WEBVTT - ‘Ticking Time Bomb’ for US, China Eco Relations 0:00:01.360 --> 0:00:05.720 This is Bloomberg Business Wait inside from the reporters and 0:00:05.880 --> 0:00:09.440 editors who bring you America's most trusted business magazine, plus 0:00:09.520 --> 0:00:13.680 global business, finance and tech news. The Bloomberg Business Week 0:00:13.720 --> 0:00:19.000 Podcast with Carol Messer and Tim Stenebeck from Bloomberg Radio. 0:00:20.200 --> 0:00:22.800 So, as you know justin, was a lot of news 0:00:22.800 --> 0:00:24.440 coming out of China this week. 0:00:24.760 --> 0:00:27.120 It is, and especially when you're looking at their latest data. 0:00:27.160 --> 0:00:28.520 I mean, this was supposed to be the year where 0:00:28.560 --> 0:00:31.480 we saw big improvement in China's economy, but we're not 0:00:31.560 --> 0:00:34.040 seeing that yet when you're looking particularly in their data 0:00:34.080 --> 0:00:35.680 and what that means for the global economy. It is 0:00:35.680 --> 0:00:37.560 the world's second largest economy. 0:00:37.120 --> 0:00:40.680 Carol, it's gigantic, enormous, so important. And there's a lot 0:00:40.720 --> 0:00:42.960 of news about the property market, Ali Baba earnings. And 0:00:43.000 --> 0:00:44.840 then there was of course news from the US about 0:00:44.920 --> 0:00:48.120 China today. I most read on the Bloomberg terminal President 0:00:48.120 --> 0:00:52.480 Biden calling China's economy quote a ticking time bomb. So 0:00:52.720 --> 0:00:55.240 this is kind of a little mind blowing since we 0:00:55.280 --> 0:00:58.280 all thought the US was renewing its engagement in a 0:00:58.320 --> 0:01:01.360 positive way. Fingers crosswitch. So let's get to it with 0:01:01.440 --> 0:01:04.840 more on the Chinese economy and that difficult relationship, complex 0:01:04.880 --> 0:01:08.040 relationship between the two economic superpowers that are, for better 0:01:08.120 --> 0:01:11.240 or worse, inextricably linked. We're talking about the US and China, 0:01:11.280 --> 0:01:13.440 of course, with US Bloomberg News White has correspondent on 0:01:13.440 --> 0:01:16.760 the phone from Washington, DC and Bloomberg Economics chief economist 0:01:16.760 --> 0:01:19.840 Tom Orleck on zoom in our DC bureau. Let me 0:01:19.880 --> 0:01:23.440 first get to President Biden, since that is top of 0:01:23.520 --> 0:01:26.640 mine among our most read break it down for us 0:01:27.240 --> 0:01:32.080 right now, Jordan Fabian, What did President Biden say and 0:01:32.080 --> 0:01:33.520 what was he thinking when he said it? 0:01:35.600 --> 0:01:38.080 So, the President tends to get loose when he's talking 0:01:38.120 --> 0:01:41.199 at political fundraisers with dinners, and he did just that 0:01:41.600 --> 0:01:44.880 yesterday evening in Park City. He went on a tangent 0:01:44.920 --> 0:01:48.040 about China and said that the country's economy is a 0:01:48.080 --> 0:01:52.720 ticking time bomb, that they are struggling with demographic issues 0:01:52.760 --> 0:01:56.960 with lower growth, and that it's a paraphrase that when 0:01:57.040 --> 0:01:59.960 bad things happen to bad people, they do bad things 0:02:00.120 --> 0:02:03.000 in return, and so sort of a warning shot not 0:02:03.040 --> 0:02:06.320 only you know about what the situation is like with China, 0:02:06.440 --> 0:02:09.400 but on you know, just another clarification of like how 0:02:09.440 --> 0:02:15.240 the president personally views China, even as the administrations trying 0:02:15.280 --> 0:02:19.360 to achieve a rapprochmant with the Chinese government and hopefully 0:02:19.720 --> 0:02:22.800 set up a meeting between Biden and President g later 0:02:22.880 --> 0:02:23.239 this year. 0:02:23.560 --> 0:02:25.679 Sounds like the edit function was off. It's happened to 0:02:25.720 --> 0:02:28.040 all of us. Hey, Tom Morli, come on in on 0:02:28.120 --> 0:02:31.560 this though. Does the President President Biden have a right 0:02:31.720 --> 0:02:32.400 have a point? 0:02:32.400 --> 0:02:32.680 Though? 0:02:33.200 --> 0:02:35.360 Is the Chinese economy a ticking time bomb? 0:02:36.880 --> 0:02:41.120 So President Biden is clearly correct that there are a 0:02:41.240 --> 0:02:45.359 number of really serious problems in China right now. You've 0:02:45.360 --> 0:02:48.239 got all the distress in the property sector, and we 0:02:48.400 --> 0:02:52.079 just heard about High Country Garden, one of China's biggest developers, 0:02:52.280 --> 0:02:57.440 could be defaulting. Because property is the most important driver 0:02:57.520 --> 0:03:00.440 of China's great When you have problems in property, your 0:03:00.520 --> 0:03:03.880 problems everywhere else as well. So we've had trade data 0:03:04.000 --> 0:03:07.120 showing China's commodity imports coming down because they're not building 0:03:07.160 --> 0:03:10.919 so many houses. We've had loan data showing a big 0:03:11.040 --> 0:03:14.120 slumping credit because when the property sector is going down, 0:03:14.480 --> 0:03:17.480 confidence takes a hit, and folks don't want to borrow money, 0:03:17.680 --> 0:03:21.640 don't want to start new projects. So President Biden is 0:03:21.720 --> 0:03:24.840 correct that there are some really really serious problems which 0:03:24.960 --> 0:03:28.880 China's policy makers are confronting. Does that mean that China 0:03:28.960 --> 0:03:32.320 is a ticking time bomb? Well, I wouldn't go quite 0:03:32.360 --> 0:03:34.800 so far. If we look at the track record of 0:03:34.880 --> 0:03:38.880 China's policy makers dealing with problems without major blow ups, 0:03:39.120 --> 0:03:41.040 well they do seem to be pretty good at it. 0:03:41.880 --> 0:03:45.080 My suspicion is that in the years ahead, China faces 0:03:45.120 --> 0:03:48.720 a continued slow down in growth. But it is China 0:03:48.760 --> 0:03:50.360 going to blow up? Is going to have a kind 0:03:50.400 --> 0:03:53.240 of Lehman moment like the US did in two thousand 0:03:53.240 --> 0:03:55.760 and eight. I think the answer to that is probably known. 0:03:56.320 --> 0:03:58.400 Jordan. I want to bring you back into this conversation 0:03:58.480 --> 0:04:01.200 because the Biden administration and this week did issue an 0:04:01.200 --> 0:04:04.560 executive order barring some new US investments in China in 0:04:04.640 --> 0:04:07.840 sensitive technologies, including ship makers obviously that have been on 0:04:07.880 --> 0:04:09.960 a tear in the US stock market this year. When 0:04:09.960 --> 0:04:12.360 you're speaking with your sources, how much of this is 0:04:12.360 --> 0:04:14.720 a potential issue for our economy? 0:04:17.040 --> 0:04:20.599 Yeah, this is really encapsulated the delicate dance that the 0:04:20.640 --> 0:04:24.000 President has with China. He has been talking about doing 0:04:24.440 --> 0:04:28.279 this this kind of order for over a year now, 0:04:28.520 --> 0:04:32.360 even longer, and the first iteration of this was much 0:04:33.200 --> 0:04:36.039 broader and deeper than the final version was. And that's 0:04:36.640 --> 0:04:40.360 really because he again wants to set up that relationship, 0:04:40.400 --> 0:04:45.640 get those ties back to a certain level. And whether 0:04:45.839 --> 0:04:48.679 that's gonna like, whether these I guess outbound the vestment 0:04:48.720 --> 0:04:51.800 restrictions are going to affect the economy, I think remains 0:04:51.800 --> 0:04:54.400 to be seen. You know, even though the terms of 0:04:54.440 --> 0:04:57.320 the order itself are narrow, you could have a broader 0:04:57.400 --> 0:05:02.159 chilling effect on firms looking to investing in companies working 0:05:02.200 --> 0:05:05.800 on technologies like AI and quantum computing. You know, they 0:05:05.880 --> 0:05:08.760 might read that and sort of get confused, say, you know, 0:05:09.000 --> 0:05:11.200 what is really you know, half of a company's income 0:05:12.320 --> 0:05:15.120 on these subjects and just decide not to invest it off. 0:05:15.440 --> 0:05:18.640 But well, it'll take time to see whether that dynamic 0:05:18.680 --> 0:05:20.680 really plays out and tom. 0:05:20.520 --> 0:05:23.600 When it comes to obviously the Federal Reserve here, is 0:05:23.640 --> 0:05:26.360 there any way that, with China's growth actually slowing, does 0:05:26.360 --> 0:05:29.160 that in some ways make the Fed's job easier when 0:05:29.200 --> 0:05:30.960 it comes to the inflation flight globally? 0:05:33.640 --> 0:05:38.479 So the big issue for the Federal Reserve when it 0:05:38.480 --> 0:05:42.600 comes to China is how much is China's growth going 0:05:42.640 --> 0:05:47.280 to contribute to global inflation? Now, the fear at the 0:05:47.320 --> 0:05:50.359 start of the year was that if China came roaring 0:05:50.480 --> 0:05:54.680 back from its COVID lockdowns, what that could mean is 0:05:55.040 --> 0:05:59.520 surging commodity prices, high oil prices, higher prices for soft 0:05:59.560 --> 0:06:03.760 commodity like soybeans, and that could give an additional impulse 0:06:03.800 --> 0:06:08.279 to inflation. And exactly the moment when ED really didn't 0:06:08.320 --> 0:06:14.240 need an additional impulse to inflation. As it happens, China 0:06:14.560 --> 0:06:18.080 did raw back in the first quarter, but that momentum 0:06:18.120 --> 0:06:21.520 has really faded extremely quickly. If you look at the 0:06:21.520 --> 0:06:24.520 trade data, if you look at the credit data, if 0:06:24.520 --> 0:06:27.719 you look at the price data from China, it's pretty 0:06:27.720 --> 0:06:30.640 clear that the challenge for China right now is that 0:06:30.839 --> 0:06:33.800 momentum is stalled in growth is weak, and what that 0:06:33.920 --> 0:06:36.760 means is that China's not giving that impulse to global 0:06:36.760 --> 0:06:39.839 commodity prices. So the Fed's still got some work to 0:06:39.839 --> 0:06:43.960 do to bring inflation under control, but China, if anything, 0:06:44.440 --> 0:06:46.640 is going to be giving an assist on that project. 0:06:46.720 --> 0:06:48.120 We've got about a couple of minutes left, and I 0:06:48.120 --> 0:06:50.960 do wonder how the two of you think about both 0:06:51.040 --> 0:06:53.600 China and the US getting lost kind of politically. We've 0:06:53.640 --> 0:06:56.640 got an upcoming presidential election. So maybe President Biden thinking 0:06:56.640 --> 0:06:59.520 about you know, voters and maybe what they want to 0:06:59.560 --> 0:07:02.480 hear when it comes to being tough on China. President 0:07:02.600 --> 0:07:06.480 g also, you know, thinking about his own stance politically 0:07:06.720 --> 0:07:09.880 in his country at a time when probably facing more 0:07:09.880 --> 0:07:13.360 struggles than before. And I do wonder will the political 0:07:13.440 --> 0:07:19.400 focus potentially create more problems for these two superpowers that 0:07:19.480 --> 0:07:21.800 in many ways many would argue you still need each 0:07:21.840 --> 0:07:23.600 other and Jordan, you take that question first. 0:07:25.480 --> 0:07:26.960 Yeah, No, I think you bring up a good point, 0:07:27.000 --> 0:07:29.480 which is that the political climate in the US doesn't 0:07:29.520 --> 0:07:33.360 really lend itself some sort of broad sign between the 0:07:33.480 --> 0:07:36.960 US and China. You know, the electorate is still pretty 0:07:37.000 --> 0:07:40.240 angry at China over you know, it's economic practices and 0:07:40.320 --> 0:07:43.800 also the COVID nineteen pandemic as well. And you have 0:07:44.200 --> 0:07:48.760 the President Biden's chief rival, Donald Trump. You're railing against China, 0:07:49.360 --> 0:07:51.920 and that's good to put pressure on finance to respond 0:07:52.360 --> 0:07:53.880 in kind. And so you can look at the kind 0:07:53.880 --> 0:07:55.840 of the comments that he made on Thursday night and 0:07:55.880 --> 0:08:00.400 say this is really for domestic political consumption something. You know, 0:08:00.440 --> 0:08:03.960 President Biden is an old school Democrat. People like him 0:08:03.960 --> 0:08:06.840 and Chuck Schumer have long been skeptical of China, so 0:08:06.880 --> 0:08:09.840 this isn't necessarily coming from it a dis ingenuous place, 0:08:10.080 --> 0:08:13.760 but it does show the limits of what does administration achieve. 0:08:13.960 --> 0:08:16.240 Hey, Tom saved you about forty second, same thing. I 0:08:16.240 --> 0:08:18.360 feel like President she has more pressure on him than 0:08:18.400 --> 0:08:19.360 he has in a long time. 0:08:20.840 --> 0:08:25.120 So, first of all, I completely agree with Jordan Trump 0:08:25.200 --> 0:08:29.280 demonstrated in twenty sixteen the Saliens and the resonance which 0:08:29.280 --> 0:08:33.199 the China issue has with US voters. I expect him 0:08:33.240 --> 0:08:35.400 to be hitting that theme really hard on the campaign 0:08:35.400 --> 0:08:37.560 trail in the next year, and I expect Biden to 0:08:37.559 --> 0:08:40.560 be hitting the theme hard as well. The risk there 0:08:40.640 --> 0:08:42.760 is that they're buying a few more votes here in 0:08:42.800 --> 0:08:45.760 the United States at the expense of a bunch more 0:08:45.880 --> 0:08:51.079 risk in the China relationship. For President She, well, it 0:08:51.120 --> 0:08:56.120 doesn't have elections, but it does have politics and a 0:08:56.200 --> 0:08:59.880 president in charge of a slumping real estate sector. They 0:09:00.080 --> 0:09:03.320 forget the Chinese hoaseholds have almost all of their wealth 0:09:03.640 --> 0:09:07.000 in real estate as some political political challenges to face. 0:09:07.440 --> 0:09:09.520 Listen, both of you wrapping up what was a full 0:09:09.520 --> 0:09:11.640 week when it comes to US China news. Guys, thank 0:09:11.640 --> 0:09:14.520 you so much. Jordan Fabian white House, correspond at Bloomberg 0:09:14.520 --> 0:09:16.559 News on the Phone in DC. Timorlick, of Course, chief 0:09:16.559 --> 0:09:19.880 economist at Bloomberg Economics in our DC Bureau. Check out 0:09:19.880 --> 0:09:21.920 his column about the US is wrong about China. 0:09:22.360 --> 0:09:25.920 You're listening to the Bloomberg Business Week podcast. Catch us 0:09:25.920 --> 0:09:29.280 live weekday afternoons from three to six Eastern Listen on 0:09:29.320 --> 0:09:33.400 Bloomberg dot com, the iHeartRadio app, and the Bloomberg Business app, 0:09:33.679 --> 0:09:35.960 or watch us live on YouTube. 0:09:36.640 --> 0:09:38.760 Earlier in this week, there was some news PayPal rolling 0:09:38.800 --> 0:09:41.320 out a stable coin, the first big large financial company 0:09:41.360 --> 0:09:44.440 and a potentially significant boost to the sluggish adoption of 0:09:44.480 --> 0:09:49.400 digital tokens for payments. PayPal USD issued by Paxos Trust Company, 0:09:49.679 --> 0:09:52.520 fully backed by US dollar deposits, short term treasuries and 0:09:52.840 --> 0:09:58.280 similar cash equivalents. According to pakso so it is pegged 0:09:58.360 --> 0:10:02.640 to the dollar and will be gradually available to PayPal's customers. 0:10:02.160 --> 0:10:02.600 In the US. 0:10:02.640 --> 0:10:05.560 Actually I think that's according to PayPal. Anyway, we wanted 0:10:05.559 --> 0:10:08.360 to get to our weekly look of the world of crypto, 0:10:08.400 --> 0:10:11.000 and with us we've got a great voice. Charles Castcarilla 0:10:11.080 --> 0:10:13.680 is the founder and CEO of that blockchain company Paxos 0:10:13.720 --> 0:10:16.840 and he's on zoom in Miami. Hey Charles, nice to 0:10:16.920 --> 0:10:19.920 have you here with jessin myself on Bloomberg. First of all, 0:10:19.920 --> 0:10:21.920 tell us about your company, because you've been doing this 0:10:21.960 --> 0:10:24.680 for a few years, right, and tell us how your 0:10:24.720 --> 0:10:30.120 world and everything involving with blockchain, how it has changed 0:10:30.200 --> 0:10:31.320 over the past few years. 0:10:32.800 --> 0:10:34.480 Well, great to be on Thanks for having me on 0:10:34.520 --> 0:10:38.360 Friday afternoon here Paxos. We have i think distinguished ourselves 0:10:38.400 --> 0:10:42.280 from others in the industry by being firstly infrastructure only 0:10:42.480 --> 0:10:44.959 secondly being highly regulated. We have a trust company in 0:10:44.960 --> 0:10:46.800 the state of New York, and that means that we 0:10:46.880 --> 0:10:49.600 have great customers that rely on us, PayPal amongst them, 0:10:49.800 --> 0:10:53.880 but certainly others like Interactive Brokers and Ricado Libre Venmo 0:10:54.040 --> 0:10:58.360 also uses us. And this infrastructure role that we play 0:10:58.760 --> 0:11:02.240 is for crypto assets, but also for tokenizing real world 0:11:02.320 --> 0:11:06.080 assets such as dollars and gold, and we've done other 0:11:06.120 --> 0:11:08.720 things as well. And so we really look at the 0:11:08.760 --> 0:11:13.160 transformation of the financial system as enabling blockchain to move 0:11:13.240 --> 0:11:15.760 assets at the speed of the Internet. The economy keeps 0:11:15.840 --> 0:11:18.760 moving faster and faster, but the financial system isn't keeping up, 0:11:19.040 --> 0:11:20.839 and we can only imagine what it will looked like 0:11:20.880 --> 0:11:22.760 in three to five years, but it's going to require, 0:11:23.040 --> 0:11:25.520 I think a totally different type of infrastructure to make 0:11:25.559 --> 0:11:26.160 that possible. 0:11:26.600 --> 0:11:29.880 Talk to us about this partnership with PayPal, because earlier 0:11:29.920 --> 0:11:33.120 this year they initially paused the development of their stable 0:11:33.200 --> 0:11:36.920 coin due to regulatory scrutiny. So what change did and 0:11:37.000 --> 0:11:38.559 allow this partnership to go through. 0:11:40.120 --> 0:11:41.960 Well, you know, I think there's a lot of things 0:11:41.960 --> 0:11:43.360 that happened in the industry and it was a really 0:11:43.400 --> 0:11:46.680 difficult time. You know, we had the FTX value amongst 0:11:46.720 --> 0:11:52.520 other things. We had different types of regulatory questions that 0:11:52.559 --> 0:11:55.320 were raised around the entire industry. And I think as 0:11:55.360 --> 0:11:57.360 time has gone by, what you've been able to see 0:11:57.400 --> 0:11:59.040 is that there's a way to be able to operate 0:11:59.120 --> 0:12:01.120 in the industry, and I think think that's with regulation, 0:12:01.480 --> 0:12:04.920 which is exactly how we've always operated. And you know, 0:12:04.960 --> 0:12:07.840 I think that it's exciting to see us move past 0:12:08.160 --> 0:12:10.560 where we were for the industry over the last six 0:12:10.679 --> 0:12:13.199 or nine or twelve months into I think a new 0:12:13.200 --> 0:12:16.319 phase if you look at it. When PayPal launched crypto, 0:12:16.520 --> 0:12:18.520 and that was during the last crypto winter, they launched 0:12:18.559 --> 0:12:21.360 Crypto by sell and hold that was the biggest thing 0:12:21.360 --> 0:12:24.200 that happened in crypto, and I think just like then 0:12:25.360 --> 0:12:28.400 PayPal launching a regulated stable coin is the biggest thing 0:12:28.400 --> 0:12:31.319 to happen in crypto and blockchain, and it can fundamentally 0:12:31.400 --> 0:12:33.959 really shift how the whole economy works and how payments 0:12:34.000 --> 0:12:35.280 work for everyday people. 0:12:36.280 --> 0:12:38.240 Do you feel like though that you mentioned all the 0:12:38.480 --> 0:12:41.240 crypto winter, right, that really just brought everything to a 0:12:41.240 --> 0:12:44.200 halt and interesting on a day when we've got some 0:12:44.320 --> 0:12:46.920 news on sam Mekmin Freed and FTX or sam Meankman 0:12:46.960 --> 0:12:50.040 Freed specifically. But what's interesting is I think I always 0:12:50.040 --> 0:12:53.920 think about Charles stable coins not only so stable, and 0:12:53.920 --> 0:12:58.200 we saw that with terror USD in May of last year. 0:12:58.480 --> 0:13:02.559 So what makes this one different and stable and ken 0:13:02.640 --> 0:13:06.480 stable coins ultimately really function as money? 0:13:06.600 --> 0:13:09.120 Yeah, well, I think you know, there are different ways 0:13:09.120 --> 0:13:11.920 to create payment assets, and if you want a US 0:13:11.920 --> 0:13:14.640 dollar payment asset, it has to be US dollars. And 0:13:14.679 --> 0:13:16.319 what you saw in a lot of cases is people 0:13:16.360 --> 0:13:19.040 were saying something was a US dollar payment asset, but 0:13:19.080 --> 0:13:21.959 it wasn't. So maybe it was backed by nothing like Tarra, 0:13:22.520 --> 0:13:24.240 or maybe it was backed by a lot of other 0:13:24.280 --> 0:13:27.200 types of assets. That weren't just dollars. We do it 0:13:27.240 --> 0:13:29.320 in a very specific way at Paxos, and it's because 0:13:29.360 --> 0:13:31.520 we have a primary regulator. We do it in a 0:13:31.520 --> 0:13:35.360 bankruptcy protected way, using a trust company that Paxos fails, 0:13:35.440 --> 0:13:38.200 all of our client assets are there. Those are really 0:13:38.200 --> 0:13:41.199 important protections, and what we do is we basically put 0:13:41.240 --> 0:13:44.440 it in US dollars, T bills and cash equivalents that 0:13:44.480 --> 0:13:47.000 mature in less than three months. That means anytime someone 0:13:47.040 --> 0:13:50.199 comes and they can come redeem for a dollar, and 0:13:50.280 --> 0:13:53.040 that type of protection is what gives someone the confidence 0:13:53.080 --> 0:13:54.760 that it's always going to be worth a dollar. It 0:13:54.800 --> 0:13:57.320 always has been at Pasos. We've met every single redemption 0:13:58.040 --> 0:14:01.200 that anyone has ever come to our company for and 0:14:01.240 --> 0:14:02.800 will continue to be able to do that. But you 0:14:02.880 --> 0:14:04.560 have to construct it in the right way, with the 0:14:04.640 --> 0:14:07.200 right type of oversight in order to have the right 0:14:07.240 --> 0:14:10.319 types of consumer protections. And I think PayPal, ultimately they're 0:14:10.360 --> 0:14:13.560 the gold standard. Everyone knows PayPal, everyone knows they do 0:14:13.800 --> 0:14:17.000 things the right way. They've engaged with regulators, They've been 0:14:17.080 --> 0:14:19.880 very very thoughtful about this, and there's a reason why 0:14:19.920 --> 0:14:23.120 they want to construct a stable coin in a regulated 0:14:23.160 --> 0:14:26.280 way and That's what I think is a fundamental difference 0:14:26.360 --> 0:14:28.080 from how anyone else has done it in the past. 0:14:28.200 --> 0:14:31.760 No one who's running a stable coin today or who 0:14:31.800 --> 0:14:33.440 has run in the past, has done it with the 0:14:33.480 --> 0:14:34.840 primary credential regulator. 0:14:35.120 --> 0:14:38.120 Well, US regulators have been worried when we're talking about 0:14:38.120 --> 0:14:41.160 stable coins in financial stability and how they are backed 0:14:41.160 --> 0:14:44.360 by commercial paper. So how do you make sure your 0:14:44.400 --> 0:14:46.120 customer's money is safe? 0:14:47.680 --> 0:14:50.440 Yes, I mean, look, commercial paper is not a dollar. 0:14:51.000 --> 0:14:53.640 It's pretty close, but it's not a dollar. Is really 0:14:53.680 --> 0:14:56.040 a liability of the US government, and you want it 0:14:56.040 --> 0:14:58.320 to be one that matures in a very very short 0:14:58.320 --> 0:15:00.600 period of time. So that's how we do it. We 0:15:00.640 --> 0:15:03.760 buy t bills that mature in under three months. We 0:15:03.800 --> 0:15:06.480 put it in cash and equivalents. We make sure that 0:15:06.480 --> 0:15:10.440 if it's repo, it's over collateralized by US treasuries and 0:15:10.600 --> 0:15:13.880 it's one day, one day repo. So this is very 0:15:14.000 --> 0:15:16.160 very liquid, as liquid as you can get and as 0:15:16.200 --> 0:15:18.640 safe as you can possibly get, and we hold it 0:15:18.680 --> 0:15:21.840 in a trust company so the money is always segmented. 0:15:21.840 --> 0:15:25.040 If something happens and PAXOS was to fail, the client 0:15:25.080 --> 0:15:28.920 assets could be immediately returned to each of our customers. 0:15:28.920 --> 0:15:30.520 So who's that's regulator? 0:15:30.560 --> 0:15:34.080 Then it's the New York Department of Financial Services. And 0:15:34.120 --> 0:15:37.520 by the way, they oversee so many sophisticated institutions, from 0:15:37.520 --> 0:15:41.200 Bank of New York to Goldman Sachs to the Depository 0:15:41.200 --> 0:15:43.080 Trust Company, which you know is one of the biggest 0:15:43.360 --> 0:15:45.720 custodians in the whole world. So this is a very 0:15:45.760 --> 0:15:49.520 credible regulator. They have set the groundwork. It is very 0:15:49.640 --> 0:15:53.520 much the gold standard for crypto and for stable coin issuance. 0:15:53.560 --> 0:15:56.680 So whenever you say yours is regulator and others are not, 0:15:56.920 --> 0:16:00.520 how is it different for the other players in that space. 0:16:02.120 --> 0:16:05.680 But what's important is, firstly, we're operating from our trust company, 0:16:05.720 --> 0:16:08.680 which is a regulate identity. It's actually the same thing 0:16:08.680 --> 0:16:10.680 as a bank. It's organized under New York banking law, 0:16:10.920 --> 0:16:12.720 but it's actually safer than a bank because we don't 0:16:12.720 --> 0:16:15.360 make loans, so all the assets just sit there and trust. 0:16:15.720 --> 0:16:20.520 And then secondly, we have a primary oversight function from 0:16:20.560 --> 0:16:23.480 New York and what that means is everything that we do, 0:16:23.600 --> 0:16:27.800 not just the issuance, but all company activities are overseen 0:16:27.840 --> 0:16:30.360 by our regulator. And so that's much much different than 0:16:30.360 --> 0:16:34.280 say money transmission licenses, where of course there's creating some oversight, 0:16:34.360 --> 0:16:36.560 but it's just on a state by state basis, and 0:16:36.960 --> 0:16:40.040 you're really overseeing the way you're interacting with customers in 0:16:40.040 --> 0:16:42.520 that state, as opposed to how the product is created 0:16:42.560 --> 0:16:45.120 and how the product is overseen. That's what makes it 0:16:45.160 --> 0:16:48.520 significantly different to have a primary prudential regulator, which, by 0:16:48.520 --> 0:16:52.040 the way, is very much in keeping with the legislation 0:16:52.360 --> 0:16:55.320 that just passed through the House Financial Services Committee. I 0:16:55.360 --> 0:16:58.080 guess it was almost two weeks ago now, So help. 0:16:57.960 --> 0:17:01.000 Me out here, because in our reporting with PayPal News, 0:17:01.080 --> 0:17:03.760 you know, our team putting out how back in February, 0:17:03.800 --> 0:17:05.760 the New York State Department of Financial Services that it 0:17:05.760 --> 0:17:08.480 had directed your company to stop issuing a stable coin 0:17:08.560 --> 0:17:12.760 branded by Binance. It was known as I think BUSD, 0:17:12.960 --> 0:17:15.399 and the regulator here in New York saying at the 0:17:15.400 --> 0:17:17.359 time that its decision was a result of quote several 0:17:17.400 --> 0:17:21.520 unresolved issues related to Paxos's oversight of its relationship with finance. 0:17:21.560 --> 0:17:23.520 And I think one of the things that I'm not 0:17:23.560 --> 0:17:26.880 saying apples to apples, but I think with FTX, we realized, 0:17:27.400 --> 0:17:29.399 you know, that there were too many things going on 0:17:29.440 --> 0:17:32.320 in too many entities and the relationships. Weren't clear your 0:17:33.600 --> 0:17:35.960 comment to that and just got about forty seconds here. 0:17:37.240 --> 0:17:39.199 Yeah, I mean, I think the way you should really 0:17:39.320 --> 0:17:42.000 understand Paxos is that we are an infrastructure provider of 0:17:42.119 --> 0:17:45.520 regulated products and we create white label products where other 0:17:45.520 --> 0:17:47.760 people's brands might be on them, for instance, in this 0:17:47.840 --> 0:17:50.520 case PayPal. In that case it was Binance, and you 0:17:50.560 --> 0:17:53.000 know when you have that going on, there can sometimes 0:17:53.080 --> 0:17:56.639 be a confusion, which we really work very very hard 0:17:56.680 --> 0:17:59.840 to try and avoid, and I think clearly in the 0:17:59.880 --> 0:18:02.919 case at PayPal, here it's really clear of how our 0:18:02.960 --> 0:18:05.760 relationships are working together. What we're trying to achieve and 0:18:05.800 --> 0:18:07.840 what we're trying to make sure happens here is that 0:18:07.920 --> 0:18:10.000 you have a whole new way for payments to be 0:18:10.040 --> 0:18:11.920 able to move at the speed of the Internet. Get 0:18:11.920 --> 0:18:13.719 at the same time, have regulatory oversight. 0:18:13.880 --> 0:18:16.480 It's safe to say, regulatory oversight, transparency, all of these 0:18:16.480 --> 0:18:18.440 are key in order for this really to work. Because 0:18:18.480 --> 0:18:19.879 we've seen the problems just quickly. 0:18:21.080 --> 0:18:23.600 I'll be honest. We want more regulation. We're excited for 0:18:23.640 --> 0:18:26.320 more regulation. We think there's a place there really is 0:18:26.359 --> 0:18:28.600 no place for unregulated stable coins. Yep, you're not going 0:18:28.680 --> 0:18:30.520 to be able to get wide scale adoption without it. 0:18:30.720 --> 0:18:32.280 Well, so glad we got some time with you and 0:18:32.320 --> 0:18:34.439 look forward to checking with you again in the future. 0:18:34.640 --> 0:18:36.639 Charles Cascarella he is the founder and CEO of the 0:18:36.680 --> 0:18:41.240 blockchain company Pacsos. Joining us on zoom in Miami, you're. 0:18:41.040 --> 0:18:44.640 Listening to the Bloomberg Business Week podcast. Catch us live 0:18:44.720 --> 0:18:48.399 weekday afternoons from three to six Eastern on Bloomberg Radio, 0:18:48.600 --> 0:18:51.879 the Bloomberg Business app, and YouTube. You can also listen 0:18:51.960 --> 0:18:55.080 live on Amazon Alexa from our flagship New York station, 0:18:55.520 --> 0:18:58.320 Just Say Alexa Play Bloomberg eleven thirty. 0:19:00.040 --> 0:19:02.040 I never saw this, Jess, but earlier in the week, 0:19:02.480 --> 0:19:06.760 Bloomberg's Joe Constance writing in the Workshift Weekly newsletter about how, 0:19:06.920 --> 0:19:11.240 almost exactly one year since quiet quitting took over her recycle, 0:19:11.920 --> 0:19:15.400 there's a new workplace catchphrase that's entered the corporate lexicon, 0:19:15.520 --> 0:19:17.399 and it is called lazy girl jobs. 0:19:17.440 --> 0:19:18.200 Have you heard about this. 0:19:18.440 --> 0:19:20.440 I've heard a little bit about this, and I feel 0:19:20.440 --> 0:19:23.639 like it's definitely beyond the trend because of pandemic and 0:19:23.760 --> 0:19:25.440 especially younger generation. 0:19:25.680 --> 0:19:28.800 Right, it's just like your job, right, low stress, Oh, 0:19:29.080 --> 0:19:33.240 low art rolls pay decently well, and they allow a 0:19:33.240 --> 0:19:36.119 lot of freedom and flexibility. Yeah, yeah, Okay, she's not 0:19:36.119 --> 0:19:38.439 gonna say that. Anyway, let's talk about it because it 0:19:38.480 --> 0:19:40.680 is the new it work trend. Back with us is 0:19:40.760 --> 0:19:42.880 Katherine Minshew. She's founder in CEO of the mew. She's 0:19:42.880 --> 0:19:45.439 on Zoom in New York City. Hey Catherine, good to 0:19:45.440 --> 0:19:47.520 have you here with us. It is interesting how we 0:19:47.600 --> 0:19:50.960 keep going post pandemic, how we describe kind of the 0:19:51.000 --> 0:19:53.879 work world. Talk to us about lazy girl jobs. I 0:19:53.960 --> 0:19:57.040 kind of am a little taking a back. Maybe it's 0:19:57.040 --> 0:19:58.840 because I just saw the Barbie movie and I'm not 0:19:58.880 --> 0:20:01.240 loving this. But anyway, tell me about lazy girl jobs. 0:20:01.280 --> 0:20:04.480 What exactly you're seeing and what it's all about. 0:20:04.880 --> 0:20:08.120 All right, So first, let's define the term. Lazy girl 0:20:08.240 --> 0:20:11.360 job is a term that began on social media. It's 0:20:11.440 --> 0:20:17.200 incredibly popular on TikTok right now, particularly among gen Z candidates, 0:20:17.240 --> 0:20:21.640 and the term defines a lazy girl job as one 0:20:21.720 --> 0:20:24.240 that can be done with home, can be done from home, 0:20:25.119 --> 0:20:28.960 comes with a fairly laid back or chill boss, ends 0:20:29.040 --> 0:20:32.280 at five pm sure sharp, so kind of classic working hours, 0:20:32.600 --> 0:20:35.399 and earns between sixty or eighty K a year. I 0:20:35.400 --> 0:20:38.800 think it's a sort of half serious, half tongue in 0:20:38.880 --> 0:20:43.520 cheek celebration of not doing too much or trying too hard. 0:20:43.760 --> 0:20:46.879 And you can imagine for a lot of people, and 0:20:46.960 --> 0:20:50.880 especially women from other generations, the generation of lean in 0:20:51.240 --> 0:20:54.560