We're going to jump right in and try and
keep as close as we possibly can so

I'm happy to introduce our 1st panel for

the day on the Central Bank approaches to
financial inclusion moderated by credible.

Thank you Adrian.

I have the on and be able job of having
to come right after Jennifer tester and

this is the 1st time
that's happened to me but

the good news is I have a really amazing
panel who are going to do the work for

me I just have to get
the best out of them so.

A couple of just comments up front and
then on

I'm going to turn it over to these guys
because I think they have so much to say.

So and fortunately I was a part of the
conversations yesterday but in the hallway

conversations and over dinner last night I
got a little bit of insight into what was

being discussed so it's clear that
digital act particularly data that

digital relies on so heavily is making
the lives of financial sector regulators

increasingly complicated it doesn't
respect traditional national or

regulatory boundaries it doesn't really
affect any boundaries at all and

is challenging regulators both in
developed markets and in emerging markets

in very similar ways but
emerging markets are facing this challenge

both with really accelerated change
in their market so the leap frogging

Jennifer is talking about but often with
far fewer resources at their disposal and

just having to scramble to sort of figure
out how to deal with this explosion of

financial innovation and in a lot of ways
it's really challenging the very notion of

what the role of a central bank is and
what the mandate of the central bank is.

In addition I've seen this a lot in my
work is there's increasing complexity and

interdependence between the roles
of different sorts of regulators so

we have central banks which are often
as Black said separate from

supervisory authorities we have
telecommunications authorities but

we also have consumer protection
competition data privacy story so

there's Or you know or we don't
actually more commonly than that and so

there's this very volatile mix
of different challenges that

we don't necessarily live in one place so

how do we start thinking about connecting
the dots between the rapidly changing

mandates of these institutions to ensure
not just systemic system stability but

to Jennifer's point financial health and
actually I would say from emerging

markets point of view economic growth and
how do we make sure.

That financial and

digital inclusion stay an important part
of this emerging regulatory landscape and

I think based on some of the conversations
yesterday I'd like to maybe make a couple

of observations you know I think
there's a lot of different.

Viewpoints here about what we
actually mean by a central bank.

Raised this in one way but I think
it's almost even broader than that so

I think just for
the sake of discussion and

I think the panel here is going to maybe
pick this apart a little bit but for

the fake sake of discussion let's just
say that that you know the regulator of

the financial sector however
a country decides to define that and

will be again I think on that topic
a little bit more there's something else

that has been sort of nagging at the back
of my mind because I've been increasingly

heard the term syntax used in the same
way as the term financial inclusion

they're often conflated and they're not
the same thing they're interlinked and

they're important to each other but I
think we should be sure to make we should

make sure that we're talking about these
things in terms of what we mean the least

from my perspective financial inclusion is
financial inclusion for the poor or for

people who just don't have access to
financial services in tech is a great

way of helping us get their butts in
tech is concerned with a whole bunch of

other things in challenging the financial
system in a much more fundamental way

financial inclusion is broader and
we need to think about how those 2

things are different and
how they interact with each other in this

in this broader conversation because I
feel sometimes we start losing the meaning

of the word financial inclusion in
the way that it's used sometimes so.

In short we have many
exciting questions to

explore as we contemplate what the central
bank of the future might look like and

I have an amazing panel to help us think
about this so I'm going to briefly

introduce them and then we're just going
to jump right in the question what we'll

do is we'll have an initial discussion
around a set of questions that I've shared

with the panel and we've discussed online
and then we'll open up the floor to keep.

Una So think now and as we go on about
what your questions are I hope we'll have

a lively discussion with the 4 so
introducing myself my name is credible I

am the c.e.o. of c. gap the Consultative
Group to assist the poor it's a think

tank that's housed in the World Bank we've
been around for about 25 years in 1905

we're very focused on how
financial services technology

can help really bring benefits and
impact to the poor so including

poor people in the financial system
should have an impact on their lives.

We do a lot of research we partner with
a lot of the organizations here so to my

right is deputy governor love the hell
out who started her career in banking and

investment banking in 2004 she joined
the central bank of Egypt to develop and

execute a full fledged 2 phased
banking sector reform program and

in November 2011 she was appointed
deputy governor responsible for

monetary stability and was the 1st female
to assume the position in the history of

the central bank of Egypt in 2016 she
led an effort to enact a program of

comprehensive fiscal and monetary reforms
to put the Egyptian economy on a stable

path to growth among many other
accomplishments and I had a hard time

summarizing her many couple Schmidt's she
represents the central bank of Egypt in

its capacity as chair of the board for
the Alliance for financial inclusion.

Sophie Matins who's just to step down is
the head of the regulatory and market

environment division of the International
Telecommunications Union Sophy's worked

as a regulatory and policy expert in
the telecommunications and i.c.t.

sector in many international environment
including Asia the Middle East

the Americas Europe and Africa which is
pretty much everywhere but Antarctica.

Her scope of expertise is particularly
focused on the information economy

including Internet policy and governance
e-commerce privacy cyber crime and

cyber security.

I j Shah who's 2 steps down is
a professor of economics at

the National Institute of Public Finance
and policy in New Delhi where he code

leads the macro finance group he's
held prior positions at the Center for

monitoring Indian economy the Indira
Gandhi Institute for development research

and the Indian Ministry of Finance
he's engaged in academic and

Policy Research in the fields of
Indian economic growth open economy

macroeconomics public finance
financial economics and pensions and

last but not least is Michael weakened
who's at the far end of the table Michaels

the director of the financial services for
the poor Initiative at the Bill and

Melinda Gates Foundation leading the
foundation's efforts to make high quality

financial services available to poor
people throughout the developing world

before joining the foundation in
2016 Michael spent 10 years with

Standard Chartered Bank holding senior
level positions both globally and

in the southern Africa region and prior
to joining Standard Chartered Michael

consulted financial institutions in
the us Australia Eastern Europe and

the Middle East with McKinsey So
a big welcome to all my panelists So

we're going to start out with a fairly
broad question and I'd like to start with.

With Loma has it been enough to
have only an implicit financial

inclusion mandate and bedded in
the core mandates of central banks or

should inclusion be
an explicit mandate and

beyond that now that access to accounts is
nearing universality in some markets not

all markets how do we think about what
comes next in terms of financial inclusion

policy what might be some of our
priorities for financial inclusion 2.0.

Good morning and
I'd like to thank the organizers for

inviting me to this event that title
of the topic is quite intriguing

center futures central banks of the
futures I think few of us at the central

banking community are trying to phrase it
this way we go about our daily work but

maybe we work towards a central
bank of the future but

it has never been brought up as a local So
I think the can assess and mature and

Research Center here for putting this
in this it in this perspective I think

the Buddha was that when it comes with the
got to financial inclusion this topic for

especially for
developing countries has been coming up.

Very lately very much on the agenda of
of countries not just central banks and.

It is not it has not been it
expressed as an explicit mandate for

central banks in developing countries but
I think many of the governments and

I talk about Egypt specifically
have seen in the central banks

at the right institution where
they can lodge this this mandates.

But having said that it cannot
be done without a collaboration

at the national level we have heard the
question today what it required fiscal.

Decisions yes to recut the schizo short
it has to be collaborative effort but

it is important that there
should be one entity or

one court that is in charge of
putting the agenda the priorities and

then are aligning all of the other
speaker orders around this agenda

why should it be lodged at the center of
central banks and general regulators if

it's not specifically a central bank
because I think the dual mandate that most

of the central banks have now which is
monetary stability and financial stability

at the same sides of the coin when it
comes to financial inclusion when I talk

about financial inclusion especially in
developing countries we're talking about.

Comping countries that have a large
informal sector this informal sector

is lost opportunities for
the fiscal It is also a social and

political source of under arrest and.

Only through financial inclusion we will
be able to address this informal sector

I'm going into bringing it
into the former sector so so

it is it is quite important for
developing countries pacifically for

all countries it's important that
financial stability in terms of have

a feeling financial servitor services
through diversified financial institutions

doesn't have to be the banks only
as we see in other in what has been

emerging now but they have in one way or
the other be formal and a.q. lated

in a way doesn't have to be the same set
of regulations but it could be if he had

that deletion atmosphere would be the fin
thanks be to tell because and that brings

me back again to the issue of cooperation
between different entities as well.

Even from a monetary stability point of
view I mean when I have a large informal

sector and large informal economy my
transmission mechanism in my money I want

to see policy tools are ineffective or
they are slow because what they have and

I do with the traditional tools of
interest rate movements will not as a need

that the transmission mechanism would not
be effective if I have a large informal

economy so it is again in the interest
of central banks if they want to have

fulfilled that mandate of trustability
is that they have a proper operating

financial sector with a large financial
inclusion they should and active they

should not just adornments a financial
inclusion landscape so all of this.

At 2 it for example for
financial inclusion and

action corrosion as you rightly said we
have to define what we're talking about

is also come in crude financial
education financial literacy

financial health as we've heard today and
this all is important for

the Central Bank when fulfilling its basic
to mandates of financial stability and

monetary stability so they would come in
play and I think at one point in time.

They might become an explicit mandate for
central banks but

even now is this implicit and in
a co-operative and collaborative effort at

the level of the whole country
we would be able to get this.

Thank you love now.

A lot of interesting food for thought and

then actually Michael I could you
maybe speak to the same question right

across the developing world financial
inclusion is an explicit mandate

of many central banks and even beyond that
in a country where more than Dave but

the majority of citizens are excluded from
the formal financial system financial

inclusion is a top political priority and
more often than not the central bank or

financial regulator is the owner of
the financial inclusion strategy so

in most of the countries in which we work
it's not even a question of whether it's

part of the mandate I think given or
how loud that to give up I think

mention the close linkages between
stability I think formalizing

the economy also brings crimen tremendous
liquidity into the system which can

aid stability and she she mentioned
the transmission of monetary policy.

In terms of what are the next steps I
think that there's a real proximate issue

around around the credit and what's
the role in central banks in promoting

credit and making sure that credit reaches
all sectors of the economy and again

already and for many years some central
banks are very active and take a very

interventionist role in ensuring that
a wider set of the economy is reached.

Through credit ultimately we sort
of think about it is you know

the the financial regulatory system is
there to make sure that the financial

system works we want to make sure that
the financial system works for everybody

that's nice Actually that's
a nice frame and it Ok.

I think I'm going to move on but I make
circle back to some of the points raised

on this because we have a lot to get
through so I'd like to put this question

to and Michael so
universal financial access

requires a lot of infrastructure actually
like payment new permissions systems so

credit to your point Michael I
d k y c utilities i.c.t. and

telecommunications systems and it requires
that these infrastructures are efficient

effective open which they're not always
an adaptive So how should the central

bank what should the central bank of the
future be providers should the regulators

of these of this infrastructure or
should it be separate and

at the very least should they have
a mandate to proactively intervene in such

areas to achieve a financial inclusion
mandate and I didn't like to start with

you on this because obviously India's
been very forward looking in building

a public good infrastructure and I know
you have a lot of thoughts on this so.

In India the government has played
a leadership role in a great deal of.

The infrastructure that is a giant biome I
pick authentication system that is called.

That is a payment infrastructure
organization that is cord the and b c I

and there are many engineering standards
that are drafted by the government

and pushed into the economy
using state Courson.

And this has you did some good so

there's no question that there has been
progress made through these channels.

At the same time I'm a bit nervous
about this state led approach

we should be more cautious about
the role of the government and

I would like to say this in a couple
of different ways the 1st is that

I think all of us in this room we are in
the field of financial inclusion and

we appreciate that financial inclusion
is hard there are no simple recipes and

I think that the methods and the
techniques that Bill Burkett a given look

ill will not work in another we need
a great deal of you know we need

an exploration to figure out what's
going to work there is the ever present

danger in the state later approach that

some central planners in the government
which use some business model choose

substandard to some framework and
push it into the economy and that may or

may not be the right one these high
modernist experiments have often

worked out poorly so I think a sense of
how we will get there is a wiping market

is competition is innovation
is experimentation and we will

end up with many different solutions
particularly in a country like India which

is a large country but also an extremely
diverse country the richest parts of

India are divided by income and prosperity
that is just part of India divided by

the income of prosperity in the poorest
parts of India is the same ratio as that

it's just parts of Latin America are
divided by the poorest parts of Africa.

So it is very diverse and
that emphasizes the need to find

many different solutions that are useful
in different parts of the system and

I'm very optimistic about that all of
the quality and business model innovation

that technology makes possible but that's
not consistent with the state led model

it is also not consistent with
a domination of banks and banking and

I think that too often
in India the leaders of

policy are controlled by the central bank
which tends to look at the word from

a banking point of view and
I very often get the feeling that.

Tobacco fishers and bank employees would
like for this entire technology revolution

to turn into someone acknowledging
vendors who will serve the banks but

not really cannibalize the banks actually
tried didn't revenue streams of the banks

not compete with banks and I think that
that's selling ourselves too shocked

that the scale of innovation that is
required to be in this needs to be

a great dirt thing than just
being vendors to banks so

I think that in India we've got too much
central control we've got too much of

business models that are controlled by the
government and that generates regulatory

risk because the government can't
support your business model today it can

change its mind tomorrow and there is a
lack of due process there is no notice and

comment the democratic legitimacy of
the regulatory process is not there so

things change suddenly For instance 2
weeks ago there is a Bank of India decided

that film takes shall be cut
off from credit bureaus.

So too bad if you want to take

that was going to use data from
a credit bureau you're just.

In a lot of trouble because you're
told that you can't use a credit so

I could go on on these difficulties but
this is my quick idea that I

think we've got a lot of central planning
and state control in a free to do that and

I think we're trying more as a self
organizing system as engineers and

entrepreneurs inventing
solutions to local problems.

That is super provocative and

you know a good way and I want to just for
a moment sort of capture

a question that I'd like to explore as
a bit of a surprise for all of you.

There is this tension between control and
innovation and

we've seen particularly in markets where
banks have a pretty tight hold through

the central bank on what innovation is
allowed to happen it's lower right so

if I compare Kenya with Nigeria we've had
a very different pathway towards financial

inclusion and that's not to say one
is right and the other is not but

it's a trade off and attention and it
kind of often comes down to a governance

question who's in charge of this and
how do we come together and agree and

it's complicated because in a market like
Kenya huge amounts of payment systems

are going through mobile network operators
and yet payment systems controlled by

banks and it creates a tension and I think
that's a really interesting tension for

us to explore so I want to just flag
that maybe we'll come back to this and

get your thoughts collectively on it but

I wanted to actually put the same question
to you Michael on on infrastructure and

how how those help the market but
also this question of

you know what's the role of the central
bank of the future in that infrastructure.

I don't think there's any question
that some of these platforms have huge

impact in driving financial inclusion So
for example basic k.y.

see traditionally where you got together
documents to make photocopies and

move those around there are a lot of
estimates but generally between $15.00 and

$25.00 open up a banking just for

the k y c process with Aadhaar
in India to get all that.

Information gathering was done by the
government for the purpose of setting up

a national id banks and financial service
providers you can you give your hard

number you give your fingerprints and
immediately you're your k.-y.

seed So the estimates of it's brought
it down from $15.00 to $0.06 so

now a lot of vast majority of Indians who
would never have been profitable if you

had to spend $16.00 to $20.00
just to get them on board now

you can serve them profitably so I think
these platforms are tremendously valuable.

To the there's a question as to left
to their own devices would the private

sector have created such a system and
I think there are natural monopolies

right many of them payment systems some of
these id systems if you want them to be

a big thick with this and so at a minimum
I think they need to be regulated so

that the if they are owned and operated by
the private sector which I mentioned and

p.c.i. has them the payments
company of India.

Is it's a private it's an independent
company but it's heavily regulated and

there's a lot of oversight by by
the Reserve Bank of India and so

I think that's the balance and
you put your finger on it you want to

drive innovation technology's moving
incredibly fast the whole idea space

protecting people's privacy
protecting security will be a real

challenge these are you know honeypots
I think is Jennifer used for for

criminals but also for
you know malevolent governments and

so striking the balance where people
are protected both in security and

privacy perspective is going to
require constant innovation and

central banks may not be best positioned
to be at the cutting edge of innovation

and so I think it's a real tension but
we can't get away from the fact

that these platforms can be hugely
valuable Ok So building on that.

Recognizing that governance of
a system that we're even kind of

struggling to define what the boundaries
are because it's changing so fast so

how that gets overseen and governed.

Is still a pretty open question in a lot
of markets so what I'd like to do is then

turn this to with a twist to 1st Sophie
amends and then to Governor hall.

About a culture of collaborative
collaborative regulation for

digital transformation So how do we start
thinking about say telco regulators

working more closely with
financial sector regulators and

making this a more joined up system how do
we have regulators talking to the industry

that's producing these services and really
understanding each other in terms of both

the opportunities that Michael spoke
to but some of the risks that spoke to.

And what other agencies are important
in this equation so we've got consumer

protection we've got data protection
we've got competition issues so

how we effectively collaborate across
these different regulatory mandates or

in the case of some countries regulatory
gaps to be honest so the so if you maybe

you could take this question 1st and then
turn over to you thank you very much and

them I'm kind of the ugly duckling in
the room I feel like the odd one out and

yet I'm not the odd one out because the
message really is about collaboration and

it's become more and more part and
parcel of the narrative it's about

collaboration it's about digital
transformation digital financial inclusion

without the secure trusted
reliable infrastructure lead leads

to no financial inclusion because you
need that secure trust infrastructure and

I really want to call out to the Gates
Foundation and to the World Bank we're

working together on a project
the financial inclusion Global Initiative.

Where we have working groups on
security trust and infrastructure and

privacy data protection but also Nampa
national implementation in 3 countries

Mexico China and Egypt and

both partners have really recognize
that the i.c.t. component leveraging I

cities to achieve financial
inclusion is core to our mission and

we've come a long way you say how do we go
about collaboration Well collaboration is

actually already there and I don't
know how many of you know I tell you

the International Telecommunications Union
where specialized agency of the un and

where when unique in one particular sense
and that our membership were membership

driven and our membership includes
the private sector includes academia and

some of you might have participated in
some of the work of I to you in particular

Artes sectors are standardize ation
sector radio communication sector and

development sector but are standardize
ation sector as focus groups

on digital financial services where
many of you may have participated

we have a focus group on deal t.v.
So there were looking at the technology.

In the development sector in 2016 in
Egypt we brought together financial and

telecoms regulators in the global dialogue
for digital financial inclusion where we

came up with some guidelines some core
principles for that collaboration and

recognize some of the identified some of
the issues where there is that the there

now the need for synergy the need for
collaboration just as a funny ad anecdote

in some of the countries where we've
been on mission and there are silos and

there are turf battles and people we
come into the room and people say

What are you doing here where the central
bank where dealing with payments is.

And I'm like you know what when
the mobile network goes down and

the money goes to where
they're going to come to so

consumer protection quality of service
interconnection interoperability

these are issues that the telecoms
regulators are working with but

as love and I was saying there needs to
be that collaboration because there is

payment as it's just one more point on
the collaboration people do mention

the example of Kenya I love
the example of Kenya because

we need to balance flexibility
with stability innovation

with investment incentives in Kenya
they start Safari come was looking for

new business models they were looking
how can I up my game how can I bring

more revenue and for me as at the end
of the day there and business.

There were champions in government
visionaries who brought together

the central bank and Safari come and
the telecoms ministry and

the telecoms regulator and they said this
is important because it will allow our

business for a and our rural communities
to be brought into the digital

economy let them give it
a try let's be light touch

regulation let them give it a try
we'll see afterwards if and

how we need to regulators and it made
a huge difference not just in Kenya but

around the world so collaboration is there
we have these pockets of collaboration for

that we need to sit together we need
to learn from each other we need

to exchange experiences maybe we need
to define principals who aberration and

form out I'm a lawyer so
I always think there needs to be

a legal mandate there needs
to be the basis to go back to

because we need the human infrastructure
the technical infrastructure and

the governance infrastructure together and
together we will succeed.

Well that was for inspiring her over
this from the central bank where you.

Just fear very frankly it's not an easy

way to navigate it's
quite challenging and.

If you along I just fall back
on what we did in Egypt because

there are lessons to be learned and things
that we can do better also in the future.

We have a national payment council
that is headed by the president so

it has a lot of political authority and
will and

it brings everybody around the table
on the same on one of the down agenda.

So we have all the ministries or the
regulators and the central bank of each of

us again at the forefront is
the secretary of the Council so

we drive the agenda you put that and

then we have the collaborative offers
effort between all the entities so

this is a very important tool so that you
can get things moving Having said that

it's still difficult because again some
people might like to work in silos some

people feel that this is my area I
don't want to talk to relinquish it but

I think with the with the importance
of financial inclusion and

trickling down of economic growth to
the masses you get the buy in of others

of the other and
is because it is a highly political and

economic target so everybody has to align
but we still have to to broker a lot and

that the idea is I think
that we have to this is

at the national level now when you come
to talk to leaders among themselves.

Were discussing this yesterday there is
a difference between regulating maybe

the entities and licensing them and
regulating the activity.

That could be an activity that is cross so
to regulators and

that's here where you need to put
Courteney together so we have done this in

Egypt especially was the teleco
operators because we have a large.

Portfolio and so

we try to regulate the activity if you
are doing anything related to payments and

the central bank has to come in and put
all the criteria the am and has to be that

also involved was that they put the
criteria for the Q I c n everything and

the teleport also have to make sure that
it is a plain playing field for everybody.

And it was successful and
maybe one of the lessons learned is that

when you do it on a very macro level
things might just not happen but

when you sometimes use use cases you come
in with the specific case that you want to

bring and this is something that is
really very close to my heart and

relates yesterday to what Mattie was
saying is is the gender of the woman issue

so one of we have an employee who was
the telecom decorator and we had the 1st

thing we brought to the table was we
want to have it here's the key y.c.

for mobile wallets this is a place
in the interest of both entities and

the m.l.k. men and were able to do that
and then when you try to apply this for

women specifically because they have
the challenges when it comes to e.q.

I see which was a very clear case for
women which was

the state was paying alimony to
a lot of the divorced women's So

we put to structure the product so
that these payments could be done through

the move by wallets regulated
lightly regulated Thank you I

said because the amounts are small and

these women have their own particular
circumstances and the pro the came out

in the success of this encourage us to go
to the next project and the other one and

then all the stakeholders feel that they
are part of the success story and so

they continue to collaborate with
each other with with each other so

you have to take it to try
to define the formula and

to share the success and
make it the stock.

The success story of each and
every entities not just once or so

you can make sure that you
don't have people saying

no you're coming you
chatting with my top of my.

My.

My responsibilities so
that was what we did in Egypt and so

far it's going well and.

I think we're doing it with
other regulators we have for

example in our sandbox when it
comes to Fin Tech and to the 1st.

Cohort that is for e.q.

I see but this meant that we have to have
an animal you and I put up with of effort

was that banking that actually to reach at
the center be bank the none banking that

actually took which is a different entity
the e.-m. and the n.t. already the 100 or

so we're now as we the sandbox is at
that with the central bank of Egypt but

was through this and will you I'm
able to get all the other or so

what I get eaters so that we can
bring something to the market to get.

Ok Thanks very much I think so

if you want to come back in on that yes
thank you very much and I really think

the project in Egypt with the with the
women having access to the subsidies or

to the payments through the mobile wallet
I'm aware that there's a collaboration one

with one of your mobile operators but
one of the questions I want to put here I

think when I say finally we're talking
about collaboration finally we're hearing

about digital 1st I think we're also
hearing about financial inclusion 1st but

I'm wearing here the s d g's as d g p
it's eradicating poverty it's gender

it's education so I think together
we digital financial inclusion for

what we can make people's lives better and
I think when we talk about collaboration

we really have to think even further out
of the box we have in have to stretch it

even further it's not just bringing more
of our wallets to women but it's Brugge

teaching them digital skills and I know in
Egypt to do a tremendous amount of work

and to and digital skills awareness
building and also let's not forget

one group of people
persons with disabilities

we had the keynote on gender yesterday
there are billions of people in the world

with disabilities please let's not forget
them in on financial inclusion work and

in our digital skills campaigns
because if life is tough for

women for youth it's even tougher
people with disabilities so we really

need to keep them in our thinking and
at the top for I think in this one.

But just to come back to the point
of holistic collaboration that

digital financial inclusion for what I
think that brings us out of the box.

Ok so I want to move us to a new topic but
just to

maybe summarize some of the points on this
one because I think they're useful so

it's quite clear that there's a balancing
act between control and making

sure things don't run amok and innovation
and it's pretty hard to get that right but

that collaboration and talking to each
other is a pretty important part of that.

I think what you were saying though about
actually being clear about what you're

trying to solve for upfront is really
useful to bringing those pieces together

but actually I think what Sophie just said
beyond that is thinking about well what's

the outcome we're trying to achieve so
finance what will this do for people and

I think that's a really interesting
way of tying it together.

But let's move on to a new
topic which is you know how

does how does what we have need to change
so you know central banks are already

pretty challenge to implement balanced
risk Great based approaches to traditional

banking models which are the foundation
of global financial regulation and

supervision and while these new
business models and technologies hold

pretty major potential for inclusion
they also pose serious challenges to

traditional methods of regulation and
supervision and that suggests that pretty

radical changes are clear acquired to
get to the central bank of the future so

I'd like deputy governor Jay and
Sophie to speak to.

What shift in this landscape do
you think is most important and

how do we need to think about placing the
regulatory perimeter for the central bank

of the future to be effective in
balancing both those opportunities and

the risks so perhaps we could start with
you if you haven't spoken for a while.

I think we should see this question
in the context of the larger causes

of their margins of state capacity for

many people in this room you
take a reasonably capable.

United States government for granted
because when the United States government

chooses to build a new organization or
a new agency it pretty much gets done and

by and large it works reasonably well
I come from in the opposite corner of

the word where every day that
is the battle off state capacity

that Indian state is overwhelmed
is trying many things and

is challenged in doing most of them so

from a state capacity perspective
it seems to me that the way to get

to capability in a center back would
be to have a more narrow minded and

to have more clear accountability so
I think that the title of this conference

the future of central bank as many
others have emphasized is actually

a larger thing it's about financial
economic policy which could have an agency

landscape of many many organizations and
not necessarily the center back but

my policy instinct is that it is better
to have more narrow organizations with

more clear accountability to have measures
of accountability around each organization

sprawling mandates are more troublesome
in terms of getting performance

if I'm supposed to do many things and
I'm not particularly measured for

many components of them then I am more
likely to be able to claim that I could

not do x. because I was pursuing y. and it
helps if vies not particularly validation

so I really appreciated the morning point
about measurement and yes we should

go that but I would also appeal to an
already economics idea of the assignment

principle that you have one instrument you
have to dedicated to one objective let's

not confuse things by having complicated
organizations with many object in all

probability those organizations where do
the things that none of us consider useful

finally they don't proceed
pursue their own objectives and

they're not going to care about
the things that we consider Vandar.

Ok so I might come back to you on this
because I think very interesting what you

say but then I think there's a question
of how you connect so maybe we'll let you

come back at the end but I'd like to
hear from you about how you think about

shifts the need to get us to what the
central bank of the future looks like but

also where where you draw the lines
in that in that perimeter.

I just would like to comment
on what has been said and.

I don't I believe when you have such
a topic like financial inclusion that

we have seen and discussion to so
multi-pronged and

Monti a faceted that having these natural.

Mandates into organizations I
think we will end up with more

regulatory things falling between
the cracks that and more comprehensive.

Thing having said that I feel that still
whenever you were in in large demand it of

any situation be the central bank beat
anything that has to be accountability so

you have to bring in the idea
of keeping measures that against

which your performance is measured and
within the organization itself you have to

have dedicated teams with a very
clear mandate but that can.

Coordinate among themselves and
also with the other speak or

just outside the institution so I'm not
personally for the idea of having it's

more side of a more specialized I think
that has to be one entity regardless

what it is that the extent that sets the
agenda that puts the fray more and there's

responsible for some of the deliverables
when courts nation with other and.

Where to draw the lines
I think the topic is so

vibrant I mean every day we
are we are coming with with

was new ideas I mean at the beginning it
was just simple financial inclusion people

having accounts today we are all
trans liked not too far away 3 or

4 years from index 2014 to 17
now we find that is a jump but

we are not happy everybody saying what
about financial What about dormant

accounts what about the danger gender gap
what about the gap between what about

the quality of the services they do
the right impact they did too is it really

increasing and helping in the financial
health of citizens is it doing the poor

any good what are the poor getting even
much more leverage or endangered so

I mean it is always coming up with
new challenges and new things so so

the bout it is that topic itself
is increasing but with all

you need to do is really focus on an on
on what we what we want to achieve so if

it hasn't become just financial inclusion
I think what we are doing now and

which is very important especially for
developing countries that are just going

after the financial inclusion
in terms of accounts that they

not bring into the equation the idea
of impact the idea of financial health

the idea what Sophie said What is it that
we are really taught to think now and

this has to be done in a call
a collaborative effort but

that has to be one entity at a guard
is what it is which and it is that can

set the agenda and that is the noms
this is here we're not going to try and

also allocate the resources because
especially in developing countries

we don't have endless resources each
human capital be financial resources so

we need to allocate what what is How
can I use this resource to get the most

important impact or is it to do I need
to work on the infrastructure not

what do I need to do to work on specific
use cases because I need to address or

from social and economic.

Problems so it is quite vibrant and.

So I mean I'm actually hearing agreement
between you guys on the need for

maybe clarity but then there's
maybe a difference in terms of

narrowness and how that comes together and
we'll come back to you on that but

or a broader scope before we
move on we come back to r.j.

like to hear from Sophie Anna and her
view on this so I think I agree with both

at the end of the day it's government
that needs to set policy and vision and

needs to determine how would it how
will how it will allocate its resources

I think coming to the Jews point we
need entities that are fit for purpose.

So you need to decide on the purpose what
is the mandate and it can be a large

amended or a more restricted mandate but
that needs to be clear and

then you need I come back to the human
infrastructure so you need the capacity

it does it makes no sense in
the telecoms field lease are many many

countries that set up regulators because
that's what the donor agencies told and

they didn't give them training they didn't
give them the financial resources they

didn't give them the structural
functional or financial independence but

they gave them a whole wash list of
things to do these poor people were not

able to do it because they didn't have
the tools that had you need the technical

infrastructure so you need the investors
didn't offer to others that come and

bring the technical solutions for
what you're trying to achieve and you need

the governance infrastructure which
are the rules the procedures the processes

including the processes for collaboration
as well none of us are superhuman So

even if you have a large man doing a comes
to the restriction of resources or

indeed the technical capacity and

that's where you need a lab or
to have mechanisms and

let's not call it regulation and
let's not call it obligation but

just the simple collaborative regulatory
mechanisms that is a process that it

isn't trying to in certain administers of
rules so that you can get the help we need

to achieve if you like to
come back on this point.

We should learn to walk
before we can run and

therefore it is better to
start out with an agency and

organisation which is given
a smaller program and

get to high levels of capability and
then muddy the waters as it goes on so

we should think of
the sequencing question of the.

Always important to stop with something
make it work and then potentially if you

could make it more complicated and I
believe go back to the assignment problem

that if you wish to put 2 objects on
an agency you would need to get the agency

to instruments and we need to construct
a measurement system stored in a car so.

You are absolutely right that the
boundaries are the design decision of each

country and in each context there is
no one answer but I think that we would

all agree the principle Agent problem if
there is a contractor who is fumbling

on doing one problem would you give him
2 problems so with that principle Agent

problem between Palm and each of
these agencies we should start small.

But the nitty and
then escalated I mean and

now bring Michael into this conversation
but shift gears a little bit so

we've been talking about this
in a national sense really but

data and financial services now move
across borders very easily sometimes

without regulators even really having
much of a grip of what's going on and

so the question that I'd like to
maybe start with Michael on and

then move back this way is you know
is there was that central banks will

actually lose their relevance as
financial sector regulators and

supervisors as we think of a Libra
coming on board or and then how do

you how do central banks need to think
differently about regional and global

regulatory frameworks and how do these
need to evolve from where they are today.

So I think there is a risk of
irrelevance and there's all you know and

a very small scale already emerging the
sort of alternative financial systems that

are outside the rather regulatory
regime so I think one answer is that

central banks need to reassert their
sovereignty over financial systems so

for example you know requirement
that any any deposit account or

store value account has to have
a geographic domicile and therefore

the regulator in that area conference that
that product could have rules about how.

The system is operated relative in one
country within the filed in another

that regulation so
I think there are ways that.

The central banks can reassert
their sovereignty and

I think it's important that they do.

In terms of the question
around cross border.

I don't think there's any any doubt that
I had a conversation this morning with

the governor on cross border payments
our existing cross border payment system

is antiquated outrageously expensive and

that's what's giving rise to some of these
alternatives so I think there's work that

needs to be done by regulators to
modernize the cross border payment system

there's already a lot of regional efforts
we provide some financial support to

the west Africa economic and
monetary union which is a collection of

West African countries that already have a
shared currency a single central bank and

payment infrastructure that works
crossed borders that's a bit easier

because they do have a common currency but
there's several other regional at 1st just

the side that countries
the Southern African Development Council.

Already has infrastructure that
enables wholesale cross border

payments not the sort of cross currency
but they're working to expand and

there's many other other efforts to bring
down the costs of cross border payments so

I think that level of
collaboration is coming and

it's to do role for for central
banks both in terms of payments and

also currency conversion
directly between currencies and

the former governor of Kenya was
was active in leading some efforts

across East Africa to think about how to
unable direct currency conversion between

East African countries there's a lot
of trade in these regional areas and

the payment and
monetary systems have to catch up and

if I do you talk about standards
I think certainly the global

standards setting bodies are and
will continue to need to modernize and

as you know in parallel to
national regulators thinking

about these new systems standards setting
bodies will have to come along with that.

So if you would you like to.

Question.

Look at the cross border
payments again I come up with

in my mind I think of the i.c.t.
related issues or the i.c.t.

telecoms related issues pure
infrastructure related issues

roaming rates we all know that there
is international mega mobile roaming So

when you use your mobile
phone in another country so

these roaming rates are of importance but
then we're coming to the crunch issues

identity id privacy data protection and
there are 4 I think.

I think it is very important especially
for regulators are central banks from

developing countries to be part of
the discussions and there are for

around the world I think of all the
initiatives the Gates Foundation are doing

the work what the World Bank is doing what
I do you is doing with our fees doing.

Internet governance issues that are look
at even not looking at privacy data

protection you have there
I g f the gack we had

our global dialogue on digital financial
inclusion again where we brought people

together because if you're not part of
the discussion discussions will happen and

decisions will be made and may not be made
in the best of your interests be involved

in those discussions and that I think is
a message I want people to come away.

And like you to respond to this question
and particularly in the context of India

sort of exporting a lot of ideas now so
how how do we think about.

Not just cross border but it's really
crossed her flow of data cross border flow

of ideas how do we think about how
these regulatory frameworks both

at the at the country level regional level
but also the global level how they need to

shift to comedy this very radical
transformation in the financial sector.

I think 2 things if I may now
start doing some dreaming for

50 years yes that's a nice
endgame of the session I think

there are 2 things going on the 1st is we
should see the free trade problem in data

as analogous to the free trade problem
that we've known for 200 years that there

will always be the short term political
economy of trying to do some protectionism

of various kinds of nativism and
nationalism that will come in the way and

that we will always be better
with more open more free.

In the connections between individuals and
farms that cut across borders so

I see the present difficulties
around data as just

being the con wars all over again
that we've been through this movie

over an over 400 to 5 years and
this is just the latest skirmish

of a long tradition of
battles around free trade and

in that sense I think that we need
to think about the institutional

arrangements that were used by
the world in the past to overcome

problems of free trade
whether it was the g. 880 or

the deputy your order European Union I
think the Proscar says What

are the Cross national frameworks
that will give us a more bendable and

approach to this because it can collapse
into nativism very easily as we're

seeing this all over the world it is very
easy for this to run so I think this would

be one part of my you know big thinking
that how do we make the world safe for

the new world of data let's recognize that
this is a new milestone in the history of

mankind we kind of went through free trade
in agriculture free trade in goods and

a certain kind of free
trade in services but

in the data economy how
are we going to rethink 3 to.

And how are we going to underpin it in
the legal foundations of agreements and

coalitions of countries that will come
together jointly to make those agreements

create us 14 engines I think they're
the beginning of that story and

my 2nd 50 years idea this is a provocative

thing that I think we should
all start thinking about.

At present in the world we
have perhaps 150 kind of.

50 years from now do we really
need $150.00 currencies is

a currency like a national airline is
a currency like a National Stock Exchange

is it really feasible and efficient in
this word of the efficient ability for

resident everybody to use the u.s.
dollar to use a euro or

to use because is it feasible for

subscale currencies can and then the kind
of arrangements you describe are so

important that this is the most important
puzzle that they're going to need

to figure out of how do groups
of countries come together

how do we arrive at agreements around
us sharing the same units revenue.

How do we protect ourselves
from yanking access.

Between countries and
I wish to forward for

you a great example of a success story in
global cooperation did you know India and

Pakistan through the worst
of times have protected

water sharing treaties on the dust of the
name duster was talked out in India and

was deployed through the worst of
times the treaties have had so

I think that it is possible to create
the cross-country legal framework for

cooperation and collaboration in something
I said today was water can be done to

something a sensitive us currencies and
I think it behooves all of us to start

working towards act on the 50 year horizon
fact it Dan asked us to think about.

Yeah I think that's a really great comment
My only question is whether 50 years is

the right time horizon this is all faster
than that so maybe we need to think in

a shorter time horizon but great question
yeah I mean because I think it's

also very important I think but also
special comes a financial crucial need to.

Use this divide between
developed countries and

developing countries I think we
face most of us was the same.

Threats the same disruption and
I would say even at the same level a so

I hope that's also in the next 50 years
we don't have this division between

developing countries and countries in this
topic specifically I love that comment and

that takes me to my next question
which I'd like to direct to you but

then also to Michel we can and
it's sort of a 2 part question so

central banks and
governments are run by human beings and

I think the only perhaps differentiating
factor to your point between.

Developed market central banks for lack of
a better word an emerging market central

banks is resource both in terms of
capability and commune resource but

also just a number of people technology
tools people have at their disposal.

And so

what I'd like to hear from you on is what
you see in terms of the main gaps between.

Central banks in emerging markets
today and what what needs to happen

to fill that gap to get us to the central
bank of the future in terms of building

that pass because that the challenges
you're right are all the same so

how do we how do we get everybody through
in the same conversation and then I'd like

to ask Michael to specifically
reflect on whether there's a role for

the development community and
philanthropic capital to help

in some of that because I would
just posit that you know we love.

Throwing attention and money at shiny
new objects and business models but

there's not a lot of attention always
put to the regulatory side of things and

the rails that sort of make sure
those business models don't

drive us off the road so
maybe you could respond 1st and then.

As I said I'm in central bank's emerging
markets and developed a mock as we

have a challenge was our resources
beach human resources or.

Our capital but.

But but we have also a very huge
opportunity which is that our

populations our own was young we have a
high percentage of a young population and

young population means
more agility of motor.

They have the tools of this era that
maybe we as older people do not have so

I think if we just focus on investing in
those young whether they'd at the central

banks but in other entities but
the human capital is important and

we have a very good chance of
developing this human capital and and.

Then some to sponsibility on the countries
themselves because we find a lot of flight

of Cap human capital from the developing
countries to the developed countries it

should be the other way around what at
least we can maintain our young people

that are being well trained well
educated in developed countries and

then they don't come back so you hey
we need to work on that because this is

this is our this is the couple
of that we know that we have.

For in terms of infrastructure I think
this is again something that we need

maybe some some of the countries we
need cup to but I personally believe

it's the transfer of knowledge and that
is important but specifically for this

topic financial inclusion going forward
some of this transfer of knowledge is even

should happen happening between developing
countries themselves because a b..

It has been a focus areas.

Many countries so and
that's for example why the Afi.

Alliance is successful this is a member
driven alliance it is focused on

developing countries and that has been so
much knowledge sharing between us as

regulators that week we build now on
we have case studies and so on so

I would focus on the human money can come
we have the international donors we have.

I have also I would say that this
is this is a business opportunity

it will draw money from the private
pockets not just donors or international

organizations it is a thriving business
that will make money for everybody so

the private sector has to be or so will
come and we've already seen them coming.

Would you like to yeah I think there's
a huge role and a huge need for

do technology and me just step
back a minute what's the risk of

central banks get this wrong right there
are 3 ways that they can likely destroy

financial inclusion forget about promoting
it one is if they block innovation.

The 2nd is if they fail to manage and
mitigate risk things blow up and

people lose faith in the systems but
the 3rd is that they regulate these

systems in a traditional manual
way that destroys the economics

right it's very very difficult
to serve the poor at a profit

you really need to get your marginal
cost down very close to 0 and

if you have to you know invest millions
of dollars in supervision reporting and

so forth it'll destroy
the economics of the systems and so

central banks need to balance letting
in innovation mitigating the risk but

doing it in a way that doesn't
destroy the economics and

I think technology is is a solution so
think of what's called Reg tech super tech

more standardized methods to gather and
analyze data.

There's you know huge opportunities as
used if you start to have standardized

payment systems now you have
the ability to analyze that data to

identify fraud how do consumers.

Report misdeeds by providers and how do
you respond to that because again think

about you know in the in the developing
world context where you're going from 20

percent financial inclusion to 80 percent
you're you have 4 times as many consumers

and what much wider range of financial
service providers that you need to now

supervise and protect you can't use
the old traditional ways I think I

take technology as a huge importance that
your question of Is there a role for so

improper Corgan ization for developing
organizations I think absolutely it would

be a huge mistake for every country to
invent their own technology there and

their own approach I think absolutely
we have to be learning from each other.

You if you want to attract private sector
companies that will bring the way this

technology they need to have scale so some
sort of standardization of the tools for

regulators is required and
it's a really new area so for

the students out there if you want to go
out and start businesses read tech and

soup tech I think is a huge opportunity
and a huge need I actually really like

both of your responses because they
go together right so technology

can help make things more efficient and
help banks operate better but

you need the human capital to run the
technology and I think one of the things

that's so fascinating about India for me
you talked about sort of brain drain and

how you make sure that that stays in your
country India is in fact a brilliant

case in point a lot of that was
driven by super smart engineers and

economists to train someone else came
back and you know you've got this hotbed

of of amazing talent sitting in Bangalore
Chennai and other places and so I think

there is a real imperative for governments
to think about how they mobilize some

of that talent and
use that to leverage the technology so

I think really great points I want to
just give 2 minutes each to Sophie and

in case they want to jump in on that or
any other question then I'd really like to

open it up for
questions from the audience.

So I don't know if you
have anything you'd like.

Michael what you said is so interesting
and I think it's bang on what we

have found in India that is a large number
of regulators to many different regulators

and in my organization they've
been that intimately involved with

process so
we go on building state capacity by doing.

We've been dreaming and
we have begun building open source systems

that would do the in Gunnell
processes of these regulators and

that put into mediate the information
flows between the regulators and

the private firms are done with exactly
the sorts of things that you had in mind

and we think of it as a twin object
of the 1st is to shut the effort and

the daily require for each organization
to build it on capital and

you know if somebody says what card on
it if you can stand on the shoulders of

the development or work that has been
done some better than all the better and

the 2nd is to move the interface
between the regulator and

firms do all electronic
as much as possible and

have a mental model is basically that
should be our back office process at night

that runs in a regulated form which
does a bunch of compliances and for

the rest of the void a business
is extremely low friction so

we've actually begun the process
of building open source

regulatory process software I don't
know which buzzword if attempted.

But we can we can invent one
Sophie Yeah I think that the human

infrastructures key like what you say
about working on the process I think for

telecoms regulators as well in
the area of digital transformation and

there is a need to revisit some of
the governance proper processes and

procedures dispute resolution
sanction enforcement licensing and

in our syntax tech companies when you use
drones when you use proper chain How do

I sense them so it's licensing procedures
really need to open your mind and

I also salute India in terms of digital
financial services we have actually

provided training on d.f.s. really in
the results of our focus groups to.

People across the administration so
it wasn't just the telecom regulator as

well it was working with and the telecom
regulator and others in civil servants

in the administration to tell them Here's
what digital financial services are so

it's that openness bringing
those pockets of expertise and

trying to raise it across collaboration
across demonstration because that will be

perfect Ok so
we've got about 20 minutes left I think.

So would like to open it up for
questions from the audience

here Can I Can we get a microphone up
there up in the back corner there.

Chris.

You're not going to court for
International Settlements for so

little tent dependent is for
your discussion was a very interesting and

I want to be good point about coordination
and in particular International Court of

the nation because in the discussion
it was clear that we are in a situation

we should get out now 3 different
object the For accept we think about.

The financial side
the financial stability the.

Competition but then we have another
objected that is that our privacy so

Professor Shahrzad that we need.

Following that embed good rule we need.

For every objective we need to have
a just tool to upgrade the store so

we this means that we need the
coordination at the initial level between

the Prudential I'll go to these
competition authority and the other but

I was the authority so it's already a lot
of the nation I did a messy clever but

then there was another element that
was very interesting is that the.

Terms of our welfare maximization of
the country level it's the finance

society preference across countries so for

example an advanced economy called
the wheat Maura that privacy while

an emerging market economy with the modern
need for financial inclusion could the.

Less that their privacy so
there is a question here about.

A medium or my standard the foreign that
our privacy data sharing and sex and

so on so the question is are do we need
Summerset in body for a for the date

of the shooting of the deed at the
international level requestion with light.

Try that with.

The whole area of data data
privacy both facilitating data

if there's a tip people say
the the poor in developing world

don't have primarily a privacy problem
they have an invisibility problem by so

there's real benefits to the data
sharing real potential benefits but

there are real risks I was in New York
last week during the General Assembly and

in every single meeting
data was the top issue and

it's clear that we don't even have
the right framework to figure out how to

approach the problem how to even have
break it down so there's a lot of work

that needs to be done at and a little
bit of agreement on on frameworks and

ultimately potentially some some
standards right now you've got

radically different approaches in the us
versus Europe versus India versus China.

We're you know we're far away
from even an agreed view

of how to make off those trade offs and I
greeted those different cultures different

societies will make different
tradeoffs between privacy and access.

We may ultimately get towards a standard
setting body I think it's kind of for

us this morning the central bank
of the future deed to manage data

I suspect they'll have a role to play but
it's much bigger issues and

just financial services and
there probably is a new.

Entity that needs to what particularly
a data it'll be cross-cutting.

Yes.

I want to think a little more about
the tradeoffs involved when different

countries view this differently Ok so
if you think of today's Germany

this is a country with deeply
entrenched liberal democracy and

civil liberties and
when there are questions about data and

surveillance we can be reasonably
optimistic that they will work out well.

But this could be different
in different countries the.

Experiment I would like to play to you
is would the world be different if

you need Gratian have was given modern
surveillance technology in the us as

a good word the u.s.s.r.

have come to 989 if
the Communist Party had to fish and

surveillance technology again so
the important trade offs and

there is a path dependence in these
things once a society is set off

in the direction of Execute of power and
access to surveillance then

potentially you have permanently changed
the trajectory of that country similarly

on these trade offs I was struck by
the political debate in the u.k.

which led up to the decision that even
though we have considerable damage to

liberal democracy in the u.k.
they chose to not do biometric id

because they found that it would
do harm to the political system so

I think we need to take much
more about these trade offs.

Not.

British as well as American we were to
cheat pay for it as part of the debate at

the time but a bit I actually one of
the points I've heard a couple of people

say you know there's this tradeoff
between data privacy and what we want to.

Take advantage of the opportunities of
data in low income countries we've just

done some recent research saying you know
actually we have to challenge this is

something that poor people are happy to
let their data free because we we did some

sensitivity testing around this very poor
people are willing to pay to make sure

their data is not shared without their
permission both in time and monetary terms

so I think we'd be really careful about
assuming that poor people are just willing

to let their data be used by anybody so I
would just caution against that assumption

so we've spent a fair amount of time
discussing how the new technologies

can promote financial inclusion but
it's certainly quite possible that new

technologies also create greater
exclusion to certain groups and

a good example would be in
countries such as Sweden where Cas

uses has fallen to such low levels in
the order of one percent of g.d.p.

that it's very difficult to use cash in
many transactions because merchants have

to drive 20 miles to deposit
the cash at the nearest bank or

a.t.m. And so I was wondering what your
perspectives are about the role of central

banks in trying to redress
this financial exclusion

possibility and in particular

whether it's really incumbent on
subtle banks to bear the costs of.

Making sure that there is a for instance
uniform medium of exchange available to

really most of the population.

At very low cost you know volunteer and
friendly.

I think that that are also to extend out
of these upon society when poor people

will be better connected to the financial
system so I think that is a case.

But I think it's a transition
problem not an end state problem.

But it's it's significant and
it's so that we deal with all

the time a lot of the investments we make
as a support government and digitizing.

Government payments to
the poorest individuals and

there's a real risk that you're
actually doing them more harm than good

because they can't readily make
access of those to those payments.

So it's absolutely a balance
that needs restricted but

it's about how do you argue it's about
how do you progress the system so

that people can take advantage of these
digital platforms and charge at it so

before it is obsolete
right I think we totally.

Underestimate the risk of you know what if
we move everybody to a digital so stop and

the network goes down for a month which
is not at all inconceivable what do you

do running banks in southern
Africa we had multiple backup

plans right where old about where you
would have to go back to your branch but

every branch would have the data they
already have generators to try to

get back to or get back your data if the
system went down a lot of these 2 systems

have no backup plan and no redundancy
plans I think it's a huge risk Sophie and

can we get a microphone here we're
going to go to Jennifer next and

then we have a couple of hands up over
here I don't know where the microphone on

this Ok we have another person so so we go
ahead and then we'll go to Jennifer and

then we'll go to the back and I come
back to the point that I made before.

There are groups that excluded
including persons with

it's not and
if it's retrofitted into a policy.

Much larger burden for those employees
let me give you an example in

the telecoms where if you have for
example decision of government we want

all our schools and that's integrated into
policy measures into regulatory leading

into licensing but you forget to.

Integrate the need that
there are children with.

That $100.00 laptop now becomes $3000.00

or there are excuses not to do it so

you really do need to think of it
from the start 1st and for all

and so they're financially to you as well.

Ok so we'll take a question here and then
we'll go there just just a quick comment.

I really appreciated both of
your comments about data.

I agree completely there's
a superstructure But on this issue of

coordination among central banks among
countries there is an interesting.

Example that might be
worth considering and

that's unfolding real time
here in the United States and

that's the work that the Conference of
State banking supervisors is doing to

bring maybe not all 50 but
as many states as possible to gather.

Around licensing.

Regulation and supervision of.

State licensed.

Money service businesses and
other other kinds of actors.

And from an innovation perspective what's
driving them many things driving them but

one of them is the Fin Tech
community saying I can't afford

to go the 50 state licensing route.

Because I'm being asked for fingerprints
from every single one of my boards of

directors blah blah blah blah blah
50 times over among many many other

challenges can't you guys and
girls kind of get it together and the.

C s b s has making really important
strides in common technology systems and

it's not just about the technology though
it becomes a huge issue around process and

also around what your existing laws
require And I think one of the things they

found that's really interesting is how
much of this is really an issue of what's

prescribed by my state law versus what's
just process and procedure and custom and

how and I think they're finding far more
of it is the latter than the former and

so I think there's a hopeful story there
that might be useful as we think about how

to do that on a cross country basis Great
thank you I want to take the question of

care because I was to listen for go ahead
I've been part of the path of organization

called Children you find international and
one thing they did it was just working

with local nonprofits to do financial
to caging among young people but

another kind of vision if you think about
central bank of the future is you know

every child born in the world will have
an account in their name when they're born

which will lead to i.d. and it will
provide an opportunity for international

donors and for nation to kind of do
those the deposits without going through

a lot of intermediaries and I just
wondered one if it's even possible and

if that's something that would be
entertained in the future with like.

Us.

Have this in Sweden I
believe that with each one.

Id.

Had a discussion yesterday about whether

as you get an idea should it
automatically come with like now.

Obviously issues around
with which institution and

I think you'd want to couple that with the
portability but it is absolutely possible

Ok so we've only got 5 minutes and we've
got a whole budget joins her hand for

a while so we can get
a microphone down here and then.

We're here you know they're like Thank you

Joe I'm barefoot with air the Alliance for
innovative regulation untasted panel.

Had like to go back to what you
were talking about on open source

the Michael made the point that if we
don't modernize how the regulators do

their work the cost structures will
never support full inclusion and

there's a nascent conversation
that I hear around the world

about regulators moving to
an open toed and interoperable.

Layer Can you talk more about what
you think is the promise of that and

the pathway toward it I think a lot
of regulators hear those words and

it sounds alarming sounds insecure and
some want to talk more about that.

Well as I just quickly said 2 things
one is exactly as Sophie had begun

there is a drill in every regulator
there is a licensing problem that is

a dispute resolution problem dot dot dot
so by the time you study a large number of

regulators you see those design patterns
the same things are happening over and

over then part 2 is really I
would say the self-interest

of a regulator that when you wish to
improve your internal systems and

processes would you like
to start from scratch but

would you like to start from a community
of practice that has talked a lot about it

has developed a thorough process
manual for how to do it and

that is available in an encoded open
source software system that you will come

to modify for your own internal says so
I find that this is a nice and

useful way to proceed it is
non-threatening it doesn't put

any discomfort upon the organization that
might choose to adopt some of this work.

Thank you great panel I like to throw
a hot potato at the panels just for

question I feel like we're always trying
to play catch up and play in a reactive

way to big data right we're talking with
them talk with telcos banks and other to

talk about regulated entities but when it
comes to big data it's an unregulated into

to right now and greatest comment
was very interesting which is

a lot of poor people actually would like
to be very guarded about their privacy and

their data there's a project at Harvard
University I'm trying to learn more about

is called data integrity the whole premise
of it is that we pay a little bit more for

it to some of these apps that we use and
it's they get no payments back and

these are not insignificant estimates are
that us family typical us family could get

$20000.00 a year through all this
transfer back off that money and

redistribution So is this relevant for

financial inclusion globally and is there
a reason why almost nobody talks about it

like I've been to a lot of panels and
everyone talks about a lot of

interesting important things but
we're not going to the root of it which is

the Transformation Experience from land
to capital a couple 100 years ago and

I was seeing it from capital to data and
almost there's no redistributive element

here at all so I'm just curious if there's
any comment from anyone on the panel.

I would say everyone is talking
about it no one has an answer.

But the whole question of ownership and.

It's a huge issue but

we're right at the beginning of
trying to get our hands around.

I don't know if we have time
are Ok one more question.

Rand Ok I guess Ok please and

I'm sorry for those who we missed
there was a lot of them and

so I'm feel for
I feel fortunate Aaron Klein Brookings I

wanted to link something that
Jen said was something that.

A.j. said and see people's reactions which
were a.j. you said that in India there

is a policy choice to ban the fin tax
from access to credit bureaus and

Jen's example of the policy disk
that is unfolding every tweet and

get go to one unusual
policy action every week.

So risk risk risk reward right Jen
made a comment about Equifax having

a stale database of info of old
information on folks Melissa's

organization has come out with a fantastic
paper showing the benefits of cashflow

underwriting as an alternative to credit
scoring and Pouri has a fantastic paper

looking at Wayfair lending in
Germany where 5 Fin Tech variables

outperform German FICA on an actual loan
pool so the question I have for both a.j.

and the panel is do you think that that
that banning fin techs from credit

reporting agencies will
produce better the same or

worse outcomes in terms of accurately
measuring risk and risk based pricing for

lending though I would like to focus on
the question of state power if I was a fin

deck I am entirely in your shoes that the
cash flow based measure has a phenomenal.

But do you really want to use
government course of power to force for

index student not use credit bureaus
that's where I get nervous and

that's the concern about
creating a very state led

edifice where the business models
are being controlled by the government.

Though and d.c.i.
has given limits to what happened

how many number of accountant get passed
there is newspaper talk about n.b.c.

I asking Google to gap it's market
share at 33 percent in payments and

so this is the sort of stuff
that I worry about that

if we go down this route of state control
then we will lose out on the innovation.

Anybody else likes which I.

Think it's a very delicate balance
that has to be played and I think.

If the state is involved as it should
1st should be watch us as a customer

70 per But even if they have something
more than that they have to come out to

the market then explain why I mean if this
decision was taken then they need to go

out if I don't want to stifle innovation
and make sure that they still have the buy

in of all the players then we have to come
out and say what they have a legitimate

reason I don't know but it cannot just
be done by that sits and has to be

enforced because these players have come
within a certain environment with certain.

Rules and Regulations and

it cannot just be taken out like that so
this balance has to be there and

I think the dead the most important think
is is transparency and accountability.

The whole the whole question of
regulating credit is a difficult one and

it comes back to financial health
right is is more credit better

is it the state's role to
protect people from themselves.

Are pretty does a pretty good question I
don't know whether your your your question

of whether you get better underwriting
results with less data was rhetorical or

but I don't think anyone would say you get
better results by restricting access to

data but don't think that was.

You would say that may be so.

Easy.

To every good tunes.

Because Or because strange.

Ok I think we've gone over our time I'm
not going to do a massive sum up but

you know I think there's some really
interesting messages coming out

you know between the tension
between control and

innovation what's the appropriate role
of government is it directing is it

running is it overseeing is it nudging
I mean and I think to your point.

It's a very delicate balancing act on
all of these and what technology and

particularly data is doing is
really challenging us on where that

point of balance is I like a point
that somebody made about being really

clear about the objectives you're trying
what are you trying to solve for in some

of these policy questions and I think that
maybe drives towards a better outcome.

And also just the need to invest in
technology in people so as we think about

what our central bank of the future looks
like there's a big need to invest in

that's not just emerging markets that's
in developed markets too and so how do we

think about doing that clear mandates but
also collaboration between institutions

seems to be very clear and between the the
private the public sector talking the each

other really makes a huge difference so on
that note I'd like to thank my panel for

talking to each other today I think we've
had a great conversation and thank you for

all the questions from the audience I'm
sorry we didn't get to all of you but

hopefully there will be opportunity to
speak at coffee break so thanks very much.