Abdel Banda, Stefan Ingves, Njuguna Ndung’u, and moderator Adrienne Harris participate in the third panel for the Central Bank of the Future Conference. Learn more here.
We have an exciting discussion
ahead of us on digital currency
distributed Ledger technology and
cross border payments and
a fantastic panel here to talk to
us about this this interesting and
wide ranging set of topics I'll
read through everybody's bios and
then we'll have short remarks by each of
the panelists before we do some discussion
on the panel and then open it up for
Humanae so immediately here to my right
is Dr a new who is executive director of
the African Economic Research Consortium
a Pan African premier cut premier
capacity building network
He's an associate professor of economics
at the University of Nairobi Kenya and
is the immediate former governor of the
central bank of Kenya where he served 24
year terms as required by law from 2007 to
2015 he has been a member of the global
advisory council of the World Economic
Forum and a visiting fellow of practice at
Oxford University prior to his appointment
as governor he was the director of
training at the African Economic
Research Consortium He also worked
at the International Development Research
Center of Canada as a regional program
specialist for eastern and southern
Africa regional office in 2001 and
the Kenya Institute for Public Policy
Research and Analysis in 1909 as
a principal economist he holds a Ph d.
in economics from the University of Sweden
immediately to it to his left is
governing Bez from Riggs Bank and
where he is the chairman of the executive
board he's also a member of the board of
directors of b.s.
and chairman of the i.a.s. banking and
risk management committee he's a member of
the General Board of the European systemic
risk board member of the General Council
scuse me of the e.c.b.
and governor for Sweden in the i.m.f.
and board member of the Nordic Baltic
macro prudential forum.
In 28 scene Mr Ng the as was appointed
chairman of the Toronto Center for
Global Leadership in financial supervision
he was previously the chairman of
the Basel Committee on banking
supervision director of the monetary and
financial systems department at the i.m.f.
deputy governor of the Riggs Bank and
general director of the Swedish Bank
support authority prior to that he was
undersecretary and head of the finance
markets department at the Ministry of
Finance and he wants a Ph d.
in economics and last but
not least we have Banda who is the founder
and c.e.o. of Bunyan infrastructure
founded in 2017 buying an infrastructure
utilizes machine learning algorithms and
distributed Ledger technology to encode
natural language financial contracts into
smart contracts to provide lenders
with an integrated sas solution for
autonomy as tracking and reporting of
contractural requirements contained in
credit agreements used to finance
distributed infrastructure systems and
transportation assets as c.e.o. he's
responsible for the company's strategic
corporate and market development Mr Brand
also serves as director of Africa for
Edison Schweppes offshore a leading u.s.
ship builder and marine contractor
to the offshore energy industry
as he supports the company
strategic finance initiatives and
previously led the company's corporate and
business development efforts in Africa
prior to coming to Suez he was
an analyst at Sandler O'Neill and
Partners an investment
banking firm in New York.
He's also the co-founder and trustee of
students bridging the information gap a 5
a one c 3 in the u.s. celebrating its 10th
anniversary building computer labs and
libraries for going in orphanages and
schools he wants a b.a. in finance from
the University of Notre Dame where dare
I mention here he also played football.
No fights start fights of the peace for
parents and the other thing
we're going to have everyone start
with some opening remarks Dr new.
Good afternoon I am not so
sure when you speak of the line so
you don't know how to make sure that
everybody's going to be engaged but
let me say that I'm very
happy to be here and.
They think I've shared so
many e-mails with Christie and Michael and
so think I like the team the little bit
efficient and so I'm very happy to be
here it's my 1st time to be in Detroit and
the University of me too and so
I'm very happy that I was able to be
invited here I was taught to talk about
digital evolution especially I
wanted to talk about the money and
they were trying to payments ecosystem and
I wanted to give the king an example but
it is because this is the for the I am
I've been away from the central bank and
looks like everything is for a meow if you
look at the might it just papers actually
most of the papers are focusing on that
because everybody has been asking me right
on this might it disposed
to talk about state and.
Talk about digital technology and
in the Global Center for
Global Development is because this subject
matter is actually coming at a time when
everybody is exhausted about the new
visions that are taking place.
And I think maybe once I share the Kenyan
experience you'll see how Actually
even the way we look at it in terms of I
know there is always this confusion about
crypt occurrences and and
also the the domestic currencies and
I always tell people that let's let's not
go there this a boundary if domestic For
example in Africa even the mystic
currency So rates to the dollar or
even to the euro by 10 percent
they'll be a commission of inquiry and
I've went through so many of those but
it meant a commission of inquiry why did
they actually and units write to
changes massive price structure must be
relative pressure yes but
we have seen Bitcoin just crash and then.
It's not commission I don't know who can
provide the commission of inquiry but
it would be double that.
Then before I go into the subject matter.
You know when you change your jobs your so
have to remember to pay some form of.
Marketing and this is where this is a r.c.
African Economic Research Council should
we start a collaborative net
a complete corroborating network
we've been there during capacity in
Africa for the last 20 s. now a new build
capacity through research and graduate
training corroborating with of public
universities in not in sub-Saharan
Africa and we also have an interactive.
Communication and an outreach program that
is to disseminate the parts that make us
in terms of our research out what we have
managed to build capacity in Africa in
sub-Saharan Africa to the point where most
of the institutions that you see have been
strengthened just because of that capacity
I'm one of those products and there are so
many so many others that we can talk about
but in a way it is good to talk about
it because this is going to be an area of
corroboration in terms of research and
the people who sit in front yard
not likely to see this race but.
Every let me talk about let me go into
this electronic payments ecosystem
because that's where I want to start but
my 1st point my 1st point when I entered
the central bank in 2007 my for
I was faced with this issue about.
What happens what what what what what
what what what what are you going to do
with the request to actually rice and
this mobile phone financial
services payments but
most people didn't understand it that way
it was called m s but I want to show you
in person is just one product is a product
but the idea stretches far much waiter but
the other aspect of I was faced with was
how do we even a financial inclusion and
they remember according C.E.O.'s of banks
who are also my friends what we need to do
and one of the topical issues that came
up was how do we bring bridge networks to
the people we tried even trying to
say we can what is expensive but
we can actually minimize how much
we can do the 2nd thing was agents
a banking isn't a group of a team of
people to Brazil and Colombia like
within 2 weeks they came up with draft
regulations about agents a banking but
when empathic hit the ground it
was a coordinating mechanism for
bills but that is the most important
point but my point my 1st point here is
that is that there isn't 2 women
banking in the presentation and
talked about even dormancy of of accounts
even to do we suffer from governments.
We thought that financial inclusion was
opening accounts in the banking system but
I think that the new direction
that M.P.'s are gave us is that
you need a transactions
account savings comes of it or
when you have stop you
can include everyone.
Once you have an efficient retainer at
a training payment system and that's
the starting point that's what an M.P.'s
A's are about the 2nd thing is that we
have talked to says yes that our recent a
very nice debate and then I thought that.
You need to be cognize in countries like
Africa where we have market segmentation
you need a product that can never
get across market segments and
it's going to be very difficult but
are not going to lose market segments
because markets and Titian is defined
by the distance of the market or
even less force of income and maybe
a combination of so many other factors but
into it that is maybe that's why when I
talk about a chronic payment system of
course come up with a widely quoted it
electronic payment system we want I want
to show that it is actually at the entry
point in terms of financial services and
then after that we can talk
about financial inclusion and
then what happens to the ecosystem
of that So essentially
even though I have some slaty I don't
intend to go through them one by one but
the most important thing is just to point
out some few things that are I like and
I would like I have seen the World Bank
came up with a new with a review of
trying to and rice payments
instruments and we were just so
happy about the even the savvy that has to
be done and I've look at surveys that have
been done outside ward like in kind of
the for example how much cost cost and
how much a cash will cost in terms
of distribution and all that but
I'm I'm happy to share with you one of
the recent examples that have been done
is especially no Binya is
that once you migrate as it.
When when you're using physical
instruments they consume months money
as well pay almost 50 percent of
the cost of that of the transactions but
when you move to a chronic payment
actuary that 50 percent shifts to
the infrastructure provide it so
it's an idea that actually electronic
payments system themselves are becoming
cheaper to the consumers the whole issue
is if you have the physical infrastructure
then you can talk about skid ability.
The terror training payments and this is
where I come in is the one it's into law
as an employee the central bank of Kenya
was given out an extra minute that is to
issue a to have or to make sure that you
have a safe efficient payment system that
will support a successful
financial inclusion goal and
then all of a sudden we started looking
at how do we effect on how do we bring up
payments and a payment system a national
payment system which was not part of
the core might it at the very beginning
and so it means that you start with he or
from one and then you go from what
by the time it started to those and
then 3 by the time I went to the Central
Bank into those and 7 that's not even been
approved by a pandemic and parliament is
one of those institutions that it's going
to be very difficult to push but
we wanted a payment system or
a transactions platform that was going to
be important in terms of the entry point
and it's also going to be real tight and
also put Of course they
might bring evidence has shown that
if you actually have a successful and
I think then of course when you talk about
financial inclusion which is actually
market access but it it makes a difference
or talk about the mobile phone best
data but the most important thing is that
we have seen the successes maybe I can
proclaim that the success we have seen
is that financial inclusion has been
effective because of having a very
well maybe well should a city.
Accepted literate 20 payment system and
beyond that it has actually generated
its own life because essentially it has
come up with products that are accessible
I've seen studies that have shown that
women can actually enter that space and
save in products that cannot be encroached
and that for us is a bit of important and
we have also shown that when
women take up that their fish and
savers that the cycle is between
savings and investment at.
And I think there's a study based on but
it doesn't it suited in mit and
sort in Washington but have come up with
that paper to show that actually 2 percent
of the of the households enough in Kenya
of Africa have been lifted from politics
so essentially financial question becomes
a public policy that actually can
help us in time solve or
sustainable poverty reduction but
only talk about the Kenyan case because I
just want to be very brief here therefore
stages in Kenya in Kenya in case and
then M.P.'s I know softly
softly talked about that there was a need
for the copper of the Sephardic community.
Mineral to work and increase.
It is a need to serve the market in
the right way but how should it so
to congest took it on the Earl of from
from there should it the whole issue or
support it come how that
may system of prepaid.
Air time and all of a sudden
everybody started trading with the.
Then one microfinance here is that
if my customers don't have to come to the
city they can use the air time to pay for
their aunts then they don't have
to come and we can do that but
then there was one catch we have to uproot
Sephardic home to create aggregators so
that several people can send the air
time and somebody can aggregate and
send it to the microphone as that's how
they went to Microsoft to do the analysis
I think this has been documented by
them but it just Foundation make.
Some people who have done some good
work I was trying to document this
case study not in Oxford and that is
where the starting point comes in and
set out a comedy or is this or this could
be a good case Lestrade to research and
that's how deified becomes into provides
to provide some in intervention
that is where it started but now we
talk about really go from what it's only
it only became changed into some M.P.'s or
into those and
6 when the government changed their role
or made it there are 2 up because one is
a tronic units of credit of many and
then according to in this of a chronic
signatures that is what change this tire
though it would have been a better treat.
That send us air time we know
the equivalent amount and
then we can transform it into a month
in a way that's a story that we use for
another day but that is a starting point
this affects about a Comedy Hour is that
it's a good advantage and
that is a good advantage because so
far we have seen how it has
been successful let me.
Summarize what 4 stages in
the fasted was just transfer p 2 p.
government or even forms to be payments
for goods and services but for
me the most important being put
on point about this stage is that
there was that it erect 20 payments
pratfall which was sufficient and
it was safe I've seen colleagues in the
world some friends in the World Bank and
even the Oxford University crane in
the car in Mer they came to the conclusion
that actually in Kenya we could have
a distribution is taking prisons and
the backing sector outside the banking on
and that was a very important contribution
because it was actually because of
the agent model the must agent model
is that of information behind that you
can talk about it in my job my stage and
information more and how the resource
that it could it is a problem so
in a sense the naivety of this
stage is the transactions account
became actually the sort of
the the trust account because
it became the transactions account
it was that it electronic.
Payments back from that became
very very important and
the title comes to I
just the transmission.
Point of going to several African
countries and they come and
tell me that we want a bank led
model not to tell call it moral and
I always tell them that tell of course why
just the transmission bug What is that
all of that that of course they change
crushing air chronic units of cash and
store it in the trust account which is
in the commercial bank so they just that
is their main function and their anybody
did with the guidance that the central
bank provides plus the communication
authority the rest is left for the.
Central Bank 2 after the money the payment
system the 2nd stage is fight your savings
account I don't remember Bill Gates
himself leader pushed us talking about or
you have been the very excess for
them yes but it is not even affecting
the intermediation in the banking sector
it is not it is not going to a bit affect
people's lives because essentially people
slaves are going to be affected by one
savings to credit because they can
then right there I said base an escape
say cause of poverty and then the next
thing is that it's expensive unit cost was
very expensive How do you actually
turn it into a savings pratfall and
it worked remember promising
that it to work just give us
a give us some time and it's going
to work thank you it's not I'm so
vital savings account was a little magic
but the next thing was used transactions
data and the front end the savings
data to generate credits caught for
use for short term clearly I think
this is the part I like more and
today and there I would been telling
people that we have seen that
the factual savings account and
vital could be surprised Pratt form
has moved 5 countries to move from
Kenya Tanzania because Commercial Bank
of America was there to move to Uganda
it to use moved to Ghana a certain sort of
to Rwanda and now it has moved recorded
one you can imagine I have been looking at
that even micro data for example in Rwanda
when it was formed there were Nando's
in grown up brick Asians everybody.
And they were proved and the turnaround
time was not more than 45 seconds and
their bridge loan was about $5.00 and
the payments period was $21.00 days and
then M.P.'s will have it all and
the 4th one is the cross border this is
the interesting bit because we are allowed
Western Union can order is send money to
the forms and then after that you have to.
Travel to Natal be allowed in the other
station to get your money now you can get
it in in your mobile phone and
having said that I want just
to talk about 5 outcomes.
1st of all it is talked about
the 1st one literate 20 press for
the literary tronic payment system which
is effective efficient transparent and
safe this is very important the 2nd
one is financial inclusion and
even financial development has taken place
and we can talk about poverty reduction
we can talk about even something
that I'll talk about later
about even they fictive less of a mantra
policy I went to the central bank and
actually when it looked at that they
account the banking accounts and
even who was borrowing and who was lending
there were just a 2.3.4000000 accounts for
a population of about that a 1000000
then I ask myself quite we complain
about the banking September reading rates
because nobody's going to the banks and
that's for another day but
we'll talk about it but
even I went to the central question m.l.c.
after the gym in 10 or so bed and
we try to improve on it using this and
because of time sustainable business
models I'm very happy about this we can
talk about these fin techs This is where
field techs comes in they can roll out
products even payments practice form for
other sects or for other sectors of
the economy we have already made
a contribution about tax policy and even
fiscal policy design public finance with
the i.m.f. in volume in 2017 we talked
about even even provided the connected
study in terms of how even the fiscal at
the Kenya revenue authority was deciding
tax payments platforms on the basis of
these retailer trolling pressure forms and
finally even the government was deciding
government services based on that because
I have to finish and then we talk about
morass paper has focused on for years and
this is something that we can talk
about let pre-puberty across from their
experiences in Kenya in East Africa we can
even talk about half the rest of Africa.
I've talked about this it's on many of.
So many areas but and we focus on 4
areas one of them is connectivity and
since yesterday I heard about this in
the course of in this allows us of
connectivity you know what the government
provided the physical infrastructure
that's I bought optic across
across the cut across a bunch
centers but the core infrastructure is the
one that moved to the payment system to
Platys the 2nd one is interoperability
this is a market conduct thing and
of course the Kenyan case stands out but
it's a whole issue of saying how do we
insure in top ability we get a little
includes the math markets ace and
not all unit cost but
they issues must come in but
we have to be there then of
course transformative language or
to rigid that's something that I have
always said they somebody who mentioned
that if you are not at all innovation
in the market then obviously the market
cannot not have a chronic id system
in Kenya we succeeded because of a b.
but so too are the market we need
to move to the 20 women system and
the final one and
very important for me is to.
Institutionalise that Clegg unit they had
risks that are emerging and they will
give us today because I don't want to talk
about it more land abuse my other is that.
By the time I was leaving the central bank
I told the government and I even top of
the president telling him that we have
to regulate the betting on Main betting.
Because it to can come to hurt
the financial system we have to tell
the regular go to did it in $700.00 s.
of the regulator for the Benteke but
they didn't listen of course the wind
the betting companies went to Ireland and
the much lauded the m.p.
so that at that all was not asked and
then in the end what happens.
Now as as we stand now they are more than
$3000000.00 Kenyans that have broccolis
that because of betting on rain and
borrowing through the roof
through the through the credit then
through the virtual credit the problem
is that if you would just open up and
say that this banks must actually put of
provide food provisioning will be a media
critic but for me those are the points
that I would like to replicate that across
the African economies these are the points
we would like to make sure that we simply
go but this is got this is what is going
to help in terms of this digital
revolution thank you very much sorry for
using you know that of course I don't
know what I tried to verify but
I wouldn't be it will be invaded by
the way owner driver this were to come and
talk for 10 minutes but
I don't want to argue with.
Thank you so much.
So there was just persistent.
Factors you're ready to hear your pick or
carrying around a car just because it's.
The current color no way could you
keep those it's about $50.00 for.
3 practive or so
that was really not a paper money.
Not least you might have a better America
so that's one of the other words and
photographs of the chairman
of the Office of.
partners to see your sitting over there.
A lot of internally inclusion resource.
So part of the last year's training for
Was arriving in Serbia.
Because the lower the high school.
Accent comes from and
the it was combination
of sorry you know I honestly
just caught in that you only.
Do that or are.
Several routes they
produce a public good for
many different types because
you provide monitors and the.
Trust of the become white
settlement that is important in say
money and we issue knows that
because in many parts of the world
these things are sort of work properly.
That all of this the global level
come back again and again another.
Priority Another one is
sort of a combination of.
Do you deal with that and then you go
beyond that the arguments of the new
technologies available to
help with actually use.
These lists and also.
To think come to my mind.
Where we really need to get the public.
This is a cross border.
And here in the sense of
acting community I think my
view is that we have not been and
Do the same about some of the National.
Across quarter 8 because
all of our all of us are.
You know that habit and then that leads.
The other why would you ever do that but
it is incredibly important.
To realize that is that in
order to do everything.
You need to have.
Need a secure online
identification to feel confident
in the national identity
because you can do a lot or
is who you are in a digital form forget
about another customer money laundering.
My view does America not done enough that
one would expect opportunity to see with
every word of realizing there
is a high school there and
we can make some money out
of sitting with factoring.
Problems of a race that were beautifully
written before and had to this is
at a level of quality level the rest of it
you name it that's not at all surprising.
The pencil Adelitas on this event.
And when it comes to the most
personal All we need to
do with the Newseum we have failed
already show the power of the.
Virus and the baggers it is actually our.
How can one also be mindful
of revive the Tigers
are probably not opted out of
all the financial details.
They gave them for that because
the central bank to do a public good.
Public good fire and
use the system rated as any guidance
provided in a good way by the problem so
one of the private sector guys I got a
great model or the systems crashed in are.
Everything the money required will be
good money is not getting all the money.
That is how we define money in.
The public sector have been one awfully.
Lot So you need the support
of Parliament to make.
Such an easy.
To come by the words that's
already available and
then discuss what in the public good and
All the time.
Just let me go mention 11 example of
what I think is doable in the future but
Real moral value settlers.
And money within 10 seconds or
you're a very much it's a multi has.
To do with the sea within a year hour so
we could use this system for settling
from oneself and doing the research for
now because you can take the side of
the transaction or fire something.
Into the front are and
then you can do the same thing in your us
you probably still have to be arsed
brothers to realize that it must be
possible to move different problem
around your back also that in time.
So looking for somebody else.
Would we be willing to do that and
if no one showed up on the private sector.
Well the guards also knew that you
have to be able to you are and
you have to do here to
the money that money or
making the decision of all of the rest
of it and that means that online.
Wired being here in the.
Land thinking about.
It the other pirates are only doing.
The other one I would like.
To start doing if their priorities are.
Favorites on the world.
On cellphones are we
going to get to the same
proposal probably through the one
in Germany or right person.
Then you actually have to carry on.
How do you do that.
Is that patients.
Have been getting by to be around and
they have good Leon and
particularly in my building in my corner
of the world if you're old enough
you really don't have to
do anything at least for
a while a few years ago that
you realized that to find.
Your stuff so you have been
there on the line for origin or.
And why is this something that is
in July Let me give you some
numbers of examples of.
Things way out.
As a share of cash out there for
the press and he's down to 30 percent.
40 percent of the people never use cash
and all if you talk to retail brass.
Many of them sort of say.
Probably cashing the drugs off.
Not being good because somebody had.
So much more can be
used to use technology.
To get something there is international
for people to come up to here
is that I'm that guy do that this
idea that we're getting out of cash.
I did this and
I'd say no that's divided in.
The producers over here on some
of the battles are that we
have to think hard about why it is and
why this is is because
he said Americans use old
fashioned technology paper money.
Or is there something
in this that we need to
deal with when it comes to providing
2 things one systems real pie.
Clean retail claims on the.
To do one issue that we struggled
with a lesson in their earlier.
Work moving away from I.
Mean the early adopter
of our organization.
But these news does that.
Have a purpose it.
Is good to just becomes too hard to use.
For people to marry.
And so far where I have seen all
the private investors follow
the products that.
Produce systems that everybody can use
it's just not there because there's not
enough money in producing
other tools available for
people with Izzy's goods if you
have a choice that denies the level
of producing something that if you
have a use for your field of vision.
To figure out where.
Though there are some of the issues
that are important there's one more very
critical issue I think but it's something
moving in the digital Laden one for
the other and
that it would be fine for money.
Most people take this provided they
have never ever thought about.
The good things that I love really but
talk to the lawyers and with a fraction of
the surface they just didn't come
up with another that makes sense so
we have the position of the parliament
saying the last time you develop a good
1st one might be get out of
the heart of it with your knowledge.
And then you sort of came out for.
Physical clashes this feeling
this is all casual and
that's essentially how unity
following the uniter this week.
And this is all disappears and what is
a speech from nobody leading els so
we have written to the Parliament of the.
Like it or not this is what you
do in our lives pondering how to.
Be here is the word 5
percent to 5 years a lot of.
Good really the definition of good
in the trouble because we don't have
that efficient we don't know what.
Why is it that I'm talking about this
from this perspective that because I'm
a central banker and
that my job to produce good
all this is the short run and
then my job here is a good start.
Because most people never
think about money this way but
money is ever her that holds.
Produces good out of people filing for.
Us and it is my job to make sure that
the entire country of our artist or
start using he or any other.
That would be.
On my side and so part of my job is
to make sure that we get the only.
People going to be here for
another 350 years.
Thank you so
earlier today that many people brought
up the why of financial inclusion and
I think Mr Randall here well help us
think about some of the things that that
the governor former governor said and help
us extrapolate to why some of the stuff is
important in some of the private sector
applications that come from this.
So I'm going to talk about.
And it will at 1st it does and also.
Cultural and economic representations
of sustainable infrastructure.
I like to say a big.
Piece on the Asian you 1st you wish
you but I mean there really are.
Risk of fema by you know a structure
that is worthy of speech.
And the right governors.
This is not my 1st time in Michigan.
To get out of this.
And you know no pose or
you look up the left.
That's saying here oh this is
interesting developments and.
Let my book you know your mindset.
On the way.
I was in Gaza last year it was.
Very Saturday really growing up.
But he was and I asked this u.n. secretary
general I mean I'm so sick very very.
Close to the country.
Or that I'm really opening my eyes to the
only world of possibilities to start with.
What are you sure.
And the last.
You know one of the few people
who got you if you got it.
Were used so.
And you think about that in the broader.
Without electricity today.
Is by moving Julian dollars as
usual around the world as the.
One to you the.
And vision larger on a mission are
knowledge unable to financial community.
Groups that are in on the.
National things Lou I'm
sure you saw the last we.
Grew 30 learning 30 percent will
bang sign on to a new charter
or are there immunity to a virus or
social as far.
As this is a watershed moment.
Or that we have.
And the already losing that
this is yours and the.
Vision really needs of the highest level.
At the highest levels.
And why a lot of additional resources.
What we've done is really a lot of.
What some of the challenges for and.
Really didn't do a lot on her bottom 3.
For operations as we say Do you
understand the legal structures.
We notice and
the structure projects small or would.
We know of building a building whole lines
any more than I mean I'm observation of.
All of the projects and
the costs to lenders and
mash a bunch of little and
headroom genius owner Remus Rouge
is predicting a lack of
regulation will natural prices.
Are an ongoing diligent in every school
and this is becoming an endurance
to lenders so
we knew of ours as a distributor lender
The reason I guess what we do during
verbal agreements into smart contracts
we connect those laundryman with
the sensors on line assets that are funded
all agreements that obligation clause and
we're able to use
real nonsense as a bottoming all
the contractual agreement with clauses
of contractual cause with then build and
ask for is lenders really try.
Out each individual overspill or.
This is a very well received lenders
working with grammar school and
is in the u.s. and your approach.
Is almost laughable and
we started going to market in March and.
The strategy is easy.
But the big story here.
Is the very small start.
One there are all those.
In the routing we're doing
with all the new shooters.
And discuss the last of
the big stars to Nasheed
reshape the actual system in one
general in order to allow it address
societal challenges so
you visual payments.
As you are able to digital natives and
so on have worked.
That land or that have much
more from back of the moon on.
You utils landers are you
a lot in every way for a fact.
But my vision.
Reporting we now another layer
another tool used by that they are.
A woman and having a page or
water or electricity has ones that.
Are attractive asset manager.
In New York or Stockholm.
The perfect lead on that.
Lenders money more often will only
officers sure they can be small loans.
The low in a religious matter.
Because they were started doing as
we start integrating bunches of.
Points tracking the edgy
atmosphere from very boring.
So we have real time and sensors.
Weeding out really.
Cool reviving all
the environment who measure and
one will care about and
what is important is the information.
Part of a long.
Separate post and
believe or that may reduce.
It Down the homes part of
living that are actually and
every single transaction an event series
this enormous credit system in this credit
reading history in full life cycle
origination as if your vision.
Stored on an issue of leisure and
assured you can borrow as Anderson
as mutability a lot of stress are.
Generated on the market.
On on the street or
over those with you 1st.
We generally have a token.
On your leisure with a director.
And all the environmental measures and
I think this is very rewarding.
Providers around the world.
About requiring more transparent.
There something for us for financial.
Leaders for and
we've all seen your central bankers I
live in Boston Harbor as a purchase really
so I think you know that combination of.
Advocating for lenders to provide more.
More regular cars reporting and
you know creating fuel system
by purchasing a very box.
Very little of the lives of
those on the group probably.
That's really been.
Living here and works or so.
So that one of the people
running the company.
From earlier today and in particular.
That are central bankers here mentioned
one of things that came up earlier was
the decisions that central bankers
regulators face in terms of their how
doing gauge with innovative technologies
whether it's regulating quickly
regulating out of existence taking
a hands off approach and I wonder if
afternoon and governing that is if you
could think about and talk to speak to.
The times that which you've been
dealing with the disruptor earth.
And paste maybe about a decade ago and
the digital currency and
how you thought about the decision I think
in the case of Kenya to take a watchful
eye but sort of a hands off approach
is developed in the private sector and
then in the case of of Sweden have as you
said you weren't the decision maker and
so you've taken the the watchful eye
of some of the private sector apps and
other things developed but
you're also piloting the krona So
I wonder if you could just talk
a little bit about how you came to
the calibration of how to
engage with these disruptions.
If you think you very much.
We've all been given.
Ideas of the on.
The margins I lose.
It 1000 I don't use it.
But it is the really
good players we really
keep people needed in parables and
his ministry mission.
If I can see who actually this
is something that can help.
Quite a bit should be on my own so
when I'm ready I hope you do feel I
think the position what we did I.
Write here and even professional market.
According to them hub.
We want to be a lot all little.
Provide that to do that
we need to be informal.
And so we did all forms of
it we thought should we
can do just a little good and
that it really was up in the.
In the my duties on an informal.
Get the money.
Then we have to.
I think that is it was that.
Very basic started for us just crops
realizing that people usually a.
Very way to run it and
use a one of their own maybe were
very very were thinking or it was.
A very proud but there's a lot of very
work started Also most people that are for
think about that most people
never will never be able.
So have a very strong
practice in restricting.
And that means that the system like
this is the core of the whole that
that means that everybody's interested
in talking to you about how you actually
do these things can be good little
money from one another to go.
Viral that's a slew the way this.
In this country back to night parks.
And those who read our history
know the part where there are so
everything ends up in the set.
Sooner or later and take our
swished we're just recited from one
another we have to if
they live weather and
we have users we were part of
that evolutionary process for
a while because but the general public
need not understand there are it's
that way to do a solution transaction
costs are part of the method of money.
Because the Bastille process so
we have a part of the 1st.
One thing of course one would
like to see that this or
of a subtle way so that people don't get.
Not so that they will.
Get there and
this falls all over the world with us.
From the awful village
where all these different.
Ultimately the one passes
to the end system are.
So those are only like what you showed
above and yes are kind of well but
the end users see no but you can.
Get around the simple.
To shift to the.
Way America goes looking for
her about $200000.00.
And just so far coming as I wonder if
you could provide an sob specially and
that audience here in
the audience on mine.
As you're watching your pilot develop
Are there any early conclusions you can
share or new questions that are that are
popping up that you did not anticipate.
A lot of.
Part of the money.
So that's one of the striking feature of
that conversation another series 5 good.
Thinking the whole plenty of people
who are experts but it's all good.
Because that's something
to be separated from.
And they're really very few people have
an education in mother figure and sort
of the inner workings of money and some of
those issues are horrible to most often.
And it's just that this is
really the hard part to.
Crazy Asperger's with
different backgrounds and
get them to talk to each other in such
a way that you have to create something.
The kind of where we're
getting our grandson to go and
drip process that we
have a lot of companies.
For a lot of the.
Process is over we will
produce a program a pilot but
it will be for do with such
a great scalable so that there.
Are women of this art.
We know that we can do it at
the National at the actually
we have these 2 this is
the conversation where the Years ago.
Years ago the bag issue
the whole digital back no.
It's about money a 100 years ago the
baggers arguing that there was no need for
a bad physical money and
they argue that there is no need for
the jewels on so in that respect
there is nothing new under the sun.
Good service I hope.
So but I mean Karachi to do
with the fisheries we go so
much of this is that we're going to get
into that treaty you just assume that in
this article we are 100 percent
all going to go off it and
you know how it happens and the same
thing with money you just sit around
in the stew that there is a certain
structure there that is being
used to do these things and
then you're certainly making the.
Case it's actually the equal
who decides on these doctors.
But for the good hearted to have.
A political they are provided in
the program for so great with the blood.
And that sort of catches
that sort of heart of.
Well you touch collaboration and how so
the the tech people come in and they don't
know anything about central banking or
financial regulation and I think
the same is often true sometimes you talk
to regulators and it's hard for them to
keep up with all the developments in the
private market I wonder if you could talk
a little bit about maybe just thinking
about your experience broadly beyond.
But also back to your history
in investment banking but
now you sort of seen this
opportunity taking your cues
from some of what's happening in the
financial inclusion space in the e.s.u.
space and use that to find
your business opportunity so
there is a a collaboration of sorts
there and I wonder if you could just
speak to that and tell us how you how
you look to central banks and other
authorities to decide how to form your
technology for a business opportunity.
To leverage this.
Friction there is.
A market being a real barrier and.
Lenders or concerns really.
That there was no
regulation no central bank.
That they had to answer to.
Actually just be doing whatever they
wanted to do and we were seeing that story
before and it was really good.
You need to.
Think about how we can prove
the power of technology to reduce
the burden of the regulation
on the natural immunity and
I would hold the central bank to
the core celebrate their groups they.
And we've been fortunate
this far because we
had a few lenders who were willing
to engage with us very early at.
With what we were thinking and
I think on the regulatory side
more bad engagement with me.
Coming back to this idea of.
jurisdictions being and
different places I wonder after New Moon
and governing rez if you could tell us
maybe a little bit about
the conversations you have or
experience in terms with your
counterparts across the world.
And how others are are thinking about
Central Bank digital currency where some
are really leaning in and experimenting
with with going cashless maybe being led
there by their constituency while others
have as are stuck to the need for
cash and really resisted the idea
of a central bank digital currency.
Thank you thank you very much I think
when it comes to jurisdiction you know.
You have to start from the home front and
you know I didn't push on because one
of the things I had a big fight with the
banks with the commercial banks especially
in Kenya that is the time was so there was
a success in terms of micro finance some
banks have had succeeded in terms of
micro finance they argued that the small
this impasse is going to Oculus
not accustom us but I argued that
you need to encourage these because
essentially then you can get deposits and
even you command the Jeffries
247 because essentially you can
get everyone actually participating in the
payment system throughout the night and
I think I remember I was in the u.s.
given making a presentation and
and the u.s. secretary.
Say that actually you can pay for.
A taxi night will be using
a mobile phone at midnight
which means you're drawing from me about.
Now but that is the can in case was the
banks were very much opposed to this but
in the end they realize that all
of us at the actually don't need
to even create a large number of branches
they can use the agency network they can
use virtual accounts so
it's a question of investment let me go
when then we when we started even talking
about it I thought member I had so
many occasions that I had to talk with
them and the World Bank actually even to
explain how it was working and
that was a very difficult aspect because
at one time it was being seen like
oh it's a payment system we did with
Nora Grecians there what we don't have
we didn't have very well framework for
payment system in Kenya then it was it was
just sitting in the parliament waiting and
what we did was to invoke the trust
role and then that the trust account
which later became the transactions
platform was actually a caution cash
transfer technology corporate
form which again was actually.
Guided by the trust straw and the trustees
while they were not silicone this
water it even with this jurisdiction
now of course in the end after
3 presentation of that is everywhere in
Europe meeting I think the World Bank and
them ever agreed that it was working well
what are the by the African regions and
actually my most of the governance
in the region except for Tanzania
everybody else thought that we are out
there of course to deal with money and
I think this is this this is
an idea even going to Nigeria xover
times invited by its foundation
to talk to the Central Bank and
even the business community and the banks
and then they believe that we don't want
to tell call it moral Kenyan mores
attack call it moral then I actually
insisted that it wasn't
the movement the whole idea of.
Converting cash into electronic units of
the same cash has never sank very well
across even most African countries even
today that there are some countries that
this is all which is working very well but
I'm not so sure it is good so
essentially that that it is the same thing
about the digital the digital currency and
I made a point about that area so
essentially it is across the dish and
we still have these doubts about how can
you convert cash into a chronic units of
steel core it in goes back to what
Governor is actually talking about.
Maybe it is a space we didn't need maybe
to come back and try to define that but
I think when they're most observers
came to Kenya and that's why in in
Africa Iran's for financial inclusion the
digital working group dames by the time
started as mobile phone financial services
what now it is the digital working and
because I was chairman that time I think
I had to host most of the people most of
the people from Asia right in America and
even after a couple of Kenyan tried what
is than what is really happening it is
the whole concept across the jurisdiction
that how do you have a chronic
units of money in your phone and
then it is also in the in the in
an account in the same way now
of course that comes back
to the cryptocurrency And
I remember there was a big item in the
news last year woman in Kenya was actually
receiving that she pays bills in a hotel
using the Bitcoin and it was a good
analysis and they missed only one
point how do you make the payments.
But the whole idea and
the generous went on even in hunting for
the governor Luckily I was in there and
then then they were asked then
the wires to do was quote The payments are
made and essentially is the if you have
a wire it even have a wire it between wire
it then you can change units with the same
one it isn't it and then we say if you
really want to make connections out of
that order us out of used you have to go
to a pos point also and that's when they
say they don't ask Central Bank to talk
about or even to accept a currency
that doesn't know the origin doesn't help
rules of the game doesn't have a real
Freemont that you can rail and that is
how we were escaping this big debate so
across jurisdiction everybody was like
No the central bank should narrow.
Cryptocurrency and then the question
was Where is it coming from who is and
I think this is the kind of.
Issue that Stephanie's raising that maybe
it is the failure of central banks to
arouse some innovation but central bank
has to go through the ground rules that
are supposed to be required because at
the end of the day if you lose your income
there's no massive for the central bank
because they come back and say this is
not advice that's why I started by saying
once you have there is communication and
we put it in a lot of risk mitigation and
then we put it in that it will framework
that is required and then we paraded
the guidance that are supposed to be
followed then you would be sure that it to
work nicely there on those days in what's
been looking at different retreats.
Is that the description of M.P.'s
is one of the most successful.
Regulatory stand box when
we were doing that in Kenya we didn't
realise that's what we were doing but
actually that is the case that is
the outcome that is showing up.
We're a few years on the road course.
And if the growth.
Was glad of course of discipline of that.
Whole and that actually all of
the ingenuity community in this country.
That is probably better than
the everything we have under.
The other part of.
The just and that is should
the press here be already and
we have years and
years of wholesale several.
Of the goods last involved.
A retail so.
Oil already and
here is a diverse enormously under
the timing on one of the models are.
That their country
question is undervalued or
whether you should try and
find a good whether you.
Had all so that they're finally.
Going to go away because if I go.
And then that is my responsibility and
it's nobody else.
Should have these big
cashable in the country.
If there's a problem the problem is
absolutely never ever that sort of.
So that would be.
To your point about the conversation.
We're going to my mind because
that is essentially a.
Construct had to think about
things in a very different.
And that's what we think
about those goals.
And then all of a sudden there are the.
Words like money around the.
Isn't because I'll.
I'll be like I'm.
Going to get really needs these
aggressive use of the features
that we get into the whole issue of
trust and dues actually backing up
is that God What is it
somebody else is according.
To your decision to do this and
in the worst cases
you're better off with King Bob to
be allowed to use somebody else's.
Money where your trust to do.
But in addition to that.
You're talking like cell
phones computers cars whatnot
that's kind of the cities
that lead the nation in that
you can use many different people
way of storing your money and
making sure that it's really with you but
when you do
that then you also get into the there
was alluded to the board with the cost.
And let me give you one example
on the number of things that for.
Her or a member of the.
Version of you is a part of
Europe to see over about.
The changes that have been seriously.
Part of your.
Costing coverage around 80 percent.
Nordic costing the ratio 65.
If you set up.
A new bag that I can license you.
Internet media or
possibly a racial bottles.
And then we heard earlier
this morning about
the horrible violence of one man for.
That is going to be described
there is no question about that.
Idea of God with the soul and
your occasional and
live in Eagles crap girl
mainframes Oh yes Heidi and
fighting like crazy hoping
that you will too and
that's an underlying issue let me go
blundering example I will start talking.
About the major fact.
About a year ago it's.
We're heading out of our world where
payment systems can be run for years.
So what about sending
the whole thing needles.
And I have read.
Them over again and
says them our whole state system over
those that are involved is that.
If you ever get in by
there is no need to go.
This month we were last year and
the opening hours from fire 6.
That's not as huge.
Eventually somebody else
is going to show up if you
get a tree change thing is a quibble.
But builders are the subtlety.
Part of God because we have
on our of our craft sort of
a structure of the financial center
of the structural change and
anybody that actually has
the Ace Who Needs To me he trusts in the.
I think we've got about 15 minutes last
night to open it up to audience q. and a.
Simply make sure you introduce
yourself wait for the mike and
then introduce yourself as you're
asking your question I think.
I think Dave and I.
Hi My name is David Eric and I'm a
co-founder of a Fin Tech called at all and
also a co-founder of a nonprofit
with giant barefoot called the air
the Alliance for innovative regulation
I want to thank a gin and Michael for
pulling this together this is been just
a phenomenally thought provoking and
interesting conference I also want to
thank our 3 distinguished guests because
this is really been a very
very interesting session
I have a question actually it's for
With regards to the transition to
an e currency one of the primary
values of cash is privacy privacy
of transactions and as we all know
and perhaps foreshadowing our next session
it's also one of the great pitfalls of
of cash is that access to money laundering
in the heinous crimes that that can enable
as you start thinking about transitioning
to in the currency How important is
the question of privacy is that a question
that is a part of what the central bank
should be concerned about and if so what
frameworks have you been thinking about.
Create the rules very well I.
It's a must to apply for a.
Rule that you have and
the world has changed enormously all that
5 pounds in your buying things will
mean that just would not work so
As we changed and
if we an underlying issues but rather.
Than go slow.
Or hire a company knowledgeable.
In both cases why are there
whatever they are doing.
So our bottom line very
good say that the rules.
Will be difficult and
the rules of the Midi she.
Might be or Huge are going to be really.
Thank you Katherine to make it at
the University of Michigan so.
The central banks all the central banks I
know of have a national mandate which I
think you mentioned as well and
they're not global they're
really focused on what is best for
the domestic economy but
all that we've been talking about
is this kind of idea of trust and
settlement of payments and
I'm just curious since we're talking
about the central bank of the future
how would we actually move from this
kind of very nationally focused.
Set of institutions or or would
the central bank of the future in your
minds actually be
an international central bank or
are we going to stick with the current
kind of country by country model and
have court nation across them just curious
about where you think that's going.
Different different different
jurisdictions going to.
I think from come from this
sheet of the African region so.
Good agents of market development and
once the market has developed
they've been moved.
Because essentially there is.
The comedies always were trying one
of them is mantra policy of financial
stability and of course support government
now we have national payments and
then support government's National
Development Agenda The next question is
what is government's National Development
Agenda one of them yourself you're
supporting the money but once you've done
that then you move on to the next but
perhaps you let the market fall and
that that that is
that is going to be maybe the central bank
of the future a successful cut how do you
know the market to the right direction and
then when do you leave exit that market
when you exit that market
as actually should I say.
Produce the right m Vironment and
is actually evolving on its own on
its own that is you are all for
that don't you know them and that is from
the region that I come from if the central
bank doesn't provide that kind of fighting
and nudging the market in that I'd
then obviously it to be failing in terms
of the national development agenda but
it doesn't have to be there after the
market has forced maybe that's the way I
would look at it and of course everybody
talks about regional integration and
we think the best we have done in
the stuff to come region is to adopt
the same kind of mantra policy
framework and I'll talk about it so
one of the most encouraging from the fund
do c.s. when everybody was moving
into information targeting But beyond that
how they use different instruments depends
very much on the market development on
their own market development and how
the central banks are pushed the market
development in that kind of sphere the.
One thing that is happening also
in a world where you have many
many central banks and
this holds particularly for for
smaller countries is there is a world
where it becomes less and less
likely that you develop your own systems
because it just costs too much to do.
And when we're talking about digital life
station when we're talking about let me
give you an example when I was a young
man in the Options business and
I dealt with stock exchanges and
things like that everything was May put
together domestically in one form or
the other Today you can buy
a stock exchange of shell
in the future it's highly likely that you
can also buy a digital currency off shelf
because it's not that hard actually
to produce these these things and
in that environment it's one thing
to be responsible for things but
it's a different thing in terms of where
actually this servers are located and
how you operate operate the systems and
take our present payment system which is
getting the wholesale system it was
actually from the beginning developed
in South Africa it's owned
by an Italian company and
I think that the good good a good chunk of
the rewriting of the code is probably done
in India or I don't know where it's done
but it's actually that's how these things
evolve in our days and that's globalized
sation because it's under realistic for
us to hire 200 i.t.
people and do all this on our own because
it's much more efficient to have somebody
else doing it but it takes quite a while
to get to that point because once
people say well you know are you buying
this from somebody else and they
they get kind of a bit suspicious and this
is really where it pays to to cooperate.
Mac. Coralie former commercial banker and
now an m.b.a.
student at the University of Michigan
it's clear that the pushback
on Facebook's Libra is that we need a much
closer partnership between the public and
private sector to be curious to get
all of your opinions on what is
the best way to collaborate towards you
know a global currency of the future.
If I if I knew that I
probably wouldn't be here.
So 2nd best is to ensure that we
have transactional systems that
are efficient and that can handle
these things because most likely
we will still continue to
have national currencies but
we maybe we will have fewer national
currencies in the future and
then what we have had and in the past and
how that we live all just
I just don't know because there has been
so many attempts and so many political
conversations of that over the years
let's say in the context of the i.m.f..
To think about a global currency but
as long as a nation states produce a loss.
That's just the way things will stay.
Good afternoon Chris clubby
from the Gates Foundation
in the 20th century central
banks regulators and
organizations like the Basel Committee
on banks region wrote standards and
rules these are words written down
the tell people how we expect banks and
other types institutions to behave and
what they should and shouldn't do but
today and yesterday we've been talking
about artificial intelligence and
we've been talking about on mation and
24 by 7 availability and
intelligent agents and Abdel is writing
code to help monitor smart contacts and so
on and loan agreements so
might the central bank of the future or
the Basel I mean if you stop writing rules
and instead write code or maybe mandate
the use of certain technologies would you
be happy in a world like that so we're 2
governors maybe 1st on on what might
change about rule writing in the future.
I would be happy in a world like
that I think it would make for
a much better world.
But my opinion I think you typically see
that innovation seldom comes from within.
Reason like Kodak and Instagram.
Usually you need a fresh perspective and
so I'm of the view that.
Collaborating with 3rd parties.
To properly you know innovate is
probably the best path forward but
you know the end game.
Ends up being the same more of a digital
regulatory environment I think.
We're allowed the whole system
to function well socially.
I think that you just have to keep at
it for years and years and years and
there was a story the other way the other
day in the newspapers about some kind of
a postal agreement
an organization which is more
than 100 years old being with how much you
pay when you say and send packages cross
border and then this is just how
these things of all over time and
I mean here when it comes to code or no
code I mean I mentioned the whole issue of
a a digital definition of who you are for
that to be meaningful cross border
you have to agree on what but
the nature of that kind of a definition
would be and that would require some
serious conversations about how you
actually do that same thing when it comes
to this with a system which is
basically a global system dealing with
not making payments but
dealing with payment messages.
And you needed local standard to do that
to deal with that because otherwise you
would have no idea what kind of messages
go with the payments and that's one
example of where it has been possible
to get to an agreement on how this is
this is done but it is never it's
never easy because I mean being
chairman of the bottle committee you
sit there in the chair person and
then you have 50 people around the table
and all of them say that they are right.
And then you have to try to make sense
of sense of that then just live with
the fact that there are many
rights using the plural.
You really get one right.
Now you know Michael again from the
Gates Foundation So you've said the you
know the existing cross border payment
system is is outdated doesn't work well.
We don't think we're going to
move to a global central bank and
a global single currency.
You know the tip system is owned and run
by by a single entity if you think about
other regional efforts and I know that the
government do go for McGovern do Lou and
Tanzania we're starting to think
about East Africa regionalization
does this require a ultimately
do we need a global entity that
runs the global payments system can
this be done just through cooperation.
And if you know these type of swift sort
of play some of that role currently but
like Abdel says innovation rarely comes
from within a monopolistic company.
What's the way forward how do we think
about this and is do we need new entities
that can help drive a whole
new cross border payments of.
Don't I think it would be just
too difficult because each and
every time we start thinking about
something global creating a better world
nothing moves because it's just too hard
because it's sort of saying let's create
a Cadillac or
a Rolls Royce it never gets done and
all those who have been involved in
major i.t. projects know that So
Hume aim 481-2718 sort of
a regional basis that's
one way to start and.
Maybe this is not a very good comparison
but it has something to do with your
question the 1st cross border mobile phone
system ever constructed was the an empty
the Nordic mobile phone standard
to the g one and the rest is history.
Because it was possible to agree on
a standard between a limited group
of countries and then there's sort of
realized maybe there is something in this
so if you can sort of gradually prove
your case you can take it from there and
that's certainly the case in various parts
of Africa and if you agree on it we're
not talking forever you just get on with
it and do it then it will happen and
eventually will be copied by others or
others can sort of voluntarily
join because each and every time you try
to create something where you impose
things on others it just won't happen or
at least that's my my view.
I don't and I think what Michael
as you're mentioning is that we
tried to do that in East Africa we created
they stuff a containment system and
then the 1st step was actually to
link up the outages those countries
that didn't have the adequate arity
real time gross at them and we
they managed to get funds from the African
Development Bank and the World Bank and
the why able to mount that the next thing
was actually when it came now to cross
border payments which required that
you you can actually use the Dakar and
so what he does very badly was actually
the 1st of all is the national
payment system we need countries are not
very well right but the most inhibiting
was actually the by the truck by that
direction it in a sense nobody wants to
one currency to dominate and they argued
that we can develop a new marriage but
nobody would know what they thought
about it so we decided Kenya and
Tanzania can go about it and then we
will be posting the better drugs and
it we find we fund account operates
we're finding the accounts in
the currencies in the currencies that were
meant bringing in physical quantities
of course we realize that it can go for
wrong with physical currency
if you take your physical.
Can and sharing to Tanzania you
know Russia which was nearest and
then bring some to Nairobi obviously
nobody was taking this the towns and so
essentially it good in go finally So
we were in financing we have
a national a new Maria for
the stuff like an economist and it can
work and we can push it but again it all
depends who is the fast who is who is that
leader with a really nice I think after.
They have to be seen living dives
already nobody even talks about it
it is a national leadership problem
because once the leaders agree central
banks will be very very effective
in moving to the next level.
And want to thank our panel and thank you.