Six Hundred Atlantic

Private credit, or loans by non-bank lenders, has grown rapidly in recent years. This lending is even approaching the volume of some traditional sources of business credit, like bank loans. As the rise of private credit funds changes the way companies borrow money, it’s also creating potential implications for financial stability. John Levin is a senior markets specialist in the Supervision, Regulation & Credit Department at the Federal Reserve Bank of Boston. He is the co-author of two studies examining the rise of private credit: “Could the Growth of Private Credit Pose a Risk to Financial System Stability?" and "Bank Lending to Private Equity and Private Credit Funds: Insights from Regulatory Data." For more interviews and discussions on private credit and financial stability, visit BostonFed.org/SixHundredAtlantic.aspx, and subscribe to our email list to stay updated on new episodes.

People in the credit business are starting to see just how much AI can do for them. It can improve profits and lower defaults. It can predict demand for new services. It can see past credit scores and comprehensively assess lending risks. That’s why AI’s role in credit is only going to get bigger going forward. Some people are very excited about that. And some are very worried. AI will lie unless you tell it not to. It will collude on pricing with other AI. Experts say those are a couple reasons why we need to proceed with caution and better understand potential hazards. Read an outline of the keynote speech at the 68th Economic Conference by UC-Berkeley professor Adair Morse, “AI Innovation for Credit: Frontiers of Benefits & Red Flags.” Watch a recording of the speech.

Decentralized finance feels like the future. This category of financial services is built on blockchain technology and transacted solely in crypto. It’s executed by automated programs called “smart contracts,” which helps reduce costs. And advocates say DeFi is more democratic: Everyone involved is just an anonymous node on the blockchain, making favoritism impossible. But how will it really play out? Some tell the Boston Fed’s podcast, Six Hundred Atlantic, that it requires too much tech savvy to be truly inclusive. Others worry about the safety of a “trustless system,” where the lack of an intermediary could make DeFi vulnerable to people with bad intent. And skeptics doubt decentralized finance can remain decentralized at all. View the presentations New York University professor Hanna Halaburda and UC-Berkeley professor Christine Parlour submitted for the Boston Fed’s 68th Economic Conference. Watch the panel they participated in, titled “Decentralized Finance (DeFi), Blockchain/Distributed Ledger Technology (DLT), and Smart Contracts: Hope or Hype?”

Financial technology, known as fintech, is everywhere. If you send money by phone or invest with the help of robo-advisors, you’re using it. Its proponents say by lowering costs, it can expand the range of financial services providers can offer and the pool of people who can afford them. But fintech presents risks, including to privacy. Fintech companies aren’t subject to the same regulations as traditional financial institutions when it comes to handling personal data. And some worry regulatory safeguards aren’t keeping up with fintech advances. Amid the uncertainty, fintech’s role in financial services keeps expanding. How will fintech change the landscape for consumers? Can banks adjust? And will it make a real difference for those long shut out of traditional financial services? Download the paper Harvard Business School professor Emily Williams presented at the Economic Conference, “Fintech, Financial Inclusion, and the Future of Finance.” Watch the session she spoke at, titled “Innovative Financial Technologies and Financial inclusion.”

What is the Beige Book? It’s the story of the economy that you can’t always see in the numbers. Eight times a year, each Federal Reserve Bank publishes a Beige Book after gathering real-world economic insight from regional business leaders and experts. Mary Burke is a principal economist and policy advisor with the New England Public Policy Center at the Boston Fed. She talks to Six Hundred Atlantic about what the Beige Book is and why it matters to the U.S. economy. Visit bostonfed.org to learn more about the Beige Book. For more interviews and analysis of the economy in New England and nationwide, visit BostonFed.org/SixHundredAtlantic.aspx. Subscribe to our email list to stay updated on new episodes.

The Fed’s latest small businesses survey found that 80% of respondents reported challenges related to how they send and receive payments, including credit card processing fees and slow payments systems. Brian Clarke is a payments analyst and deputy director in the Regional & Community Outreach department at the Boston Fed. He breaks down the most important findings from the survey – and how advancements in payments technology might help businesses address their top challenges. Visit bostonfed.org to learn more about payments-related findings from the Small Business Credit Survey. You can read the full report on fedsmallbusiness.org. For more interviews and analysis of the economy in New England and nationwide, visit BostonFed.org/SixHundredAtlantic.aspx. Subscribe to our email list to stay updated on new episodes.

https://www.bostonfed.org/publications/six-hundred-atlantic/interviews/synthetic-identity-fraud-how-ai-is-changing-the-gameSynthetic identity fraud is a fast-growing and costly type of financial fraud, and its threat is increasing – thanks to generative AI. Criminals use Gen AI to quickly create synthetic identities and make these fake identities seem more like real people so it’s easier to use them to steal. Federal Reserve payments fraud expert Mike Timoney discusses what synthetic identity fraud is and how it’s evolved. He says one of the best tools to stop thieves who use generative AI in synthetic identity fraud … is AI. Mike Timoney is a vice president of secure payments at the Boston Fed. Visit BostonFed.org to learn more about how the Federal Reserve is tracking the increase in synthetic identity fraud. You can also listen to a discussion with Timoney on why check fraud is rising, even as check usage declines. For more interviews and analysis of the economy in New England and nationwide, visit BostonFed.org/SixHundredAtlantic.aspx. Subscribe to our email list to stay updated on new episodes.

There are more ways to pay than ever, and payments are critical to the economy. Their safety and efficiency significantly impact the nation’s fiscal health. Boston Fed senior economist Joanna Stavins discusses the payments evolution and what to watch out for.

New Englanders love the lottery, and it’s long been an important source of public funding. But it’s not the only option for people’s gambling dollars. Boston Fed researcher Riley Sullivan talks about lottery history, policy, and trends.

The story after the pandemic started was that people were relocating more. But now, New Englanders just aren’t making as many moves, either short- or long-distance. Boston Fed economist Pinghui Wu talks about the trend and what it means.

How can smaller cities recover after their industry disappears? The Working Places initiative exists because Boston Fed researchers wanted to answer that question. On its 10 anniversary, director Colleen Dawicki discusses successes and lessons learned.

Check fraud is on the rise, even as the number of checks in circulation is dropping. Why? Boston Fed payments fraud expert Mike Timoney discusses why checks are an attractive target for thieves and how consumers can protect themselves.

Employers are reluctant to hire people with criminal histories, and that can be a drag on the economy, because they make up a surprisingly large part of the population. What can be done to reduce employer risks while giving this group a fair chance?

Research by a Boston Fed economist indicates that as many as 7 million “gig workers” aren’t being counted in the main survey that measures U.S. employment. Why? And how can policymakers get a more accurate view of their contributions to the economy?

The female workforce participation rate has flatlined in the U.S. over the last 30 years. Why? One reason is a lack of state-funded “family policies,” like child care. Meanwhile, the rise of so-called “performance pay” has left some women behind.

“Full employment” is often overshadowed by the better-known half of the Fed’s dual mandate from Congress: “stable prices,” but both are equally important to the Fed. This overview defines full employment and looks at why some groups are struggling to reach it.

Kenechukwu Anadu, who co-leads a group focused on bank, non-bank, and financial stability risks, discusses stablecoins – a type of crypto asset – and the potential impacts of their rapid growth on the stability of the financial system.

Can employers do more to solve the child care crisis? Some policy groups say child care and employer would benefit if they did. Boston Fed senior policy analyst Sarah Savage discusses what deeper employer involvement looks like and what it could mean.

The Boston Fed has long studied New England’s opioid crisis because of its economic impacts. In this episode, Boston Fed writer Amanda Blanco and photographer Steve Osemwenkhae discuss what they learned from talking with people fighting addiction and helping others overcome it.

The condition of U.S. currency–including whether it’s genuine–is the business of the Federal Reserve because healthy currency is essential to keep the economy moving. But how does the Fed know when notes aren’t “fit for commerce?” Or when they’re fake?