[Dave Birch] Payments aren’t just about contactless taps on the buses and chip and PIN in the shoe shop and PayPal on eBay. They are also about banks clearing with other banks, brokers settling with other brokers and companies paying other companies. Long ago, in the days before electronic payments, the City of London, the world’s financial capital and the very hub of the global money system had simple and straightforward payment and settlement systems for handling these transactions. Chaps did business with other chaps (dictum meum pactum and all that) and then they sent their men around to settle up.

the inspectors found that the bank’s clerks who did business at the Exchequer each day walked through the streets of London with more than 100,000 pounds in bank notes carried in a “small Tin Chest,”

[From U.K. Bank Inspectors of 1783 Found Some Familiar Flaws – Bloomberg]

In other words, in 1783, the British empire was kept afloat by chaps were wandering around the Square Mile with the equivalent of TWENTY MILLION QUID in biscuit tins. Well, if it ‘aint broke, don’t fix it I guess. The system of having chaps wandering around with wads of wonga continued, essentially, until the early 1990s, when what I understand is the second biggest robbery in history took place (I don’t think they count the taxpayer bailouts of too-big-to-fail investment banks).

John Goddard was a 58 year old messenger working for broker Sheppards, who was mugged whilst carrying a briefcase on a quiet London side street. However, the contents of that briefcase contained £292 million in bearer bonds. Goddard was delivering Bank of England Treasury bills from banks and building societies.

[From 10 Largest Robberies in History]

I well remember this mugging of astonishing proportions, because at the time one of our biggest projects was with the Bank of England, working on what eventually put a stop to the chaps wandering around with satchels stuffed with M4: When the Bank of England’s Central Gilts Office (CGO) and Central Moneymarkets Office (CMO) went online.

One of the very first projects that Consult Hyperion worked on was the Bank of England Central Gilts Office (CGO), way back in the days of “Big Bang”. We were subsequently chosen by the Bank of England to work on the Central Moneymarkets Office (CMO) and then CREST, the equity settlement system that they created when the Stock Exchange’s TAURUS project collapsed. These are now part of Euroclear, which makes the card scheme networks look like loose change: it currently handles an average of HALF-A-TRILLION pounds per day in gilt, equity and money market trades.

[From Digital Money: Heavy weather]

That was then. This is now. In the last quarter, they turned over FOUR HUNDRED TRILLION EUROS. So thanks to the efficiency of electronic payments and the sterling (pun intended) work of our experts in securing electronic transactions, you just don’t see people wandering round with huge quantities of cash on them them. Oh, wait…

I watch some people leave with bundles of notes – one man, who has brought in several kilos of gold, walks out on to the street with nearly £75,000 in £50 notes stuffed into a plastic carrier bag.

[From The great Asian gold theft crisis | UK news | The Guardian]

A bank would have to file a suspicious transaction report, wouldn’t it? I mean if someone came in with 75 grand in euros and wanted them changed to pounds. And given the strongest money laundering regulations in place around the world and the diligence with which banks enforce these regulations, I’m sure this money has legitimate sources. And as for the gold, surely you don’t see people carrying gold around any more. Oh, wait…

AN airport maintenance worker who stole cash and three gold bars worth more than 550,000 yuan (US$86,136) from a passenger’s luggage on a carousel belt was sentenced to 11 years in prison, the Changning District People’s Court said yesterday.

[From Airport worker’s theft punished — Shanghai Daily | 上海日报 — English Window to China New]

When I fly, I won’t put my laptop charger in my checked baggage since I assume that there is a reasonable chance that it will get lost or stolen. I really don’t think I’d entrust gold bars to the carousel. If I had a load of gold bars, I want to travel with them myself so that they would be safe. Oh, wait…

Armed men dressed as police boarded a fishing boat Friday in Curaçao and stole about 70 gold bars worth an estimated $11.5 million (£7.2 million), police in the southern Caribbean island said.

[From Multi-million gold heist from boat in Caribbean – Telegraph]

What is going on? Secure, cost-effective electronic alternatives are in place yet people carry around gold bars and bags of cash with associated transaction costs (taking into account transport, loss, theft and storage) that are vastly greater than anything CHAPS, FPS or Euroclear might charge. There is, surely, only one explanation. Non-electronic large payments made using bearer instruments such as 500 euro notes or gold bars (or the Slower Payment Service, SPS, as I think of them) are all about crime.

These are personal opinions and should not be misunderstood as representing the opinions of 
Consult Hyperion or any of its clients or suppliers


  1. @dgwbirch Thank you for another insightful blog.
    I read this post along with another recent tweet reminding me of a phase you coined “Identity is the new money” and reports of the new free press foundation.
    Identity conversations often revolve around the need of anominity or pseudonymity. Both of which could offer a sense of privacy (if executed correctly)?
    So I am curious if new money should provide privacy.
    Does a digital tipjar need to know who you are?
    Separately, should new money be traceable or can the benefits of non-traceability out weight the perceived risks?

  2. HOW DARE YOU suggest that my wish to keep my affairs private from criminal institutions makes me a criminal.
    And what planet are you on when you say that money laundering rules are enforced? Is anyone in jail yet from HSBC? Do you think that exposing these crimes stopped them from happening there and in every other bank?
    No the ‘enforcement’ is only the big gangs weeding out the competition. And by blithely ignoring this rampant, unpunished crime, you are covering up for some of the biggest mobsters on the planet. Is your money that good?

  3. [Dave Birch] I’m not against privacy, and nowhere have I suggested that your affairs should not be private. But having been involved in discussion and dabte about this time and again, I really to think that I am against anonymity

  4. ‘Against anonymity’ is rather a blanket policy. Don’t you think anonymity is appropriate, even necessary sometimes – Like when your ‘private’ data is being managed by unconvicted criminal organisations? Your policy seems to assume that the governing powers are benign.

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