WEBVTT - Benoît Cœuré On Central Bank Digital Currencies And The Future Of Monetary Policy 0:00:11.000 --> 0:00:14.360 Hello, and welcome to another episode of the Odd Thoughts Podcast. 0:00:14.440 --> 0:00:19.119 I'm Tracy Alloway and I'm Joe Wisenthal. Joe, we like 0:00:19.200 --> 0:00:21.239 to talk about money, don't we. And you know what 0:00:21.280 --> 0:00:24.279 I realized the other day, there's Well, we've spoken a 0:00:24.320 --> 0:00:27.480 lot about different types of money. So we've done cash, 0:00:27.640 --> 0:00:31.040 We've done historical forms of money, We've done a ton 0:00:31.240 --> 0:00:36.920 on bitcoin, ethereum cryptocurrencies. We've even talked about that time 0:00:37.120 --> 0:00:40.680 you develop your own cryptocurrency. But there's one type of 0:00:40.840 --> 0:00:44.080 money that we haven't actually done an episode on yet. 0:00:44.520 --> 0:00:48.400 Tell me more so. There is a type of money 0:00:48.440 --> 0:00:53.159 that sort of straddles the world of digital currencies and 0:00:53.400 --> 0:00:56.960 traditional forms of money, I think, and that is the 0:00:57.080 --> 0:01:01.960 central bank digital currency or c d C for short. 0:01:03.400 --> 0:01:06.960 Oh yeah, No, this is an interesting area because, yes, 0:01:07.120 --> 0:01:14.240 alongside the sort of emergence of private, uh independent digital currencies, 0:01:14.480 --> 0:01:17.640 we have seen central banks all around the world do 0:01:17.880 --> 0:01:21.399 some efforts towards implementing their own or creating their own 0:01:21.520 --> 0:01:28.880 piloting projects of essentially having yeah, digital versions of cash. 0:01:29.000 --> 0:01:30.800 I guess, I guess you would say. And I think 0:01:30.880 --> 0:01:34.080 China is fairly far along with it's endeavored but I 0:01:34.080 --> 0:01:36.600 don't think any of them have really taken off yet, 0:01:36.640 --> 0:01:39.440 but definitely an area that I think a lot of 0:01:39.480 --> 0:01:42.560 people are pretty interested in for a lot of different 0:01:42.880 --> 0:01:47.960 policy And yeah, that's the thing is you wouldn't necessarily 0:01:48.000 --> 0:01:50.360 expect this to be the case, but a lot of 0:01:50.400 --> 0:01:54.240 the digital currency exploration that's going on right now is 0:01:54.600 --> 0:01:58.200 very closely tied to monetary policy. And I have to 0:01:58.240 --> 0:02:01.720 confess before we start, I have never entirely understood the 0:02:01.800 --> 0:02:05.480 concept of called central bank digital currencies. I've never quite 0:02:06.120 --> 0:02:10.440 understood what the problem central banks are trying to solve is, 0:02:10.600 --> 0:02:14.240 and I've never quite understood how they will function alongside 0:02:14.560 --> 0:02:18.400 traditional cash and bank reserves and things like that. But 0:02:19.360 --> 0:02:21.120 I'm happy to say I think we have the perfect 0:02:21.400 --> 0:02:24.600 person to discuss all of this today and to get 0:02:24.639 --> 0:02:27.120 into a lot of those themes. So we're gonna be 0:02:27.160 --> 0:02:30.200 talking with Ben Watt. Cray was of course on the 0:02:30.280 --> 0:02:33.120 board of the e c B from two thousand eleven 0:02:33.200 --> 0:02:36.520 to twenty nineteen, and he's now head of the Bank 0:02:36.560 --> 0:02:41.480 for International Settlements Innovation Hub, and that group recently published 0:02:41.639 --> 0:02:45.920 a report on cd d c s, part of a 0:02:46.200 --> 0:02:48.640 sort of task force that involved a bunch of central 0:02:48.680 --> 0:02:52.040 banks exploring this topic. So I think it's going to 0:02:52.080 --> 0:02:55.720 be a good conversation and hopefully it answers some of 0:02:55.760 --> 0:02:58.400 the questions that I, at least and probably a lot 0:02:58.400 --> 0:03:01.440 of other people have had about central bank digital currencies 0:03:01.440 --> 0:03:04.960 for some time. Yeah. No, I'm really excited because I'm 0:03:04.960 --> 0:03:08.959 with you in that um, I too have had numerous 0:03:09.040 --> 0:03:12.960 questions about what purpose they serve, what the central banks 0:03:12.960 --> 0:03:17.600 see as the reason for launching them. So hopefully we 0:03:17.600 --> 0:03:20.320 can get a lot of questions answered, and also hopefully, 0:03:20.560 --> 0:03:23.000 you know, maybe we could squeeze in a few questions 0:03:23.040 --> 0:03:27.399 about uh just the economy and monetary policy as well, 0:03:27.480 --> 0:03:31.080 because of course, Ben, while having served at the ECB 0:03:31.280 --> 0:03:33.840 for so long, hopefully we get some thoughts about the 0:03:33.880 --> 0:03:36.040 state of the world today, which of course still an 0:03:36.040 --> 0:03:39.160 extraordinary time. Yeah, and I think, weirdly there might be 0:03:39.200 --> 0:03:43.440 some natural overlap between two currencies and what's going on 0:03:43.640 --> 0:03:46.520 right now in the global economy. So, without further ado, 0:03:46.920 --> 0:03:50.080 Ben walk Curay, thank you so much for coming on 0:03:50.120 --> 0:03:52.680 all thoughts welcome. Thank you very much for having me 0:03:53.920 --> 0:03:57.520 so in the intro. Joe and I both just admitted 0:03:57.560 --> 0:04:02.480 to not necessarily understanding digital occurrencies from central banks, maybe 0:04:02.960 --> 0:04:07.040 just to begin with, you could sort of explain the concept. 0:04:07.240 --> 0:04:11.000 And maybe one thing that's always confused me is if 0:04:11.080 --> 0:04:14.120 we were to see something like a digital dollar or 0:04:14.280 --> 0:04:20.000 a digital euro, how would that differ two For instance, 0:04:20.680 --> 0:04:24.280 me holding a euro or a dollar in a traditional 0:04:24.440 --> 0:04:27.880 electronic bank account, what is it that makes that digital 0:04:28.279 --> 0:04:32.880 money different to you know, align in in my bank. 0:04:33.880 --> 0:04:36.640 So yeah, I mean, these are these are excellent questions 0:04:37.160 --> 0:04:39.440 because you may wander, I mean, we're living in a 0:04:39.560 --> 0:04:45.320 in the world which is already massively demateralized. Most of money, 0:04:45.320 --> 0:04:50.160 I mean more than money is already digital. So might 0:04:50.240 --> 0:04:53.480 wonder why why all of a sudden now we discussing 0:04:53.920 --> 0:04:57.880 digital currency. And so we're here to discuss central bound 0:04:57.920 --> 0:05:02.040 digital currency, right CBDC. And so let me focus on 0:05:02.040 --> 0:05:05.080 on the on the CB in CBDC, that is a 0:05:05.120 --> 0:05:09.360 definition of CBDC. It's money that is issued by the 0:05:09.400 --> 0:05:14.000 central bank, meaning it's a liability of the central bank. Um, 0:05:14.040 --> 0:05:16.400 it's not the liability of a commercial bank or any 0:05:16.400 --> 0:05:20.200 other player. It is digital, so it's not physical like 0:05:20.440 --> 0:05:24.800 bank notes, and it's not issued to bonks as part 0:05:24.920 --> 0:05:28.240 of monetary policy as we as we know it, which 0:05:28.279 --> 0:05:31.600 is as bank reserves. Right, So bank reserves is as 0:05:31.760 --> 0:05:34.359 if you think about it, it's money that bonks have 0:05:34.480 --> 0:05:36.479 on their account with the central bank. It is digital, 0:05:36.520 --> 0:05:39.280 so it is central bank digital currency and it has 0:05:39.279 --> 0:05:42.400 been existing for for decades. So here we're talking of 0:05:42.480 --> 0:05:45.919 any liability of the central bank which is digital but 0:05:46.160 --> 0:05:50.640 not issued to commercial bonks as part of the implementation 0:05:50.640 --> 0:05:53.800 of my type policy, which means to things. Either it 0:05:53.920 --> 0:05:58.000 is digital and issued directly to citizens, so it's a 0:05:59.120 --> 0:06:01.640 the equivalent digital equivalent of a bank note, and that 0:06:01.680 --> 0:06:06.599 would be entirely new. Or it is issued to commercial bonds, 0:06:06.680 --> 0:06:09.960 but not as a deposit on an account, but as 0:06:09.800 --> 0:06:14.120 a token for instance, which gives give the answer to 0:06:14.120 --> 0:06:16.640 your initial questions. So what's the what what the question? 0:06:16.680 --> 0:06:20.640 We are we're trying to answer what the problem statement? Well, 0:06:20.640 --> 0:06:23.200 there are two problems statements. The first one is what 0:06:23.279 --> 0:06:27.640 happens if cash disappears, if citizens don't want to use 0:06:27.720 --> 0:06:31.640 bank notes anymore, and how we happy if the only 0:06:31.640 --> 0:06:35.359 way they have to pay for their expenses consumption is 0:06:35.400 --> 0:06:38.040 to use commercial money money, should buy bonds to draw 0:06:38.080 --> 0:06:41.200 from their bank accounts? Or do we want to keep 0:06:41.240 --> 0:06:44.240 providing them with central bank money which today doesn't exist 0:06:45.279 --> 0:06:48.560 in a digital form, so that the first question and 0:06:48.600 --> 0:06:52.120 the second question is what happens if at the core 0:06:52.160 --> 0:06:56.680 of the system, banks or financial market infrastructures would need 0:06:57.480 --> 0:07:00.400 central mark money to set all the transactions in a 0:07:00.440 --> 0:07:03.039 way that is not an account at the central bank, 0:07:03.320 --> 0:07:06.280 and that could be a token for instance. So imagine 0:07:06.400 --> 0:07:11.280 a future, maybe a near future, where some financial market 0:07:11.280 --> 0:07:17.080 infrastructures would be um transacting exchanging tokens on on d 0:07:17.280 --> 0:07:19.960 l t s. Right, if you want to keep settling 0:07:20.000 --> 0:07:23.360 these transactions in central mark money, then you need a 0:07:23.360 --> 0:07:26.280 way to either connect the DALT with the traditional payment 0:07:26.320 --> 0:07:29.920 infrastructure or to issue a central bank token to the 0:07:30.000 --> 0:07:33.560 d LT And that's what we call wholesale CBDC. So 0:07:33.600 --> 0:07:37.680 there are two answers. Either it's whole sale CBDC because 0:07:38.120 --> 0:07:43.360 the technology underlying financial infrastructures is changing, or it's retail 0:07:43.440 --> 0:07:48.040 CBDC because in some places at least cash may be disappearing. 0:07:48.280 --> 0:07:51.000 So these are two separate questions at both ends of 0:07:51.040 --> 0:07:52.960 the financial system, at the front end and at the 0:07:53.000 --> 0:07:55.520 back end. First of all, that was very helpful, just 0:07:55.600 --> 0:07:57.960 sort of overview of what you're doing or what the 0:07:58.280 --> 0:08:01.800 vision is. I guess one way that I sort of 0:08:02.000 --> 0:08:05.320 think about it or here, what you're saying is, rather 0:08:05.400 --> 0:08:10.040 than seeing the analogy as Okay, here's a money. If 0:08:10.080 --> 0:08:12.600 I have it in a bank, it's a liability of 0:08:12.600 --> 0:08:14.160 a bank. If I have it in some sort of 0:08:14.200 --> 0:08:17.760 payment app like PayPal or Venmo, that dollar or that 0:08:17.880 --> 0:08:21.080 euro is a liability of PayPal or Venmo. This is 0:08:21.120 --> 0:08:24.080 more like cash, something that I hold in the wallet, 0:08:24.240 --> 0:08:28.600 and something that's a direct liability of the central bank. 0:08:28.720 --> 0:08:32.320 So that part makes sense to me. What is the 0:08:32.360 --> 0:08:36.160 fundamental advantage, however, of doing this? So we have cash 0:08:36.400 --> 0:08:40.360 that currently exists, we have online money or sort of 0:08:40.800 --> 0:08:44.960 bank liability money as you described it, What from a 0:08:45.080 --> 0:08:49.960 policy standpoint would in your view, the creation and widespread 0:08:50.000 --> 0:08:53.480 adoption of a digital euro or a digital dollar or 0:08:53.520 --> 0:08:57.360 a digital pound. What are the advantages that you see 0:08:57.400 --> 0:09:00.960 for governments and central banks to actually launch them. So 0:09:01.120 --> 0:09:04.000 my my answer, and that might might might be surprising 0:09:04.000 --> 0:09:06.360 coming from a central banker, but that my answer would 0:09:06.360 --> 0:09:08.480 be that it's not even a policy discussion. It is 0:09:08.520 --> 0:09:13.160 a political discussion. The key question here is are we 0:09:13.240 --> 0:09:16.680 satisfied if all money used by citizens for their daily 0:09:16.679 --> 0:09:20.640 transactions is commercial money? That is how we satisfied if 0:09:20.640 --> 0:09:24.560 the whole functioning, the daily functioning of the economy is 0:09:24.679 --> 0:09:28.560 a at the end of conversation between citizens and and banks, 0:09:28.760 --> 0:09:31.880 right or do we want the central bank as a 0:09:31.880 --> 0:09:34.800 public institution to be part of it? And what's very 0:09:34.800 --> 0:09:37.280 important here and also for the for the rest of 0:09:37.320 --> 0:09:39.720 our discussion, is that the answer might be different in 0:09:39.760 --> 0:09:43.960 different places. That is, in some places citizens may trust 0:09:44.360 --> 0:09:46.480 and in many places I guess citizens would trust the 0:09:46.520 --> 0:09:50.880 central bank better than visa, master card or Facebook or 0:09:50.920 --> 0:09:54.600 city bank. Right in other places or in other corners 0:09:54.600 --> 0:09:56.920 of societies, that might not be the case. And you 0:09:57.120 --> 0:10:00.000 will find many people who who trust city bank more 0:10:00.120 --> 0:10:02.280 better than the central bank, and you would you you 0:10:02.360 --> 0:10:05.360 find people who trust bitcoin more better than the dollars 0:10:05.600 --> 0:10:09.640 or the yero. And so the conclusion here is that 0:10:09.800 --> 0:10:12.000 we have to let to let people decide for themselves 0:10:12.040 --> 0:10:14.720 which kind of money they want to use, provided that 0:10:14.760 --> 0:10:17.920 they are well informed on the risks, on the on 0:10:18.080 --> 0:10:22.839 what on the implications. But the emerging consensus is that 0:10:23.160 --> 0:10:27.440 a substantial fraction of society will ask to keep that 0:10:27.520 --> 0:10:30.080 contact with the central bank, which is the ability to 0:10:30.200 --> 0:10:34.800 use a direct liability on a public institution under parliamentary 0:10:34.800 --> 0:10:38.640 supervision as part of a political system, and if we 0:10:38.679 --> 0:10:40.520 want to keep that kind of access, then we need 0:10:40.600 --> 0:10:44.160 to do CBDC. So that's really interesting because you've framed 0:10:45.000 --> 0:10:48.920 more direct contact between people and the central bank through 0:10:49.000 --> 0:10:54.000 cb dcs as an advantage or something desirable. But I 0:10:54.040 --> 0:10:57.200 know one of the criticisms of digital money is that 0:10:57.240 --> 0:11:00.079 there is a concern that you're in effect reduced in 0:11:00.160 --> 0:11:03.400 the role of commercial banks in the economy, and that 0:11:03.840 --> 0:11:08.440 might have unintended consequences for the transmission of monetary policy 0:11:08.520 --> 0:11:11.640 or the way the financial system actually works. Some people 0:11:11.640 --> 0:11:15.640 have talked about the potential to increase bank runs. For instance, 0:11:15.679 --> 0:11:20.160 if people have a central bank issued alternative that's seen 0:11:20.360 --> 0:11:23.040 as a safe place to park their money, they might 0:11:23.200 --> 0:11:26.160 fly fly out of bank deposits and and go into 0:11:26.520 --> 0:11:31.160 digital money. How are you thinking about about that particular issue, 0:11:31.200 --> 0:11:35.600 How are you thinking about how CBDC might impact the 0:11:35.640 --> 0:11:39.559 financial system as it exists today. So that's a that's 0:11:39.559 --> 0:11:42.040 a very important point, Tracy, And that's that's also why 0:11:42.080 --> 0:11:46.080 why I'm saying that we need an ecosystem right and contact. 0:11:46.200 --> 0:11:50.280 What what people sometimes hear or think the there is 0:11:50.320 --> 0:11:53.560 no intention by central bonds to to have a monopoly 0:11:53.600 --> 0:11:57.160 on all kinds of money. The economy is are operated 0:11:57.320 --> 0:12:00.240 with commercial money today or when you when you when 0:12:00.240 --> 0:12:02.400 you buy a beer in a bar, it's very very 0:12:02.400 --> 0:12:04.360 likely that you're going to pay either with a credit 0:12:04.400 --> 0:12:08.000 card or with a telephone, and that will be eventually 0:12:08.200 --> 0:12:11.000 coming from your bank account, and it's commercial money, that's 0:12:11.040 --> 0:12:13.439 not a claim on the central mark, and we're going 0:12:13.480 --> 0:12:16.600 to keep it like that, right, So so we'll we'll, we'll, we'll, 0:12:16.640 --> 0:12:19.240 we'll keep an ecosystem where you'll have different forms of 0:12:19.679 --> 0:12:22.520 different means of payments, different forms of money, and most 0:12:22.600 --> 0:12:24.920 of it will be commercial. The question is do we 0:12:24.960 --> 0:12:26.720 want to keep central mark money at the heart of 0:12:26.720 --> 0:12:29.840 the system to uh to to to make it stable? Right, 0:12:30.520 --> 0:12:33.120 And one of the of the key considerations that we 0:12:33.120 --> 0:12:36.720 we have in thinking about the future ecosystem is exactly 0:12:36.720 --> 0:12:40.040 what you mentioned, which is we don't want CBDC to 0:12:40.040 --> 0:12:42.400 to kill bonks, right. We don't want to go to 0:12:42.480 --> 0:12:46.440 the to the extreme of a system where all economic 0:12:46.440 --> 0:12:50.160 players would use CBDC um and bonds would at best 0:12:50.200 --> 0:12:56.080 be kinds of conduits would buy assets or extend credits 0:12:56.120 --> 0:12:58.640 and and fund on the on capital markets, you know, 0:12:58.760 --> 0:13:01.640 narrow banks or or a system of sovereign money at 0:13:01.800 --> 0:13:04.760 that it's sometimes called or in Switzerland had a vote, 0:13:04.760 --> 0:13:08.280 as you may remember, on some something called Folgal which 0:13:08.360 --> 0:13:11.000 was rejected. So that's people that that's something that most 0:13:11.000 --> 0:13:13.640 people don't runt, and that's something that regulators and sattle 0:13:13.679 --> 0:13:17.319 bankers don't runt because they see your value in the 0:13:17.400 --> 0:13:20.800 existence of commercial bonds as institution who take risk, who 0:13:20.840 --> 0:13:24.760 transform credit, who take maturity risk and credit risk uh 0:13:24.760 --> 0:13:28.640 and would do all kinds of financial intermediation in the economy. 0:13:29.040 --> 0:13:31.679 We don't want to kill that system. And so there 0:13:31.760 --> 0:13:34.880 is an active discussion on how to to mitigate the 0:13:34.920 --> 0:13:39.040 kind of risks your highlighting treacy, which is that CBDC 0:13:39.120 --> 0:13:43.120 would take over bank deposits and would would would make 0:13:43.120 --> 0:13:46.120 banks more vulnerable. And there are different answers. We can 0:13:46.160 --> 0:13:48.200 go into the details if you wish, And one of 0:13:48.240 --> 0:13:50.439 the of the important discussions will have in the coming 0:13:50.480 --> 0:13:53.680 months and years is what's the best answer if we 0:13:53.720 --> 0:13:57.520 don't want this to happen. I want to ask take 0:13:57.559 --> 0:13:59.640 it from the other angle. I mean, one of the 0:13:59.760 --> 0:14:02.880 nie things about cash as we know it. If I 0:14:02.960 --> 0:14:06.200 pay for something in the bar, if I you know, 0:14:06.320 --> 0:14:09.400 go out and meet up with friends and want to 0:14:09.440 --> 0:14:11.839 split a check somewhere or anything else. Is that it's 0:14:11.840 --> 0:14:16.400 anonymous person a or somewhat anonymous person A can pay 0:14:16.440 --> 0:14:20.520 something to person be without person ce knowing about it. 0:14:20.560 --> 0:14:25.800 And they are all kinds of reasons why people prize privacy. 0:14:26.200 --> 0:14:29.000 I'm curious if in your vision of a c B 0:14:29.160 --> 0:14:33.000 d C A, would two people be able to make 0:14:33.080 --> 0:14:37.480 a transaction without some third party entity having a sort 0:14:37.480 --> 0:14:42.080 of centralized knowledge about who just made that transaction. And 0:14:42.120 --> 0:14:46.640 I'm curious in your conversations around with regulators and central bankers, 0:14:46.640 --> 0:14:49.200 I'm sure you talked to a lot of different groups, 0:14:49.400 --> 0:14:53.120 law enforcement agencies about their concerns. Finn send you think 0:14:53.120 --> 0:14:57.200 about know your customer, anti monitor uh, anti money laundering laws, 0:14:57.440 --> 0:15:01.440 And I'm curious whether in your converse stations and consultations 0:15:01.800 --> 0:15:07.680 we've also talked to privacy groups about their concern So, UM, yeah, 0:15:07.680 --> 0:15:11.600 I mean we've been doing that in particular when last year, UM, 0:15:11.760 --> 0:15:15.920 there was a related discussion not on on CBDC, but 0:15:16.080 --> 0:15:21.160 on stable coins right um, start starting from liberal right um, 0:15:21.280 --> 0:15:25.000 And there has been an active discussion in policy circles 0:15:25.120 --> 0:15:28.000 on how to regulate stable coins and the FSB just 0:15:28.040 --> 0:15:31.800 came with a report on that with with guidelines on 0:15:31.800 --> 0:15:34.560 on a stable kind of regulation. And privacy is also 0:15:34.600 --> 0:15:37.320 a key, a key issue. And by the way, something 0:15:37.360 --> 0:15:40.920 we found out that financial regulators don't often talk to 0:15:41.080 --> 0:15:45.360 to privacy regulators or two privacy groups. And so that's uh, 0:15:45.440 --> 0:15:47.800 let's say, it might sound like a kind of an 0:15:47.760 --> 0:15:51.080 ancillary discussion, but it's actually very important that this this 0:15:51.200 --> 0:15:54.600 kind of technical innovation forces us to also to read 0:15:54.640 --> 0:15:57.760 things the way we we do regulation and to connect 0:15:57.880 --> 0:16:02.200 to connect silos right which which until recently weren't connected 0:16:02.200 --> 0:16:04.920 at all. And so and so we are talking now 0:16:05.000 --> 0:16:08.920 with privacy regulators and with privacy groups. And that's an 0:16:08.920 --> 0:16:12.360 instance of choices that have to make that have to 0:16:12.480 --> 0:16:14.640 be made by by society and and and through a 0:16:14.680 --> 0:16:17.920 political process. Because on the one hand, you have a demand, 0:16:18.040 --> 0:16:21.200 you have demand for privacy which is there and which 0:16:21.240 --> 0:16:25.000 is absolutely legitimate, and which is already in some places 0:16:25.040 --> 0:16:28.640 like Europe very much unshrined and had hard wired into 0:16:28.720 --> 0:16:31.920 lower with with with GDP are in particular. But on 0:16:31.960 --> 0:16:34.640 the other hand, you also have a regulation and and 0:16:34.640 --> 0:16:37.840 and and and laws against money wandering, against the financing 0:16:37.880 --> 0:16:43.080 of terrorism, etcetera, which are equally important, right, and so 0:16:43.080 --> 0:16:45.680 so any any CBDC architecture will have to strike a 0:16:45.680 --> 0:16:50.720 balance between these two aspirations and the exact the way 0:16:50.760 --> 0:16:53.160 we turn the dial. I imagine you should be a 0:16:53.160 --> 0:16:56.040 political discussion, because I I don't see how central bankers 0:16:56.480 --> 0:16:58.760 or bank supervisors could decide on on the on that 0:16:58.840 --> 0:17:02.040 kind of things. It has to be political discussion. And 0:17:02.080 --> 0:17:04.920 again there are ways to reconcile. So for instance, I'm 0:17:04.960 --> 0:17:07.000 just giving an example, so I'm not I'm not saying 0:17:07.400 --> 0:17:09.919 that's the way to go, but just to illustrate, you 0:17:09.960 --> 0:17:15.120 could imagine a system where CBDC would be distributed by banks. Right, 0:17:15.160 --> 0:17:17.840 so the front end would be banks. You would keep 0:17:17.880 --> 0:17:20.280 talking to your bank. You wouldn't you wouldn't go directly 0:17:20.320 --> 0:17:22.480 to the to the FED or the HKm, MAY or 0:17:22.520 --> 0:17:24.840 the or the E c B. You would get your 0:17:24.880 --> 0:17:27.400 CBDC from your bank, just as you get your bank 0:17:27.440 --> 0:17:30.080 notes from your A T M. So exactly the same 0:17:30.080 --> 0:17:33.400 as today. Banks would buy a given quantity of CBDC 0:17:33.560 --> 0:17:37.479 from the central Bank using their bank reserves, just as 0:17:37.480 --> 0:17:40.600 they buy bank knows today. And see, the central bank 0:17:40.640 --> 0:17:44.680 could regulate the amount of CBDC for monetary policy purposes, 0:17:44.680 --> 0:17:47.560 but the central bank would not know exactly to which 0:17:47.600 --> 0:17:51.840 CBDC has been distributed, and that would be subject to 0:17:52.080 --> 0:17:55.440 m L and c FT and and generally no customers 0:17:56.000 --> 0:17:58.879 diligence and I know your client client rules just as 0:17:58.880 --> 0:18:01.480 any transaction today. So that's a possible way that do 0:18:01.520 --> 0:18:22.000 reconcile different aspects. You mentioned Libra briefly, which is Facebook's 0:18:22.040 --> 0:18:25.640 attempt at a at a stable coin, and this sort 0:18:25.680 --> 0:18:28.560 of reminds me of of another big discussion when it 0:18:28.600 --> 0:18:32.080 comes to c b d C, and I guess part 0:18:32.119 --> 0:18:34.600 of it is that if you're going to launch digital money, 0:18:34.640 --> 0:18:36.639 even if you're a central bank, you're going to have 0:18:36.720 --> 0:18:39.320 to have some sort of payment system that goes along 0:18:39.359 --> 0:18:41.639 with it. And so central banks are going to have 0:18:41.680 --> 0:18:45.399 to decide whether to build and run their own payment 0:18:45.480 --> 0:18:49.040 systems or maybe to team up with companies in the 0:18:49.080 --> 0:18:52.680 private sector who can do that for them. I'm curious. 0:18:53.280 --> 0:18:58.600 Private corporations like Facebook are pretty good head technology. How 0:18:58.640 --> 0:19:04.199 do central bank compete against companies like that like a Facebook, 0:19:04.520 --> 0:19:07.960 or how do they work together with them for the 0:19:08.000 --> 0:19:11.680 payment system. So we shouldn't be competing against against Facebook 0:19:11.880 --> 0:19:13.919 because we are not in the same line of business right, 0:19:14.840 --> 0:19:17.520 we're absolutely not in the same line of business and 0:19:17.520 --> 0:19:19.159 and in the sense that's so if if I may 0:19:19.160 --> 0:19:22.199 take a step back, that's that's exactly why these um 0:19:22.600 --> 0:19:25.560 You mentioned the report which was issued by seven central 0:19:25.560 --> 0:19:29.200 banks together with the bis UM, and that's a working 0:19:29.200 --> 0:19:32.000 group I was culturing with a certainty from the Bank 0:19:32.040 --> 0:19:36.640 of England. It started exactly with the consideration that we 0:19:36.640 --> 0:19:40.040 we central bankers, have to come back to first principles 0:19:40.280 --> 0:19:43.119 UM and and too often the discussion on digital money 0:19:43.160 --> 0:19:47.359 digital currency UM started from the wrong place, like started 0:19:47.359 --> 0:19:50.000 from the technological end of the discussion. Are we going 0:19:50.040 --> 0:19:53.320 to do CBDC using blockchain? And if it's a blockchain, 0:19:53.440 --> 0:19:56.400 is that going to be corder or hyper ledger or 0:19:56.400 --> 0:19:59.840 whatever else, which is an important discussion in due time, 0:20:00.400 --> 0:20:02.680 but it's not it's not the right the right place 0:20:02.720 --> 0:20:05.360 to start from. We want to start from first principles. 0:20:06.000 --> 0:20:10.360 And as a central banker, I would say our job 0:20:10.520 --> 0:20:14.320 is to is twofold, is to ensure price stability or 0:20:14.359 --> 0:20:18.040 monetized stability, meaning that you should have the ways and 0:20:18.119 --> 0:20:22.360 means to implement your monetipe policy, whichever moneytype policy you've decided. 0:20:22.440 --> 0:20:25.040 As a as a Monetipe Policy Committee. That's the first thing, 0:20:25.400 --> 0:20:28.119 and CBDC should not hamper that. And if it can help, 0:20:28.160 --> 0:20:30.960 it's even better. We can discuss it later. And the 0:20:31.000 --> 0:20:34.600 second thing is financial stability. And an essential part of 0:20:34.640 --> 0:20:38.440 financial stability is the existence of core payment systems at 0:20:38.480 --> 0:20:43.280 the heart of the financial infrastructure, which connects financial institutions, 0:20:43.320 --> 0:20:47.959 which connect jurisdictions, and which a low real time settlement 0:20:48.480 --> 0:20:51.720 in central bank money. Right, and so the key role 0:20:51.760 --> 0:20:54.639 of the central banks really is at the heart of 0:20:54.640 --> 0:20:57.480 the system to provide stability. And we don't want to 0:20:57.520 --> 0:21:00.240 take over. And there are many many things, most things 0:21:00.240 --> 0:21:02.400 that we we won't we wouldn't do well and we're 0:21:02.400 --> 0:21:04.760 not going to do so. To give an obvious example, 0:21:05.240 --> 0:21:09.800 if CBDC comes as as a token, most likely is 0:21:09.800 --> 0:21:12.600 going to be handled in in wallets, right, So you 0:21:12.640 --> 0:21:15.919 would have a wallet on your phone, say with with 0:21:16.000 --> 0:21:19.720 CBDC with central bank tokens in it. That's not something 0:21:19.720 --> 0:21:22.359 central banks should be doing. It's it's very obvious to 0:21:22.640 --> 0:21:24.760 all of her. That's wallets are something for the private 0:21:24.760 --> 0:21:28.200 sector to do, right and so and so there there 0:21:28.000 --> 0:21:30.600 there is room for everyone. There is room for everyone. 0:21:30.760 --> 0:21:33.560 The key thing is any form of commercial money has 0:21:33.600 --> 0:21:37.560 to be regulated, right, and there there might be a 0:21:37.600 --> 0:21:41.439 financial stability considerations which would lead us to impose some 0:21:41.520 --> 0:21:45.040 requirements like settlement in central bank money. But apart from that, 0:21:45.680 --> 0:21:49.320 we need the private sector to innovate. All that innovation 0:21:49.359 --> 0:21:51.879 will come from the friend sector. I'm not I'm not 0:21:51.920 --> 0:21:55.040 aware that central bankers are particularly good that you know, 0:21:55.280 --> 0:21:59.879 at finding new technologies. That's not what we do. Okay, 0:22:00.040 --> 0:22:01.960 Can I ask you a question? I mean, you mentioned 0:22:01.960 --> 0:22:04.840 stable coins. We talked about Libra, and I think that 0:22:04.880 --> 0:22:08.639 there is a sort of spectrum of what we see 0:22:08.800 --> 0:22:13.480 in the stable coins space, from sort of extremely projects 0:22:13.480 --> 0:22:17.560 that attempt to be very uh legitimate Facebook as Facebook 0:22:17.640 --> 0:22:20.040 Libra is probably one of them, to others that are 0:22:20.080 --> 0:22:24.240 probably a little dice here. What is the regulatory case 0:22:25.080 --> 0:22:29.080 for the existence of stable clinates because central bankers regulators 0:22:29.080 --> 0:22:32.199 have been pretty permissive it seems of them for a while. 0:22:32.320 --> 0:22:37.160 And I'm curious why from your perspective they're beneficial and 0:22:37.440 --> 0:22:41.000 why uh sort of people should be able to use 0:22:41.240 --> 0:22:45.919 a currency on the distributed ledger somewhere that is ultimately 0:22:46.000 --> 0:22:51.920 backed up by a sort of licensed, licensed bank. Well, 0:22:51.920 --> 0:22:55.639 I wouldn't really see um stable coins as currencies, so 0:22:56.000 --> 0:22:59.200 it's it's a little bit of a misnomber um. I 0:22:59.200 --> 0:23:03.320 would see stable coins as um as new payment systems 0:23:04.000 --> 0:23:08.040 which are very well, very integrated, back to end, a 0:23:08.240 --> 0:23:11.080 close loop payment systems. So it's a it's it's a 0:23:11.119 --> 0:23:13.160 little bit different from the kind of innovation that we've 0:23:13.200 --> 0:23:16.560 seen until recently in the payment world, which was really 0:23:16.600 --> 0:23:18.439 at the front end, right, it was about, you know, 0:23:18.920 --> 0:23:21.960 providing you with a better interface, providing you with an 0:23:22.000 --> 0:23:25.080 interface on your smartphone and son and so forth, And 0:23:25.160 --> 0:23:28.000 all of a sudden we see payment architectures which are 0:23:28.119 --> 0:23:32.840 entirely private, which which are encompassing and go and include 0:23:32.840 --> 0:23:36.120 the the back end, that is the pipeline that will 0:23:36.200 --> 0:23:38.440 that will bring money from one place to another, right, 0:23:38.920 --> 0:23:42.320 which wasn't the case so far, and um, and that 0:23:42.400 --> 0:23:45.040 might be okay. That might be okay if it's well regulated, 0:23:45.520 --> 0:23:50.720 if consumers or investors are protected and know the risk 0:23:51.080 --> 0:23:53.520 the risks they are taking, that might be okay to 0:23:53.560 --> 0:23:55.560 have that kind of payment systems. I don't see I 0:23:55.560 --> 0:23:57.680 don't really see that as the currency. I think that 0:23:57.760 --> 0:23:59.680 as a new means of payment which can be convenient, 0:24:00.560 --> 0:24:03.720 but which also raised as risks. And these risks have 0:24:03.800 --> 0:24:06.600 been highlighted last year in the in the G seven 0:24:06.640 --> 0:24:09.640 report and stable coins and and uh and and recently 0:24:09.680 --> 0:24:12.680 by the by the FSB UM and the risks come 0:24:12.720 --> 0:24:15.000 from the fact that these new projects are are global. 0:24:15.280 --> 0:24:18.280 Liberal is an obvious example. And so there are risks 0:24:18.280 --> 0:24:21.119 to the for instance, to the to the functioning of 0:24:21.160 --> 0:24:24.560 the international monetized system which are entirely new, which you 0:24:24.560 --> 0:24:28.840 you didn't have with earlier forms of cryptocurrency. Like what 0:24:28.920 --> 0:24:33.320 happens if you have a major stable coin which is 0:24:33.359 --> 0:24:36.600 being issued and you start to see substitution with with 0:24:36.680 --> 0:24:40.199 local currency in some smaller jurisdiction. That would be a 0:24:40.200 --> 0:24:42.919 concern for that jurisdiction, would be a concerned for the 0:24:42.960 --> 0:24:44.760 I m F, would be a concern for the World Bank. 0:24:45.160 --> 0:24:47.359 And that's something that we want to discuss. So so 0:24:47.400 --> 0:24:50.359 you see new risks coming, right, But there is no 0:24:50.400 --> 0:24:55.000 reason why a priori stable coins should be h rejected 0:24:55.920 --> 0:24:57.760 and and and and and let me let me just 0:24:57.880 --> 0:25:00.240 as a just for for the record mentioned there are 0:25:00.240 --> 0:25:03.960 other forms of stable coin which hardly anyone speaks about, 0:25:04.040 --> 0:25:07.679 which are wholesale stable coins. Right, imagine a coin that 0:25:07.720 --> 0:25:10.119 would be issued by a by a large commercial bank 0:25:10.560 --> 0:25:15.480 to settle transaction within a few a small group of clients, 0:25:15.800 --> 0:25:18.400 and that would be backed by by central bank money. 0:25:18.760 --> 0:25:21.080 That's a stable coin. It's much less of a discussion 0:25:21.119 --> 0:25:23.960 because it's not going to reach billions of people, but 0:25:24.080 --> 0:25:28.400 only a handful of commercial banks. So that's pretty easy 0:25:28.440 --> 0:25:31.760 to to to understand and to regulate. But it's also coming. 0:25:32.600 --> 0:25:35.560 My understanding is that one of the big debates about 0:25:35.560 --> 0:25:39.760 digital money from central banks is whether it would strengthen 0:25:40.080 --> 0:25:43.359 the transmission of monetary policy. So, on the one hand, 0:25:44.359 --> 0:25:49.880 if you have CBDC, central banks can directly influence interest 0:25:49.960 --> 0:25:53.800 rates on digital money and they basically control it. But 0:25:53.840 --> 0:25:57.480 on the other hand, your as we discussed potentially setting 0:25:57.560 --> 0:26:00.760 up a competitor to bank deposits, and we're not exactly 0:26:00.800 --> 0:26:04.840 sure whether or not that might change the sensitivity of 0:26:05.040 --> 0:26:08.080 the demand for that type of money to interest rates. 0:26:08.560 --> 0:26:11.200 I be curious to get your views on is how 0:26:11.240 --> 0:26:16.040 do you see CBDC interacting with monetary policy. That's a 0:26:16.040 --> 0:26:18.119 really good question. It's a little bit the elephant in 0:26:18.160 --> 0:26:20.600 the room because that's a it's a really good question, 0:26:20.680 --> 0:26:24.199 and that's it's a it's a question that most central 0:26:24.240 --> 0:26:28.400 banks are working hard to not to answer and see, 0:26:28.480 --> 0:26:31.359 I take the report we've been we've been discussing. We 0:26:31.359 --> 0:26:33.840 we we kind of allude to that, but we are 0:26:34.040 --> 0:26:35.920 very early on the front. We say we're not going 0:26:35.960 --> 0:26:39.160 to discuss it, right. And there is a simple reason 0:26:39.200 --> 0:26:42.000 to that that, which is that monetary policy is a 0:26:43.320 --> 0:26:46.800 is a different mandate and it's it's it's very national, 0:26:46.880 --> 0:26:50.600 it's very domestic, and it's being decided in different places 0:26:50.640 --> 0:26:54.679 like I mean monetary policy committees, um, and so central 0:26:54.720 --> 0:26:58.080 bonds don't want to mix up the two discussions because 0:26:58.200 --> 0:27:01.760 if CBDC comes and the way they will use it 0:27:01.800 --> 0:27:04.000 for money type to do monetype policy is something that 0:27:04.040 --> 0:27:07.760 they want to decide for themselves. And so the case 0:27:07.880 --> 0:27:13.080 for international cooperation today is not on the monotype policy side. 0:27:13.119 --> 0:27:15.760 It's on the payment side, because we want the payment 0:27:15.840 --> 0:27:20.520 architecture to work smoothly and it is global, right uh. 0:27:20.560 --> 0:27:22.880 And this is why, this is why you already see 0:27:22.880 --> 0:27:25.960 and you're going to see a lot more international coordination 0:27:26.080 --> 0:27:30.280 on CBDC and on digital money generally because payments are 0:27:30.359 --> 0:27:34.480 the the backbone of the of the international financial architecture, 0:27:35.040 --> 0:27:37.080 and so you won't go to see coordination for the 0:27:37.119 --> 0:27:40.720 system to be stable. Well. Monetype policy is a sovereign matter, 0:27:40.960 --> 0:27:44.639 is decided locally people and and and governors want to 0:27:44.640 --> 0:27:47.400 talk to their and to report to their to their parliaments, 0:27:47.480 --> 0:27:50.600 right to US Congress, to the European Parliament, et cetera. 0:27:51.040 --> 0:27:53.320 That's not something they want to discuss in the open 0:27:53.359 --> 0:27:56.720 air and internationally. So so that was a little bit 0:27:56.760 --> 0:28:00.280 of a sociological or political you know, the tour to 0:28:00.280 --> 0:28:02.240 to to explain, to explain to you why we're not 0:28:02.280 --> 0:28:05.160 discussing it now. Of course, it is an issue. Of course, 0:28:05.160 --> 0:28:06.800 it is an issue that central banks will have to 0:28:07.080 --> 0:28:11.720 to decide for themselves. And I really see a key 0:28:12.000 --> 0:28:15.840 question coming for for each and every central bank to decide, 0:28:15.840 --> 0:28:20.520 which is do you want to do CBDC for monetary 0:28:20.560 --> 0:28:23.640 policy reasons or do you want to make it as 0:28:23.760 --> 0:28:27.359 neutral as possible on the way with respect to the 0:28:27.400 --> 0:28:31.400 way you implement your monetype policy. And that's a decision 0:28:31.440 --> 0:28:34.199 to take early on, because it impacts your architecture, It 0:28:34.240 --> 0:28:37.080 impacts the way you're going to do CBDC. Right, if 0:28:37.080 --> 0:28:40.400 you want CBDC to be accessed by your broad range 0:28:40.400 --> 0:28:42.760 of economic players and if you want to be able 0:28:42.840 --> 0:28:47.960 to control both the quantity and the price of that 0:28:48.000 --> 0:28:50.800 particular form of money, which is what monet type policy 0:28:50.840 --> 0:28:55.560 is about. Then it's different from deciding that you you're 0:28:55.560 --> 0:28:58.200 going to issue a given amount of CBDC and then 0:28:58.680 --> 0:29:00.880 you you don't want to know where it's going, for instance. 0:29:01.600 --> 0:29:03.920 And so there is a potential to use CBDC in 0:29:03.960 --> 0:29:07.440 a kind of tailor made way right in a kind 0:29:07.440 --> 0:29:11.360 of very very granular way to um to bring money 0:29:11.400 --> 0:29:15.600 to particular places, to uh to to to pump money 0:29:15.600 --> 0:29:18.560 down the last mile as a as my colleague I 0:29:18.720 --> 0:29:21.480 was in constance has has one said, that's that's that's 0:29:21.280 --> 0:29:23.360 something that today's Central Bank is very much want to 0:29:23.360 --> 0:29:26.080 see money being pumped down the last mile and and 0:29:26.160 --> 0:29:30.680 reaching all players, all corners of society. UM. But if 0:29:30.720 --> 0:29:33.440 you want to do CBDC to do that, then you 0:29:33.560 --> 0:29:36.680 probably have to to design your CBDC in a different way. 0:29:37.200 --> 0:29:40.120 And and Central Box have not decided yet really, so 0:29:40.160 --> 0:29:42.360 we're a little bit at a cross roads there, and 0:29:42.400 --> 0:29:46.640 different Central box may take different decisions. And so my 0:29:46.720 --> 0:29:50.160 person my personal take if you're which which doesn't commit anyone, 0:29:51.040 --> 0:29:52.920 and I'm not even doing money type policy because I'm 0:29:52.920 --> 0:29:54.760 had the bi s so it's it's really my personal 0:29:54.840 --> 0:29:59.160 view is that it is worth reflecting on that because 0:29:59.280 --> 0:30:01.840 we we're kind of at the end of a cycle 0:30:01.920 --> 0:30:06.080 where monetipe policy. We've made money type policy implementation incredibly 0:30:06.120 --> 0:30:10.440 sophisticated since the Great Financial Crisis and again now through 0:30:10.560 --> 0:30:14.120 the years of corner crisis. But most of it, if 0:30:14.120 --> 0:30:16.600 not all of it, he goes through capital markets, right, 0:30:16.720 --> 0:30:20.720 So we have very different sophisticated ways, complex ways to 0:30:21.760 --> 0:30:25.640 influence on capital, on financial market expectations, and on and 0:30:25.640 --> 0:30:28.560 and and on pumping money in and I out of 0:30:28.600 --> 0:30:31.960 capital markets. But at some point that's hitting the limits 0:30:32.040 --> 0:30:35.320 because our places in the economy where money just which 0:30:35.320 --> 0:30:38.720 money just cannot cannot reach. It also might create political 0:30:38.760 --> 0:30:43.280 issues because incredibly incredibly societies see monetype policy as being 0:30:43.600 --> 0:30:47.680 a conversation between central bonks and and capital market participants 0:30:47.880 --> 0:30:51.600 um and they feel excluded from that conversation. So that 0:30:51.720 --> 0:30:53.320 that was my my last word that the e c 0:30:53.480 --> 0:30:55.360 B last year, in my last speech in my last 0:30:55.360 --> 0:30:58.760 meeting at the ECB, the conclusion was that if if 0:30:58.760 --> 0:31:02.160 money type policy remains a conversation between central banks and 0:31:02.200 --> 0:31:04.960 capital markets, then we shouldn't be surprised if people don't 0:31:05.000 --> 0:31:08.120 trust us, right, And that's a little bit what we've seen. 0:31:08.560 --> 0:31:11.040 And CBC can be a way to reconnect central banks 0:31:11.080 --> 0:31:13.400 with with people if it's if he's done well. But 0:31:13.520 --> 0:31:15.400 some central banks might want to go there, so we 0:31:15.480 --> 0:31:17.840 don't want to go there, and that's fine. They're all different. 0:31:18.280 --> 0:31:20.520 I mean, this might be a good moment to sort 0:31:20.560 --> 0:31:22.800 of seg a little bit to some of the bigger 0:31:22.840 --> 0:31:26.040 policy questions that the world faces right now. But it 0:31:26.120 --> 0:31:28.280 seems to me like a point that you've made which 0:31:28.320 --> 0:31:30.240 I find really interesting, and a few of your answers 0:31:30.320 --> 0:31:33.080 is like a lot of these are just political questions, 0:31:33.080 --> 0:31:35.880 and political questions have to be made to some extent 0:31:36.480 --> 0:31:39.240 outside of the central bank. But I guess one of 0:31:39.240 --> 0:31:44.080 them is do we want monetary authorities to have the 0:31:44.120 --> 0:31:48.320 ability to more easily put buying power in the hands 0:31:48.320 --> 0:31:52.040 of normal people, not just functioned through capital markets. And 0:31:52.080 --> 0:31:56.000 it sounds like the sort of CBDC conversation that the 0:31:56.000 --> 0:32:00.000 world is having is sort of a parallel potential conversation 0:32:00.160 --> 0:32:03.560 to this question of do we want to expand the 0:32:03.600 --> 0:32:06.640 tools that central banks have to get people money? Yeah? 0:32:06.680 --> 0:32:08.840 I would, I would agree with that, And I mean 0:32:08.840 --> 0:32:11.080 the fact that there are political dimensions. So it doesn't 0:32:11.120 --> 0:32:16.960 imply that central banks should defer to two politicians, right CBDC. 0:32:17.280 --> 0:32:20.040 CBDC is about the future of money, it's about the 0:32:20.040 --> 0:32:23.040 future of multi policy, it's about the future of payments, 0:32:23.400 --> 0:32:25.360 and so central banks should be on on top of 0:32:25.400 --> 0:32:28.520 that discussion, which which which they are now. But what 0:32:28.680 --> 0:32:31.719 I guess what we're both saying is there are dimensions, 0:32:31.720 --> 0:32:34.239 there are some trade offs where you need to to 0:32:34.280 --> 0:32:38.480 get a sense of of the preferences of society. You 0:32:38.560 --> 0:32:40.800 need to you need to take the pulse of society. 0:32:41.320 --> 0:32:44.840 And that's why in all places CBDC will require um 0:32:45.080 --> 0:32:49.440 extensive consultations, which is the way the for instance, the 0:32:49.520 --> 0:32:52.440 Riggs Bank in in Stockholm has taken, which is always 0:32:52.520 --> 0:32:55.680 easy b now is taking. You need to consult a lot. 0:32:55.840 --> 0:32:58.320 That's not something that you want to do under closed 0:32:58.320 --> 0:33:02.280 door in a in a central somewhere. You that's something 0:33:02.320 --> 0:33:06.920 where many dimensions where which need their engagements with society 0:33:07.000 --> 0:33:11.440 at large. So I know there's been some discussion on 0:33:12.080 --> 0:33:15.040 potentially tearing interest rates when it comes to cb d 0:33:15.040 --> 0:33:18.120 C and and maybe even allowing the Central Bank to 0:33:18.320 --> 0:33:23.720 impose negative rates on digital money that they issue. That 0:33:23.880 --> 0:33:28.080 probably says more about where we are in terms of 0:33:28.600 --> 0:33:32.000 unconventional monetary policy as a whole than it does necessarily 0:33:32.040 --> 0:33:34.760 about c B d C. But maybe that should be 0:33:34.800 --> 0:33:38.360 a que too, to broaden the conversation and talk a 0:33:38.360 --> 0:33:41.200 little bit about what's going on in the world at 0:33:41.200 --> 0:33:43.960 the moment. I think when you were at the ECB, 0:33:44.680 --> 0:33:48.520 there was an assumption that monetary policy would eventually get 0:33:48.560 --> 0:33:52.239 back to normal, But it seems increasingly likely now that 0:33:52.440 --> 0:33:55.800 low interest rates and asset purchase programs, things like that 0:33:55.840 --> 0:33:59.480 are here to stay. Do you think we're ever going 0:33:59.520 --> 0:34:03.240 to get back to the days of boring central banking 0:34:03.360 --> 0:34:06.560 where we would never be talking about negative interest rates 0:34:06.600 --> 0:34:11.680 when it comes to CBDC. Yeah, well that's truely through 0:34:11.719 --> 0:34:15.160 that term. I'm now old enough that I remember the 0:34:15.239 --> 0:34:19.560 days where interest rates were positive. Le see, these were 0:34:19.600 --> 0:34:22.480 the good old days. And the year the Corona, the 0:34:22.480 --> 0:34:26.320 Corona crisis, the Corona shock as there has disrupted everything. 0:34:26.520 --> 0:34:29.160 So I think it's fair to her, it's fair to 0:34:29.200 --> 0:34:31.879 say that there is no prospect, there is no short 0:34:31.960 --> 0:34:37.280 term prospect of money typolicy normalization anytime soon because of 0:34:37.320 --> 0:34:40.799 the the amounts extraordinary amount of uncertainty that we have, 0:34:40.920 --> 0:34:43.640 which which comes from from outside the economy, which comes 0:34:43.680 --> 0:34:48.440 from the UM from the cycle of lockdowns and UH 0:34:48.560 --> 0:34:51.439 and and waves, etcetera. And so as long as we 0:34:51.440 --> 0:34:54.760 will have this kind of waves and uncertainty on lockdowns, 0:34:55.000 --> 0:34:57.239 there will be the economy will be in a state 0:34:57.320 --> 0:35:03.719 for very high fragility because UH expectations will because there 0:35:03.760 --> 0:35:06.360 is no way that they are that that that businesses 0:35:06.440 --> 0:35:09.440 or consumers can form expectations about the future, so that 0:35:09.560 --> 0:35:13.320 that that that kind of compresses the time horizon of 0:35:13.320 --> 0:35:16.840 of both businesses and consumers in a way that that 0:35:16.960 --> 0:35:20.000 makes it very very difficult to to plan for the 0:35:20.040 --> 0:35:22.000 long term, which is what central banks should be doing 0:35:22.000 --> 0:35:24.400 now in there. If you think of the kind of 0:35:24.440 --> 0:35:29.520 assignment of roles in the in the economic policymaking world, 0:35:30.120 --> 0:35:32.799 you would expect central bankers to care for the long term, 0:35:32.880 --> 0:35:36.399 while politicians are kind of prisoners of their of short 0:35:36.520 --> 0:35:42.040 term incentives and constraints and political cycles and underlike UM 0:35:42.040 --> 0:35:43.920 and you would like central bankers to think for the 0:35:44.040 --> 0:35:48.080 for the future. But today's count because it's just too uncertain. 0:35:48.960 --> 0:35:51.880 So it's very difficult to to UH to to to 0:35:51.960 --> 0:35:54.000 kind of make make plans about the future of my 0:35:54.120 --> 0:35:56.839 entire policy, and these I think the only year kind 0:35:56.840 --> 0:35:59.920 of a sensible conclusion is that central banks need my 0:36:00.000 --> 0:36:03.120 semum flexibility to to coop result kind of outcomes, So 0:36:03.280 --> 0:36:05.760 they need to keep to keep all their options open. 0:36:07.840 --> 0:36:11.400 So I mean, because of this sort of extraordinary moment, 0:36:11.440 --> 0:36:13.279 and you mentioned it, I think in one of your 0:36:13.280 --> 0:36:16.879 first answers were in an era in which they're sort 0:36:16.880 --> 0:36:20.240 of a perception but prior also reality that there really 0:36:20.360 --> 0:36:24.160 is only so much, so many tools at the central 0:36:24.160 --> 0:36:28.360 bank's disposal. Right now, we have more people talking about, okay, 0:36:28.760 --> 0:36:33.240 we need more aggressive fiscal policy across the developed world. 0:36:33.320 --> 0:36:36.320 Even the I m F has said as such a 0:36:36.920 --> 0:36:39.480 do you believe um that that is the case, that 0:36:39.560 --> 0:36:43.040 there is an argument for fiscal authorities to do more? 0:36:43.480 --> 0:36:46.320 But more importantly, do you think sort of going forward, 0:36:46.360 --> 0:36:49.080 and even as this crisis hopefully sort of phades into 0:36:49.120 --> 0:36:51.279 the rear view mirror, do you think it's worth a 0:36:51.360 --> 0:36:55.040 sort of broader rethink about a more permanent role for 0:36:55.360 --> 0:36:59.200 UH fiscal policy in terms of macro stabilization, such that 0:36:59.239 --> 0:37:03.720 we're not really depended on central banks to balance the economy. 0:37:03.760 --> 0:37:08.080 Every time, you know, things things go bad, it's there. 0:37:08.400 --> 0:37:11.640 It's a pity that you would need their global pandemics 0:37:11.680 --> 0:37:15.000 to to have that discussion, right, I mean, I mean 0:37:15.040 --> 0:37:17.440 it has started a little bit before, but it does 0:37:17.480 --> 0:37:21.120 feel as though the pandemic has accelerated the discussion of nothing. Yeah, 0:37:21.120 --> 0:37:23.280 I mean that there are there are I think the discussion. 0:37:23.320 --> 0:37:26.759 I mean it it looks different in different places, and 0:37:26.880 --> 0:37:29.879 we're thinking there. In the US, you have a very 0:37:29.920 --> 0:37:34.120 decent tradition of stabilization policies, both on the monetary side 0:37:34.120 --> 0:37:36.879 and on the fiscal side, and of a good, good 0:37:37.760 --> 0:37:42.320 complimentarity between monetary policy and fiscal policy, and the economy 0:37:42.400 --> 0:37:46.279 is flexible and resilient and strong enough that you you 0:37:46.320 --> 0:37:49.320 can stay in that mode, right, because the economy always 0:37:49.360 --> 0:37:52.080 comes back, and so you're not stuck in a state 0:37:52.120 --> 0:37:54.520 of the world where you would have to to do 0:37:54.640 --> 0:37:57.880 a very active monetype policy and very active fiscal policy 0:37:57.880 --> 0:38:01.200 at the same time, because the economy it comes back. Right. 0:38:01.800 --> 0:38:04.839 It's more difficult in Europe for different reasons, one reason 0:38:04.960 --> 0:38:07.680 being that we've we've never been able so I say 0:38:07.719 --> 0:38:11.359 we as a European right, uh now, we've never been 0:38:11.400 --> 0:38:14.720 able to find the right fiscal framework, and so fiscal 0:38:14.760 --> 0:38:18.400 policy has never been has never been very helpful in 0:38:19.120 --> 0:38:23.839 helping the ECB manager cycle, and it's becoming more helpful now. 0:38:24.400 --> 0:38:26.840 And you've discussed it with with my former colleague of 0:38:26.840 --> 0:38:30.080 it or Constanzo, and I agree with with a lot 0:38:30.120 --> 0:38:32.360 of what what he told you that is now happening, 0:38:32.400 --> 0:38:35.279 and it's a it's a very good development. But the 0:38:35.320 --> 0:38:37.880 other reason is that the economy is in Europe is 0:38:37.880 --> 0:38:41.399 not nearly as flexible than the US. So if you're 0:38:41.400 --> 0:38:44.520 into that kind of of extraordinary situation where you need 0:38:44.560 --> 0:38:47.759 to to turn the dial and and have a very 0:38:47.800 --> 0:38:50.800 active type policy and fiscal policy at the same time, 0:38:50.840 --> 0:38:54.560 because the economy is not responding, you don't know how 0:38:54.640 --> 0:38:56.480 much how how much time it will come to go 0:38:56.560 --> 0:39:00.000 back to normal, right, because the economy is not facile 0:39:00.000 --> 0:39:02.319 bab enough to do it by itself. So that's that's 0:39:02.320 --> 0:39:05.799 a different situation, which also calls for a little bit 0:39:05.800 --> 0:39:08.719 of caution, right because you can be stuck there in 0:39:08.800 --> 0:39:10.480 that kind of in that kind of state of the 0:39:10.480 --> 0:39:14.080 world for much longer. And so so far, so good. 0:39:14.160 --> 0:39:16.920 I mean, the what what what fiscal authorities and my 0:39:17.040 --> 0:39:19.360 entire authorities have done so far is exactly what you 0:39:19.400 --> 0:39:21.960 were suggesting, And what what you what we want to 0:39:22.000 --> 0:39:25.239 see that is good complimentarity between my entire policy and 0:39:25.360 --> 0:39:29.120 fiscal policy. Even in emerging markets economy is by the way, 0:39:29.520 --> 0:39:32.560 you are now seeing some I mean many emerging market 0:39:32.600 --> 0:39:37.120 economies UM doing quee and the government is issuing more 0:39:37.120 --> 0:39:40.279 domestic depth I mean domestic currency, the nominated depth, which 0:39:40.280 --> 0:39:43.600 is santral banc and partly buy UM and that's the 0:39:43.640 --> 0:39:46.399 way to kind of strengthen the complimentarity between my Thai 0:39:46.480 --> 0:39:49.680 policy and fiscal policy, and that has given them much 0:39:49.719 --> 0:39:53.920 more policy space. So you're seeing that happening in different places. 0:39:54.400 --> 0:39:57.360 The question is what happens if that is that a 0:39:57.400 --> 0:40:01.680 situation that can last for many years, because then depth 0:40:01.719 --> 0:40:04.960 public depth will be building up. Private depth will be 0:40:05.000 --> 0:40:07.640 building up as well. Some of it will be transferred 0:40:07.640 --> 0:40:10.799 onto the balance sheet of the government UM and at 0:40:10.840 --> 0:40:15.080 some point, whatever the efforts of the central bank, the 0:40:15.120 --> 0:40:17.520 depth will be will be will be so high that 0:40:17.560 --> 0:40:20.719 you will need some kind of rescheduling or restructuring. UH. 0:40:20.760 --> 0:40:23.680 And so if if if the situation with the virus 0:40:23.800 --> 0:40:27.480 states as it is for a number of for another 0:40:28.239 --> 0:40:32.520 a few years, which of course nobody nobody hopes what 0:40:32.640 --> 0:40:35.960 today looks like good corporation between moneti policy and fiscal 0:40:36.040 --> 0:40:40.440 policy and and respectful of everyone's mandate right, not not 0:40:40.560 --> 0:40:44.280 harmful to the independence of central banks. That's something that 0:40:44.080 --> 0:40:47.360 that would become much more difficult to sustain because you 0:40:47.400 --> 0:40:51.040 will have to start discussions on some some ways to 0:40:51.040 --> 0:40:54.080 to to share the fiscal burden. And these discussions can 0:40:54.080 --> 0:40:56.880 be politically very difficult and very harmful. And and it's 0:40:56.920 --> 0:40:59.400 already starting in the in the developing world. I mean, 0:40:59.440 --> 0:41:03.320 there is an a discussion on depth restructuring and depth 0:41:03.640 --> 0:41:07.480 depth initiatives in the in the developing world. M if 0:41:07.520 --> 0:41:09.640 we stay there for a few more years, that will 0:41:09.640 --> 0:41:12.719 gradually come to the developed world, and that will that 0:41:12.760 --> 0:41:17.319 will come with huge political difficulties. So um, I guess 0:41:17.320 --> 0:41:19.200 the only conclusion is that you want to you want 0:41:19.239 --> 0:41:22.040 a vaccine to be found very quickly. That's a conclusion. 0:41:22.960 --> 0:41:25.440 I think we can all agree with that. Definitely, we 0:41:25.520 --> 0:41:39.319 all agree with that. Yeah, you mentioned the interview we 0:41:39.400 --> 0:41:43.040 did with your former colleague bitour Constantio, and one of 0:41:43.080 --> 0:41:46.200 the things that came up quite a bit in that 0:41:46.239 --> 0:41:52.040 conversation was inflation or the lack thereof. Rather than ask 0:41:52.120 --> 0:41:55.279 you the same question that we ask bitore, which is 0:41:55.640 --> 0:41:58.719 do central banks understand inflation? I want to ask a 0:41:58.719 --> 0:42:01.799 slightly different one, which is, why do you think that 0:42:02.080 --> 0:42:07.000 consumers or the average person's perception of inflation seems to 0:42:07.320 --> 0:42:11.640 differ from what central banks are looking at? And I 0:42:11.640 --> 0:42:14.360 think there's a stat out there that um, according to 0:42:14.480 --> 0:42:19.120 European Commission Survey, households thought annual inflation was something like 0:42:19.280 --> 0:42:24.399 nine percent between two thousand four and whereas we all 0:42:24.440 --> 0:42:28.440 know having this conversation now, that inflation was actually below 0:42:28.640 --> 0:42:31.000 the two percent target and quite far below it. So 0:42:31.640 --> 0:42:34.839 where do you think that discrepancy is actually coming from, Well, 0:42:34.880 --> 0:42:38.600 it comes from there. The way statisticians and central and 0:42:38.640 --> 0:42:41.640 central bankers look at inflation is a is very is 0:42:41.680 --> 0:42:44.640 from a southern feet right. It's a bird's eye view 0:42:44.760 --> 0:42:49.120 on everything that's going on into the economy across social groups, 0:42:49.160 --> 0:42:53.000 across age groups, across different places. And it's so it 0:42:53.040 --> 0:42:58.040 totally kind of ignores the diversity of consumption habits, um 0:42:58.160 --> 0:43:00.840 and the and also the fact that you buy different 0:43:01.000 --> 0:43:05.080 different goods and services at different frequencies over time. So 0:43:05.239 --> 0:43:11.000 individuals are are biased towards overweighting goods and services that 0:43:11.080 --> 0:43:14.000 they buy very often like like obviously, I mean food 0:43:14.040 --> 0:43:18.640 and dairy and and transports and and and refueling your 0:43:18.640 --> 0:43:21.600 car and that kind of things, while and the price 0:43:21.640 --> 0:43:25.120 of her of smartphones might be collapsing. I mean, that's 0:43:25.120 --> 0:43:28.239 not something you buy very often. So when people ask you, 0:43:28.320 --> 0:43:30.759 come and ask you about inflation, you're not going to 0:43:30.800 --> 0:43:33.960 think about that. So there are huge cognitive biases which 0:43:34.080 --> 0:43:37.279 which are which are just normal, and central banks have 0:43:37.360 --> 0:43:40.319 not really made the effort to kind of translate their 0:43:40.360 --> 0:43:44.319 concepts into concepts that people can relate to. And I 0:43:44.360 --> 0:43:47.480 think that's a big challenge for the future. That central 0:43:47.520 --> 0:43:49.720 banks are absolutely right to to look at the economy 0:43:49.800 --> 0:43:53.680 in the aggregate at a at an aggregate level, but 0:43:54.160 --> 0:43:57.040 when they when they when they formulate their policies and 0:43:57.040 --> 0:43:59.520 they're and their targets are in terms of inflation, they've 0:43:59.520 --> 0:44:03.440 got to translate it in a way that people can understand. 0:44:03.520 --> 0:44:07.319 And we're not doing that, you know, Without getting too 0:44:07.440 --> 0:44:11.880 much into specific actions being taken by major central banks 0:44:12.080 --> 0:44:13.719 right now, you know, I want to just talk a 0:44:13.760 --> 0:44:17.040 little bit more about this sort of intellectual landscape, and 0:44:17.080 --> 0:44:22.160 we see this movement towards um policies or frameworks that 0:44:22.200 --> 0:44:26.160 seek to avoid past mistakes and the FED is engaging 0:44:26.239 --> 0:44:29.279 or and now it's the new framework of average inflation 0:44:29.400 --> 0:44:34.759 targeting UM combined with a sort of more robust forward guidance. 0:44:35.080 --> 0:44:37.760 You've done a lot of work on these types of things, 0:44:38.160 --> 0:44:42.160 uh in your career. Do you see this as evolution 0:44:42.360 --> 0:44:47.080 average inflation targeting to avoid premature hikes in the future. 0:44:47.640 --> 0:44:50.719 And do you think there's more that central banks can 0:44:50.760 --> 0:44:55.400 do with sort of state contingent for for guidance, very 0:44:55.400 --> 0:44:58.960 clear levels that they set before which they would consider 0:44:59.040 --> 0:45:01.840 hiking raids or do you think the sort of current 0:45:03.080 --> 0:45:05.600 or they sort of I guess at the state of 0:45:05.640 --> 0:45:07.200 the art, so to speak, in terms of what can 0:45:07.239 --> 0:45:11.120 be under this tour. Yeah. Look, look, I don't want 0:45:11.160 --> 0:45:14.359 to I don't want to comment on specific decisions by 0:45:14.360 --> 0:45:17.239 specific central banks. UM. I mean you can you can 0:45:17.280 --> 0:45:20.919 put very sophisticated words and concepts on that. I think 0:45:20.920 --> 0:45:23.279 at the end of the day, or it's a lot 0:45:23.280 --> 0:45:25.920 of what is being done today in different places amounts 0:45:25.920 --> 0:45:28.920 to just making sure that you will have maximum flexibility 0:45:28.960 --> 0:45:33.160 to cope with with economic uncertainty and as you said, UM, 0:45:33.680 --> 0:45:37.080 kind of firm tilting the discussion so that you're on 0:45:37.120 --> 0:45:39.759 the right side of the discussion, and you prefer you 0:45:39.800 --> 0:45:42.160 don't want to take the risk of having even lower inflation, 0:45:42.800 --> 0:45:45.800 given that you're at or close to the lower abound 0:45:45.880 --> 0:45:49.360 in terms of your interest rates um and and given 0:45:49.400 --> 0:45:52.840 the the harmful the harmful con sequencers of deflation for 0:45:52.880 --> 0:45:55.080 the economy, So you want to be in terms of 0:45:55.200 --> 0:45:57.000 risk management, right, you want to be on the right 0:45:57.040 --> 0:46:00.719 side of that of that risk. And if you if 0:46:00.719 --> 0:46:02.200 you're going to take a chance, that would be the 0:46:02.280 --> 0:46:05.239 chance of higher inflation, because then you know what to do. 0:46:05.680 --> 0:46:08.040 That's how I understand what they're all saying, right, And 0:46:08.080 --> 0:46:10.920 then you can put very fancy concepts on it, which 0:46:10.960 --> 0:46:13.799 is which is fine. But as long as you as 0:46:13.840 --> 0:46:16.239 the outcome is that you keep a lot of flexibility 0:46:17.120 --> 0:46:19.520 and you are on the side of caution in terms 0:46:19.520 --> 0:46:23.400 of not allowing a deflation to happen, I think that's fine. 0:46:23.760 --> 0:46:27.480 And I don't think the exact framework matters matters too much, 0:46:28.120 --> 0:46:31.239 all right, Well, Ben, what I really enjoyed that conversation, 0:46:31.360 --> 0:46:35.600 and I feel like I actually have a, let's say, 0:46:36.719 --> 0:46:40.000 the start of a good understanding of central bank digital currencies. 0:46:40.239 --> 0:46:42.600 You did a really good job of framing the discussion. 0:46:42.680 --> 0:46:45.719 So thank you so much. Okay, very good. So I 0:46:45.960 --> 0:46:47.880 hope now you know why we are why we're doing it, 0:46:50.040 --> 0:47:11.120 definitely more than before. Thanks. That was great. Thank so. 0:47:11.400 --> 0:47:15.880 I found that conversation very very interesting, And one thing 0:47:15.920 --> 0:47:19.719 that I did appreciate was Ben was framing of a 0:47:19.719 --> 0:47:24.280 lot of these issues or debates not as technological problems, 0:47:24.360 --> 0:47:29.120 but as political problems or political issues that need to 0:47:29.120 --> 0:47:34.680 be decided by governments. Yes, I think to me that 0:47:34.920 --> 0:47:38.839 was like the big takeaway too. So there's obviously the 0:47:38.880 --> 0:47:43.960 technological side that's interesting. There are some exciting things that 0:47:44.000 --> 0:47:49.400 can theoretically follow from the technological innovations, whether it's advances 0:47:49.440 --> 0:47:54.440 and payments, the ability for people to engage in finance 0:47:54.520 --> 0:47:58.080 outside of just um sort of interface with commercial banks. 0:47:58.520 --> 0:48:01.239 But it does feel like these are all sort of 0:48:02.120 --> 0:48:04.960 the big questions are still have to be fought over politically, 0:48:05.200 --> 0:48:08.560 how any country actually wants to set these up, and 0:48:08.600 --> 0:48:12.200 the parameters of digital currency. Yeah, and I think that's 0:48:12.239 --> 0:48:15.840 another thing that came through from the conversation, the idea 0:48:15.960 --> 0:48:19.560 that not every cb d C is going to look 0:48:19.600 --> 0:48:23.520 the same, and countries might have different things or different 0:48:23.560 --> 0:48:26.480 problems that they're actually looking to solve when they issue 0:48:26.520 --> 0:48:29.520 these and for instance, you brought up the discussion about privacy. 0:48:29.640 --> 0:48:33.200 There might be certain countries in the world, you know, 0:48:33.280 --> 0:48:36.040 I don't know, the Cayman Islands, Bermuda, places like that 0:48:36.440 --> 0:48:41.480 where anonymity of central bank digital money could work and 0:48:41.640 --> 0:48:44.799 could even be valued. Um, but that might not not 0:48:44.880 --> 0:48:47.919 necessarily be the case in other parts of the world. Yeah, 0:48:47.960 --> 0:48:50.920 I mean, I think this is the question of anonymity 0:48:50.960 --> 0:48:53.640 is super important because look, that is a really important 0:48:53.680 --> 0:48:57.520 aspect of cash, right, Like people like cash for that reason, 0:48:57.920 --> 0:49:00.040 but cash is going away. It's being used less and 0:49:00.160 --> 0:49:03.319 less because a you know, we have our phones and 0:49:03.360 --> 0:49:05.680 there's all kinds of sort of digital money infrastructure out 0:49:05.719 --> 0:49:08.120 in the wild, but also just on the internet, there 0:49:08.200 --> 0:49:10.880 is no way to spend cash. And so the question 0:49:10.960 --> 0:49:14.879 is if there's a if we if we transport sort 0:49:14.920 --> 0:49:18.960 of the concept of cash to the internet and such 0:49:19.000 --> 0:49:22.839 that I can pay you for something directly without us 0:49:22.880 --> 0:49:26.040 having to use a commercial bank, do I get to 0:49:26.200 --> 0:49:30.279 keep what is a pretty fundamental characteristic of cash, which 0:49:30.320 --> 0:49:34.160 is that privacy? And if not, I think that's like 0:49:34.200 --> 0:49:37.879 a potentially sort of a loss and a worrisome thing 0:49:38.040 --> 0:49:42.320 for sort of civil liberties and rights. If that goes away. 0:49:42.920 --> 0:49:45.080 You know, one thing that never ceases to amaze me, 0:49:45.120 --> 0:49:47.640 and I was thinking about during that conversation is just 0:49:48.160 --> 0:49:51.880 how many different types of money there actually are. And 0:49:51.880 --> 0:49:55.359 people say money, but of course, yeah, you know, there's 0:49:55.400 --> 0:49:58.480 so many variations. There's the sort of commercial back end 0:49:58.719 --> 0:50:02.399 money that been always talking about a lot um, there's 0:50:02.440 --> 0:50:06.640 obviously cash, and I don't know, like, I don't know 0:50:06.640 --> 0:50:08.719 what I'm trying to say, but it's it's just remarkable. 0:50:09.000 --> 0:50:10.640 You know. What I think is what I always think 0:50:10.680 --> 0:50:14.120 about is interesting, is that like when people think of money, 0:50:14.200 --> 0:50:16.240 like when they think of like a dollar or a euro, 0:50:16.560 --> 0:50:19.280 I think the first thing that usually comes to mind 0:50:20.200 --> 0:50:23.360 is the physical version. But I realized what I've like 0:50:23.440 --> 0:50:25.839 sort of like come to appreciate over the years is 0:50:26.120 --> 0:50:29.200 the physical version is like the weird freak show thing 0:50:29.280 --> 0:50:32.399 that doesn't really fit into anything else, so we tend 0:50:32.400 --> 0:50:34.920 to they're not the same. And you know, like the 0:50:35.280 --> 0:50:37.920 physical money, the cash that we have like in our pocket, 0:50:38.200 --> 0:50:41.839 that's like this like narrow slice of the money system. 0:50:41.880 --> 0:50:44.480 It doesn't even really make sense. Most money is credit, 0:50:44.560 --> 0:50:47.799 but it's not it's the direct liability of the central bank. 0:50:47.880 --> 0:50:49.560 But that's also strange, because what does it mean to 0:50:49.560 --> 0:50:52.919 be a liability all the other forms of money, whether 0:50:52.960 --> 0:50:54.960 it's the money that I have in bank, whether it's 0:50:54.960 --> 0:50:57.360 the money that I have in penmo, whether it's the 0:50:57.400 --> 0:51:01.040 money that banks have held at the central bank at 0:51:01.040 --> 0:51:03.840 the foot of reserve, that all sort of like fits 0:51:03.880 --> 0:51:07.680 into like this sort of like nice sort of like 0:51:07.840 --> 0:51:10.759 framework of like credit money that is essentially the core 0:51:10.840 --> 0:51:13.360 of the system. And so the money that most people 0:51:13.400 --> 0:51:16.600 think of is like the weird exception and not the 0:51:16.719 --> 0:51:19.920 rule at all. Yeah, I think when you think about 0:51:19.960 --> 0:51:23.600 it that way, the discussions around cd DC make a 0:51:23.600 --> 0:51:26.640 lot more sense, like why central banks would be trying 0:51:26.719 --> 0:51:30.560 to solve the problem basically of cash being such a 0:51:30.600 --> 0:51:34.000 weird thing and serving such a unique role, a unique 0:51:34.000 --> 0:51:38.160 all be a changing role in society, you know. The 0:51:38.160 --> 0:51:40.279 The other thing is, like we talked about privacy. I mean, 0:51:40.280 --> 0:51:42.640 there are some people who are like really see the 0:51:42.719 --> 0:51:47.480 privacy aspects of cash to be a super negative. I mean, like, uh, 0:51:48.000 --> 0:51:50.759 who is it that um can rogue off? I mean 0:51:50.760 --> 0:51:54.360 he wrote a book basically about how awful cash is, 0:51:55.400 --> 0:51:59.960 how it facilitates crime and tax evasion and corruption other 0:52:00.000 --> 0:52:03.440 and stuff. So while there are some people who are like, okay, 0:52:03.560 --> 0:52:07.960 online digital currencies may solve the problem of anonymous payments 0:52:08.000 --> 0:52:10.879 on the internet in the world without cash. Other people 0:52:10.880 --> 0:52:13.520 will say, like, this is really exciting because we can 0:52:13.520 --> 0:52:16.000 get rid of cash and then there's no more anonymous 0:52:16.000 --> 0:52:18.560 payments anymore than we can go against all these ills 0:52:18.640 --> 0:52:21.080 like drug dealing and money laundering and stuff like that. 0:52:21.160 --> 0:52:23.640 So some people see this as a huge opportunity to 0:52:23.880 --> 0:52:25.880 fix what they see is one of the major flaws 0:52:25.880 --> 0:52:29.120 of money right now. I mean. Other people argue also 0:52:29.239 --> 0:52:32.560 that there are less harmful forms of digital cash already 0:52:32.600 --> 0:52:36.400 in existence, such as gift cards issued by Visa and 0:52:36.480 --> 0:52:41.160 MasterCard things like that. Um, okay. Well, clearly there's a 0:52:41.200 --> 0:52:44.000 lot to unpack when it comes to the very nature 0:52:44.120 --> 0:52:47.000 of money, and we will of course keep talking about 0:52:47.000 --> 0:52:49.560 it on All Thoughts. It's a perennial favorite of ours. 0:52:49.640 --> 0:52:53.000 But for now, should we leave it there? Let's save 0:52:53.040 --> 0:52:56.200 it there. This has been another episode of the All 0:52:56.200 --> 0:52:59.080 Thoughts podcast. I'm Tracy Alloway. You can follow me on 0:52:59.120 --> 0:53:02.160 Twitter at tre See All the Way, and I'm Joe 0:53:02.200 --> 0:53:05.200 Wisn't Though. You can follow me at the Stalwart and 0:53:05.360 --> 0:53:09.280 follow our guest Benay on Twitter he's at B Currey. 0:53:09.719 --> 0:53:13.080 Follow our producer Laura Carlson. She's at Laura M. Carlton. 0:53:13.360 --> 0:53:16.239 Follow the Bloomberg had of a podcast francesco Leavi at 0:53:16.239 --> 0:53:19.839 Francesca Today, and check out all of our podcasts under 0:53:19.880 --> 0:53:22.400 the handle at podcast Thanks for listening.