From: hughes@ah.com (Eric Hughes)
Date: Tue, 30 Aug 94 08:28:17 PDT
To: cypherpunks@toad.com
Subject: In Search of Genuine DigiCash
In-Reply-To: <2E628D30@microcosm.SanDiegoCA.NCR.COM>
Message-ID: <9408301507.AA01626@ah.com>
MIME-Version: 1.0
Content-Type: text/plain


   Anything that our government would come up with would be???
	c.   Expensive because of all the regulations.

I was reading American Banker yesterday, and found an absolutely
amazing figure, which did not strike me that moment, so I don't
remember details.  I'm remembering this a bit dimly.

~"The cost of compliance in a typical USA bank is 14% of operating
costs."~

Compliance refers to all the things the regulators make a bank do.
Some the bank might do anyway, e.g. for a hypothetical private deposit
insurance provider, but part of it is only for the benefit of the
regulators.

Now 14% is huge in terms of relative competitive disadvantage.  In a
tight market, even a 3% price difference in a commodity service is
enough to capture a market.  It's these kinds of effects combined with
international competition which will cause banking deregulation in the
USA.

Eric