Connecticut Banking Commissioner Jorge Perez recently presided over a public hearing for the formation of a proposed de novo bank in Greenwich, to be called Currency Reserve.
Currency Reserve styles itself as a fintech bank, but it will primarily serve customers by providing them with direct access to physical deliveries of physical cash.
“Currency Reserve aspires to be an appropriately capitalized state bank with principal offices in Greenwich, Connecticut,” said CEO Vivek Tyagi at the hearing in Hartford. “As described in the application document submitted to the department and reviewed by FS Vector in the feasibility study, we plan to safely and responsibly engage in bank note distribution of U.S. dollars.”
Tyagi has a long history in banking, including roles as the head of risk management for liquidity and short-term investments at JP Morgan, managing director and chief risk officer at Bank of America Merrill Lynch, and managing director for the investment banking division at Goldman Sachs.
Tyagi also served as the head of risk for products at Silicon Valley Bank between 2018 and 2019. Recently, empty positions within the risk management team at Silicon Valley Bank were blamed by some analysts and commentators for the bank’s collapse.
According to Tyagi, Currency Reserve will fulfill the application requirement that approved banks will benefit the state by contributing to efforts to keep the U.S. dollar as the world’s primary reserve currency. To that end, Tyagi cited his experienced management team as an asset in launching the bank.
“In addition to [Chief Administrative Officer and General Counsel] Matthew Hurlock and myself, the rest of our management team are highly experienced and have deep functional subject matter expertise,” he said. “For good governance, our management team is overseen by a board of directors that have longstanding alignment with the department of banking and the Federal Reserve’s principals for the safety and soundness of the U.S. banking system.”
Hurlock has worked for almost 15 years with various law firms, specializing in mergers and acquisitions. Also named on the application was Richard Ravitch, who was lieutenant governor of New York for a brief period of time. He was prevented from serving in most of the role’s functions due to a series of legal battles over the constitutionality of his appointment by David Paterson after the resignation of Eliot Spitzer in 2009. During his actual time in office, Ravitch focused on tackling budgetary concerns and also served in a number of appointed positions in New York government.
Three applicants are members of Salt Lake City, Utah-based Cynosure Group, a financial services company. Among them are Randal Quarles, a founder and current executive chairman of the Cynosure Group and former member of the Board of Governors of the Federal Reserve System from the end of 2017 to 2021. Quarles is joined by Zachary Larkin, a managing director of the Cynosure Group with extensive experience on company boards and self-described “adrenaline junkie,” and Gregory Giordano, an associate at Cynosure.
Commissioner Perez had few questions for the applicants, saying he had closely read all the application materials. However, he did pose a philosophical question: “Given the growth of digital currencies how do you think the whole concept of a bank might be impacted by the concept of a digital world?”
“Our belief is that bank notes occupy a distinct value proposition which is not adequately serviced by the digital alternatives,” Tyagi replied, citing a feasibility analysis by FS Vector, a consulting firm that specializes in services for innovative financial institutions.
FS Vector representatives told the commission that the bank is likely to succeed, even if faced with headwinds from changes in the market, or the adoption of a “digital dollar” and recommended that approval be granted contingent upon gaining access to Master Account and Cash Services Access through the Federal Reserve to acquire the dollar bills for distribution, and contracting with fully licensed delivery providers to ensure that the banknotes can be securely delivered.
Commissioner Perez stated he will render his decision in writing as soon as practical.
