Clear goals

[Dave Birch] I mentioned before that I happened to be at the recent Financial Services Club dinner with Charlie McCreavy, the EU Commissioner for the Internal Market and the man behind initiatives including MiFID, SEPA and the PSD. I can’t report what he said, because the dinner was under Chatham House rules and we were asked to seek permission to use any quotes, but what I will say is that it meant that I had the opportunity to think about the general direction of regulation since it’s likely that one of the outcomes of the current crisis in the financial sector will be more regulation of all financial services. If this is the case, I hope the regulation will have more concrete and explicit targets to that we can measure whether it is working or not. Suppose, to pick an obvious example, that the purpose of SEPA was to reduce the total social cost of payments in the eurozone from the current 0.5% to, say, 0.25% in a decade. Then we could decide for ourselves whether the costs incurred (which in this case are substantial) are, in the long run, justifiable. Not regulation for political purposes but regulation to increase the net welfare, which is how it should be.

If we can’t measure what’s going on, we end up wasting money on large-scale IT infrastructure changes that make no difference to either business or consumers. One of the reason why is that the standardisation does not really end up being standardisation, but merely a superset of existing schemes. In the European tradition, we end up with a “fudge” that keeps everyone happy. This has already happened with the SEPA Cards Framework (SCF).

In particular, it rules that any national card scheme can be deemed to be compliant with the SCF if the cards it issues are technically and commercially capable of being accepted everywhere in the Sepa territory.

[From Finextra: European Payment Council clears up Sepa for Cards confusion]

How can anyone judge whether this is a step forward for the European payments industry or not unless we are all clear on what the goals of the European payments industry are? Does anyone have any concrete suggestions as to what these should be?

These opinions are my own (I think) and presented solely in my capacity as an interested member of the general public [posted with ecto]