Full transcript of 2023 MOEF-BOK-FSC-IMF Conference 2023 Speeches
[1:10] Ladies and gentlemen, if you could now enter the Hall, we will begin our conference.
[1:15] Please come inside the hall and take your seats.
[1:17] Thank you very much for your cooperation.
[1:34] Your excellencies distinguished guests, ladies and gentlemen, good morning and welcome to the 2023 Ministry of Economy and Finance Bank of Korea Financial Services Commission and the international monetary fund.
[1:51] International Conference, allow me to introduce myself.
[1:55] My name is Julian Cho and I’m the conference interpreter and I will be your facilitator over the course of the next two days.
[2:03] Thank you very much for your attendance.
[2:12] Thank you very much.
[2:13] It is indeed an honor to host and to be the facilitator of this conference attended by such prestigious delegates representing their countries and organizations the conference as you have seen from our title is co-organized by for institutions the Ministry of Economy and Finance of the Republic of Korea the bank of Korea the Financial Services Commission of the Republic.
[2:42] Lake of Korea and the international monetary fund and it is being held over the course of the next two days under the theme of digital money navigating a changing Financial landscape.
[2:55] I believe that it is a befitting theme for for the times the conference will provide a forum bringing together experts around the globe to discuss opportunities and challenges posed by digital money with shtick policymakers academics and Market participants and expert panel discussions will cover crucial topics such as implications of digital money for the global economy crypto regulation developments in Central Bank Digital Currency among others.
[3:31] And without further Ado.
[3:33] Let us begin that 2023 and MOEF be okay FSC IMF International Conference.
[3:42] And now before our main session begins in Earnest, I would like to introduce two of our organizers doctor Taeyang Joe the director of the economic research institute at the bank of Korea and mr.
[3:56] Harold finger the assistant director of the asia-pacific division of the international monetary fund will each deliver the organizers.
[4:04] Welcome messages, then first, let us welcome.
[4:08] Mr.
[4:08] Cho with a hearty Round of Applause.
[4:21] Distinguished guests ladies and gentlemen, I would like to express my sincere gratitude to you all for your participating in this conference on digital money and digital asset today and tomorrow.
[4:42] This components has to be no year and a half in the making and it is a valuable intellectual Forum that has been organized by the Ministry of Economy and Finance of the Republic of Korea and Bank of Korea and the Financial Services Commission.
[5:08] in collaboration with the international monetary fund I would like to thank all the organizers for their cooperation in making this conference happen.
[5:26] And I hope that you will share in the joy of mission accomplishment on a personal note.
[5:35] We organized a conference with the IMAP in September 2017.
[5:41] And this is my second time.
[5:43] So I’m even more honored to be here today under the theme of digital money navigating the changing.
[5:56] Financial landscape these components will discuss in depth the economic impact of and Prospect of digital money the direction of Keto acid and the role of central banks and the relationship between CBDC’s and then stable coins.
[6:18] In particular, it will be a valuable opportunity to hear about current status and future direction of each issue through Library panel discussions by top experts in the field as well as to hear about Korea’s position and challenges in this field.
[6:42] I hope that this conference will encourage Korea to work closely with international monetary community and the IMAP and I hope that the digitalization of the financial sector will progress in a way that benefits more people.
[7:08] We have a packed schedule for the next two days.
[7:12] But I hope you will take some time to explore the streets of Seoul where the old and the new get together and experience the flavors of Korean cuisine and the weather.
[7:28] Sorry about the summit rainy weather.
[7:31] But anyway, you feel the only season of the winter.
[7:36] Once again, I thank you for joining us at this Compass.
[7:41] I and I hope you will spend the next two days forging memories that will last a long time.
[7:52] Thank you.
[7:58] Thank you very much.
[7:59] Dr.
[8:00] Joe for your opening remarks and ladies and gentlemen from overseas in Korea.
[8:07] We have a saying whenever we move or we start a new operation and if it rains on that day, we say that it’s going to be a success and I believe that rain is forecast for the next two days.
[8:21] So I believe that our conference will be a resounding success.
[8:25] Thanks to our guests from overseas the thank you.
[8:29] Thank you very much.
[8:32] And now I would like to also invite to the stage Mr.
[8:37] Finger for his welcome remarks.
[8:39] Please welcome him with a big round of applause.
[8:53] Dear Deputy Prime Minister Zhu di our vice chairman Kim of the Financial Services Commission dear Madam managing director, you give of the international monetary fund dear distinguished guests dear conference participants from Korea the asia-pacific region and Beyond dear viewers on Bloomberg and all the viewers on online live streaming.
[9:14] So on behalf of the conference organizers from the Korean Ministry of Economy and Finance the bank of Korea.
[9:20] Who’s Governor re will be with us tomorrow the Financial Services Commission and the IMF.
[9:27] I would like to welcome you to exciting days of peer learning and exchange on the topics of digital money and digital assets.
[9:35] I’d like to extend my heartfelt gratitude to our co-organizers for their very close engagement throughout and to the Ministry of Economy and Finance and the bank of Korea in particular for their generous financial support.
[9:48] We are embarking on a two-day program, which I think would be enriching and thought-provoking full of dialogues among experts at the Forefront of the various aspects of the fast evolving topic of digital money.
[10:02] We have designed the program to facilitate meaningful exchanges among policy makers from Asia and across the globe.
[10:10] And this reflects our shared commitment to fostering International cooperation and mutual understanding.
[10:16] So in this spirit, I would like to encourage all participants to seize the opportunity to interact and exchange ideas with their peers from other countries in the rapidly evolving field of digital money and digital assets.
[10:29] These kinds of interactions can be a great Catalyst helping us to learn from each other explore new Solutions and pave the way for Collective progress.
[10:39] The IMF has been deeply involved in exploring practical aspects of digital money from analyzing its impact on the global economy to addressing the regulatory issues.
[10:50] We have been committed to delivering evidence-based insights in a very close collaboration with our member countries and our International Partners such as the standard setting bodies just last week we had the opportunity to release a fintech note exploring the macro financial implications of crypto assets and I would encourage you all to take a look.
[11:12] We will of course continue to contribute to the discourse and understanding of these critical topics.
[11:18] So on behalf of the conference organizers, I look forward to the wealth of knowledge that will be shared over the next two days.
[11:24] And once again, thank you all for being here and I wish you all a great two days ahead.
[11:29] Thank you gamsahamnida.
[11:36] Thank you.
[11:37] Once again, mr.
[11:37] Hurd finger for your welcome message.
[11:41] And of course your organization of the next two days.
[11:45] I believe that it will be a fun fact to unpacked two days.
[11:50] Thank you very much.
[11:52] And now ladies and gentlemen, it is my great privilege and joy to introduce our next speaker.
[11:59] It is going to be our Deputy Prime Minister and minister of economy and finance his Mr.
[12:07] Kim huchu ladies and Gentlemen, please welcome him with a big round of applause.
[12:27] I’m Kim Ho to the Deputy Prime Minister and minister of economy and finance firstly I extend my sincere gratitude to IMF managing director carry Ava and her team as well as to the officials from the finance service commission’s and the bank of Korea.
[12:48] Till dedication has been instrumental in organizing this conference collaborative efforts between the Korean government and the IMF and the first since 2017.
[13:04] I also wish to express our deepest appreciation to kneel as you Secretary General of the puzzle committee Global CEO what Deepika Swift and other esteemed experts from Havana growth and warm welcome to those joining us online as well.
[13:29] The current international monetary system, which is primarily based on the Fiat money underpin.
[13:36] The fire Nations not issuing authorities has been a Cornerstone of the remarkable growth of the world economy since the mid-twentieth century.
[13:49] The state-managed of Fiat money has the advantage in securing reliability and stability of the system crucial for confidence in transaction and effective financial and monetary policy implementation.
[14:08] Yet in our digital era we encounter Noble player to the system private sector issued due to money.
[14:19] They include crypto asset and stable coins rooted in groundbreaking Technologies like blockchain.
[14:28] Policymakers are still contemplating how to deal with the digital money in today’s Financial landscape.
[14:37] There is clear recognition of their potential to fill the gap of our current Finance and monetary system.
[14:48] Yet at the same time.
[14:50] They also have potential to bring certain risks to the financial stability.
[14:58] The global crisis response mechanism that have been refined over time through financial crisis might be compromised.
[15:08] The most significant benefit of digital money is that combined with Innovative Technologies?
[15:18] It can facilitate rapid settlement and clearing immensely, enhancing payment system efficiency.
[15:26] We anticipate breakthroughs enabling swift and cost-effective overseas remittances transforming several day processes into view manage.
[15:39] Additionally digital money has the potential to make a financial services more accessible and inclusive.
[15:49] Through user friendly mobile apps it can reach people who have been underserved by trading 20 traditional Financial systems.
[16:00] First and foremost it can capitalize Fintech industry growth.
[16:07] As evidenced by recent developments in tokenized Securities digital money might open new markets for three economic growth and create jobs.
[16:21] However, digital money particularly those based on private platforms would frequently raised the issues with reliability and stability.
[16:35] The Tara Luna instant from the previous year served as a clear reminder of this folder villages.
[16:46] A widespread adoption or private digital money could undermine the effectiveness of monetary policies and make our economies more vulnerable to financial crisis.
[17:00] In addition these digital currencies are increasingly being used for illegal Financial activities worldwide making it more challenging for governments to tackle money laundering and other illicit transaction.
[17:20] Despite the challenges we face.
[17:22] It is clear that transition to digital money is already happening and it is Unstoppable.
[17:32] Our goal is to establish a set of policy tools that not only support economic growth and financial Innovation, but also ensure the reliability and stability.
[17:47] First we need to stay Nimble to customize our policies and institutions to keep up with digital Innovations.
[17:59] I actually communicating with this fast-moving industry.
[18:04] We need to quickly embraced important policies such as safeguarding users of digital money.
[18:14] Second, we should focus on solution to build public trust and the stability on top of the convenience and efficiency provided by digital money.
[18:28] Discussions about Central Bank digital currencies are good examples of such efforts. finally setting up Global standards through close cooperation collaboration with governments and international body is the essential especially considering that digital money note.
[18:51] No borders.
[18:54] Against this background initiatives like the IMF’s recent CBDC pool and process led by the p is with central banks are great examples of moving in the right direction.
The Next phase of the INTERNATIONAL MONETARY SYSTEM
[19:11] We may be at the entrance of a next phase of the international monetary system on era of uncertainties in digital currency learning with IMF managing directors thoughtful advice to think a little more like entrepreneurs.
[19:31] We must adopt on Innovative approach in developing policies and systems relevant to these two money.
[19:41] Just compromise which gathers in size from both the private and public sector is crucial in devising a current currency framework suitable for the digital age easy.
[19:55] I extend my profound gratitude to all participants for taking time out of your busy schedule to make a searching invaluable contribution.
[20:07] Thank you.
[20:12] Thank you very much.
[20:14] Deputy Prime Minister Zhu for your welcoming speech and thank you for your leadership and your Insight.
[20:20] Thank you very much and next ladies and gentlemen.
[20:24] We also have another welcoming speech from our co-organizers.
[20:29] We will now invite our vice chairman of the Financial Services Commission The Honorable.
[20:35] Mr.
[20:35] Su Yong Kim for his welcome.
[20:37] Speech.
[20:38] Please welcome him with a warm Round of Applause.
[20:49] Good morning.
[20:50] I’m So Yong Kim from from Vice chairman.
[20:53] I’m sorry, I’m sorry.
[20:55] I’m sorry Kim Vice chairman of diversity of Korea under the theme of navigating a changing Financial landscape.
[21:04] I would like to extend a warm welcome to all of you participating in this digital circumference co-hosted by Korean authorities and the IMF Let me Begin by thanking miss Kristalina Georgieva the managing director of the IMF for taking your time to join us.
[21:28] I also would like to recognize.
[21:31] Mr.
[21:31] Kang ho to deputy prime minister of Korea.
[21:37] I’m so grateful to the island for Secretariat and the Korean authorities like Bank of Korea may still economy and finance and FSA for their valuable contribution to the success of this event.
[21:55] And my special Thanks goes to expert who will participate in discussions.
[22:05] Near the end of to 2023 it is all the more meaningful to have in-depth discussions with people from various Fields particularly on these Terraces and CBDC.
[22:20] Our lives are rapidly changing due to digital transformation.
[22:26] Cruises for payment and settlement are now used in the form of digital money.
[22:31] They are using electronic forms rather than in physical forms.
[22:37] Since 2009 blockchain technology and virtual access such as Bitcoin has emerged.
[22:45] Blockchain has been considered as a revolutionary technology that might overcome the limits of the traditional Financial system in addition through the decentralized financial system the efficiency and transparency of transactions can be enhanced.
[23:06] Based on these possibilities as a future currency and asset cryptosystem Market has expanded significantly.
[23:15] Nowadays, there are thousands of quite obsessed with a market capitalisation of approximately 1.7 trillion dollars.
[23:27] However, as there are diverse types of voucher assess very side effects are always surprising.
[23:36] Due to the technical features of anonymity and decentralization crypto assess have been used as a means for various illegal activities such as terrorism drugs and gambling.
[23:52] The Tera Luna case led to the investment damage of more than 40 billion US Dollars and the bankruptcy of FTX the world’s third largest virtual set exchange greatly eroded trust in the Crypt Asia Market.
[24:11] Real script I said scams and unfair trading activities also continuing to damage investors.
[24:21] In addition if a Crip tricep replaced money and deposits or decreasing bank deposit may cause a weakening of intermediate owned by Banks.
[24:33] The link between virtual says and financial markets is also strengthening.
[24:40] When a coin run occurs in the criticism Market banks with a crypto deposits are likely to be affected when last we will collapse in March this year it resulted in a sharp depreciation of the stable coin which deposit Reserves at SV B.
[25:00] Against this backdrop governments are facing an unprecedented challenging.
[25:08] They need to prepare for new risks proposed by digital access which have a different concept and system from the existing one the original virtual access and the whereabouts of producers are still difficult to know in the vision.
[25:26] Due to the nature of cross-border transactions the application of the regulations by individual countries alone is not enough.
[25:34] In not Innovative and smart.
[25:37] We can Lottery system design coordination by each jurisdiction and international cooperation our well-being becoming increasingly important.
[25:52] Decentralization and anonymity are should no longer be used as a cover for illegality and tax evasion.
[26:03] Music Global countries are preparing for the possibility that disputed lecherous and blockchain Technology will be used in the financial sector.
[26:14] At the same time they are operating a regulatory system to protect users and stabilize financial markets.
[26:23] In the EU markets encrypt offset because is expected to be implemented among member states from the second half of 2024.
[26:35] Because aaa’s obligations for virtual service providers including disco disclosure requirements and customers as a protection.
[26:47] In addition insider trading and Market manipulation are prohibited.
[26:54] Market regulations will be enforced which stimulate the investigative and search for books for by Zuri power among authorities.
[27:06] The United States strictly regulates relevant entities in the virtual Market under the existing Securities act and commodity commodity exchange Act.
[27:19] According to executive order on the response of development of virtuous has issued in 2022.
[27:27] The u.s.
[27:28] Laid out is policy Direction with regard to consumer protection and financial instability.
[27:37] In particular International organizations like the FSB BCBS.
[27:44] Iosco FATF and the IMF are working closely together.
[27:51] They have recommended International standards.
[27:54] Mainly focusing on the linkages between virtualization Global Financial markets.
[28:01] Their work goes on based on the principle of same activity same risk and same regulation.
[28:08] They emphasized the establishment of new regulatory Frameworks for macroeconomic stability Financial stability and consumer protection.
[28:20] And risk management cross-border cooperation and information sharing are also highlighted.
[28:28] Implementation series of member countries will also be reviewed.
[28:37] Then Korean government has continued to improve its regulatory system in line with global standards.
[28:44] In 2017 don’t know the number of investors and consumers in Korea increased dramatically following the global ICO.
[28:54] Boom.
[28:56] When the market was overheated with daily trading volume approaching seven point seven billion dollars the government initiated measures to block the link between Critters and Marcus and the financial market and to strengthen risk management.
[29:15] In 2020 act on reporting and using the specified financial transaction information was a mandate to comply with the FATF international standards to prevent money laundering using virtual sets.
[29:30] It stipulates anti-money laundering obligations for virtual Services providers and financial institutions.
[29:39] However, unfair trading practices and various forms in the crypto Market are have continued to damage users.
[29:52] In 2020 in 2022 in the wake of in the wake of the terror Luna crisis and effect FTX bankruptcy some domestic service providers went bankrupt and deposited with Rory’s was suspended.
[30:11] Under these circumstances the need for user protection in the virtualization Market was right they emphasized.
[30:20] The Berkshire I said user protection act was enacted and will be enforced from July next year.
[30:29] It forces service provider providers to take various measures to protect users while very some Fair Trade Practices will be prohibited at a similar level to do Captain America.
[30:44] Unlike virtual access discussions on improving the current situation for tokenized Securities are underway in the National Assembly to apply disciplines set up in the existing Capital Market Act.
[30:58] Will this overall regulatory framework in place?
[31:02] We will further review the issuance and distribution of virtualized cells as well as service providers operation activities and Market regulation.
[31:13] These systems implements will reflect reflected in additional legislation based on global regulatory Trends and discussions.
[31:26] We will share the result and implications of the implementation of The Virtuous attacked by participating in various Global discussions.
[31:37] In parallel, we will actively cooperate and strive to strengthen International coordination and have integrity in the regulatory system.
[31:49] Only the big wave of the first Industrial Revolution and digital transformation the year 2024 will be a moment the systematic regulation of digital access with convention honest.
[32:05] Now opportunities and limitations of digital access that being discussed together the direction and strength of Regulation will be hinged Vector that will determine the direction of Future Finance.
[32:21] Four new regulations and Innovation to work as a positive hinge.
[32:25] We should establish the institutional Foundation where users are well protected and digital asset Market bring reasonably responsible growth.
Regulation from international organizations and global standard setters:
[32:41] This is equally important to work with international organization and Global players to ensure consistency with International regulatory framework.
[32:52] We hope today’s conference will serve as a venue for the industry authorities and international reputation to gain a broader understanding of their respective goals and directions.
[33:06] This in turn will help create a healthier digital set ecosystem.
[33:11] Thank you.
[33:16] Thank you very much Vice chairman Kim for your kind remarks and sparing your wisdom and thank you very much for your support from the Financial Services Commission.
[33:26] Thank you very much.
[33:28] And now ladies and gentlemen, I am very much excited honored and grateful to be introducing our next speaker to you as she is one respectable leader and also an inspiration for us all she has also traveled far and Wide to be here with us today.
[33:47] I believe that it is her first time in Korea as her role in the international monetary fund.
[33:55] So with that I’m very much looking forward to her opening speech.
[34:00] Let us invite, dr.
[34:02] Crystalline ago, rogova the managing director of the international monetary fund for her opening speech.
[34:08] Please welcome her with a resounding Round of Applause.
[34:22] and you incur say oh I have been looking forward to visiting Korea for quite some time and I am so delighted that it happens when I can take part in the discussions of this conference my deepest gratitude to Deputy Prime Minister Cho to Deputy Vice chair Kim and to my dear friend governor.
[35:00] V with whom I have worked very closely when he was with us at the IMF.
[35:06] In old times when guests would come from distant lands, they would huddle around a roaring fire and they would tell a story and allow me to do the same today tell a story.
[35:28] It is a story of past future and present.
[35:33] It is a story of Cheers and lawbreakers.
[35:40] It is a story of risks and opportunities.
[35:45] It is the story of crypto and blockchain.
[35:53] We begin with the recent past.
[35:57] It feels like the dusty wild west of American History most crypto assets arrived on the scene and backed or poorly backed lacking interested value and suffering from Price volatility.
[36:22] Some of them as we heard from the previous speakers collapsed.
[36:29] because of Reliance on shaky Reserves script to assets were really risky assets many households have the scars to prove it.
[36:45] They lost money a lot of it.
[36:50] The wild west was a tough place.
[36:55] With few sheriffs around and limited legislation and regulation criminals dominated money laundering and other illicit activity has been estimated to cost tens of billions of dollars per year.
[37:15] Just last month the founder of the largest crypto exchange of being been ants was Pleaded guilty was was taken to court and he pleaded guilty to charges of money laundering.
[37:34] Right after the founder of ftx a prominent exchange that crashed was convicted of Fraud and other crimes.
[37:46] Put it simply in the last 15 years.
[37:49] The crypto is industry has not built a glorious reputation nor it is out of the woods.
[38:02] That takes us to look into the future.
[38:06] We must consider the effects if crypto assets become widespread.
[38:14] the scenario is not far fledged they met.
[38:20] For one they are certainly not going away Bitcoin now is trading at its highest value since April 20 22 the crypto market cap doubled over the last year.
[38:40] And still today people search for the word Bitcoin about 20 times more than health and wellness and seven times more than climate change also crypto asset adoption is high especially in emerging market economies in India, Nigeria Vietnam and according to chain analysis.
[39:10] Though data is scarce.
[39:13] We are seeing that advancement quite fast in Brazil.
[39:21] Our ongoing research shows every hundred real spent on foreign security has 25 real house going to crypto assets.
[39:36] So we have a rising tide.
[39:40] The challenge is that high crypto asset adoption could undermine macro Financial stability certainly a challenge.
[39:49] We care very deeply about at the IMF and with our members for one as our recent paper shows.
[39:59] script to Tokenizationzation the use of crypto assets instead of domestic currency can undermine monetary policy transmission what uses to raise interest rates on a currency few people use in addition Capital flow management measures such as limits on foreign currency Holdings Could be circumvented in this world of digital dominance and crypto could undermine fiscal sustainability.
[40:40] If tax collection becomes volatile or more difficult to endure to endorse 2.
[40:47] Mm.
[40:47] Sorry to enforce and this is the future we do not want to go into.
[40:56] To figure out how we can minimize the risks.
[41:00] Let’s return to the present.
[41:03] And go from Wild West to East Asia to learn from the rich traditions of Korea.
[41:13] I am inspired Deputy Prime Minister by hung gu for my fellow visitors those of us who came from far away lands.
[41:25] This is the writing system of the Korean language that was introduced in the 15th century by King sejong.
[41:34] It’s simple structure replaced an inefficient writing system.
[41:40] That was only accessible to the elite.
[41:44] From ancient scripts to smartphones hungry who has proven incredibly adaptable and it is beautiful you can I’m sure if the Korean see the audience would be great with that hunger is the perfect public goods with clear rules of constructing syllables and words to minimal yet.
[42:14] Very solid infrastructure and alphabet of 24 letters.
[42:21] This is similar to what we are trying to accomplish today.
[42:25] Our goal is to make a more efficient interoperable and accessible Financial system by providing some rules to avoid the risks of crypto and infrastructure by leveraging some of the Technologies and let’s look at each of those after a enlightening discussion with our member countries the IMF and the financial stability board published a report last September offering guidance on the rules for crypto assets among the main island elements.
[43:07] Do not make Rick to assets legal tender.
[43:12] or official currencies clarify and consistently apply Lowe’s standards and regulations including for anti-money laundering and financial terrorism.
[43:27] Establish clear tax rules provide a solid Legal Foundation with the clear classification of crypto assets and coordinate policies globally to avoid regularly regulatory Arbitrage since crypto acid providers can relocate at the click of a button countries are implementing this guidance.
[43:57] Sydney get into legislation training supervisors and overseers and enforcing compliance career for instance is showing leadership by amending its anti-money laundering clothes.
[44:15] We heard some of the legislative changes that are being introduced just now and setting up a new legislation on crypto assets again.
[44:26] I want to I want Thank bolt previous speakers for the information.
[44:32] They have provided to us.
[44:34] We together with the FSB are helping members on all these fronts and we stand ready to do more.
[44:43] These rules are not meant to return us to the pre crypto World nor to squash Innovation.
[44:54] Neither is creep to all tainted by fraud.
[44:59] Like when we were in the wild west it was not only about Crooks.
[45:04] It was also about creativity development expanding opportunities for all.
[45:11] Good rules can spur and guide Innovation for instance banks are exploring new trading infrastructure using blockchain technology refined and popularized by the Crypto Zone
[45:28] It is now so very well known to us and it wasn’t a couple of years before they hope to cut costs.
[45:40] And boost speed so trillions of dollars of daily asset transactions can happen broadening Financial access to those currently content with low yielding deposit accounts today Banks create an asset in paper form deposited with the custodian and message intermediaries.
[46:07] So each May reconcile, its version of who owns what it works but it is expensive instead imagine establishing the asset as an entry or token on the blockchain and trading it by updating the blockchain.
[46:32] What are the potential gains they’re very large.
[46:35] The blockchain is accessible by all transacting parties.
[46:39] It is transparent tamper-proof and settlement is fast.
[46:45] It is instantaneous Financial Assets in talking form can also be divided into parts to serve smaller investors.
[46:56] And transactions can be automated and bundled to occur simultaneously this lowers the risk that counterparties or traits fail before an acid gets to its rightful owner.
[47:14] I saw this with my own eyes when last month in Bank Pirates under the monetary authority of Singapore project guardian.
[47:25] The IMF was invited to be an observer to be clear many hurdles must you be overcome to go from Pilots as project guardian to production such as establishing legal Frameworks.
[47:42] Well, we cannot predict the Dobson we must be ready planning.
[47:49] The right infrastructure is absolutely Paramount.
[47:53] That’s where the public sector comes in to ensure that this infrastructure meets public policy objectives.
[48:02] The blockchain I just described would need to be cheap stable and trusted.
[48:11] It must ensure interoperability between us and the contract to trade them.
[48:19] They will also require save money.
[48:23] That is also on chain.
[48:26] At this safe money that we all now engage in talk about Central Bank Digital Currencies.
New Financial System:
[48:35] They can play a key role in integrating this new Financial system compliance with International standards such as anti-money laundering will be absolutely key as will consistency with country’s policy priorities.
[48:57] And I want to stress that we have been talking about this topic now for some time.
[49:04] It is the platform’s I described at the Singapore fintech Festival does virtual Town squares that facilitate transactions.
[49:17] I focus that they’re on how platforms favor interoperability of currencies while today.
[49:25] We are discussing.
[49:27] Sync, the interoperability of assets after all money is a financial contract.
[49:34] It is an IOU just like any other asset where do we want to fix cross-border payments or ensure the efficiency and stability of asset transactions we end up in the same place.
[49:53] Rules and infrastructures may well be the consonants and vowels of tomorrow’s international monetary system.
[50:04] They need to be as sensible and far-sighted as angle.
[50:11] I want to finish with the words of the great Korean philosopher and public servant you got.
[50:22] He said if one practices with one’s strength one can reach efficiency and then obtain results.
[50:35] Let’s do it come siham data.
[50:42] Thank you very much.
[50:44] Dr.
[50:44] Casselli Niguel rogova for the wonderful and enlightening speech.
[50:49] Once again, please give her a big round of applause.
[50:52] Thank you very much.
[50:56] Thank you for the story of the innovators and the law Breakers and also thank you for introducing our hon girl in your speech and of course our proud ancestors of King sejong and your GUI.
[51:13] We are very proud of our ancestors, but it was great to hear them be as spoken and to be recognized by our doctor gergovia.
[51:22] So thank you very much.
[51:24] And Now ladies and gentlemen, we will move on to our first panel discussion under the title of digital money and its role in the global economy opportunities and challenges allow us to set the stage.
[51:37] We have five panelists and a moderator in our first discussion and I will first introduce them to you one by one and then invite them all at once upon to the stage.
[51:48] So first and foremost, we are joined by, dr.
[51:51] Kristalina georgieva the managing Der of the international monetary fund will also be joined by dr.
[51:58] Stephen Incubus the former Governor of this ferruginous riksbank and we’ll also be joined by mr.
[52:05] Suh Yong Kim the vice chairman of the Financial Services Commission also, mr.
[52:09] David Rudder the founder and CEO of our three Mr.
[52:14] Young assumption the economic advisor and head of research the Bank for International Settlements and our moderator.
[52:21] Of course Miz has Linda am in the anchor and chief International correspondent for Southeast Asia for Bloomberg television, please welcome them up on stage with a big round of applause.
[52:59] I believe our moderator and panelists are all seated and ready.
[53:02] So I hand the floor over tomorrow.
[53:04] Moderator good morning digital money provides a great opportunity for the financial system the Global Financial system.
[53:13] It promises to be more inclusive more efficient seamless and most settled bangs are exploring digital money some already testing their own digital currencies several weeks ago in Singapore.
[53:27] Kristalina said that digital money can replace cash and she is right.
[53:31] She’s always right by the way.
[53:33] But the problem is this they are still big issues that need to be addressed interoperability scalability.
[53:43] So how do you assess the opportunities and challenges of digital money?
[53:48] Crystalline?
[53:48] I just let’s start with you.
[53:50] Right?
[53:50] We have China launching its digital Yuan back in 2021 India launches Indian rupee last year Singapore doing all sorts of tests to pave the way for the general Singh dollar give us a sense of the compelling reasons for digital currency.
[54:11] But thank you very much.
[54:14] It is.
[54:17] Clear that the world of money is now moving faster.
[54:26] Towards digitalization before the pandemic we used to say the future is digital.
[54:34] And with the pandemic The Future Has Arrived processes that were already in place are now moving much faster.
[54:43] Why is that what they are three reasons?
[54:47] The first one is technology allows us to gradually move into Transactions in which speed is Many Times Higher and that of course means the second reason costs of transactions go down.
[55:11] And the third one is that with the advancements of Technology policy makers have found ways in which two risks of digital money can be addressed and take the This segment we talked about it.
[55:29] So what we see today is a very diverse world of how countries are approaching digital money in advanced economies.
[55:40] For example, the major issues top-of-mind issues are can we ensure that monetary policy Sovereign entity is retained can Center Banks play their role?
[55:55] Sydney in a world of digitalization in emerging markets and developing economies.
[56:03] These are also top-of-mind concerns but their financial inclusion as well as opportunity to LeapFrog not go through the, you know, bricks-and-mortar Banks, but straight into the digital space are also also important concerns.
[56:25] What we see at the IMF is our membership comes to us more and more with demands for technical assistance in this area of digital money and they usually come with first a request to help them understand the whole landscape.
[56:49] What is the difference between central bank digital currencies and crypto?
[56:55] It’s within the crypto assets.
[57:00] How could we go to a safer place?
[57:02] What is the difference between back then and backed?
[57:06] Can we think of crypto as money or we have to only think of keep to as acids some riskier than others and I think that it is fair to say all of us in this room have been Galloping through our own learning on.
[57:29] On and on the topic that certainly is going to be with us.
[57:34] He’s going to impact the way we operate where risks and opportunities are very very real.
[57:42] We know that more than 90% certain banks in the world are exploring digital money.
[57:48] Yep in your conversations.
[57:50] What’s the key issue for most of them?
[57:54] The key issue for central banks is monetary policy Serenity.
[58:02] How could they make sure that they can operate an economy where there is predictability second on the list comes interoperability.
[58:16] How can we make sure that the world remains connected that as technology and policies?
[58:24] So quickly change, we don’t lead to a fragmentation in financial interactions.
[58:34] And the third issue of course is how to prevent people falling for basically scams how to advance regulation without stifling.
[58:52] Innovation and that’s that’s not an easy easy task.
[58:56] I also have had a number of very interesting conversations around cbc’s wholesale and Retail and how do you make this choice?
[59:09] So yeah, that’s that is now for us in the IMF the fastest growing area of demand for our engagement with other organizations with f B with B is and for providing capacity development and I want to recognize career Curry is the sixth largest supporter of capacity development activities of the fund and they are among those countries that say in this area we need to fund because if we don’t have an institution like the front with 190 members we do risk, you know thousand flowers blooming.
[59:52] Thing but no bouquet Stefan.
[59:55] Let’s bring you into the conversation.
[59:56] You have a deep understanding and appreciation for the history of money and monetary policy.
[1:00:03] How are you looking at the evolution of money and finance right now?
[1:00:06] Well, first of all, I think it’s very important to be mindful of the fact that Money is a convention money is about what we have in our heads and that’s what really matters and money also has a very long history and that we tend to forget when you talk about crypto this and that and people actually try to reinvent the wheel Technology’s changed and financial sector structures also change and financial sector structures are different in different countries and that raises the issue then what do we do?
[1:00:41] Technologies change and how do we understand what these new technologies Technologies can do and what is it that we really want them to do?
[1:00:51] And that’s quite that’s quite that’s quite a difference and then if history gives us any guidance actually private money does not have a stellar record.
[1:01:04] And that is regardless of choice of technology and that is really what is important.
[1:01:11] Unfortunately in some cases public sector money does not have a stellar record either and I’m not going to mention any countries but all of you in this room know exactly what what type of economy is.
[1:01:23] I’m I’m talking are talking about but in this environment still someone has to set the rules someone has to determine D convention and here actually, the state has the Monopoly right to produce laws and that ultimately means that it’s up to the state to Define what money is and to Define what various technology is actually do in this in this setting and the last time this happened and this is why we are struggling with this topic today and why we have this conference was basically in the late 1800s because back then more than century years ago.
[1:02:05] Everything was on paper.
[1:02:07] Nothing was digital and we had a great debate who should have the right to issue physical banknotes and eventually most central banks and it up with the sole right to do that and private Banks usually did not issue banknotes and that was because of the bad experience that we had back then now all of this comes back because technology changes and then people all of a sudden have to struggle with issues that they have taken for granted.
[1:02:34] Said that they have not had to deal with for 100 or 150 years and find they find that very puzzling and and many many people think that they have invented something new when it is actually not new at all.
[1:02:48] It’s just sort of the same old story.
[1:02:51] What’s the convention?
[1:02:52] How do we how do we Define money?
[1:02:55] And if we talk about CBDC doesn’t really matter so much if it’s wholesale retail.
[1:03:00] You just need it in order to Anchor.
[1:03:04] Your unit of account and if the exchange rate between public sector money and private sector money is not one-to-one, then you don’t know what money is anymore in your particular economy.
[1:03:19] And that’s why it’s so important for central banks and Central Bankers to struggle through this issue of how do we deal with CBDC’s in this new in this new environment at the same time?
[1:03:30] And here I am using a phrase that a colleague of mine came up with a few years ago.
[1:03:35] I do think that what what I call the Fiat money tea.
[1:03:40] Central banks and Legacy banks have been too slow.
[1:03:45] And that’s because in many many cases Legacy Banks run age-old it systems and many banking sectors are way way too oligopolistic and they just don’t want to move because it costs money to create new money and that has created an environment when all of a sudden all these other guys show up out of the blue and try to replace the the banks and that creates an element of confusion.
[1:04:11] And that means that today when you talk about money we should actually Use the plural monies and because at one end of the spectrum We have basically see CBDC’s then we have what we call stable coins.
[1:04:24] Sometimes I actually call them unstable coins that so much better phrase and then we have various coins with no backing at all.
[1:04:35] And that means that we have a full spectrum of stuff that people call money, but most of it is not really money on ya.
[1:04:45] And that’s really a key when it comes to thinking about these things.
[1:04:48] And what matters here is that?
[1:04:50] It’s up to the Fiat Money Team to create what I call transactional efficiency because if you’re unable to engineer transactional efficiency basically consumers and investors will use somebody else’s money and then you are out of it.
[1:05:08] And then you cannot really do monetary policy anymore the way the way we think about monetary policy, so Why it’s so important not to be asleep at the wheel and that this is a challenge today and one more challenge in this among many is I think a fact and that is that those who know a lot about money.
[1:05:31] Do not know a lot about it systems and those who know a lot about it systems don’t know but they know almost nothing about money and that’s why this is so challenging Stephen.
[1:05:46] I just want to follow up you said there’s no difference between wholesale and Retail CBDC’s yet.
[1:05:52] Some sort of banks are reluctant to issue retail CBDC’s I mean take us through the thinking and why not Ultimately, it’s a political value judgement because essentially if you do not issue a retail CBDC see it you make it impossible for their son for the general public to hold central bank money.
[1:06:14] And I think that that’s a very bad idea because then essentially you have privatized money and that has a bad record.
[1:06:23] We tried that in the Swedish economy in the late 1700s because the Central Bank refused to lend to The King The King got so upset.
[1:06:31] We started the national debt office and the dead office started issuing its own money and there was an immediate evaluation about at least 50% and that means that if central banks refuse to do this somebody else is just going to do it for them in one way or the other and but but again economists will never come to come to this conclusion by just doing five more equations because it takes political value judgment to reach that conclusion, Dave.
[1:07:01] But we can’t talk about digital money without talking about blockchain that is essential essentially the technology backing it talk to us about the potential of blockchain and financial services.
[1:07:13] Sure challenge.
[1:07:14] One thing.
[1:07:14] I’m not sure blockchain is essential for digital money, even though I come from that I think what blockchain did was got us all the think differently about how we did things importantly to give you my perspective and this isn’t a sales pitch but Head 40 years on Wall Street in various roles and I’ve owned broker-dealers a registered Securities rep and I was really inspired by Bitcoin and I thought wow there’s technology can do things we haven’t been able to do in the past.
[1:07:43] It can solve the trust problem.
[1:07:45] What I see is what you see it can be appended but not amended.
[1:07:49] It can be permission-based.
[1:07:51] So that only actors that have the right to do certain things can do certain things so we can get rid of reconciliation.
[1:07:58] We can use Advanced cryptology and distributed ways.
[1:08:01] To have higher security so it opened up a whole plethora of opportunities that have actually taken longer to take hold and I thought I’ve been at this for years now, but from my perspective financial markets fundamentally work, they’re in perfect in many many ways.
[1:08:18] And I looked at this technology as a way to improve upon that and we are beginning to see some real, you know production based systems.
[1:08:30] Sdx.
[1:08:31] Digital bonds that are truly digitally native and you can settle them now with Wholesales CBDC from the Swiss National Bank, you’ve created a firms like hqla X which tokenize underlying collateral for collateral swaps and balance sheet management the Italian banking system runs on our product corta, you know, we’ve made decisions around a private permission Ledger because we always felt that the regulatory regime as it exists today fundamentally works.
[1:08:59] It’s developed over a hundred years.
[1:09:01] It can be applied to this new technology from the private sector.
[1:09:05] I can speak a little more bluntly probably in some ways the public sector gives maybe more Credence to crypto than I ever would by talking about it as an asset when fundamentally it’s not the vast majority almost all crypto coins that have been issued have been fundamentally about issuing a white paper and Founders taking money off of the table.
[1:09:27] We’ve had we’ve heard many speakers today talk about Nefarious usage of crypto calling them assets has is concerning and also, you know, I can’t tell you how many painters at my house or valets or folks that have come into contact and they maybe they Google you and they think blockchain is crypto on actually court has a distributed Ledger technology.
[1:09:54] We don’t use blocks that’s inefficient for regulated Finance or we’re not going to actually have blockchains underpinning.
[1:10:01] Or financial infrastructure and you know the express how hey I have half of my retirement Savings in a combination of xrp Dogecoin and God knows whatever coin so it’s been really concerning for me and I think that the Regulators have been a bit slow to address it now with any new Technology Innovation like the internet there’s amazing potential for us to reinvent money and we’re doing a lot of work there.
[1:10:31] Was Project Jura and project Dunbar and we mentioned projects out of Singapore a little bit earlier and there’s we can see clear pass to improve International payments domestic payments purpose bail money for social good.
[1:10:47] There’s a lot of good stuff that can come out of this but as a community we have to be very aware of the dark side, and and I think those things can be addressed more forcefully and I don’t consider crypto money and just one other Other thing is I’m not going to claim to be the greenest person in the world.
[1:11:04] But the fact that Bitcoin when I last checked consume more energy than the country of New Zealand and we can all go crazy about what’s happening out of cop and and just ignore that this thing exists that burns that kind of energy and is used for nefarious means as we know primarily in my opinion.
[1:11:24] We shouldn’t ignore those things.
[1:11:26] Stephen talked about how those who know money don’t know anything about technology so full.
[1:11:31] Policymakers what are the key considerations when you think about blockchain and technology for digital money?
[1:11:39] So there’s all sorts of monetary considerations monetary policy considerations, which is you know is beyond my expertise and that’s up to you all in this room to solve but you know, you you end up with natural effects like the increasing velocity of money, but you end up with all the benefits for for Commerce where you can link a Livery of goods to instant payments that’s very important in developing economies with small companies where cash is King.
[1:12:08] It’s all about cash flow.
[1:12:09] So you can you can do so many new things and certain institutions like Swift and I don’t have a view here, you know come into question CLS.
[1:12:18] Definitely.
[1:12:19] Why do you have you don’t have hair stat risk when you can atomically lock a payment in an asset on a single level ledger.
[1:12:26] So there’s no need for some of these institutions.
[1:12:29] So I see a very very bright future.
[1:12:31] I would just encourage, you know, there’s a lot going on in for the central Bankers in this room.
[1:12:36] There’s plenty of s is that would charge you a ton to reinvent the wheel there’s been dozens if not hundreds of experiments done.
[1:12:43] There’s there’s live implementations already and there’s ways you can learn very quickly and come up to speed on what the technology can do for your country and your money.
[1:12:52] So Regulators don’t necessarily have to play catch-up all the time.
[1:12:55] They’re like guards essentially most of the time.
[1:12:57] Yeah, and I think the good news for Regulators is there’s fundamentally sound principles around consumer protection and the way institutional finances regulated today.
[1:13:08] So as a 724 and 63 the fundamental concept behind institutional Finance regulation is I have a firm that I can be that I can hold responsible for activities on a platform whether it’s a stock exchange and derivatives exchange and FX exchanger fixed-income exchanges two of those for I’ve run before Or and if the firm doesn’t behave in a way that’s appropriate.
[1:13:34] I can go after the individuals.
[1:13:36] Well that makes you really pay attention to how you treat your customers and if it came to anyone as a surprise, I mean I’ve gotten a lot of flack because I’ve said in my 40 years I’ve seen fraud I’ve seen Ponzi schemes and I’ve seen bubbles but crypto was the first fraudulent Ponzi scheme bubble ice all wrapped up.
[1:13:55] So so so if anyone was surprised this embankment freeze alchemor Seas CV or whatever, you know we smell of coffee here and that’s just exactly the same regulations to those actors are that we do for for folks that run traditional exchanges.
[1:14:13] So young so much skepticism and criticism from this panel when it comes to cryptocurrencies.
[1:14:21] I mean Korea has a very active crypto Market.
[1:14:24] I think it’s valued at about 21 billion dollars or so.
[1:14:28] What kind of policies can ensure the safety of the consumers and perhaps save God the financial system?
[1:14:38] So first Korea has a highly detailed financial sector in Korea 78% of banking transactions that don’t digitally and 93% of balance inquiry services are don’t buy internet banking and Korea is also very much interested in quit plus set recently Bloomberg reported for criticized transactions in this November.
[1:15:09] Korean was it used even more than the US dollar.
[1:15:14] However, quick quick process still mostly utilize for simple investment purposes rather than for more useful purposes, for example transaction cost reduction efficient, cross-border payments or finish inclusions.
[1:15:34] Then for government regulation of cryptos Marcus, I think the top priority is user protection and anti-money laundering this is because if many people suffer from the Crypto class at transactions or criticizes a used as a means of prime, then we can release a pocket for crypto asset transactions.
[1:16:04] So this is exactly what we are doing in Korea in July next year.
[1:16:10] The crypto are says user protection act will take effect in Korea the Act established the regulatory system for user protection based on the principle principle of same function same risk and same regulation unclear transactions like Market manipulation will also be strongly punished.
[1:16:33] And we have already introduced a reporting system for a quick process service providers to comply with the standards set by the FATF.
[1:16:43] So this data is for anti-money laundering.
[1:16:47] Then we plan to have a we plan to further develop regulations and other area like tokenize this tokenized the Securities some pieces conduct in relation to for example issuance of distribution and so on so we will go on step by step step by step.
[1:17:09] Is there a risk of for regulating the sector because there’s always that fine balance between regulation and Innovation.
[1:17:18] How are you looking at it?
[1:17:19] So up to now we haven’t really over-regulated.
[1:17:22] The only as I said that you would impinge on on Innovation.
[1:17:29] Yes, so up to now we only have a the law for user protection and anti-money laundering.
[1:17:35] So I think that as you said innovation in the sector is very important.
[1:17:41] So we consider them more in the next stage of the regulation.
[1:17:47] So we we have to regulate or we have to set up the regulations on the issuance and trade and the distribution.
[1:17:59] So I think that that’s the test exactly the area that we will we have to look at we have to be in balance with protection and innovation.
[1:18:10] Tokenization hyung song how will that influence and shape the financial system?
[1:18:15] I think tokenized those tokenized Securities can help a lot on by introducing new technologies new Securities and you type of Securities and I think that tokenization actually the tokenize accurate is one of the most important area that really go for Innovation compared to other virtual access for Other virtual access doesn’t have any intrinsic value.
[1:18:43] So on the other hand as tokenized Securities has a that there’s Baker Securities that has intrinsic value.
[1:18:50] So I think the most Innovations will be mostly from to Canal securities.
[1:18:59] Well, I think I mean first of all, let me thank the IMF and the Korean authorities for laying on this very timely event and it’s a tremendous set of topics that we’re discussing on tokenization.
[1:19:11] I would start with what Stefan said we have to look to history and see how technology has really kept pace with economic development and the development of the monetary system over history has really given rise to tremendous leaps in economic activity.
[1:19:29] And and growth and digitalisation, which is 50 60 years old without that we would not be here today tokenization is digitalization plus a very important element which is the rules and logic governing the transfers now, I didn’t say blockchain.
[1:19:48] I didn’t say decentralization because I think the technology is secondary.
[1:19:52] The principle is we have the rules on the logic that are combined with the digital representation of the your assets now why this is important is because the nature of the financial system nature of the economic transactions has to do with a very dense web of contracts.
[1:20:12] So I do something in the expectation that you will do something the simplest form is I pay you deliver and what tokenization does is to combine the payment and the delivery.
[1:20:25] So there’s no risk that I pay but I don’t get the money.
[1:20:28] I don’t The goods or vice versa.
[1:20:31] So what do you need for this?
[1:20:32] Well, I think David put it very well.
[1:20:36] You don’t need blockchain, you know, you could use blockchain, but you don’t need it.
[1:20:41] What do you need is for money and the digital assets to be in the same venue so that you can apply the same program to both and I think Securities digital security financial securities is probably the lowest hanging fruit.
[1:20:58] But I think what this does show is the the limits the using blockchain, especially the public blockchain because suppose that I want to buy a real world asset, lets say a security.
[1:21:10] I have to be sure that whatever the digital representation there is on the platform actually gives me legal ownership of the underlying security Now for that you do need the legal framework to actually back it up and Is why crypto, which was designed to circumvent?
[1:21:31] The legal framework is not the right, you know approach and I think you know, we’ve we’ve heard plenty from the managing director today and the other speakers on why you know crypto is not the right way forward instead.
[1:21:45] What you need is much more of the public infrastructure perspective, which is money is a public infrastructure.
[1:21:52] And what you need to do is to have a way of putting assets and money on the same platform Central Bank digital currencies are absolutely essential because that is the settlement acid but most of the of the transactions will be taking place using private money and the bis has advocated the use of tokenized deposits and let me just mention, you know, the the project that the career.
[1:22:21] Four of these are conducting and very much with the bank of Korea at the at the helm which is on the project of having Central Bank digital currencies tokenize deposit Commercial Bank deposits together with other digital assets that are interlinked and maybe and which makes the programmable.
[1:22:47] So, let me just stop there and I’m just wondering how this is all going to play out because you Go with what get Mackenzie is suggesting.
[1:22:54] It says that four to five trillion dollars of tokenized digital Securities will be issued by 2030 but that’s a conservative estimate and others are suggesting that it wouldn’t just be like your stocks and bonds is just going to go into your fine wine and art how is it going to play out?
[1:23:14] Absolutely.
[1:23:15] So I think first of all, I think digital Securities financial securities, that’s the lowest hanging fruit.
[1:23:22] Is that to already digitalize through the Securities depository in the various, you know centralized Securities depositories.
[1:23:31] So we already have ways of transacting Securities simply by adjusting a digital entry.
[1:23:38] I think the the bigger goal will be to expand the set of assets that can be tokenized and for the Korean audience today.
[1:23:47] I think a very very good example would be the risks that we can overcome.
[1:23:51] Um in the in the transfer market, so John said has been there as you know is a very special Korean type of housing contract where you hand over a large deposit to the landlord in return for sitting in the collateral asset, which is the house.
[1:24:07] So you’re actually living in the collateral but one thing that we’ve seen in the last year or so last couple of years when house prices have fallen is that sometimes they transactions were not very transparent.
[1:24:21] There were actually additional leans on the house like a mortgage which was not disclosed and there are timing problems.
[1:24:29] Wouldn’t it be nice if we could have tokenized Johnson contract where you can be assured that whenever I pay my deposit I get a clean house back in return and that’s the power of tokenization.
[1:24:43] You can actually program these things in a very clean way.
[1:24:47] My colleagues do hourly would appreciate that very much.
[1:24:50] She went through quite a bit of difficulty.
[1:24:51] LT Stefan, you know we talked about earlier how digital body allows for greater inclusion, but it is kind of problematic because when you think about technology there’s always that to technological divide.
[1:25:05] How do you bridge the gap?
[1:25:06] How do you address the issue to ensure that everybody is on board?
[1:25:11] Is going to happen one way or the other because I come from an environment where basically you can forget about notes and coins.
[1:25:19] That’s yesterday’s technology.
[1:25:21] So it’s just it’s just happens and you have to get used to that idea but Financial inclusion actually varies from country to Country and it varies quite a long and financial inclusion new technologies go hand-in-hand and will be I think quite important in many many smaller.
[1:25:41] Love being countries because in those places, it’s quite usually it’s not all that unusual.
[1:25:45] I figured that the central bank is the only functioning Institute the only functioning institution that people trust and in that environment if the Central Bank chooses sensible Technologies, then that will actually very much faster and financial inclusion in one in one form or the other and one way to think about it is that we’re not really Talking about bricks and mortar anymore.
[1:26:13] We’re not talking about Branch offices were essentially talking about how to recreate old-fashioned credit unions and Savings Banks the way they were structured in the mid-1800s, but only using digital technology to make to make that happen and then you actually end up with a system which is better than Branch offices and cash because it’s much more.
[1:26:41] Convenient to use but some of the preconditions need to exist to make that happen.
[1:26:47] First of all, you have to have some cut some kind of electricity in one form or the other otherwise, it doesn’t work.
[1:26:52] You have to have seller and let cellular networks.
[1:26:56] It’s very helpful.
[1:26:58] If you’re able at the national level to create a digital ID so that you can Define who you are who you are and you need sort of a public sector Vision or how this is supposed to happen because without that vision is very very difficult to give guidance to the to the private sector but also and this I hope his music to to the fun people in this room.
[1:27:26] You also need to have a reasonably stable macroeconomic environment because that really means that you have to fix the fiscal and don’t print too much money and nothing can save you.
[1:27:40] From from those two on the technology side if you misbehave you misbehave and people actually migrate to somebody else’s somebody else’s currency.
[1:27:51] So that’s also part of part of the system and here the recently published.
[1:27:57] IMF digital handbook or whatever.
[1:27:59] It’s called.
[1:28:00] It’s a very nice documents or a giving elements from guidance when it comes to how you should actually go about doing doing this I’ve And all this stuff and there is there always elements of sort of uneasiness in those documents as well.
[1:28:17] So you better make up your minds.
[1:28:19] Actually you guys on the fun side.
[1:28:21] What what your opinions are when it comes to this because life is a risky business.
[1:28:25] And if you see with your arms crossed forever if somebody else is just going to run it for for you.
[1:28:30] So you you have to choose a direction when it comes to doing this and it we already had have examples you looking for example, what has happened in India.
[1:28:40] And how all of this has been implemented for hundreds of millions and millions of people clearly.
[1:28:47] There are good examples where you can show that this is actually doable with existing existing Technologies, but having said that you also need to understand how to supervise in the digital world.
[1:29:02] What does that really mean?
[1:29:04] What what what is the supervisors supposed to do in a completely digital world?
[1:29:10] And that is something that we have actually put we need to put more resources into into that because it is not it’s not obvious and new technologies do not make old problems go away.
[1:29:24] I mean this when it comes to money if it’s too good to be true that is Over the case and that’s independent on whatever technology you have chosen.
[1:29:35] So and I also do think that some of these investments will not will not be carried out by the private sector alone because some of it is about returns to scale.
[1:29:47] Some of it is about setting the rules and particularly when it comes to financial inclusion.
[1:29:53] Somebody actually has to invest in apps and systems that also so people with disabilities can use and there’s not enough money in on the private sector side to to do that and there are elements of consumer protection also that you need to be mindful of so really what you need to do.
[1:30:14] And this sounds like an oxymoron is you need to be a kind of a public sector entrepreneur.
[1:30:22] To make this happen and that’s of course hard to do when it comes to financial inclusion.
[1:30:28] Kristalina.
[1:30:29] Are you encouraged but digital money will achieve their what are you seeing so far when your conversations?
[1:30:35] Well the unquestionably this is very welcomed by developing countries that they can very quickly expand access.
[1:30:52] To everyone there are preconditions and Stephen talked about them one.
[1:30:58] You do need electricity access to electricity for fairness.
[1:31:03] You don’t need access to electricity 24/7.
[1:31:07] We have seen this in remote areas in Africa with two hours access to electricity you charge your phone you have an ability to function developing countries Emerging Markets.
[1:31:20] They also see a tremendous opportunity.
[1:31:22] D2 cut short their own Movement by jumping over things that we have done and still do like checkbooks.
[1:31:39] Do not exist in in developing countries, you know, you show checkbook and they said what what it what is this?
[1:31:48] We have seen enormous Innovation like a sir in Kenya that now spread all over.
[1:31:57] And if you think about who are the sometimes determined obstacles, they come from business interest in the current infrastructure.
[1:32:12] If you are in the business of cross-border payments that allow you to take today, the average cost of remittances is 6.3 percent.
[1:32:26] Went it’s very profitable business.
[1:32:28] The Target in the Millennium development goals is 3% with massive shift towards digitalization that Target can be reached and exceeded.
[1:32:42] So I think I’m with Stephen.
[1:32:46] I think that this is happening policymakers either.
[1:32:53] Are part of it and help it to be done better or it would be done anyway, and we would find ourselves wrestling with consequences of Our Own in action.
[1:33:08] I want to finish with one point what we have seen at the front is tremendous interest in learning from each other and guess what the biggest interest Learning from emerging markets that are ahead of the curve India India India the digital public infrastructure.
[1:33:33] The fact that there is digital ID for everyone that put something in place that public and private can tap into and benefit from of great interest to the to everybody in the emerging markets and passer.
[1:33:50] I mentioned it took.
[1:33:53] A courage to put it in place and now everybody says in Africa.
[1:33:58] This is the way to go but does it mean that there is not a big role for the for advanced economies?
[1:34:08] No advanced economies.
[1:34:09] Bring two things.
[1:34:11] They have by and large most, you know, most of them very sound macro fundamentals and they have learned through history the role of rule.
[1:34:23] Flow to have trust without which none of what we talked about is going to really work and secondly advanced economies bring the experience.
[1:34:37] They have had in their own history of money.
[1:34:41] And again Stephen was right to say it is a very valuable experience.
[1:34:46] Even if we now move to a different direction in the digital world.
[1:34:53] Speaking of opportunities David.
[1:34:55] I mean we talked about cross border.
[1:34:57] Where are the opportunities there?
[1:35:00] Well, I think we just identified an exciting business opportunity for our three.
[1:35:04] I will be more than happy to deliver a global remittances system at three percent.
[1:35:10] So and I won’t I won’t start there but there were men and you make you with the make good money out of it very very good money.
[1:35:18] Very good money.
[1:35:20] I was going to start with the remittances, but we might as well and number.
[1:35:23] The country’s we’re doing a lot of work in the Gulf right now where there’s a lot of Migrant workers and there’s just so much optimism and so much going on in that region and they genuinely are looking at their migrant workers and how they transfer money at home and what it costs and not only do you have savings but in a programmable world you can have directed payment so it could come directly out of their salary.
[1:35:48] It could go back home.
[1:35:49] It could be purpose bound money specifically for education.
[1:35:52] Mission and milk and nappies for the for the kids and I think that you know, some people that Santa’s in Florida and some others think all this is the great state taking charge but you know, everyone’s allowed to have different perspectives.
[1:36:05] And this was my point earlier about how purpose bail money can be used for for for good from the business perspective International payments are very very clumsy.
[1:36:19] They’re very slow.
[1:36:19] They’re very expensive and I have no visibility.
[1:36:23] And and cash is the bloodline of every business especially small businesses.
[1:36:29] And we want to encourage developing countries smaller manufacturers.
[1:36:34] We want to create of startups.
[1:36:37] We want to make sure that they can Thrive so with cross-border payments and we know this we’ve done enough experimentation already.
[1:36:45] It’s cheaper.
[1:36:47] It’s more efficient.
[1:36:49] I have much more visibility as to my my payments certain infrastructure that exists today as I mentioned earlier whether it be CLS or Swift correspondent banking all can be challenged under this and you can come up with a much more creative solution and importantly because we talked about smart contracts on Ledger and it doesn’t have to be just on one system because there is a lot of work being done interoperability now, but you don’t want thousands, you know, you can actually Vuillemin exporter.
[1:37:24] I can enter a contract to sell a good or service based on payment terms that I understand and I accepted the time of sale and that could be an iot device like the UBS UPS or FedEx guy scans the box when it’s delivered on the porch.
[1:37:43] It releases the payment, you know, those the type of certainty for young businesses in programmable money where delivery of your good is is linked to the payment can be very very valuable and and we’ve tested nearly all of this out the other the other driver.
[1:38:01] Let’s face it.
[1:38:02] Is that China and Ambridge project?
[1:38:06] Certainly.
[1:38:06] There’s a geopolitical aspect of that which I you know, fully understand.
[1:38:12] It will allow countries to have more control over the international payments for themselves and for their business.
[1:38:20] There’s often reasons.
[1:38:21] Why You know, they might want to support a given sector or open up a new a new trade Avenue and the like so there’s just a lot more flexibility.
[1:38:32] It’s cheaper.
[1:38:33] It’s efficient.
[1:38:34] There’s visibility I can watch it on my smartphone.
[1:38:37] So there’s a ton of benefits that well.
[1:38:39] How do you expedite the process human soul.
[1:38:43] How do you know like we talked earlier you mentioned about the banking systems or on older technology.
[1:38:49] I mean, I hope I don’t get in trouble for this but you know FMI is like DTCC and euroclear and some of these other organizations.
[1:38:57] They still use COBOL.
[1:38:58] I mean, they they hire Engineers they overpay them and they put them into training classes because no one teaches COBOL anymore that infrastructure has been hardened over decades, but it works.
[1:39:11] Okay and it Protects consumers that protects folks involved so it’s going to take awhile and importantly it doesn’t have to be a hard cut over they will coexist and and and my own view is that because of all the benefits I mentioned once there’s enough, you know CBDC in plays with bilateral multilateral trading connections.
[1:39:38] We will very quickly see folks move over to the new rails.
[1:39:42] But it will take time cosmetic platforms.
[1:39:45] How do they fit into the future international monetary system what the this is a very exciting for us because what we recognize is that the is now progress on multiple fronts first, there is progress on the easy fixes.
[1:40:09] There is no understanding that for for cross-border.
[1:40:12] Point platforms to exist we have to have common standards and there has to be kind of common language so they can they can function.
[1:40:22] Well, this is fairly straightforward than we see movement second.
[1:40:27] We see countries bilaterally and Puri laterally coming together Singapore Taiwan with a BS help asean 5 now saying well we want to move on.
[1:40:42] this very quickly in the Gulf extremely fast-moving and when when you have this plurilateral bilateral security Arrangements, what happens is they catch us how that can be expanded even faster and then comes the tough part which is to create what I talked about here and in Singapore this virtual public squares platforms that are Fine for for everyone and that is going to take some some time.
[1:41:18] But if you go in this multiple directions you a each one of them builds the foundation for the next 14 getting to a point when platforms are there and cross-border payments are instantaneous much cheaper much much more accessible to people who today, you know have very a little money and see a big chunk of it being taken away just to pass it from here to to their can I ask the audience a question?
[1:41:53] I got very intrigued by that my question is how many of you have cash in your wallets?
[1:42:02] Can you raise your hand people with cash?
[1:42:05] Okay.
[1:42:06] Yes.
[1:42:07] I’m actually also have so how many have no cash whatsoever?
[1:42:12] So here we go it just for because I see the new don’t see it.
[1:42:17] It seems to me more like one-third two-third.
[1:42:20] Yes to third with cash 1/3 we do and it would be interesting a year from now to ask the same question and then a year from now to ask this question and I think the direction to travel would be fewer and fewer with cash.
[1:42:32] I had a conversation with Ravi Manon and he says have cash as backup.
[1:42:42] Said they would they would coexist and it is very possible that having cash for at least years and years ahead would be necessary.
[1:42:55] But the question is not whether we have it.
[1:42:57] The question is whether we use it.
[1:42:59] Where do we keep it in our pocket every day or we have something stashed just in case and I think we would move towards just in case of course if we were to then ask them graph.
[1:43:12] Fix and see younger versus older.
[1:43:15] I think the all those of us from the older generation would be more inclined to have cash in case anybody wanted to add something.
[1:43:24] Yeah.
[1:43:24] I was just going to say but you’ve already covered it and no offense to the audience.
[1:43:29] But if you look at the average age of this group, if we we had an average age of say 28 out here, it would be 95% carries.
[1:43:38] No cash and financing carries kid.
[1:43:40] That’s exactly it.
[1:43:41] Yeah.
[1:43:43] Can I just add a comment coming through that because reading reading up on various reports coming a coming to Korea.
[1:43:50] I read a report about transactions in the case of Sweden.
[1:43:57] And basically the view is that cash transactions, maybe 1% in the future.
[1:44:03] Not more than that.
[1:44:04] And in addition to that and this has something to do with age if you talk to young people they’re Really more comfortable using apps than cash and they feel insecure when they pay using cash because they don’t know how to do it.
[1:44:22] So the fascist very liberal grandma and grandpa in the in the future.
[1:44:27] And also when it comes to making payments using cash It’s a logistical system.
[1:44:34] So it doesn’t really matter how much cash you store some place secretly.
[1:44:40] If you can’t manage the logistics, you don’t know what to do with it.
[1:44:45] So if you really want to enforce the use of cash, then you have to have some kind of a legal structure report is supporting that because I don’t worry guys cash is just going to go away.
[1:44:56] I feel very insecure with our cash, but that’s just me.
[1:44:59] So young.
Future of the Global Financial System
[1:45:01] When you take a look at the Future Global Financial system, do you see it as being more integrated or more fragmented?
[1:45:08] The reason why I’m asking is because if you take a look at the crypto assets networks, they’re kind of like closed-loop.
[1:45:17] So Projecting forward so young.
[1:45:22] Do you think it’s going to be more integrated or fragmented that they’re gonna be more integrating?
[1:45:27] So we have a more and more electronic trade electronic forms.
[1:45:35] And also we have more and more quick process and many other things so What are the risks that we more fragmented?
[1:45:45] So yeah, actually General though.
[1:45:49] We probably have to think about there are more and more.
[1:45:52] It’s a connection between quick process and funniest system.
[1:45:57] So it is in some cases.
[1:46:01] So this is also the this is both in domestic and international and in some cases furnish information directly investing in crude prices and in other cases finished.
[1:46:12] Homes make Equity investment in crypto has a company’s vice versa.
[1:46:17] And in fact in April 20-21 coin basement public on NASDAQ.
[1:46:24] And this this is the first time a crypto as a company has entered in the Captain America.
[1:46:31] In addition nowadays A Pension funds from major countries also purchase a series of coinbase.
[1:46:38] So Crypto I said exposure of traditional Financial system has expanded.
[1:46:45] So this ends of that concerns about liquidity risk and also finish instability the price of crude, I think the main problem is the price of cryptanalysis a very volatile.
[1:47:01] So if these are cells are held by Financial forms, they can cause large losses when the price drops sharply and financial firms may use crypto us.
[1:47:16] As collateral loans collateral for loans, and they may also extend credit to criticizes service providers.
[1:47:24] This can also lead to financial instability.
[1:47:27] If the price of us a promise in addition steal coins can be more deeply connected to the core Financial systems Reserve asses.
[1:47:39] And then I think to address all these constraints about could process monitoring and regulation is very important and that should be led by very reputable Authority for example a government and and these are very important for the government to clearly understand the new Financial linkages and you systemic risk.
[1:48:03] So the absolute there are more and more into The action between the Kree processing financial sector.
[1:48:12] So coming to the keep watching and monitoring and also with the government should recognize that this connection all this risk can change very rapidly and sometimes these changes these connections or this can evolve in the direction that we are not expected.
[1:48:33] So, yeah, so it’s comma 2 comma should really care carefully monitored.
[1:48:39] Monitor the development of the equity markets, right?
[1:48:42] I think we discussed earlier how the issue of interoperability is key.
[1:48:49] It is complicated.
[1:48:51] How is BIS looking at it?
[1:48:52] How do you expedite it?
[1:48:53] And what’s being done and the BIS Innovation Hub to address the issue?
[1:48:59] Well interoperability is absolutely key.
[1:49:02] It’s partly about the technology.
[1:49:04] Let me come back to that later.
[1:49:06] But I think it’s important to underscore the importance of things we can do even without going to the frontier.
[1:49:13] So if we think about the current Financial system, how can we encourage interoperability among all the various participants in the financial system and the economy more generally, I think we’ve learnt It’s it’s the governance and the institutional features which are really crucial for this.
[1:49:35] So this includes for example, the data governance standards all the initiatives on open data open banking which levels the playing field enables entry enables competition and financial inclusion.
[1:49:52] I think that’s been very well demonstrated to be really crucial for four economic efficiency and for wellbeing generally and we know from the Walled Garden set up by the big tax that if we had the ability to channel the network effects in the you know in the good direction we can actually do a lot of good so so certainly we can do a lot even with the current system.
[1:50:20] The other thing that we should be very very cognizant about of is the institutional backdrop, so When the managing director talked about public infrastructure and the IMF’s work on the global platform.
[1:50:38] What that does is to enable lots of different and disparate parties to actually come together and transact you’re not working in a silo where you’re beholden to one particular provider and I think here it also guides the way that we design digital money because if we have a stable coin, What typically happens is that?
[1:51:00] There are exchange rates between stable coins?
[1:51:03] I mean they may be very small deviations from par but there will be an exchange rate and sometimes these exchange rates can become quite volatile.
[1:51:14] For example, as we saw at the time of the FTX collapse last November and what what that argues for is that we need something that preserves the singleness of money and singleness of money means whether you pay using cash or whether you pay using a banking app or a or a fin taker in a one one dollar is $1 1001 is 1001 and you don’t have exchange rates between money and I think it’s absolutely crucial that we have that so that money can play the role of the convention that Stephen mentioned so the technology obviously features into this because we In design various initiatives where we build in these institutional and governance standards and the IMF Global platform is certainly, you know one example of this but you can also link just existing first payment systems.
[1:52:18] So the managing director mentioned project Nexus, which is a project that comes out of our the bis Singapore center of the Innovation Hub.
[1:52:28] And this is nothing, you know revolutionary in terms of the technology.
[1:52:33] What it does is to link existing first payment systems so that when I pay someone in another country I can do it just as if I’m paying domestically and the money shows up immediately and I think what that shows you is that the technology is very much of course secondary here what’s really important is to think about the architecture and the public good nature of money.
[1:52:59] And that element of trust kristalina.
[1:53:02] Yep, and the element of trust but also it is trust and it is functionality.
[1:53:09] We want money to store value in a reliable Manner and be means of exchange fast agenda cheapest the cheaper the better I can call this money if you are willing to exchange things sure.
[1:53:30] But any store some value however, very impractical if I decide to build my life on this being my means of exchange good luck to me.
[1:53:41] So it is it is some of what we have learned over thousands of years about means of exchange and storing value and what now technological advancements can put on a different Platform with different speed it would be reliable only as as you brought it back.
[1:54:06] It would be reliable only if it is on Foundation of trust and Foundation of trust comes with rules that are respected by everybody with legal Frameworks that operate and that there is no shortcut for it.
[1:54:25] And David, is that even realistic?
[1:54:30] What specifically rural I mean interoperability if it’s based on trust if it’s first off from a technical perspective, yes interoperability comes with challenges especially in the world of distributed Ledger’s distributed computing blockchain because it’s a you know in the perfect world its own one Ledger makes it much more difficult to tamper with in the like but there has been a lot of work done.
[1:54:56] So the answer is the technology Energy side is not a long-term challenge.
[1:55:03] It’s just short-term Challenge and then you know money and Trust in the singleness of money.
[1:55:08] I read read the work that BIS did.
[1:55:10] I mean that’s that’s very important.
[1:55:12] One of the things I’ve always struggled with and I’m not a monetary person but we prefer stable coins as if their money I look them look at them as a as a poorly regulated money market fund and and that’s effectively what they are and it’s just a way for me to get swap in and out.
[1:55:28] Out of my crypto.
[1:55:29] That’s why they exist.
[1:55:31] So I mean for me I’m you know, as a traditionalist.
[1:55:35] I’m just really encourage, you know central banks to kind of get on with it and you know realize the gaps that need to be filled ultimately, you know trust comes from the full faith and credit of the country that backs it up and Stefan said earlier.
[1:55:55] There’s some countries whereas Sound but generally speaking.
[1:56:00] I think the technology is just an enabler to a more efficient Global monetary system.
[1:56:06] We talked about CBDC’s we also talked about how they are private forms of digital money Stefan talk to us about the risks from both the private forms of digital money and cbc’s well, first of all given that I’ve sort of come from the Central Banking side.
[1:56:28] It has always puzzled me when people say that a CBDC is very risky in some sense because if you go back to the 1800s when everything was on paper, I know that the bankers Association in my country argue that when the Central Bank cut the sole right to issue physical banknotes.
[1:56:46] They would go under the private Banks they still exist.
[1:56:50] So apparently they were wrong and now this whole conversation sort of comes back in a way that I find a hard hard time that I have a hard time.
[1:56:59] To understand because actually central bank money.
[1:57:02] I could provide stability to the system not instability providing that you do this in a sensible way, but we have already talked about and touched on Legacy systems and and the issues with old Legacy payment systems and they are stable and maybe they’ve been to stable because everything is moving somewhere else and that creates risks in itself.
[1:57:28] Because the Fiat money team as I called it has actually been a bit too slow on this side and I’d like your example and I’ll give you two other examples where sort of is not so easy to really understand what we’re talking about and I’m picking this is not to pick on these particular examples because there are probably many many others when Libra showed up out of the blue some years back and it never really took off.
[1:57:53] I asked my staff to get me the tech specs and what it was all about.
[1:57:58] So we got 150 200 pages of stuff and what really surprised me was that in that document.
[1:58:07] They had only 10 pages on the monetary aspect of Libra and that told me that these guys didn’t really know what they were doing or they had something to hide.
[1:58:19] And that made me very very sort of suspicious of the whole setup and it was kind of a money market funds.
[1:58:26] So where do but you couldn’t really get to the legal stuff in a way that made sense so that you really could understand something something similar happened to the other day because I stumbled over the PayPal dollar which has showed up now if you go to the Internet and try to understand what a PayPal dollar actually is be my guest you’re going to have And click pretty far into the system before you find this stuff what it actually is and my conclusion is that either it is a money market fund or it’s a bank or it’s some version of both and in terms of risks and consumer protection.
[1:59:04] That’s not a good place to be because actually consumers need to understand what they’re buying a seller selling and what they are investing investing in so so and this is not the particular in these particular on these two companies, but this is a sort of a common feature.
[1:59:18] Feature that you’re trying to sell something to the general public and the general public can really and fully understand what on Earth it is that they are buying and if you call this thing a stable coin you sort of take for granted that you will always get your money.
[1:59:35] You can transact transact and get your US dollars in that particular case.
[1:59:39] But if you click your way deep deep into the system, you actually end up on a page where it says we can unilaterally impose withdraw.
[1:59:49] Restrictions on you so so much about the moneyness on that particular money.
[1:59:57] And and this is really where we have some issues when it comes to risks and where the public sector needs to work hand-in-hand with the private sector so that you can actually better understand what you are doing because an essential feature of a market economy is well understood.
[2:00:19] Transfers of ownership titles and when stuff goes in One Direction money usually goes in the other direction and if you cannot do that in a legally sound way you run a pretty high risk that systems will collapse sooner or sooner or later and that’s that’s an issue in it in itself.
[2:00:40] So Technology here can do an awful lot of nice things.
[2:00:46] That is absolutely a given but you need to have legal certainty so that you know what you’re actually doing and if that is not the case if somebody is promising that the sky is the limit beware because that is probably not the case and it’s obvious when we think about these things in sort of physical terms that if you are trading Stamps, no one would ever claim their trading stamps is equivalent to money.
[2:01:17] But when it comes to digital stuff all of a sudden you claim that something is money when it is not money when it is actually much closer to trading stamps.
[2:01:27] And that’s where the risks come from and know as always when it comes to dealing with the financial sector.
[2:01:34] Try to find the Leverage.
[2:01:38] And if you can pin down where you have too much leverage, then you have also found a risk, but you have all sorts always have all sorts of elaborate systems where you try to hide the leverage and then the whole thing blows up and then a couple of years later you say.
[2:01:56] Oh my gosh had I just understood that this whole thing was completely over levered.
[2:02:02] Everybody would have been better off and these risks are sort of certainly there when it comes to these.
[2:02:07] New instruments as well.
[2:02:09] Help me understand in the not so distant future when central banks.
[2:02:14] Release launch the cbc’s well, they coexist with a private digital money.
[2:02:22] How will it work?
[2:02:24] Yes, it’s not harder than that because we have had that kind of a system for hundreds of at least 150 years when it comes to everything being paper-based and this is only taking the concepts that evolved over hundreds of years accepting.
[2:02:44] That technology has changed but using the same Concepts within within a digital digital world in some I mean, this is exactly the system we have now where Commercial Bank deposits are the primary means of payment for most of us, but Central Bank Reserves.
[2:03:05] So central bank money is the settlement asset.
[2:03:08] I mean that’s what gives the interoperability that we talked about and so in some ways CV is already here.
[2:03:16] So, you know, we have central bank money in digital form.
[2:03:20] I think we can quibble about what exactly you know, what additional features we would like cbc’s to take on but to a large extent.
[2:03:29] We already have it here and I think this is where we need to use the private sectors engineer tea and creativity to actually provide the customer facing services, but the central banks and the public authorities they can provide the infrastructure.
[2:03:44] ER where do you see that collaboration?
[2:03:47] Kristalina?
[2:03:49] Well, the the cooperation between private sector innovators and public authorities.
[2:03:57] It is happening.
[2:03:59] What we do here is collaboration between private sector and and public authorities.
[2:04:06] And what we have seen is that indeed the private sector brings more creativity more Innovation, but actually the Credible private sector banks for the public sector to play its role and it is what is the legal framework?
[2:04:23] What are the rules?
[2:04:25] What are the standards and Stephen brought the point that we should not forget.
[2:04:30] How is this all being supervised in this new era?
[2:04:33] How what is the role of supervising authorities?
[2:04:37] We also look for our role as an international financial institution and it is too Bring different experiences together help countries learn from each other and then help those that are with more limited institutional capabilities not to fall behind.
[2:05:05] We have an instrument called f sub financial sector assessment and that instrument today.
[2:05:14] Has to reflect the changing nature of money the fact that we have CBDC interest actually not just interest.
[2:05:22] We now have 19 countries where cbdc’s reality and we have a universe of at least 60 where progress is being made there.
[2:05:35] Not just exploring they’re working on it to those that are saying well, I don’t know where the CBDC.
[2:05:45] Is for us and we know that in some economies that that is being questioned.
[2:05:51] My advice is stay on top of it because you don’t want to be falling behind just because you are not not engage not not on top of it in in the world we are.
[2:06:09] We’re changes happening much more rapidly than it used to to happen in the 19th century.
[2:06:17] Well, you know we moved around on buggy switch horses.
[2:06:24] We just have to to have both public institutions much more interested in developments and engaged in the bodies that they have to help them but also private.
[2:06:39] Nurse being more open to collaborate with the public sector because what if if I put a very simplistic view when we talk about CBDC sees the issue of interoperability is absolutely Paramount.
[2:06:56] We cannot be in a world where every country has its own money and they thought they don’t talk to others whereas in the world of unstable coins.
[2:07:09] The regulation is the Paramount priority there has to be Clarity of how this all works and these two topics interoperability and regulation.
[2:07:25] They cannot be addressed without partnership between public and private sector.
[2:07:31] We are just not going I mean Stephen Dad talked about it.
[2:07:34] We cannot get too fast enough to Point that serves the public if we choose to go our own way not talk with each other not engage with each other.
[2:07:49] Let me prove that on the International cooperation the importance of the international cooperation So currently International organizations make recommendations on criticized regulation and they also provide the direction for discussions in order to apply Commerce tenders and I think all these efforts are very important and in turn the each country does not have the same situation so there will be differences when detail will be Is applied then we can share share and learn from each country’s experience and this helps create a better equipped has that ecosystem and I think this is a this is exactly the purpose of this conference.
[2:08:41] When Korea prepares?
[2:08:43] Lausanne Crypto I says we also met with major institutions like us regulators and IMF and we discussed regulation transient palace directions, and we are also checking with other international relations like fsp and iosco, and we will continue our efforts in this direction and FSB and iOS course post says that the Learning information is very important and cooperating with the other authorities are very important.
[2:09:16] So Korean government will also share the information with other jurisdictions to ensure coordinated by Palace responses, and we were also actively participate in the efforts of international organizations to establish regulatory standards.
[2:09:34] Just a couple of minutes left.
[2:09:36] I just want to go down the line maybe a call to action.
[2:09:40] So as we head towards digital money.
[2:09:45] I think well, I mean, let me just underline what the managing director said.
[2:09:51] The private sector is incredibly creative and you know, they have a lot of Ingenuity in providing customer facing Services.
[2:09:59] I think the issue if you just leave it in the private sector is that they tend to build you know, they tend to achieve the aims by you know, whatever means available so you can Bill silos many commercial banks have to Innovation initiatives it’s all within the Silo and they would use stable coins because you know, that is the the simplest payment instrument.
[2:10:24] I think there is a very very important role for the official sector very important role for central banks in providing a firm foundation upon which others can build and I think that’s the way where we can make the progress.
[2:10:40] in the fastest way Really quickly only thing I would say is the private sector can be very self-serving at times and you are supposed to rise above that.
[2:10:51] Last thought I would have is embrace the change all the work we’re doing and and moving towards production supports a two-tier monetary model that will be very familiar.
[2:11:04] But we just have the advantages that The Ledger can bring which is smart money.
[2:11:09] It’s easier to have regulatory oversight to And and see flows in real time and to enhance your economy and help your businesses in many of the ways.
[2:11:18] I’ve already discussed.
[2:11:19] So Embrace change and be not afraid I supposed to be both.
[2:11:25] Yeah.
[2:11:27] Stuff you cannot turn my you cannot turn back time because if that had been the case the institution I happen to represent would have been in favor of 20 kilo copper coins, and then we would not have existed.
[2:11:43] So you just have to accept change having said that it’s incredibly important to do this jointly with the private sector and in such a way that you have a legal framework.
[2:11:58] Supporting what you do?
[2:12:00] Because that’s the only way to define who owns what when and why and that’s what you need in a functioning market economy.
[2:12:10] Kristalina.
[2:12:11] Well keep an open mind.
[2:12:14] And embrace opportunities manage the risks responsibly time is not our friend we have to move fast.
[2:12:27] So my last word is buckle up my words ladies and Gentlemen, please join me in thanking our panelists today.
[2:12:40] And to our lovely moderator as well.
[2:12:43] Thank you for the great time keeping and the moderation.
[2:12:46] Thank you very much.
[2:12:46] Please give him another big round of applause.
[2:12:49] Thank you very much, and now ladies and gentlemen, I believe that we have deserved a good coffee break.
[2:12:57] We will now break for 20 minutes and resume and later on.
[2:13:01] We do have coffee and refreshments and snacks in the lobby.
[2:13:06] So please do enjoy and I will see.
[2:13:08] Back here in 20 minutes.
[2:13:10] Thank you.
Join the Global Future Citizen Community:
Join the discussion by commenting below or joining us on X (Twitter) Future Citizen News / Citizen of the Future
Thanks for visiting Future Citizen News - Let us know if you enjoyed this type of content and share your opinion and ideas in the comment section below!
