypto “phenomenon” cannot be ignored! pic.twitter.com/0o4WZwdhnA
— Julia Chatterley (@jchatterleyCNN) August 18, 2020