The Strategic Imperatives of Digitizing the Dollar

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   thank you everyone there's going to be a time when we finish up tomorrow for so many thanks to so many people that made this happen I'm not going to do that now I just have one thanks and that thanks is to all of you for bringing your thoughtfulness your intelligence your good will to Bear today we successfully was were able to take the discussion of cbdc stable coins and crypto out of the politization of Washington and have an intelligent and

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   thoughtful discussion of it which is a miraculous achievement so thank you to all of you I have a few minutes tonight before a fabulous panel that you're going to hear from in a few minutes and I want to use the next 10 minutes to issue if you allow me a challenge indeed a call of action to all of us gathered together following today's discussions and that challenge is simply to make the future

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   of digital currency one that is worthy of free societies and free peoples and true to our finest and most noble ideals so what do I mean by that what am I talking about well let me start by observing that modern money today is changing and changing rapidly that was the message we all heard it's expanding from fungible cash bills and electronic notations on the balance sheets of Central and Commercial Banks to Unique

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   digital notations on new digital infrastructure operated by global decentralized collectives National Sovereign governments and private sector entities in short the internet is doing to Banking and finance and money what it's already done to information gathering Wikipedia retail shop shopping Amazon entertainment YouTube social networking Facebook and Twitter photography fit uh Tik to journalism and

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   so much more and what is that well it's increasing speed efficiency and automation it's lowering costs it's increasing inclusion it's unlocking new business models and Woe Is it disrupting intermediaries and challenging the traditional Financial system and it's already happening as we know from the great work of the Atlantic Council today well over 100 foreign Nations representing over 95% of the

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   world's GDP are exploring various forms of Central Bank digital currency and it's not just central banks it's stable coins as well Global stable coin usage continues to increase dramatically stable coins settled over 11 trillion onchain transactions in 2022 and that number almost surpasses the payment volume of visa and reached 14% of the volume settled by a and 1% settled by fedwire the supply of stable coins has grown from less than three billion just three years ago to 125 billion

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   today here's the point whether or not one country redeploy Central Bank digital currency or many do the fact of the matter is all of us and our fellow men and women are going to be dealing with crypto cbdc and stable coins for years to come the sometimes fashional debate in Washington and elsewhere between cbdcs and stable coins is a false Choice the future is all of the above the backdrop to the deployment of

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   cbdcs and the development of stable coins as well as the continued Vitality of Bitcoin ethereum and other cryptos is the backdrop is an increasingly multi-polar complex and fragmented World Riven by War global conflict and political and social division there's a trend line that the later 20th century Financial system dominated by multinational Banks many of them American the US dollar and Pax

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   Americana is gradually yielding to a 21st century worldwide Kaleidoscope of overlapping and sometimes interoperable and many times non-interoperable digital networks of value some decentralized like Bitcoin While others are variously centralized and operated by global Banks and big Tech firms and others deployed and even exported for sale by national governments and there's a danger in that Global Kaleidoscope those centralized digital currencies that emerge both Sovereign

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    and non-sovereign will be gathering points for massive amounts of data about the economic and financial activities of users our fellow citizens and indeed voters many thoughtful people across the political Spectrum from right to left and across the globe are appropriately concerned about the misuse of such honey pots of Private Financial information they're concerned about direct access by both government and big

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    Tech to such troves of personal data and they anticipate political pressure on private sector actors to conduct survey surveillance report on activity and disable Financial transactions with disfavored groups and activities sadly in a similar fashion to the now increasingly evident censorship of speech on social media by both governments and big Tech firms and that's why regardless of the form of digital currency cbdcs or stable coins Sovereign or

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    non-sovereign it's imp narrative that free Society thoughtfully consider privacy implications and insist that the future of money be consistent with key free Society laws norms and values that's why we launched the digital doll project in January of 2020 to be a neutral nonprofit Forum considering how best to modernize the US digit the US dollar preserve its Reserve currency status and the values it

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    represents in this coming world of decentralized and centralized digital currency in some ways to provide a safe space where thoughtful considerations like this can take place from the politization of our times the digital dollar project does not call for ready deployment of a us cbdc although some people believe that's what we do but we don't we believe that the US should only only consider issuing a cbdc once key design elements of

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    privacy inclusion security distribution and economic stability are properly understood and most importantly democratically addressed but we do encourage the US to assert principal leadership and assert it now in cbdc experimentation both here at home and in digital currency standards setting abroad that is consistent with our norms and values and we further believe that dollar-based

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    stable coins can play an important role in ensuring the role of the US dollar designed right a digital dollar or indeed a digital Euro or a digital pound or any other digital currency system Sovereign or non-sovereign can run on systems that are operationally and objectively transp parent providing the public with independent Assurance about technical function security and resistance to impermissible monitoring

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    Data Mining and other exploitation in fact individual economic privacy and censorship resistance should be affirmative design features and competitive advantages of digital currencies that are worthy of free societies but such a design approach will only work if governments are willing to embrace new digital Technologies and Regulatory approaches for satisfying legitimate National Security and law enforcement

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    objectives these Technologies include privacy enhancing or what they call Pet Technologies such as zero knowledge proofs homomorphic encryption and multi-party computation that enable parties to prove that an encrypted proposition is true without revealing underlying private information combining these pet Technologies with big data analysis pattern recognition and AI as we heard today will allow law enforcement to

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    protect privacy and here's the important Point by identifying wrongdoing when it actually takes place rather than invading people's privacy when without cause in case it someday might by encoding individual economic privacy into its very architecture cbdcs and stable coins should serve as desired instruments for people the world over who aspire to financial autonomy and inclusion consistent with basic human rights and Civic Liberties I want to quote a friend and

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    former regulatory counterpart who I'm sure many in this audience know and that's former uh governor of the Bank of Canada and the bank of England Mark Carney in remarks to the bis in 2021 Carney reminded fellow Central Bankers that quote the value of money requires not just the belief of the public at a point in time but critically the consent of the public at all times he said when it comes to money the consent and Trust of the public must be nurtured and continuously

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    maintained well when it comes to digital money obtaining such consent and Trust of free people will depend on not just the value of the digital currency but upon the values inherent in the underlying digital architecture and design and the most important of those values may be Financial privacy civil liberties and the rule of law clearly ordinary citizens have as much to gain from the digital networking of the world's Financial systems as do central banks and

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    governments but the same people have as much to lose if digital currency diminishes their autonomy or their inherent worth as Free People governments that deploy cbdcs or support stable coins that do not protect Financial privacy or otherwise depart from the core values of a people will find such digital currencies rejected by their citizens to the benefit of digital currencies that do yet those digital currencies that

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    protect Financial privacy and lawful transactions while driving Network Innovation will Garner the enduring confidence of free people and those are around the world who aspire to free life the Nations that Foster such privacy protecting digital currencies will win both the economic power prize in this digital future but also the trust and consent and affection dare I say it of their people so ladies and gentlemen it's clear that the future is not a choice

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    between cbdcs and stable coins and crypto it's all of the above nor is is the future whether the digitally Network future of money can be forestalled it can't it's coming the digital future of money is upon us the real choice is between Financial Freedom and financial control and the role of free people in driving key design choices and related regulatory networks 30 years ago in the first wave of the internet the Us and other leading

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    free Nations made sure that the internet of information reflected the values of open and Free People rather than closed and repressive ones today the Free World must again work together to make sure that this coming internet of value reflects similar values of Financial Freedom and economic Liberty so in closing here's my plea to you this evening let's work together as our enlightened predecessors did 30

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    years ago to ensure that the future of digital networks of value and the digital networks of money is one that is safe for the Free World let's set standards for digital currencies Sovereign and non-sovereign cbdcs and stable coins that are worthy of free societies and free people everywhere let's not be intimidated by this Innovation but just as our predecessors did 30 years ago let's

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    seize it to enhance the worth of our fellow men and women let's shape it in accordance with our finest and noblest human values and let's get on it today tomorrow and every year to come thank you all very very much thank you Chris for those really important remarks good evening everyone I'm Angie Lao editor and chief co-founder and CEO of forecast it is a pleasure to be with you tonight I have the honor and the privilege to be chairing the next panel that follows on

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    Christian Carlos's very very poignant Words which is the future is inevitable and all of you participating in these conversations today uh recognize the roles that you play in helping us shape our future so thank you very much without further Ado I would love our audience to help greet and welcome our panelists tonight let's start with CEO and co-founder of digital asset yval ruse former speaker of the US House of of Representatives partner at saler Capital and vice chairman of Teno Paul

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    Ryan head of bis Innovation Hub Bank of international settlements please welcome Cecilia skingley and we've got one more chair to fill last but not least Global head of strategy Office of the CTO at City Andre wolberg stock all right so our tummies are full and uh so are our brains I think we've all been really inundated with a lot of really smart conversations that um really was the

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    full spectrum of wholesale retail cbdcs stable coins uh digital assets private sector public sector roles uh many of Industry sectors and government agencies and central banks are represented tonight and I thank you all for being here because as an average global citizen watching this story unfold from afar from my perch um and and recognizing the importance of this technology I'm also seeing the Myriad differences that arise from different

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    jurisdictions and it is really uh a telling moment in time and uh Paul I'm going to start with you as uh someone who is obviously uh you know a veteran in the political Arena and now lending your expertise to the private sector and certainly to CEOs and governments alike how did we get here as we talk about the digitization of money how did it get get so politicized how does technology get so

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    politicized it's easy politics uh well first of all it's it's we're going in an election year there's that uh but it's it's easy politics and the politics come from a good place I would say the the populism it comes from a pro privacy pro- Freedom Place so that's good uh but it's it's such an un it's such a misunderstood technology very few people know what it is how it works what it does um a lot of people think it's a choice as to whether this is going to

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    happen or not it's not uh and and the politics is very simple for for ambitious populists so the question is can you see through this particular moment the Overton window as we describe it I think the answer is yes because the inevitability of this technology is here as an American uh I want to see our our Reserve currency um status continue uh and that means we have to stay on top of this and ahead of this and help um the world as a as a

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    conservative of the classical liberal variant meaning a limited government free market individual rights you know Advocate I want to make sure that the Free World free societies have their values protected inside the architecture of this as it is deployed across the world so you got to have authoritarian regimes deploy their versions of this and the question is can the Free World

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    uh stay ahead of this and protect our critical values privacy Freedom Liberty security and and that's where this populism comes from so I'm actually I'm a little shocked at how it got out of control but honestly it's really not as big as you think if you walk around the state of Wisconsin and pull people in the street they don't know what the hell you're talking about so you know it's it's just it's just sort of catnip for people who are running for a couple of offices for president and the rest I'm

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    not that stressed about it because when you drill down the issue if you go to the financial services committee and talk to the talk to Patrick McKenry or people like that they know exactly what this is they understand the politics and they know we have first of all they're moving a stable coin bill right now they know we have to get on top of this I think the FED is worried about their independence so they're going to keep their heads low for a little while while they figured this out I'd like to see

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    America take a longer a bigger leadership role on this but I think our politics is probably holding us back as as a government for the most part at this time because in other parts of the world the average person and not necessarily in Wisconsin it might be in Soul it might be in Hong Kong do you absolutely know what you're talking about and they're experiencing it they're conducting it and that really comes from the private sector youve all

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    um how have you seen the private sector roll out this technology globally and what is the interface and the the experience experience that maybe retail consumers or the average person is experiencing that is also driving potentially policy abroad yeah so so first of all I think you know we've been in the space for now nine years and where you've seen a lot of advancements in the usage of the technology is in non-money related assets so bonds

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    private Equity Funds structure products and over there you're already seeing the value of the technology so I I truly believe it's inevitable that it will get to money because the Holy Grail is to actually put money and other assets on the same rails that's really where you unlock the real potential of this technology so I think that one of the biggest issues that this industry had specifically related to this technology is that 5 years ago there were so many

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    promises on how this is going to change to the world but there was nothing to show for MH so a lot of people really put this technology into the into the bucket of you know a bunch of Crypt Bros that are just pumping coins I think now you're actually able to show demonstrable use cases not even use I think when you say use cases it sounds still like an experiment but actual asset classes that are processing

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    hundreds of billions of dollars of transactions on a daily basis you're seeing reconciliation being reduced you're seeing operational risk being reduced settlement risk being reduced so I think that having these other asset classes that are already using the technology in real life is helping at least at least for digital asset when we're having conversations with the FED with the OCC and with Regulators globally to say look this is not a pipe dream this is actual reality and guess

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    what all of these organizations that are using this technology for other classes guess what they're worried about privacy they're worried about scalability all of the things that you're worried about when it comes to money so I actually think that very similar to Paul you know you are seeing a lot of politics play play in some of the challenges but I will tell you that at least behind

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    closed doors we are finding much more open ears and now the fact that you have use cases that are showing Real Results is really helping propelling this forward Andre how do you think about it um and how does you know traditional Finance um as you've evolved in the space obviously as the incumbent financier right as a sector uh of which you're a participant um embracing the very technology that uall you know one

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    of the ogs in the space from the private sector um has really kind of built up and so now how are you adopting this this from a more traditional Finance perspective full knowing that you are engaging with different jurisdictions different governments and different agencies yes and and traditional finan is less and less traditional uh by the day but I think I I would build on on

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    yuval's point about the digitization of many other types of assets and the fact that maybe demonstrating those capabilities of the technology and the efficiencies that are there for the taking might be a an easier Road there than focusing on the lightning rod of the very thing that symbolizes um the the money in people's lives so maybe there are less sensitive points to begin with maybe the underlying the infrastructure

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    structure of global Commerce and trade and payments maybe tokenizing Commercial Bank money tokenizing central bank money on a wholesale basis things that are maybe on the whole less sensitive less of a of a flash point for the political debate especially in this context uh but in ways that can set the scene where there is the return on investment seen as being there for consumers to eventually do

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    a retail cbdc but if you think about scale in terms of the number of uh transactions and the uh the throughput that is necessary it's probably also easier to start with something that is uh wholesale rather than than retail that's already happening right Cecilia you you run seven Innovation teams around the world um I've seen pilot projects happening between countries it's already happening yes thank you very much for being here I think I might be the only non-american

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    on the stage uh and I'm also representing an international organization so okay I'm already on deep water uh and I'm going to try to avoid uh saying anything that's going to be interpreted as a um comment to us politics so watch me Square this circle uh but yes um um the B um is there to um to the best of our ability help central banks in their pursuit to uh deliver monetary and

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    financial stability uh so it's a membership driven organization uh the Federal Reserve is a member as you know uh and there's so much going on in the tech space as we all know uh and then you have to think about okay uh cool stuff you know we can build a better world in the certainly in the financial service area how do we make sure sure it works for people how do we make sure it works in the domestic

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    area you know people societies want to make their different choices that's fine but if we want to continue to play together even actually make it better when we we transact together uh we get to have bring our heads together and and and see how we get that done and and yes we are uh there is a number of experiments projects being done both from the bis side which is done in a very transparent way which I really love with the with the projects

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    because anyone can sort of look in and follow and and get upset or get excited or or not care um uh all all reactions are fine um but technology only takes you part of the way um what really is necessary is to agree on sort of governance and who's paying for what and how do you run the thing and from where do you run it uh and that takes sheer willpower uh and ladies and gentlemen there is a lot of willpower out there uh to get things done uh and uh a lot of countries

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    are saying that yeah they want to participate in this conversation and experiments and they don't make any commitments that they are going to launch a cbdc so they they can manage to bring those two messages across at the same time so so I'm just saying that others can walk and talk at the same time and that's something considering it is worth considering because there is a um responsibility some would say um from leadership that

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    is either missing or in in some cases and I share Cecilia's uh diplomatic uh uh dance um compared to other jurisdictions in the world that are seizing it and uh very strongly um when we started forecast in 2018 one of the key stories from my perspective was to share what China very publicly was doing in the cbdc arena uh at the time in 2018 they were already years ahead um we also know that uh in

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    terms of emerging markets and in different parts of the world money and influence and politics really do combine and so you know when you take a look and this is a question for the group when you take a look from the both public policy space and the private sector space what is the convergence that needs to happen in um an intellectually honest way so that we could pave the way for for really a formidable

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    future I'll give you the I'll give you the political answer then I'll let you all give you the technical answer uh our politics are early in r in the rud rudimentary phase they're in the early phase of this and all the the populist politics against it is they're just assuming it's a retail cbdc right the FED is going to give you your money and then they're going to surveil you and they're going to tell you what you can and cannot buy that's it's just that

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    simple um China's doing it we're going to do it also it's awful so that's where the politics is today now what's coming after this first of all truth that that's not what a two-tier system is and that's not what CBD so there's there's facts to come behind that to put those myths to the lie because no one no one that I know in Congress is proposing and by the way this does have to go through Congress no one is proposing that we have a retail C cdbc from the fed the FED would never do that in my opinion so

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    there's that here's what's other what's happening I just looked at my phone I called a friend in the bond market today how much is the treasury going to float today in the bond this week in the bond markets $626 billion bills bonds and notes $626 billion so you know we got to sell this stuff um it's it's helpful that we're a reserved currency if we if we continue to act like we're not a reserve currency it's

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    going to be much harder to sell this stuff at a at a reasonable rate so we've got the fiscal pressures coming down on us which means we better innovate along with the world or else we're going to lose our Reserve currency even faster than our propagate fiscal policy is making us lose it there's that point and then there's the National Security point for free societies versus closed societies China with their ecny and their surveillance money against the

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    Free World and we the Free World and yes we're for now we're the road's Reserve currency have a duty and obligation to our shared principles our shared principles to protect this and so those issues are not even in the conversation politically right now because you just have simple populist politics in an election year because it's easy because there's just not enough understanding of

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    this issue you get past that simple politics and look at the realities of our fiscal and economic situation our International challenges between free people and unfree people and tyranny and and and the issue wins the day the principles win out and what leads us is not our politicians right now particularly our people running for president what leads us is our technology companies our technologists

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    who are telling us oh you can have your cake and eat it too we can future proof freedom and privacy and future proof the dollar to guarantee that the architecture is such that we want it to always preserve our values oh and by the way get the benefits of all of this technology and what it does with our money and be a free Society so it's our technologists and our technology companies right now that are going to

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    have to take the lead they're going to have to tell the story they will have friends in Congress helping them tell that story while we educate the P public public so that the populists don't have an uneducated public to sell their wees to with all due respect to the politicians um with utmost respect and deepest deepest respect yes thank you it you know it's it's hard it's hard to criticize if you're not going to

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    participate and I say that broadly um you know to to you know to see what other jurisdictions are doing and then to to point it out and yet not participate I think that that is really the biggest concern amongst you know um uh those who hold certain values which is if everyone is participating right now why handcuff the public sector uh sorry the private sector um that is trying very hard to innovate which is clearly what we're seeing on the on the

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    political front from different agencies um which also is a reflection of some of the frustration uh across the board yeah if if I can just add to what Paul said I think I think in the last 20 years there's a great case study of free societies versus closed societies investing in Emerging Markets I have I I was telling earlier I have two friends who work for IFC and the world bank and

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    they have been losing on the Investments because again free societies with all the politics have been taking too long where other countries are coming and just giving the money with no conditions and I think that when it's going to come to digital money as an infrastructure you're going to see the same pattern of certain countries coming and saying here's your payment infrastructure it comes with no terms and conditions and guess what you could do whatever you want uh in terms of surveillance and I

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    think that there's the respons ibility of of you know free societies to to first of all at least try to do the best you can to prevent that from happening and I think that there's just this false iconomy that is happening right now with with cheap politics that technology is the problem at the end of the day today in the US if politicians were to do something that just will never happen but will change the bank secrecy act to report and every

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    financial transaction that is above a penny you have achieved surveillance without you know implementing one line of code so there's there's there's always an ability to surveil your citizens if that's what you want to do and I think what what ended up happening is people blame the technology rather than just saying you actually just need to have the right policy in place if anything you should

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    actually be much more engaged in the conversation and make sure that your policy and your laws are continuing to protect citizens because in in the absence of that in the vacuum of that you're actually going to see people innovate outside of your control and are going to do things that are actually contrary to to what we are trying to achieve as a as a free Society so I think what we're trying to do as as the private sector is is again continuing to

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    educate because I do think that there is a lot of powers behind the scenes that don't necessarily want to see cbdc succeed for many reasons and you know I do actually have quite a lot of sympathy to regulators and politicians because if you just think about the amount of Technology moves at an exponential rate right the head count of regulators and politicians definitely does not grow at an exponential rate and when you start hearing uh homomorphic encryption

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    multiparty comput ation zero knowledge proofs blockchain crypto this coin this coin this coin this coin you know we have this model we have the it's really hard to keep track right so I do think that for us as an industry the private sector we also need to get get aligned and come together to stop the confusion because at the end of the day I do think that the confusion is really what gives its hand to to cheap politics uh because

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    there is no clear message that is is is being sent whether it's to DC and I would say also other jurisdictions so then what is a common International message what do you think that should be a common International yeah if there is a message that we need to send we collectively you know as as administrators public sector leaders private sector leaders that reflect the best of this idea of the technology what

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    is that common what is that common message I will just start from at least from from the technology side of thing and this is what I said when when we were giving testimony in DC the technology can Implement whatever policy politicians want to enshrine in this technology and and and the like so at least at least I do think that as as the tech industry we just need to be very clear you can achieve privacy you can

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    prevent the issuer of money from seeing every small transaction that happens on the other hand you could also have no privacy at the end of the day it's a configuration I think that the tech sector whether it's stable coin issuers or or vendors like digital assets and and some of our peers I think the message from the tech industry should be whatever is the policy that policy makers want to to enshrine in the payment rails is possible I think that

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    that's extremely important because I do actually see that message being confused stable coins is where you have privacy cbdc you won't have privacy both running on the same technology sending clear like the opposite message to me again that doesn't make sense so I do think that at least from the tech side it's extremely important that we send a really unified message technology is a tool that can Implement whatever policy that you want yeah I think the answer

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    your question is um and I'll speak more bluntly like because I can because I don't care I'm a recovering politician you're a recovering politician you know China is going to go export um tyranny in a box they're going to go to Every authoritarian say we've got your smart City solution we've got your surveillance system we've got tyranny in a box here's your money we'll give you a kit you can keep your people under just going to be a subsidiary of us but here

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    you go that's going to happen that is happening and they're going to do it by hook and Crook and by inducement and other other other incentives and disincentives so we not just America we the free world owes it to ourselves and owes it to the world to bring to owe it to the world to bring an alternative an alternative where we have standards that we all develop curate and agree upon so

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    that we can have a plethora of competitive products that are out there the Brits the Swiss the whoevers can put competitive products out there so that the Free World can enjoy its freedom and stand up and show an alternative to the Temptation that some countries going to have to sign up um for for the tyranny in a box so that's this kind of the way I see it and and and I know we're all frustrated that that here our I'm a

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    Republicans I'm not a Democrat so I'm I'm frustrated with Gary Gensler in the way that those guys act as well but I think to try and be charitable to to this Administration I think the political appointees and the career people in these agencies don't want to pop their head up above the radar right now in this political moment for fear of getting killed and not having the space

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    and time to work on these ideas so I think you know a I think stable coins stable coins is buying us time and space but B I think these Regulators just want to lay low right now so they can go work on this it's not that they're not thinking about it they are thinking about it they're just not going to go out there and and and and promote what they're doing because they know the demagoguery is going to get them and it's going to hurt them in advancing

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    their mission that's what I think they are doing right now I I think the calming message that you're asking for is um that um you know be present at the global stage uh I I think the one of the problems we're facing here is that um very simplistic now I'm I'm apologize in advance but um in this part of the world um um Market managed or Mar Market uh in R solution seems to be the sort of the dominant model uh in the in Asia is more of the other uh other end of the

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    spectrum and Europe is sort of in between but but Europe is is trying to at least trying to sort of regulate uh crypto regulate AI sort of put up the boundaries and is actually prepared to to lose a bit of the Innovation Spirit and the competitiveness as as as a result um and and we will never be able to to sort of have a joint opinion across the globe so we need to to at least agree on the sort of the least common denominators uh I agree with those who

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    says that it's going to be a world with both crypto and stable coins and cbdcs uh but I I also think that we need to really be respectful that different countries will make different choices what what we need to agree on is the um um the crossb rails the global rails and and I um when I despair over these things I usually think about two things US history and Airline traffic and let me elaborate a little bit on that US History look at like from the bright

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    side you quarrel like crazy over should you have a central bank at all and you you try to manage without one for for a very long time until you sort of C in and say all right far fair enough the rest of the world is probably right we need one uh and and it got sort of structured in the end um and the airline why do I keep point that out well they manage to move things cross border right

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    we we we fly over many borders when we we move around on airlines so if we can move ourselves around we should probably be able to to agree on at least common denominators so we can move our money around and then we can argue like crazy over the Chinese model versus the US model but finding these least common denominators I think that's going to calm our way and then we're not going to

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    get everything right at first um so it's going to be mistakes and and and and the Americans you are going to jump up and down and say oh this is not Market friendly enough and yeah it's not Innovative enough uh but at least we getting somewhere and I think that's that's the right sort of spirit it's about participation and showing up Andre right yes and I was just going to say we

85. 44:23

    keep mentioning cbdcs and stable coins can we please make it a try ahead and ADD commercial bank money just as automatically as we pair cbdc and stable coins there's no reason not to leverage whatever advantages these Technologies can bring for where the real with apologies to everyone else but where the real action is today now having said that I think it's incredibly appropriate that the Atlantic Council should be

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    co-hosting this event because I think one thing that became clear through the uh sessions all day today in this conversation is that having gone through a series of phes of fetishizing the technology then the asset we're now landing on some of the fundamental geopolitical questions that are the real drivers behind this yes we haven't mentioned once a consumer need here a pressing need for retail cbdc we haven't

87. 45:27

    mentioned once whether crossborder wholesale payments can be fixed first through updates of laws and regulations because the technology is not necessarily at fault what we're talking about is really geopolitics and the shape of the world of the future the geopolitics question arises because of the lack of action that we've seen over the past decade and when the private sector sees a problem and evolves a solution are they playing a role that governments should

88. 46:04

    and you're shaking your head now I'm shaking my head because I think this is this debate is the continuation of geopolitics by other means primarily or we just in the part of History where a lot of breakthroughs are happening at the same time um it was the same thing in the 19th century uh we had a several sort of general purpose Technologies uh the private sector runs ahead exploring it get a lot of things

89. 46:36

    right a couple of things wrong and then sort of things start to sort itself out not by nature but because there's an interaction between law uh policym supervision and the private sector so so we we may just be in a very stressful time at the moment uh but I think we it takes a bit bit of ambition here uh I think it takes a bit of political risk-taking uh it it's going to take a bit of exactly showing up uh um not uh

90. 47:06

    you know criticizing the G20 for everything they do actually that's the best Forum we have for this kind of collaborations um and um yeah um be there and um get down to business as a young journalist I was taught to follow the money as a a much more experienced one I recognize it's not necessarily about the money per se it's about the structure of money how money flows between countries to your point there is

91. 47:36

    a very clear geopolitical aspect to all of this so when we talk about the future and we talk about all of these central banks that are investigating exploring and experimenting in policy rails be it stable coins or their own cbdc and you know um either policing uh domestic sectors um creating International rails as we explore all of these themes what is the world that we're going to graduate to I mean this is really what all of you are participating in right now what is the

92. 48:15

    world that my six-year-old is going to graduate into that we're all going to inherit as a result of these conversations what is that as the technologist I mean I listen I think I think that and and this maybe goes to to some of the remarks that were done earlier I think that we need to think about it from a retail side and then kind of the backbone I think that when it comes to retail we talk a lot about

93. 48:47

    privacy I personally think that when you think about Gmail venmo all of these products retail doesn't really care about privacy it kind of is a cool topic to debate but really we we we we give our privacy very quickly to Big Tech that provides us really good user experience and really the direction where the world is going is that everything is digital I think the world is waking up to that lack of care but his point makes our point which is if if tyrants get out there with this first

94. 49:18

    and put people up on these things then freedom is set back in the 21st century so we have an obligation to make sure that it doesn't happen yeah and I guess I guess my point is what retail cares about is convenience right at the at the end of the day I do think and may maybe I I say it too easily that we don't care about privacy it's more about the level of importance I think that

95. 49:43

    retail makes you know choices for the most part when it comes to convenience and that's why it's so important that the backbone is actually able to facil facilitate the Privacy that I do think is actually very important I think that when you go to the average you know Joe or Joan in the street and you're going to ask them about how privacy gets enforced yeah they're going to say that privacy is important but do they actually understand no and that's why I think that it's extremely important that

96. 50:16

    from a policy perspective we're seeing this now with AI we're seeing it with payment we're seeing it with so many other Technologies I think that as the world is becoming more and more digital it is becoming more and more easy to exploit you know privacy and do a lot of things that in an analog word would be you know much harder and that's why I I do think that it is extremely important

97. 50:41

    that the backbone which is more the wholesale side is able to cater for these privacy requirements and scalability requirements uh and and you know that's why we at digital asset are much more focused on the backbone pipes meaning the wholesale bank to bank you know Bank to exchanges that that's where I think is going to you know you're going to see most of the Innovation with this technology what does the future look like I never won a political fight by playing defense uh ever you play

98. 51:14

    offense and that means you you go seize the moral High ground and you lean into these issues by saying we can actually enhance Freedom we can enhance privacy we can improve these values with the proper design of this technology and Advance these things we care about banking the unbanked throughout the world who have no Services who have terrible currencies you know we you can actually win the argument by taking the

99. 51:40

    force of the arguments against the technology and harnessing it to to advancing this argument properly designed so I think look I'll I'll quote a Brit democracy is the worst possible form of government except for all the other forms of government it's it's sloppy it's messy but we we deliver and the reason it delivers so well is because it has a free Society with private property rights that produces the kind of innovation that gives us these ideas and these Technologies and

100. 52:07

     and using it by infusing these values that we in free Society have together I think we'll win the day and we will win the argument but it will be sloppy it will be frustrating and it will be a little late but I still think we get there does America still have a role to play on the international stage absolutely uh I agree with all the things you said about you know decision making being sloppy and uh and messy anday but but uh that's yeah that's life

101. 52:38

     you know uh but it's much better than the Alternatives uh rather a late decision and than a quick decision that turns out to be horrible uh and uh yeah absolutely I mean you are you are needed out there and I what I'm saying now is saying as a representative from a coming from a very small country um you have to be very careful um to choose what friends you're playing with on the on the world stage uh but at the same time you you try to be independent and I think what would be

102. 53:12

     very powerful uh for the US and I have to be careful what I say now is um to to to make the offer around how to help countries being um um you know independent in the way they're sort of they pursue their happiness and and and progress uh because uh that's uh that's one of the beautiful things this country's model has actually achieved over over history um the the transparency Choice there sort of

103. 53:43

     reasonable balance between the public and the private rule making um and um definitely there because if you're not there uh there'll be a void and there is never never such thing as a void on the global stage and when we think about you know even from the institutional Finance side with city as a as an American obvious bank but really with International influence even your withdrawal from some countries cause geopolitical concerns as

104. 54:20

     well and so what is the role that that you view technology playing internally but also externally yeah I think one area that um maybe doesn't get enough attention is the likely exponential growth in complexity if we think the rails on which money moves today globally are complex when you introduce some form of tokenization uh uh you're not just going to set aside all the complexity we have today you're just going to Overlay it with another layer which is going to

105. 55:05

     create innumerable points where interoperability is going to be required there was a lot of talk this afternoon about interoperability between differently engineered and designed cbdc setups potentially and questions as to what the shape of that interoperability could take and that's great but I think we heard nothing about interoperability between this new layer and the existing layers which are not going to go away so

106. 55:39

     unless you want to end up having to create huge financial Market infrastructures that mediate those connections all over the world and among themselves which would just Cube the complexity that's a good incentive and from the perspective of a company that is present in 160 jurisdictions around the world and moves a lot of money around every day that is not an azing picture of additional complexity well I mean it's like a microcosm of what we're

107. 56:16

     talking about you are taking your principles as an American firm but when you are in a separate jurisdiction there is no synapse back to the parent these are very exclusive rails sometimes in countries and jurisdictions because the rails are very specific so you need to play locally but always under a set of values which are immutable globally and where those values are not compatible with the reality on the ground we will

108. 56:50

     withdraw as we did in Russia it's a great metaphor um I'd like to open it up to the audience we have a few minutes left as you digest a lot of these themes and and ideas would love to open it up to the audience there will be someone with uh a microphone in her hand if you could state your name uh your agency or organization and then State your question thank you so much great I direct this to Paul though others can pipe in what do you think the chances

109. 57:23

     are of getting a um stable coin legislation passed in Congress over the next you picked the number of years and it being bipartisan supporter oh if you give me a plural number I'll say very very high uh this year you know um I me one of my closest friends is Patrick McKenry was my chief Deputy Whip when I was speaker uh he's got his bill out of committee he's actually mapping floor

110. 57:48

     time in February March so he's got a plan to get his bill off the floor think he's got the votes he's one of the best vote counters we have and so you know the Senate I I can't speak to how well they're going along but I think you have a very reasonable chance the house will pass at this session uh in end of q1 maybe beginning of Q2 so um that's always a good sign forgetting the law um there's a chance the Senate can move it if not they'll get it done next session so I give you a

111. 58:18

     1 to three year um um you know I give you one to three years definitely within three years within one year is possible definitely within three years it does have bipartisan support the house version does have bipartisan support yeah so they've got the votes for it I think over here I have a question on the emphasis that has been given to privacy I come from a family of girls so um one day my nephew called me

112. 58:50

     and he says oh Auntie I'm going to be a best man can you buy me a suit and I went into a man's shop and I bought a suit 10 minutes later I got a call from the credit card saying oh we think your card has been stolen it has been used in a men's in the men's shop I didn't even realize that I never buy things from Men's shops now at the same time we have social media people post everything about themselves where they have gone so the question that I have is this concern

113. 59:23

     about privacy and the cbdc are we not exaggerating it people are free to put their you know privacy private the most private things where they went where they danced on social media and every day every end of the year we get a statement from visa and MasterCard that said you spent so much on food on clothes on you know if the government wanted it they could just ask master had to provide that

114. 59:56

     so why are we you know emphasizing MasterCard abuses your privacy you can fire them you can go to Visa or you can fire them go to American Express the government's Monopoly so you can't fire your government so the the the the the reason for the higher concern about you know retail cbdc from government is Government Can coers you government can do things to you that a credit card

115. 1:00:20

     company cannot and you have no redress that's why the elevated concern for giving this kind of power not to Visa mcard but to government yeah but but I I do think that it is important because a lot of times people talk about all of our constitutional rights and maybe the Counterpoint to that is from the private sector you are not entitled to those to those constitutional that's kind of lost in the argument but I'm just saying people worry about big brother in government than big brother you know Mark Zuckerberg you know what I mean

116. 1:00:51

     they're just people worry about Mark Zuckerberg but I'm just saying it's it's a bigger concern when it gets to the level of of your government that's my point at the end of the day privacy is a commodity that has been taken away from us from social media to now potentially technology with money etc etc but blockchain and this technology also can be uh a Level Playing Field back for the

117. 1:01:18

     individual so that when we own our own information we can then choose whether or not to to commoditize or not that would be our choice as individuals of course as countries around the world Cecilia as as you very eloquently described this is a communal and Global effort of which you're all participating and I want to thank our panelists this evening for their very candid and honest remarks and for that so very grateful to

118. 1:01:49

     all of you thank you so much