banking on tomorrow in the US – sole-source policy control
According to a number of stories in recent media (new an traditional) the US Treasury with support from other concerned interests is about to propose what could amount to paradigm shift for the banking industry. According to reports, Treasury Secretary Timothy Geithner and others will be sponsoring a proposal to Congress for the creation of a new government agency whose responsibility will be as the ultimate and only banking sector regulator.
I believe it is highly likely that such a sole-source regulator by definition will try to remove as much complexity from the sector as possible while at the same time attempting to reverse the continuing erosion of credibility, which rightly or wrongly is confounding the effects of positive earnings and other early signals of recovery. In turn, I believe this will have the effect of changing the ways in which a bank manages hard currency – both notes and coins. Holding more funds while simultaneously being more creative in managing their use and distribution based on need and quality could potentially be a method to offset trust-generating holdings requirements such as cash, if such requirements existed that is.
In any regard, the new reality of an as yet only “proposed” new omnipotent bank regulator, will be much deeper and far reaching than just the cash management department. It will be interesting to see how this will impact, if at all the function of the FRB with respect to the provision of services to the commercial sector. Could we see reason to continue and perhaps even hasten the move to cross-shipping and Custodial Inventory for more or even all denominations? What would this mean for potential use-cases for recycling and dispensing technologies, not to mention note and coin sorters, coin wrappers, transportation and over-all private sector third-party services growth.
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