Facebook’s LIBRA, Good, Bad or Ugly? 9 observations.

Stuff worth knowing from The Bankers’ Plumber. LIBRA?

Stuff worth knowing from The Bankers’ Plumber

Schizophrenia often looms large when I look at new tech and new solutions in the Financial Services space. I am your typical SME; loads of years in banking, understands the legacy stuff, has changed a lot of things over time. I’m not though an outright disruptor or outsider. 

Looking at new stuff, part of me says: “This makes no sense or this is no big deal”, the other part, the chimp on my shoulder if you will, says: “There is something here I am not seeing.” The unknown, unknown as it were.

So, here is my thinking on Libra from what I have taken in so far. Feedback is welcome in any form.

First Observation: Not a totally new invention. when I first heard about Libra, or “Zuckbucks” as I christened them, I thought “Thomas Cook Travellers’ Cheques 2.0” – or alternatively the cheques were Stablecoin 0.1, and “They’ll make a ton of money on the float”. 

For those under 50, these cheques were physical bearer cheques that you bought before going on holiday. You pre-paid, say in USD, no doubt paying a fat commission and receiving a poor exchange rate. Thomas Cook sat on the cash until you used the cheque and it was presented for payment. Kerching.

That observation is about right; Libra will make money with your money.

Second Observation: If Libra helps make it easier and cheaper to make remittances aka sending money home, then this is good. See: “Will Facebook’s digital money Libra be good for Africa?”. Whilst in London, I have all the ease of Revolut to send money instantly, for free to our university student son. Right now, it costs a staggering $19 for every $200 in remittances to sub-Saharan Africa. That is a horrific burden for those on the giving and receiving end. 

Third Observation: The basket currency idea generally makes no sense. Libra’s plan is literally that you will receive a common currency, “Zuckbucks”, for your dollars, euros and pounds. They see this as part of reducing volatility in currencies. 

This makes some sense in countries with badly run economies: Zimbabwe and Venezuela are the obvious examples, where just about anything except a sieve is a better store of value than the local currency.  

It makes sense if, once you have Zuckbucks, the price of everything you want to buy is in Zuckbucks. Even then though, the average Joe is going to have to deal with exchange rates. Nearly 30 years ago I moved from London to Zurich. CHF / GBP was something like 2.20. For ages, I would translate all the local prices into pounds. The average Joe is going to struggle with that one.

But, and this is a big one, it makes no sense to me if for the average Joe, there is a chance that if you put in USD 100, and then take it out, you might get something other than USD 100. Imagine the average Joe in say Waco, Texas, puts in USD 100, has a balance of 120 Zuckbucks, then realises he needs to pay his gun club membership by cheque. The world will look a crazy place if he gets out anything less than 100 USD. Try telling him: “Joe, better luck next time. Put your 98 back in and roll the dice!”. That gun might be put to use.

Then comes the big issue of whether a Zuckbuck is a security or not. If Libra is not a bank and not a payment system, then there is a risk of Uncle Sam and some of his non-American regulatory cousins deeming a Zuckbuck a security, which brings a whole lot of tax-lot accounting burdens with it. It is possible that Zuckbucks do not pass the Howey Test to be deemed a security. That said, given Facebooks’s track record, it is hard to see no US regulator claiming jurisdiction; rather some mad jurisdictional fight like in an TV episode where a bunch of Alphabet Soup teams all turn up at a crime scene” “FBI, we are in charge”, “Miami Dade Police, we are in charge”, ”DEA, we are in charge”, etc. You get the picture.

Fourth Observation: Don’t mess with money. Facebook has badly misjudged the regulatory side of what they are doing. There is an old saying that you can either ask for permission or beg for forgiveness. Facebook’s approach has, I think, added a new dimension: “Or, if you are Facebook, you somehow expect approval”. 

Regulatory engagement and outreach seems not to have featured in the preparations. Various regulators and lawmakers have since signalled that this is not cricket aka not one of the available options. Bank of England governor Mark Carney was quite clear in his recent Mansion House speech that even the most moderate success would make Libra systemically relevant and with that, subject to a wide range of regulation.

In the US, demands from Capitol Hill have been made and statements from Treasury Secretary Mnuchin highlight concerns about whether Libra’s will provide all the controls around KYC & AML that are an integral part of the incumbent banking infrastructure.

This is important; it is as much about a level playing-field as it is about consumer protection. 

Fifth Observation: Dependency. More dollarisation is not really a good thing. I was in South Africa recently, where a topic of conversation was the African Continental Free Trade Area and how there is a huge desire to encourage more trade in local currency as a counterweight to the increasing spread of dollarisation, i.e the use of the greenback in preference to local currency. 

Libra will of course provide short-term, tactical relief in Zimbabwe, with its hyper-inflation. Substitution with Libra doesn’t seem like a great long-term strategy.

Sixth Observation: There will be a need to be some detailed discussions about about resiliency. Over at Fnality International we are very clear that what we are going to do with USC as a wholesale digital currency (W-DC) means we have to fully comply with the provisions for financial market infrastructure, the PFMI

Seventh Observation: The structure looks pretty sound. From several of my colleagues I have heard praise for the organisational and the technical side of the set-up. They noted the use of an association and also some of the tech components. 

Eigth Observation: There are opportunities to improve the customer experience, as well as efficiencies. I recommend reading: “Libra: A Strategic Perspective”. This article offers some telling insights on how Facebook might leverage its skillset to vastly improve the consumer experience aka UX. 

Ninth Observation: There is a great opportunity to improve the value of and control over “Digital Identity”. There is clearly a holy grail around identity; if we could manage our own data centrally and then provide access on a “need to know” basis, then lots of administrative things would get a whole lot easier. BankID in Sweden is an example of this in action. 

Now clearly, Facebook has got what the English police call “form” and their American Cousins call “a long rap sheet” when it comes to careless management of personal data.  So, if this latest development leads to overall improvement in how well we can store and re-use our DigitalID, that would be a good thing. If it leads to repeat offences of misuse, both deliberate and careless, by Facebook or other tech giants, that would not be good.

In summary. The world is changing and at a tremendous pace. For my part, as a veteran SME, I just have to get comfortable with the fact that there is much about the potential of new tech that I just don’t see. 

For all that change, the business of money is a very serious one that brings with it clear obligations to service and be responsible to the stakeholders: clients, business partners and regulators.

Good discipline, understanding the basic processes and a sense of proper controls will I hope get me someway to the future. 

About the Author: The Bankers’ Plumber.

I help banks and FinTechs master their processing; optimising control, capacity and cost. 

Right now, I am part of the team at Fnality International which is working on turning The USC, Utility Settlement Coin, Project into reality.  

If it exists and is not working, I analyse it, design optimised processes and guide the work to get to optimal. If there is a new product or business, I work to identify the target operating model and design the business architecture to deliver those optimal processes and the customer experience. 

I am an expert-generalist in FS matters. I understand the full front-to-back and end-to-end impact of what we do in banks. That allows me to build the best processes for my clients; ones that deliver on the three key dimensions of Operations: control, capacity and cost.

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The Bankers’ Plumber’s Handbook

Control in banks. How to do operations properly. 

For some in the FS world, it is too late. For most, understanding how to make things work properly is a good investment of their time.  

My book tries to make it easy for you and includes a collection of real life, true stories from 30 years of adventures in banking around the world. True tales of Goldman Sachs and collecting money from the mob, losing $2m of the partners’ money and still keeping my job and keeping an eye on traders with evil intentions.  

So you might like the tool kit, you might like the stories or you might only like the glossary, which one of my friends kindly said was worth the price of the book on its own.  Or, you might like all of it. 

Go ahead, get your copy! 

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An up to date view of the latest issues and how BCBS guidance that came into force from Jan 1 2015 will affect this area of banking. Kindle and hard copy.

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The New Contract Recruitment Process
The New Contract Recruitment Process

5 Costly Mistakes to Avoid When Consulting

Originally published > www.inc.com/brenda-della-casa

5 Costly Mistakes to Avoid When Consulting

Take note: If you’re afraid to offer a contract, you shouldn’t be in business.


There are few things more fulfilling for new business owners than signing that first client and having the chance to do what they love under the structure of their own business and brand. Freelancing is an exciting venture, and in today’s market, it’s big business. A 2016 study by Upwork showed that there are 55 million freelancers in the U.S., making up 35 percent of the American work force.

If you’re thinking of joining the consulting club, let me be the first to congratulate you. You’re in for one of the most rewarding experiences of your professional life, but only if you do the work to ensure that you protect yourself. Ignore this important step and you’ll set yourself up for a lot of unnecessary stress and possible burnout.

Here are five tried and tested ways to avoid some of the more common mistakes made by new consultants.

1. Mistake: Not setting the right tone.

Because most freelancers are usually so excited to have their first one or two clients, it’s not uncommon for them to fall into the trap of doing a little extra (read: free) work here and there. They will eagerly respond to messages and emails immediately and take calls when they really should have been scheduled. They think they’re being generous and accommodating (and they are), but the clients see this as setting a tone for the rest of the contract. This tends to backfire as clients become accustomed to having responses in real time, all of the time. Before you know it, confusion ensues. The consultant is overwhelmed and both parties are frustrated and resentful.

Protect yourself: Put your guidelines in writing — and stick by them.

Have a very clear discussion laying out your professional boundaries and ask your client to do the same. Come to an understanding about working hours and response times and agree on how you will schedule calls, meetings, and Skype sessions. Once you are in agreement, put all of this information into your contract (see below) and have both parties sign it. If you are going on vacation or going to be unavailable on certain days, let your clients know as far ahead of time as possible. Ask them to do the same.

2. Mistake: Being afraid to put a contract in place.

I recently asked 15 consultants if they offered their clients contracts and was surprised to find that only three had one in place. The most common reason for not offering up a formal agreement? Consultants were worried that doing so would cost them a gig. The best way to move past this costly concern is to understand that quality contracts are put into place to protect both parties, not for one to strong-arm the other. This is done by making responsibilities and timelines clear, securing payments and fees, and putting a formal agreement in place if the relationship does not work out.

Protect yourself: Make it legal.

For most professionals, a contract is a basic step in the process of doing good business. Put bluntly, anyone who is unwilling to put his signature where his mouth is isn’t someone you want to be in business with. In fact, several business owners I spoke with claimed they would steer clear of a consultant who didn’t offer one, out of fear that that consultant would be unprofessional or untrustworthy. Paying a few hundred dollars to have a lawyer look over your verbiage (to ensure that you have covered everything properly and are fully protected) is a worthwhile investment.

3. Mistake: Not holding clients accountable.

Whether it is allowing clients to hand in deliverables late, jumping through hoops to complete tasks by unreasonable deadlines, or working with an unpaid invoice, many freelancers help create a culture of chaos by not drawing a line in the sand when clients behave badly.

Protect yourself: Create consequences.

Though revisions and delays are inevitable on most large-scale projects, there needs to be a clear understanding as to who is doing what and when it is due. I personally like to use a task-management system to manage to-do lists and follow-up with a weekly email outlining what is being worked on and what is outstanding. It is also important to remember that accountability goes beyond checking items off a list. If a client schedules a call and goes MIA, doesn’t pay an invoice on time, or crosses a line, you need to have a system in place to deal with it. Charging the client for a percentage or the full amount of time you set aside for the call is not inappropriate and stopping all work until an invoice is paid is acceptable. Just be clear to have these guidelines laid out in the contract beforehand. Once they are in place, it is up to you to abide by them.

4. Mistake: Allowing them to treat you like their employee.

One of the biggest struggles freelancers face is forgetting that they are in a professional partnership with their clients. You are doing work for them, not working for them. The distinction is an important one.

Protect yourself: Remember that boundaries are a good thing.

As a consultant, you are not privy to the benefits of a full-time employee, nor are you involved in the day-to-day running of the business. You have been contracted to do a specific job because of your talent, not to get caught up in office politics or drama or to feel anxiety about the mood or shifting decisions of your client every day. Additionally, when on-site, you are not there to “jump in and be a team player” on tasks that are not outlined in your contract.

5. Mistake: Getting too friendly with clients.

We all want to work in a friendly environment, but getting too familiar with a client will inevitably blur the line between the personal and professional relationships. This can make objective decision-making and clear communication difficult in the long-run.

Protect yourself: Keep a professional distance.

No one is saying not to open up a little bit or that you need to turn down every cocktail invitation, but it is important to know what to share and when to leave. This is where that age-old advice still rings true: Do not open up about or do anything you’d be embarrassed to have in print. Simple.




ICOs, Cryptos & CCOs. The differences. Stuff worth knowing from The Bankers’ Plumber

Two out of three ain’t bad. You have probably heard of the expression crypto currency; Bitcoin is the poster child, and Ether its sibling. ICOs are likely just as familiar; Initial Coin Offerings, which are a a variation on IPOs. What about CCOs? Never heard of them? The extra C is for Collateral; collateralised coin offering. I am advising a client on a really interesting CCO offering, so now seems a good time to offer a view on what might be the new, new thing in the digital space.


An ICO is a means of raising capital. Rather than a traditional prospectus or offering memorandum, it is based on a White Paper, which outlines what the company will do with the proceeds.

This activity is very similar in nature to what happens in the traditional securities & banking world, with the result that regulators are beginning to flex their muscles and draw some lines to weed out bad actors. The SEC has just closed down PlexCorp for fraud; the company was promising monthly returns north of 1’000%.

As far as I can tell, most ICOs are simply asking for money saying they will do A, B or something completely different, without much in the way of a concrete business plan. The rise of the internet and the instantaneous nature of global communication means that it is very easy to spread a message about any ICO and as a result it is more likely you can find somebody, somewhere to give you money. If you invest, you need to be able to lose your money. As the saying goes: not for widows or orphans.


A crypto currency is largely a digital figment of the imagination; an imaginary value is placed on them. My view is that they are the same as art; they may be scarce and they are simply worth what somebody is wiling to pay. In truth, they have the same backing as any government issued currency; none. They both rely on trust. So far at least, officials believe that people have more trust in government than in private companies. At least this was the view offered by a Fed Governor recently on why a crypto currency would not undermine the US dollar. In Venezuela right now, you would be mad to suggest the same rules apply. You gotta have faith; in the former there is some, in the latter there is none.

A digital dollar

The same article cited the Head of the NY Fed as saying the Fed is looking at Crypto currency. This would be really welcome. In my opinion, the Fed and its fellow Central Banks are too slow on the uptake here.

For the CCO project, we will need to collect both fiat and crypto payments from buyers of the CCO. Crypto is easy and we can make it very close to a PvP, Payment vs. Payment process. Very close rather than exactly, because we need to do an FX trade to move from crypto to fiat to buy the underlying asset. Fiat is actually hard and involves some good old fashioned settlement risk for our clients; we have to collect up their subscriptions before we issue the coins. It would be a lot easier if we could accept digital Euro and Swiss Francs.

Actually, there is a digital version of the Euro and the USD; Tether. It is a private offering and claims to be 100% backed by deposits in fiat currency. This is really very much the same as somebody in Kenya giving money to their local mobile phone operator to load an M-Pesa balance on their phone. But, and it is a big but, these Tether coins will not be fungible with any other offerings doing the same thing. Imagine if you could not move the dollars in your account at Citibank to your account at JP Morgan. Add to this, you are moving your trust from banks to a start-up enterprise that is not a bank and does not have all the checks & balances that a bank has. Novel, perhaps even necessary in short-term as a step on a longer journey, but not an answer for the long term and not fit for purpose for the institutional market.

CCO, the Collateralised Coin Offering

This is like an Asset Backed Security. Understanding that you are making a sound investment means knowing a couple of things about the underlying asset; is that asset both liquid and non-volatile? Bitcoin is none of these, and even some of the major ABS products of the past turned out to have a lot more price volatility than anybody envisaged. MBS, Mortgage Backed Securities, offered comfort in in that there was an underlying asset if the payments were not made; as we now know, not all of those mortgages were equally sound.

The second factor is about the transparency of the underlying assets. This is where a certain Bernie Madoff hoodwinked all and sundry. The assets were not there. Now Tether, cited above, may be technically brilliant and it says it has the assets, but it is fatally flawed in a worst case scenario. The only place Tether can keep its $800+ million in assets is at one or more commercial banks. That is a lot of credit risk. Cash assets have very limited protection in a bankruptcy; the 100k or so that might be backed by one or other government depositor insurance schemes will not help much.

Lessons to be Learned

The ideal source of power for transactions in a digital global economy would be CBDM; central bank digital money, with the government acting as transfer agent, providing a 1:1 instant on-demand exchange facility and then locking up the fiat currency at the central bank.

Singapore is getting there with its project UBIN. The banks are trying to fill this void; UBS is leading a consortium developing a Universal Settlement Coin.

Those individual efforts are a necessary stage of the journey; regulators and central banks may well observe from the touchlines and then support the infrastructure with carefully worded regulatory guidance. This has happened in FX, with the BCBS stating in BCBS 241 on FX Settlement Risk that PvP, Payment vs. Payment, is the preferred settlement option. There is only one PvP utility available; CLS.

CCOs have the potential to establish themselves in the same generally positive way that the traditional ABS products did. To do that, they ideally need to be linked to an asset that does not have a volatile price and where the underlying assets are transparent and not subject to further issuer risk.

The CCO I am working on promises to do both those things. Super exciting. More in due course.

About the Author: The Bankers’ Plumber. I help banks and FinTechs master their processing; optimising control, capacity and cost.

If it exists and is not working, I analyse it, design optimised processes and guide the work to get to optimal. If there is a new product or business, I work to identify the target operating model and design the business architecture to deliver those optimal processes and the customer experience.

I am an expert-generalist in FS matters. I understand the full front-to-back and end-to-end impact of what we do in banks. That allows me to build the best processes for my clients; ones that deliver on the three key dimensions of Operations: control, capacity and cost.


Originally published on the 3C Advisory website.