Speaker 1: Yeah.
Speaker 1: Mhm.
Speaker 1: Hello, you're listening to copy Time, a podcast series on
Speaker 1: markets and economies from DBS group research and time Rebecca.
Speaker 1: Chief economist. Welcome to our 57th episode.
Speaker 1: Today we have the honor of having with us all
Speaker 1: the way from Basel Switzerland dr hyun sanction economic advisor
Speaker 1: and head of research at the Bank for International Settlements
Speaker 1: that are known as B. I. S. Tune has been
Speaker 1: holding this position since May 2014, before which he was
Speaker 1: the huge Rogers professor of economics at Princeton University
Speaker 1: In 2010. Only from Princeton, he served as senior adviser
Speaker 1: to the President of Korea, taking a leading role in
Speaker 1: formulating financial stability policy and developing the agenda for the
Speaker 1: G-20 during Korea's presidency.
Speaker 1: Now
Speaker 1: head of P. I. S Research, we can talk to
Speaker 1: him about global macro financial stability impact of the pandemic
Speaker 1: banking sector trends, corporate sector balance sheets. But today we
Speaker 1: will do none of that. Instead we will focus on
Speaker 1: central bank digital currencies, something we follow very closely at
Speaker 1: DBS and Singapore.
Speaker 1: And it's an issue in which B. I. S. Has
Speaker 1: taken a leadership role
Speaker 1: in outlining the use case, best practice, innovation space and
Speaker 1: implication for backup policies and for societies in general.
Speaker 1: With that in mind,
Speaker 1: Hyun, welcome to copy time.
Speaker 2: Thank you Time. It's a great pleasure to join you.
Speaker 1: Uh Our honor uh is a central bank digital currency,
Speaker 1: nothing more than a digital background.
Speaker 1: And if yes, is it at all transformative?
Speaker 2: Well, I'm not sure about nothing more, but it's certainly
Speaker 2: you can think of CBD CS as a digital form
Speaker 2: of cash. And the way you think about this is,
Speaker 2: you know, at the moment
Speaker 2: when an ordinary user makes a digital payment, you have
Speaker 2: to go through a financial intermediary, like a commercial banks.
Speaker 2: So when you make a payment
Speaker 2: digitally, what you're doing is transferring a deposit claim on
Speaker 2: your bank
Speaker 2: to the receivers. Because this balance at his or her bank.
Speaker 2: Now with the C. B. D. C. As you say,
Speaker 2: it's like digital cash. You can pay someone
Speaker 2: just as you would by handing over cash. But you
Speaker 2: can do it digitally
Speaker 2: using your smartphone or other device is now
Speaker 2: by virtue of the fact that C. B. D. C. S. R.
Speaker 2: A claim on the central bank. And it's very cash light.
Speaker 2: It brings all the advantages that are normally associated with
Speaker 2: central bank money. For example,
Speaker 2: it has the property of finality which means that once
Speaker 2: you've made the tank
Speaker 2: the payment is certain and final without leaving things to
Speaker 2: intermediaries to complete the transaction.
Speaker 2: And there's also a very important symbolic element here as
Speaker 2: well because just like cash
Speaker 2: CBD CS would also serve you like an a salient
Speaker 2: marker
Speaker 2: of the trust in sound money provided by the central bank.
Speaker 1: That's right. And and speaking of central banks, you scan
Speaker 1: the globe. What kind of interest in c b D
Speaker 1: C s do you see among the community of central
Speaker 1: banks these days?
Speaker 2: Well, you can imagine uh this is a very important
Speaker 2: topic among central banks right now. Uh the B. I. S.
Speaker 2: Hosts a number of central bank policy committees,
Speaker 2: a very important standard setter. That base at the G. I. S.
Speaker 2: Is the community on payments and the market infrastructures or C. P. M. I.
Speaker 2: Um and it regularly conducts surveys of central banks and
Speaker 2: in the last survey, something around 86% of the survey.
Speaker 2: Central banks have some kind of research going on at
Speaker 2: the moment on CBDC. S.
Speaker 2: And uh you know, as of as of June 56
Speaker 2: central banks as as far as I know here, uh
Speaker 2: this is a number that I have in front of
Speaker 2: me
Speaker 2: have publicly communicated about either their wholesale or retail CBBC
Speaker 2: projects
Speaker 2: and as you know, quite a few central banks, including
Speaker 2: the people's Bank of China, the brics Bank of Sweden
Speaker 2: are now piloting uh C B D C s. I
Speaker 2: think the short answer is there is a lot of
Speaker 2: interest
Speaker 2: and this is a topic that has a lot of momentum,
Speaker 2: I would say,
Speaker 2: and I think it's a very it's a very good
Speaker 2: sign of where we are in in the current debate,
Speaker 2: both
Speaker 2: on the theory, but also on the, on the practice
Speaker 2: on the monetary system more broadly.
Speaker 1: Okay, so I may be at risk of asking a
Speaker 1: dumb question, which is why
Speaker 1: what kind of payment settlement or societal problems that need
Speaker 1: to be solved that require exploring CDCs?
Speaker 2: Yeah, I think the way to think about this is,
Speaker 2: you know, we're in the digital age. I think the
Speaker 2: most important property, the most important
Speaker 2: feature of the digital age is the centrality of data.
Speaker 2: So in the in the digital economy there is a
Speaker 2: there is a massive amount of data that is generated
Speaker 2: in the ordinary operation of digital economy
Speaker 2: and uh the centrality of data both in business models
Speaker 2: and in in data governance and so on, generates a
Speaker 2: number of very important problems which I think you know
Speaker 2: have
Speaker 2: um emerged that were not perhaps as central as before.
Speaker 2: And uh CBD has really come into their own in
Speaker 2: this setting. You know, when when data
Speaker 2: become so central to the way we conduct business. So
Speaker 2: to put it briefly because of their construction at the
Speaker 2: core of the system,
Speaker 2: C B D C s could offer if you're like
Speaker 2: a number of advantages
Speaker 2: flow from this importance of data. So, for example,
Speaker 2: if you're thinking of setting up a payment system with
Speaker 2: the public interest in mind, so that means, you know,
Speaker 2: we want something which is efficient,
Speaker 2: we want something which has low cost for the user.
Speaker 2: Uh There is a competitive level playing field uh and
Speaker 2: that you're interested in the payment system being inclusive, so
Speaker 2: you're not going to be excluding people uh due to
Speaker 2: their high cost or you know, through not having the
Speaker 2: right kinds of, you know, credentials to join.
Speaker 2: Um then CPS has really come into their own. Now,
Speaker 2: at the at the same time, of course, given the
Speaker 2: centrality of data,
Speaker 2: we also need to bear in mind the importance
Speaker 2: of other safeguards. For example, data privacy and uh data
Speaker 2: governance rules. More generally. While at the same time, we
Speaker 2: also need to have a system which also enables
Speaker 2: integrity of the payment system to be maintained whereby when
Speaker 2: I say integrity, I mean protection from illicit activities and
Speaker 2: uh the system being used to facilitate financial crime.
Speaker 2: So it's uh so ensure what I would say is
Speaker 2: uh C B D C s
Speaker 2: are important because of data
Speaker 2: and the data has emerged because of the digital economy
Speaker 2: and it's less about the technology and more about the economics,
Speaker 2: I would say. And the and how you can channel
Speaker 2: the digital um
Speaker 2: how you can channel the economic forces
Speaker 2: in a digital economy in a way that would serve
Speaker 2: the public interest
Speaker 1: even just as a thought experiment in the middle of
Speaker 1: the Covid outbreak, say last summer,
Speaker 1: if there were indeed CBBC facilities available in countries that
Speaker 1: were being afflicted by the pandemic,
Speaker 2: what kind
Speaker 1: of gains would we have seen in terms of distributive
Speaker 1: policies or policy action?
Speaker 2: Yeah, I think this is a very good question in
Speaker 2: uh an entry into the point that I raised earlier
Speaker 2: about the public interest. So, so what could we have
Speaker 2: done with C B D. C. As well? I think
Speaker 2: the answer is um
Speaker 2: the technology as such is probably secondary. But the way
Speaker 2: that you design the payment system
Speaker 2: with the public interest in mind is more important. And
Speaker 2: I think the, so let me just put it in
Speaker 2: very broad terms then I'll get to some details. So
Speaker 2: I think the the proposition that I put on the
Speaker 2: table is it's much more important that we bear in
Speaker 2: mind the architecture
Speaker 2: rather than the technology,
Speaker 2: but the technology will enable architecture which is more versatile.
Speaker 2: So let me give you a specific example. Um and
Speaker 2: this is something that you raise just now which is
Speaker 2: uh during the pandemic,
Speaker 2: we have a sudden stop of economic activity.
Speaker 2: Um
Speaker 2: There are you know there is financial stress because of
Speaker 2: a
Speaker 2: a stop in the cash flows and many businesses and
Speaker 2: there are households that are
Speaker 2: uh that are seeing um hardship and so on.
Speaker 2: Now one way you can deal with this is to
Speaker 2: infuse fiscal transfers directly to
Speaker 2: businesses and households. Uh So one part of that could
Speaker 2: be just direct transfers, a fiscal transfer if you like.
Speaker 2: They could also be uh you know, guaranteed loans and
Speaker 2: so on.
Speaker 2: Now if you have a payment system
Speaker 2: that has a
Speaker 2: has a fairly complete record of the of the users
Speaker 2: in the system. Uh If everyone has a bank account
Speaker 2: um and you have a good record of uh
Speaker 2: uh the participants in the economy through the payment system,
Speaker 2: you could uh you know, once there is a political
Speaker 2: will to do this,
Speaker 2: you could quite easily make fiscal transfers through the banking system.
Speaker 2: So uh you know one example I would I would
Speaker 2: uh you know, put here, I think Singapore was a case,
Speaker 2: but in many countries when you know, the banking system
Speaker 2: itself is
Speaker 2: pretty well established and uh you have a very inclusive
Speaker 2: payment system,
Speaker 2: um you can make those transfers directly through through people's
Speaker 2: bank accounts. You have
Speaker 2: a good record of uh of the users from the
Speaker 2: from the banking system itself, you can you can use
Speaker 2: that for the public policy purposes.
Speaker 2: And so it doesn't really need a C B D C.
Speaker 2: As such to to really put that into effect so
Speaker 2: that uh so so Korea was a was an example
Speaker 2: where you could, you know, once there was the was
Speaker 2: the political will to do this,
Speaker 2: you could actually put it into practice in a matter
Speaker 2: of days.
Speaker 2: Now,
Speaker 2: what you can also say at the same time, if
Speaker 2: you had a retail CBD see
Speaker 2: as well,
Speaker 2: um it would be like having the same kind of architecture,
Speaker 2: but on a much firmer footing. Um, and so there
Speaker 2: are things you could do on that platform that even
Speaker 2: the well functioning banking system, you know, retail fast payment
Speaker 2: system could not have done.
Speaker 2: And uh so I think that would be, you know,
Speaker 2: one way to think about this now, the important thing
Speaker 2: is just to reiterate that it's about the economics and
Speaker 2: the public policy oriented goals of the payment system
Speaker 2: rather than the technology. The technology
Speaker 2: is pretty neutral as to the outcome in that, you know,
Speaker 2: the same technology that could lead to this virtuous circle
Speaker 2: of greater inclusion, lower costs, better innovation could equally in,
Speaker 2: you know, less favorable circumstances lead to the opposite outcome.
Speaker 2: It could lead to
Speaker 2: a much less favorable loop,
Speaker 2: a feedback loop of, you know, walled gardens,
Speaker 2: um, greater shielding from competition, greater data. Uh, you know,
Speaker 2: holding and entrenchment of incumbents. So it's less about the
Speaker 2: technology and much more about the architecture would say.
Speaker 1: Absolutely. And I want to talk about some of those
Speaker 1: things a little later, but I since we are doing
Speaker 1: a thought experiment, indulge me for another moment, please. Um um,
Speaker 1: liquidity trap is one area where, you know, you issue
Speaker 1: a lot of banknotes, you carry out asset purchases, but
Speaker 1: they just end up as balances in the central bank
Speaker 1: because banks don't have the confidence to land or even
Speaker 1: if people want to, you know, have people have the cash,
Speaker 1: they don't have the confidence to spend savings straight
Speaker 2: jump. So
Speaker 1: the ultimate
Speaker 1: time bomb helicopter money I issue CBD sees that expire
Speaker 1: in a week, which forces people to spend. Uh that's
Speaker 1: something that no cash or anything
Speaker 2: else can do, right?
Speaker 2: Yes. You know, there are things you could do with C. B. D. C. S,
Speaker 2: that you could not do in the conventional banking system.
Speaker 2: Um And what you described as a version of what
Speaker 2: has been called programmable money.
Speaker 2: Now, in a sense, the term programmable money is a
Speaker 2: bit of a bit of an oxymoron because, you know,
Speaker 2: the nature of money
Speaker 2: is um
Speaker 2: of something which is immutable, something which uh you know,
Speaker 2: is not information and sensitive, you know, the
Speaker 2: uh in the economics literature,
Speaker 2: uh you know, liquidity and manliness has to do with
Speaker 2: the fact that it is it is non contingent
Speaker 2: uh programmable money. You know, you could think about that
Speaker 2: as a kind of a voucher. Uh It's a it's
Speaker 2: a claim that has certain contingencies built into it.
Speaker 2: So you can do that. But I wouldn't pin
Speaker 2: the rationale for CBD CS on merely its program ability.
Speaker 2: I think those are kind of,
Speaker 2: you know, additional features that you could you could build
Speaker 2: on top.
Speaker 2: Um
Speaker 2: But I think the much more important point is that
Speaker 2: CBD CSR A
Speaker 2: um she like another incarnation of the classical notion of money,
Speaker 2: which is as a non contingent plane.
Speaker 2: It's something which does not change in value because of
Speaker 2: certain circumstances. The economy,
Speaker 2: you know, it is the it is the promise.
Speaker 2: It is a foundational promise, if you like. From which
Speaker 2: all other promises in the economy
Speaker 2: then follow. So yes, we can talk about programmable money,
Speaker 2: but I would think of it more as vouchers
Speaker 2: rather than money. Um and we can do, you know,
Speaker 2: various clever things on top, but I would think those
Speaker 2: are pretty second
Speaker 1: great. Um So so far we have talked about payments
Speaker 1: in the domestic setting. I want to sort of switch
Speaker 1: a little bit toward the cross borders aspect earlier this year.
Speaker 1: I think it was in March, there was a B. I. S.
Speaker 1: Working paper and I think it began with cross border
Speaker 1: payments are inefficient and technology could play a role in
Speaker 1: making them better.
Speaker 1: One means could be through inter operating central bank, digital
Speaker 1: currency Cbc's forming multi C B D. C, or M
Speaker 1: C B. D. C arrangements.
Speaker 2: So if
Speaker 1: you would help us unpack some of the notions embedded
Speaker 1: in those two sentences First,
Speaker 1: how big are cross border payments and how do we
Speaker 1: measure the degree of inefficiency in this area?
Speaker 2: Yeah, So that's, so this is um, you've raised a
Speaker 2: very important policy issue. It's one of the uh, one
Speaker 2: of the top policy questions
Speaker 2: In the G20, for example, in various multilateral setting,
Speaker 2: I think the first thing to say is uh, you know,
Speaker 2: we've so far talked about retail payments. It's it's for
Speaker 2: ordinary users, uh,
Speaker 2: household small businesses.
Speaker 2: Um,
Speaker 2: there is, of course, a much larger volume payment system
Speaker 2: among financial intermediaries. And so the first thing would be
Speaker 2: to
Speaker 2: to distinguish, if you like, the retail CBBC discussion
Speaker 2: from the wholesale cBBC discussion, which is about the payments
Speaker 2: between financial institutions, which tend to be, you know, in
Speaker 2: in uh, face values much larger than the retail payments.
Speaker 2: So, there is a discussion
Speaker 2: on multi
Speaker 2: cBC arrangements uh, in the wholesale setting. The for example,
Speaker 2: you may have seen this week that the B. I.
Speaker 2: S Innovation have announced the
Speaker 2: the euro project, which is this a joint project between
Speaker 2: the Central bank of France? The bomb to France with the,
Speaker 2: with the Central bank of Switzerland,
Speaker 2: the Swiss National Bank and the bees innovation hub is
Speaker 2: also
Speaker 2: part of that, together with the private sector consortium.
Speaker 2: And there the idea is, can we link the payments
Speaker 2: across borders and across currencies? Because, you know, Switzerland users
Speaker 2: with franks
Speaker 2: France uses euros.
Speaker 2: Uh can we think of uh
Speaker 2: linking the payments between the financial systems of uh, of
Speaker 2: Switzerland and France
Speaker 2: using a C B D C, uh, you know, architecture.
Speaker 2: And you know, there are similar projects going on in Asia.
Speaker 2: You know, there was an earlier announcement which I'm sure
Speaker 2: you've seen uh, of the, of the circle c b
Speaker 2: D c bridge between the Hong kong monetary authority and
Speaker 2: the back of Thailand,
Speaker 2: you know, which is now expanded to include
Speaker 2: china and the United Arab Emirates. Uh that is also
Speaker 2: a wholesale CBBC project.
Speaker 2: So, you know, there are projects like this going on
Speaker 2: and
Speaker 2: and they're the main advantage is that because we're talking
Speaker 2: about financial institutions, we we have fewer players that are
Speaker 2: involved
Speaker 2: the issues to do with data privacy and uh
Speaker 2: you know, invasion of personal data, that kind of thing.
Speaker 2: That is less of an issue
Speaker 2: because these are all regulated institutions, you know, we uh
Speaker 2: we have a much more direct way of just extending
Speaker 2: the current system which is already, you know, digital. I
Speaker 2: mean the the helpful payment system is already digital um
Speaker 2: in that banks have an account at the central bank
Speaker 2: and the settlement is done you know, digitally, but the
Speaker 2: but by bringing in a cBC in that context, you
Speaker 2: can bring in additional features like the fact that
Speaker 2: um you don't need to, you know, wait for settlement
Speaker 2: to take place. You can have an immediate settlement. So
Speaker 2: you can have, for example what's called a payment versus
Speaker 2: delivery type of setting where in the context of a
Speaker 2: securities transaction, you can have an immediate settlement
Speaker 2: without having a separate process which takes some time, which
Speaker 2: brings an operational list and so on.
Speaker 2: And in a cross currency setting, we have the payment
Speaker 2: versus payment idea where you can have an immediate transaction
Speaker 2: across currencies
Speaker 2: without necessarily having uh this awkward, you know, gap where
Speaker 2: you have some some settlement.
Speaker 2: So there are these additional
Speaker 2: advantage which somewhat hard back to what we discussed just
Speaker 2: now on the on the program ability. So there are
Speaker 2: ways of
Speaker 2: building in these automatic features
Speaker 2: on top of the system. Now, those are wholesale systems.
Speaker 2: Um, and so they are not something that ordinary users
Speaker 2: would necessarily notice that even if they are rolled out,
Speaker 2: what's really, I think a much more ambitious project is
Speaker 2: what's going on, for example, in the financial stability board
Speaker 2: in the G 20
Speaker 2: which is about how do we improve the retail payment system.
Speaker 2: So this is about ordinary users about remittances. Um, so,
Speaker 2: you know, workers sending money back home
Speaker 2: uh and tourism, for example, tourism expenditures. Now, uh the
Speaker 2: figure that we should have in mind is, you know,
Speaker 2: just before the pandemic, we had something around. Um
Speaker 2: So in the whole of 2019 were something like $720
Speaker 2: billion dollars
Speaker 2: in in in remittances cross border.
Speaker 2: Uh you know that that sounds like a big number
Speaker 2: but it's probably you know smaller than it could be
Speaker 2: because this is a system which has a lot of frictions,
Speaker 2: its high cost, it's about access.
Speaker 2: Uh huh.
Speaker 2: Uh If you compare that with tourism, so tourism was
Speaker 2: something in the order of double that
Speaker 2: 1 1/2 trillion. So tourism expenditure in 2019
Speaker 2: is around 1.5 trillion. So that even compared to tourism expenditure,
Speaker 2: remittances
Speaker 2: were fairly small. And so I think this is the
Speaker 2: area where uh there's probably more scope
Speaker 2: but this is also the area where the challenges are
Speaker 2: much greater because if you want to extend a retail
Speaker 2: CBC
Speaker 2: into a cross border context, I mean there are lots
Speaker 2: of
Speaker 2: both technical issues but less technical but more policy issues.
Speaker 2: For example,
Speaker 2: if you want to extend the retail CBD see abroad,
Speaker 2: how do you manage the ledger? how do you manage
Speaker 2: the record keeping
Speaker 2: that actually makes the retail cbc work because
Speaker 2: a retail C. B. D. C. Is in essence a
Speaker 2: digital ledger
Speaker 2: of who has made a transfer to who and therefore
Speaker 2: who owns what balances at what time.
Speaker 2: Now, if you want to extend that
Speaker 2: to the cross border context, you need to have some
Speaker 2: way of keeping track of what people abroad are doing.
Speaker 2: And uh so issues like digital I. D. How do
Speaker 2: you operationalize across border digital I. D. Can we even
Speaker 2: think about a super national ID? So those are really
Speaker 2: very very high level questions
Speaker 2: now. Uh It's I think fair to say that although
Speaker 2: these challenges are very large,
Speaker 2: there are ways of circumventing uh you know, some of
Speaker 2: the uh you know, there are ways of overcoming, I
Speaker 2: would say you know, some of the key challenges
Speaker 2: and this is an area where we need to work
Speaker 2: much harder because it is, it is something that needs
Speaker 2: a lot,
Speaker 2: uh, a lot more forward. So, uh, so ensure, so
Speaker 2: this has been a very long answer, but in short
Speaker 2: for wholesale CBD CS, there's been great progress. And I
Speaker 2: think from the point of view of a commercial bank,
Speaker 2: and I'm sure that you've been following this very closely
Speaker 2: for wholesale settlement. For cross currency, For securities settlement, there's
Speaker 2: been great progress. I think we have
Speaker 2: a pretty clear view, I would say, of how these
Speaker 2: systems would work.
Speaker 2: Um, you know, there's a great deal of, uh, you know,
Speaker 2: continuity with the work that's already been done.
Speaker 2: Um, it's more of an evolution because, you know, CLS
Speaker 2: is something that is already there
Speaker 2: And it's a well established piece of infrastructure 20 years old.
Speaker 2: And these new infrastructures are going to be just building
Speaker 2: on that
Speaker 2: retail c b D c s, that's a whole different matter.
Speaker 2: And
Speaker 2: domestic retail CDCs present challenges to do with privacy, digital idea.
Speaker 2: And so in the cross border context, there are some
Speaker 2: really very difficult policy question.
Speaker 1: Right.
Speaker 1: Um, so one thing that we have been looking with
Speaker 1: some degree of interest in our part of the world
Speaker 1: is that blocking scheme that central Michael cambodia has come
Speaker 1: up with
Speaker 1: precisely to help
Speaker 1: 10 million workers in Thailand and elsewhere to send money
Speaker 1: back home. And they have gotten in touch with a
Speaker 1: Japanese dlt companies who use that distributed ledger to create
Speaker 1: a trail so that workers living in Thailand can send
Speaker 1: money home and be sort of, you know, secure in
Speaker 1: the trail with which the money is going. And of
Speaker 1: course the transaction costs
Speaker 1: interior will be substantially lower. But you're right, this is
Speaker 1: you know, early days what's going on.
Speaker 2: So, you know, you've already
Speaker 1: touched upon some of the potential frictions and operational challenges, um,
Speaker 1: from a theoretical perspective shared with us the ideal design feature,
Speaker 1: I mean how would you design like a perfect cbc?
Speaker 2: Yeah, I'm not sure that you know, there is a
Speaker 2: there is a perfect one. I think the the way
Speaker 2: that one would go about doing this is you know,
Speaker 2: there are some things that we cannot really change or
Speaker 2: you know, we shouldn't try to change. So for example,
Speaker 2: if
Speaker 2: uh you know, we have sovereign countries and so, you know,
Speaker 2: they sovereign countries will have their own
Speaker 2: uh, you know, data frameworks. They will have their own
Speaker 2: approach to
Speaker 2: how to think about the linking of administrative dataset and
Speaker 2: so on.
Speaker 2: Uh there are different philosophies and you know, different political
Speaker 2: imperatives if you like. So
Speaker 2: there are some things which are just you know uh
Speaker 2: features that we have to take is given.
Speaker 2: And the question is when we take those features is
Speaker 2: given and those are like beyond the technical design elements.
Speaker 2: What are the design features that we could um
Speaker 2: that would put in place
Speaker 2: that would maximize you know, that would promote the public
Speaker 2: good
Speaker 2: in a way that is um
Speaker 2: going to respect both of those uh you know, both
Speaker 2: the underlying circumstances that we cannot change
Speaker 2: but also tackle uh the frictions that are you know
Speaker 2: much more amenable
Speaker 2: now I think one issue is uh so there is
Speaker 2: a set of issues which are technical
Speaker 2: uh you mentioned back on coin which I think is
Speaker 2: a very important development.
Speaker 2: Uh I um um
Speaker 2: you know it's been
Speaker 2: a couple of years actually when uh
Speaker 2: uh since uh since since back and corn was launched
Speaker 2: and I've been following it very closely obviously.
Speaker 2: Um So there are uh technical issues for example, you know,
Speaker 2: should we used a distributed ledger
Speaker 2: approach or is a centralist ledger approach more appropriate
Speaker 2: and different jurisdictions that will follow, you know, different parts
Speaker 2: um In in china of course it's uh it's more
Speaker 2: the centralised level approach
Speaker 2: uh which has you know, some some technical advantages which
Speaker 2: have to do with greater
Speaker 2: greater processing capacity and uh
Speaker 2: uh there are things that you know, you can also
Speaker 2: do with centralized system
Speaker 2: um which might be easier to link to the to
Speaker 2: the current two tier system and so on.
Speaker 2: Um
Speaker 2: So there are a number of
Speaker 2: technical issues which I think we can uh we can tackle.
Speaker 2: Um and there I think the circumstances in each jurisdiction
Speaker 2: will take. You know which way you go.
Speaker 2: I think the much more important than more difficult issues
Speaker 2: the ones that have to do with policy. So I've
Speaker 2: already I've already raised one issue which has to do
Speaker 2: with digital ID.
Speaker 2: So you know 11 fork in the road when we
Speaker 2: design CBD. So just do we want to go down
Speaker 2: the route of a I. D. Base?
Speaker 2: Digital I. D. Based account based system where uh membership
Speaker 2: of the network is um
Speaker 2: is granted by virtue of the fact that you are
Speaker 2: a uh that you have a digital I. D. In
Speaker 2: the system and you're granted accounts
Speaker 2: uh in a financial intermediary whereby you become a member
Speaker 2: of that network.
Speaker 2: Or do we go down the route of a token
Speaker 2: based system? Uh You know like Bitcoin
Speaker 2: where um
Speaker 2: you are a member of the network through by by
Speaker 2: virtue of the fact that you have a private key
Speaker 2: to accessing, you know, your address in the inner network
Speaker 2: in the Blockchain. So there uh in the case of
Speaker 2: Bitcoin you have uh you know you have
Speaker 2: a private key, that's your address but you can mask
Speaker 2: your true identity behind you know that private key.
Speaker 2: Now I think there is pretty broad consensus, I would say.
Speaker 2: Um but it's not universal uh
Speaker 2: especially among the among the crypt a crowd, but I
Speaker 2: think there's pretty broad progress that if we want to
Speaker 2: improve the current system, it's almost certainly going to be
Speaker 2: the case that we will need to go down an
Speaker 2: account based system with with with a verified digital I. D.
Speaker 2: It's just I think uh just infeasible to think that
Speaker 2: we can build a whole system around something is elaborate
Speaker 2: and uh
Speaker 2: you know, something is awkwardly
Speaker 2: um uh something is awkward to use as a kind
Speaker 2: of private key based uh a pseudonymous system,
Speaker 2: but once we go down the digital idea route,
Speaker 2: we have to think about how do we link the
Speaker 2: digital ID systems across jurisdictions?
Speaker 2: Um And here, I think this goes back to the
Speaker 2: policy question, this is not about about the technology,
Speaker 2: it's about sovereignty, it's about, you know, the
Speaker 2: the will of the people, if you like,
Speaker 2: because I think that the idea that a foreign entity
Speaker 2: would have access to the digital ID in your jurisdiction,
Speaker 2: I think that would be a very uh you know,
Speaker 2: high hurdle to actually cross. So if we want to
Speaker 2: link C B. D. C systems across borders,
Speaker 2: there would have to be a way of respecting each
Speaker 2: other's sovereignty
Speaker 2: while allowing each of these uh of the jurisdictions to
Speaker 2: make use of the EID systems in the other jurisdictions.
Speaker 2: I think here a cross border cooperation is going to
Speaker 2: be very important and there are ways of doing this. So,
Speaker 2: you know, one principle that I think is very important
Speaker 2: here is
Speaker 2: uh
Speaker 2: we can link payment systems without needing to have a,
Speaker 2: you know, super national I. D. Uh infrastructure, so there's
Speaker 2: no one single entity that is the all seeing eye
Speaker 2: over everything.
Speaker 2: We can actually each have a piece of the jigsaw puzzle.
Speaker 2: Uh I think of it like the jigsaw puzzle, each
Speaker 2: entity has a piece of the jigsaw puzzle,
Speaker 2: so no one actually has the full view, it's only
Speaker 2: the individual
Speaker 2: that has the full view over his or her personal details,
Speaker 2: um but each party has a slice of that.
Speaker 2: Um But there are ways of linking each of these
Speaker 2: uh you know aspects or slivers if you like
Speaker 2: and making the cross border transactions operational.
Speaker 2: So
Speaker 2: you know it so this is where we need to
Speaker 2: draw on cryptography. So it's the same kind of principles
Speaker 2: that power cryptocurrencies in the whole point of cryptocurrencies is
Speaker 2: that
Speaker 2: you know we can use these digital signatures that come
Speaker 2: from the
Speaker 2: from the private keys to validate transactions. You can use
Speaker 2: the same kind of technology but in the current system
Speaker 2: with digital IEDs that mask most of details except for
Speaker 2: the ones that are absolutely essential for that piece of transaction.
Speaker 2: And this is something that's already in place
Speaker 2: uh in many of the retail systems um where you
Speaker 2: know if you have an A. P. I. In the
Speaker 2: retail payment systems,
Speaker 2: you know you can open the app of one bank
Speaker 2: and check the balances in the other bank.
Speaker 2: Um And you can do that because you know when
Speaker 2: when you when you log onto the app of one bag,
Speaker 2: you can send messages to the other bag that authenticate
Speaker 2: the fact that you are the person that you claim
Speaker 2: to be.
Speaker 2: But the other bank doesn't divulge everything to bank A
Speaker 2: the other bank would only divulge the absolutely central pieces.
Speaker 2: So you know, it will tell you your balances
Speaker 2: but not for example your address or your payment record
Speaker 2: and so on.
Speaker 2: So the technology is not that special, it's already there.
Speaker 2: And what the C. B. D. C. S. Would do
Speaker 2: is just make this more seamless. And I guess, you know,
Speaker 2: it was something it would be something that uh would
Speaker 2: just take what's going on right now but make it
Speaker 2: technically smoother and uh
Speaker 2: and more efficient. So sorry for the very long answer.
Speaker 2: But I think that's a
Speaker 2: you know this needed to be said
Speaker 1: great okay so moving on from the architecture issue to
Speaker 1: the issue of exchange rates. We live in a world
Speaker 1: of currency trading. Fx rates being quoted by dealers on
Speaker 1: a second by second basis.
Speaker 1: How would that be impacted by an M. C. B. D. C.
Speaker 1: Type arrangement and will actually make things more stable?
Speaker 2: Yes. I think this goes back to our previous conversation
Speaker 2: about program ability. Um So at the moment there's a
Speaker 2: whole um
Speaker 2: uh you know intermediation system is built on the idea
Speaker 2: that payment is made when you
Speaker 2: you know debit the account of the of the center
Speaker 2: and you credit the account of the receiver.
Speaker 2: Um And if the receiver is uh in another jurisdiction
Speaker 2: um and using another currency you need the whole chain
Speaker 2: of intermediary,
Speaker 2: you know to make that uh you know to make
Speaker 2: that transfer to make that work.
Speaker 2: Um If you have a C. B. D. C. Potentially
Speaker 2: what you can do is to use its functionality
Speaker 2: to have an immediate transfer payment versus payment,
Speaker 2: so to speak, in the jargon transfer um Where you can,
Speaker 2: you know debit the account of the of the center
Speaker 2: and credit the account of the receiver instantaneously. Um Now
Speaker 2: for that to happen you need if you like the
Speaker 2: infrastructure
Speaker 2: that not only allows cbs you use in each jurisdiction,
Speaker 2: you need also some infrastructure that connects
Speaker 2: the two C. B. D. C. Systems.
Speaker 1: Right? And and to the fx market because at the
Speaker 1: end of the day
Speaker 2: you need to the fx market so you will need,
Speaker 2: so if you like, you know that infrastructure
Speaker 2: would need to you know have the capacity to have
Speaker 2: a kind of instantaneous uh transaction across currencies as well
Speaker 2: as the transfer across accounts you know across the jurisdiction.
Speaker 2: So there are two dimensions as they cross jurisdictional dimension
Speaker 2: if you like. A cross border dimension
Speaker 2: as well as the cross currency dimension.
Speaker 2: That's right.
Speaker 1: Um Google financial transactions are dominated by the U. S.
Speaker 1: Dollar uh used widely for payments, invoicing goods and financial
Speaker 1: assets pricing and so on.
Speaker 1: Do you see the proliferation of C. B. D. C.
Speaker 1: S changing that in any way?
Speaker 2: Um I think you know um
Speaker 2: perhaps over the very long run but I think it's
Speaker 2: important to bear in mind that the payment system doesn't
Speaker 2: you know, float in a vacuum uh float separately from
Speaker 2: the underlying economic transactions. Um
Speaker 2: The role of the dollar and in fact the role
Speaker 2: of any international currency um
Speaker 2: uh is really predicated on the need of the users.
Speaker 2: So you know, before the dollar was uh it was
Speaker 2: pound sterling
Speaker 2: or even gold even before then
Speaker 2: and they're the
Speaker 2: currency becomes international because users demand that currency for the transactions.
Speaker 2: Uh It has to do with trade, it has to
Speaker 2: do with the certainty of the settlement, it has to
Speaker 2: do with the legal framework it's on.
Speaker 2: So I would say that we should not put too
Speaker 2: much emphasis on the technology as such, so just because
Speaker 2: the currency is digital,
Speaker 2: um it doesn't mean that that's somehow going to be
Speaker 2: adopted universally, there has to be an underlying need
Speaker 2: and so it's the combination I would say of the
Speaker 2: need um and the technology which is going to facilitate
Speaker 2: a currency to become international,
Speaker 1: right?
Speaker 1: Uh And I like the combination aspect that you just
Speaker 1: mentioned because then when I think of china being such
Speaker 1: a large source of global trade and intermediary of capital
Speaker 1: inflows and outflows as they make their currency for international.
Speaker 1: It would seem to me just from a logical perspective
Speaker 1: there will be greater demand of holding it so far.
Speaker 1: We haven't seen much of that,
Speaker 1: but perhaps the E. C. N. Y. On a cross
Speaker 1: border basis compliment
Speaker 1: that that move, we'll have to see about that.
Speaker 1: Uh You know, I wanted to ask you about stable coins,
Speaker 1: why can't private sector stable coins solve all the problems
Speaker 1: that we talked about earlier about the inefficiencies associated with
Speaker 1: cross border payments.
Speaker 2: Oh
Speaker 2: yeah, so this is a very very good question and
Speaker 2: you know this is a this is a live policies
Speaker 2: who and we have that debate about libere a couple
Speaker 2: of years ago.
Speaker 2: Um
Speaker 2: I think the
Speaker 2: the first point to make is that you know, the
Speaker 2: currency is a promise of the central bank. So even
Speaker 2: for stable coins,
Speaker 2: they derive, you know, their value, that the stability of
Speaker 2: their value from the fact that it is building on
Speaker 2: the conventional financial system. It is, it is built.
Speaker 2: The fact that it's a stable coin um is by
Speaker 2: virtue of the fact that is that is building on
Speaker 2: conventional currency. So, you know, either
Speaker 2: uh bank deposits
Speaker 2: or uh government securities, you know, they're holding some assets
Speaker 2: that back the value disabled coins now to that extent,
Speaker 2: um you know, you can think of stable coins as
Speaker 2: being um
Speaker 2: a few, like an appendage of the current system, it's
Speaker 2: not a separate system as such. Now, the problem,
Speaker 2: if a stable coin were to take off is that,
Speaker 2: you know, one of the features of
Speaker 2: the monetary system is the importance of the coordination effect.
Speaker 2: Uh the coordination problems that are solved by money.
Speaker 2: Um There was this natural network effect where the more
Speaker 2: people use one currency, the more people want to use
Speaker 2: that currency. Now
Speaker 2: if you have a stable coin, what it does is
Speaker 2: it fragments that payment system.
Speaker 2: So it's like saying, you know, we have uh the
Speaker 2: uh the currency which is the promise of the central
Speaker 2: bank
Speaker 2: and it's you know being used by the commercial banks.
Speaker 2: Um
Speaker 2: And in turn it's being used by all the retail customers.
Speaker 2: If you have a stable chord, it's like having another
Speaker 2: kind of
Speaker 2: um
Speaker 2: another entity which then has its own closed network. Now
Speaker 2: if you can somehow ensure that there is interoperability
Speaker 2: between the stable coin and the conventional financial systems have resulted.
Speaker 2: If you open, you know you're banking app
Speaker 2: and you can just make a payment to a user
Speaker 2: of the stable coin just this way, just in the
Speaker 2: same way that you could
Speaker 2: um
Speaker 2: to the users in another commercial bank account, then I
Speaker 2: think that would still preserve that network effect and the
Speaker 2: feature of money as a coordination device.
Speaker 2: But if somehow that stable coin were to build its
Speaker 2: own close network
Speaker 2: a walled garden and it has proprietary information it uses,
Speaker 2: you know, it affords data of its users. Perhaps it's
Speaker 2: a big tech firm that has a social media business
Speaker 2: or e commerce business
Speaker 2: and the commercial banks cannot access that information. And that's
Speaker 2: something which would go against this idea of the monetary
Speaker 2: system as a coordination device. And it would lead to
Speaker 2: I feel like a fragmentation of the monetary system.
Speaker 2: And uh it also gives rise to problems that we
Speaker 2: spoke about at the very beginning, which is about
Speaker 2: data privacy, about money as a public good.
Speaker 2: Um and the importance of having a competitive level playing field.
Speaker 2: So if you have a closed network
Speaker 2: um that is very uh you know that's going to
Speaker 2: undermine this public good nature in some respects and that
Speaker 2: uh to be a user of that network, you have
Speaker 2: to be a member.
Speaker 2: You have to if you like consent to your data
Speaker 2: being used only for that network.
Speaker 2: And there are not the links that will ensure the interoperability.
Speaker 2: So in short
Speaker 2: what I would say is stable coins uh you know
Speaker 2: might be okay. They are not a game changer in
Speaker 2: the same way that cryptocurrencies are
Speaker 2: but they may not ensure interoperability
Speaker 2: and in that respect that you know they may fragment
Speaker 2: the monetary system and go against the public good nature
Speaker 2: of money.
Speaker 1: I think we've seen some of these discomforts um displayed
Speaker 1: by the Chinese authorities in recent years, especially with the
Speaker 1: Alibaba and 10 cents. And their nature of those you
Speaker 1: know there are so large and their networks are so
Speaker 1: powerful in some ways.
Speaker 1: The way the nature of money from depositing to lending
Speaker 1: to intermediation, everything is happening within those networks and from
Speaker 1: PBS is perspective. I think it was becoming challenging just
Speaker 1: to keep a track of what was going on independent
Speaker 1: of the notion of those guys coming up with their
Speaker 1: own stable coins. Already. It was becoming challenging. So yeah,
Speaker 1: um
Speaker 1: questions something that you have touched upon earlier uh issue
Speaker 1: related to data privacy will see BDC's undermine that
Speaker 2: I think preserving the safeguards on data privacy will be
Speaker 2: a very important design feature of CVD six. But I
Speaker 2: think it's
Speaker 2: um
Speaker 2: it is actually you know uh
Speaker 2: having
Speaker 2: um safeguards on your on your personal data. This is
Speaker 2: uh not simply an economic
Speaker 2: issue, it is something which is even more basic, it
Speaker 2: has the attributes of a basic right
Speaker 2: and uh you know, there are some differences across jurisdictions,
Speaker 2: I think some countries put more weight on this than others,
Speaker 2: but those are small differences compared to. I think the
Speaker 2: main point, which is that there has to be
Speaker 2: design features which safeguard data privacy.
Speaker 2: On the other hand, we have to make sure that
Speaker 2: the payment system isn't just going to be a playground
Speaker 2: for criminals. So we need to make sure that just
Speaker 2: as the current system
Speaker 2: that we have the way to preserve
Speaker 2: uh that you know, uh integrity of the payment system
Speaker 2: that we can guard against illicit activities as well.
Speaker 2: I think this is where we have to go back
Speaker 2: to that earlier discussion about
Speaker 2: ways of designing safeguards, where no one party has access
Speaker 2: to the full set of data.
Speaker 2: Um The the you know the idea of an all
Speaker 2: seeing eye that has access to everything about you, you
Speaker 2: know your personal details, where you live,
Speaker 2: uh you know what kind of brand of toothpaste you by,
Speaker 2: where you had dinner,
Speaker 2: uh you know what was on your menu and so on.
Speaker 2: So that's really a kind of caricature but that's the
Speaker 2: kind of um So if you like the limit of
Speaker 2: that spectrum where if one party has every piece of information,
Speaker 2: you could potentially have this concentration of data,
Speaker 2: you know, which would undermine this idea of data as
Speaker 2: a as a you feel like a basic right? And
Speaker 2: so we can take a leaf out of the way
Speaker 2: that the data privacy issue has been tackled already. Um
Speaker 2: So for example if you know I have a mobile
Speaker 2: phone and I can access a payment network through the
Speaker 2: mobile phone number.
Speaker 2: Um there's no reason why you can go from the
Speaker 2: mobile number two, everything about who you are and what
Speaker 2: you've done and what you've bought in the supermarket.
Speaker 2: So um if we can keep each of these pieces
Speaker 2: of information separately and have safeguards,
Speaker 2: which means that you know the central bank who is
Speaker 2: going to be executing these transactions uh only have access
Speaker 2: to that piece of data. Those pieces of data there
Speaker 2: are absolutely essential for that transaction to take place
Speaker 2: without having um
Speaker 2: you know all the information that also could be assembled.
Speaker 2: So you know the full picture can only be gained
Speaker 2: by the individual concerns only. You know what you thought,
Speaker 2: you know what brand of toothpaste report,
Speaker 2: you know what money you have transmitted and so on.
Speaker 2: Um for the operator of the payment system. They don't
Speaker 2: need to know you know what brand of toothpaste you book.
Speaker 2: Um They only need to know that you know there
Speaker 2: was this account that remitted that money to that account.
Speaker 2: And so we need to design this kind of you
Speaker 2: know Federated system if you like. Where uh we have
Speaker 2: uh each
Speaker 2: Piece of the system has one sliver of the data.
Speaker 2: Uh so that if you collect all the slivers you
Speaker 2: can construct the whole picture
Speaker 2: so each person has so each party has a piece
Speaker 2: of the jigsaw puzzle.
Speaker 2: But if you connect the dots and construct the whole
Speaker 2: picture you can get the full picture. But there is
Speaker 2: no need for one party
Speaker 2: to have full access to everything. So I think once
Speaker 2: we think along these lines and cryptography has really advanced
Speaker 2: a lot. And so
Speaker 2: if you like the
Speaker 2: the power of public key cryptography is going to be
Speaker 2: a very very sexual pieces of technology for us to
Speaker 2: For us to build on. And this technology has been
Speaker 2: around for decades. I mean this is a technology that
Speaker 2: comes in 1970s and it's already used in um in
Speaker 2: the current system. So for example you know we talked
Speaker 2: earlier about the open banking system where you open the
Speaker 2: bank of
Speaker 2: of one bank and then you can check the balances
Speaker 2: in all your other accounts that is currently based on
Speaker 2: the same technology. So it's just a matter of
Speaker 2: taking you know that kind of architecture and making sure
Speaker 2: that we can preserve privacy um all along the way.
Speaker 1: Is there a fiscal policy
Speaker 2: dimension to all this?
Speaker 2: Yes. Absolutely. And so so this is something that we
Speaker 2: talked about earlier about. How do you disperse um
Speaker 2: payments to households businesses in an emergency like during the pandemic.
Speaker 2: Um So if you had these personal details and the
Speaker 2: uh and the account details you can do that through
Speaker 2: the banking system. So you know um
Speaker 2: if you have a retail payment system that is set
Speaker 2: up already that respects this inclusive nature that everyone has
Speaker 2: access to a bank account, everyone has access to digital payment.
Speaker 2: You can already do it
Speaker 2: um Using the conventional banking system.
Speaker 2: So there's nothing you know knew about that.
Speaker 2: The C. B. D. C. By itself is not going
Speaker 2: to change that. It's just another way of
Speaker 2: building that inclusive payment system. Um There are some additional
Speaker 2: features that we talked about like the program ability to
Speaker 2: some extent they are you know if you like the
Speaker 2: you know the cream on the top.
Speaker 2: But I think that that would be a secondary feature
Speaker 2: compared to the
Speaker 2: the universality of access and inclusive natural payment system and
Speaker 2: that's already in place.
Speaker 2: Uh And you can go a long way um uh
Speaker 2: without having CBD seeds. And I would say that uh
Speaker 2: you know for many countries you don't need a cbc
Speaker 2: to have these good features if you're already you know
Speaker 2: pretty much there.
Speaker 2: But he was in the
Speaker 1: last few decades, maybe in the last half century. We
Speaker 1: have talked about central bank independence and giving the central
Speaker 1: bank semiautonomous.
Speaker 2: But the way you're
Speaker 1: describing the means of transferring benefits and it seems to
Speaker 1: me that monetary fiscal are all coming together. One entity
Speaker 1: is issuing the currency. The other entity typically is in
Speaker 1: charge of transfers. But it seems like now it's all together,
Speaker 2: I think we have to separate those. Um So I
Speaker 2: think we need to think of this very much in
Speaker 2: terms of the dispersement. Um So once the political decision
Speaker 2: has been made,
Speaker 2: once, you know, there has been a fiscal decision to
Speaker 2: distribute
Speaker 2: um you know, these dispersants to households and firms,
Speaker 2: then it's a you know, then it's a matter of
Speaker 2: getting the money to people who need it.
Speaker 2: I think what you're describing is what uh commonly is
Speaker 2: referred to as helicopter money, where we can just, you know,
Speaker 2: blur the lines between monetary policy and fiscal policy
Speaker 2: and just you know, uh use the central bank balance
Speaker 2: sheet to distribute money.
Speaker 2: Now that's something that is separate from, I think what
Speaker 2: we've been talking about, that's more about the nature of
Speaker 2: the central bank, uh the nature of
Speaker 2: the separation of monetary policy and fiscal policy. So I
Speaker 2: think that is um
Speaker 2: uh an issue that would arise even in a conventional
Speaker 2: payment system. It's not really about the payment system which
Speaker 2: is which is about, so, you know, it's worth bearing
Speaker 2: in mind that
Speaker 2: um
Speaker 2: the level of cash,
Speaker 2: so the amount of cash in circulation is typically a
Speaker 2: very small fraction of the total bank deposit. So bank
Speaker 2: deposits
Speaker 2: which are used as a store of value and which
Speaker 2: are used as a funding source for the loans to borrowers,
Speaker 2: you know, that's a much larger some than the cash
Speaker 2: in circulation.
Speaker 2: You should think of. The C. B. D. C. S
Speaker 2: is very much as digital cash. So we're trying to
Speaker 2: make the access to cash more
Speaker 2: efficient.
Speaker 2: Um And we should not,
Speaker 2: you know, overdramatized
Speaker 2: um the uh you know, these other aspects which I
Speaker 2: think uh you know uh it's easy to see why
Speaker 2: we can uh overdramatize them, but, you know, it is
Speaker 2: important to bear in mind that those are separate issues
Speaker 2: that would already arise in the convention system
Speaker 2: and they go well beyond the issue of dispersement and
Speaker 2: the payment system itself.
Speaker 1: Well, in a way you brought us back to exactly
Speaker 1: where we started trump is a very nice look too close.
Speaker 1: Um Finally, bit of prognostication,
Speaker 1: Your vision for CBD CS, five years from now,
Speaker 2: CBD from five years from now. So, you know, we've made,
Speaker 2: if you if we look back five years, I don't
Speaker 2: think many people would have uh you know, forecast that
Speaker 2: we would have made so much progress by now,
Speaker 2: I think from,
Speaker 2: so five years from now, I would say that some
Speaker 2: countries would have made a lot of progress for C
Speaker 2: b D c S.
Speaker 2: Um I think some jurisdictions which are already fairly close,
Speaker 2: we'll be rolling them out.
Speaker 2: I think some jurisdictions, they will say, well, you know,
Speaker 2: we we can already achieved most of the benefits of
Speaker 2: CBD CS and we don't really need C. B. D. C.
Speaker 2: S as such, to read those benefits. I mean, I
Speaker 2: think it's very interesting to contrast, you know, china on
Speaker 2: the one hand and India on the other, India already
Speaker 2: has the U. P. I. System
Speaker 2: which is based on other the, you know, the the
Speaker 2: biometric digital ID,
Speaker 2: it already has this uh you know, these features of
Speaker 2: universal uh universal universality of access
Speaker 2: um and the efficiency and the public good national payment system,
Speaker 2: so there you've already captured most of the benefits. Um
Speaker 2: whereas in china, as you said, you know, that that's
Speaker 2: a very different system where, you know, you have the
Speaker 2: big text are playing a much bigger role, where the
Speaker 2: public good nature of the payment system, you know, needs
Speaker 2: to be if you like a re established.
Speaker 2: So um countries will go in their different ways. Uh
Speaker 2: I think we will see certainly in the wholesale space
Speaker 2: much more progress,
Speaker 2: but in the retail space
Speaker 2: in the retail sphere, I would say that you know,
Speaker 2: you would see a diversity of approaches
Speaker 2: and you know five years, although it sounds very long
Speaker 2: is going to approach us very quickly and uh these
Speaker 2: projects take a long time and a lot of it
Speaker 2: is unrelated to the technology. A lot of it has
Speaker 2: to do with
Speaker 2: the underlying institutional changes
Speaker 2: um and the underlying policy changes. Um and the political
Speaker 2: conversations that always accompany does
Speaker 1: well, we'll look forward to B. I. S. Bringing us
Speaker 1: continue to bring us you know, sort of in the
Speaker 1: latest views and analysis on this issue for those five
Speaker 1: years that I can't wait to watch
Speaker 1: Hyun. Thank you so much for your insight. This was
Speaker 1: a terrific conversation.
Speaker 2: Thank you so much. It was a pleasure to join you.
Speaker 1: Thank you to our listeners as well. Uh Kobe time
Speaker 1: was produced by martin Tuckey, daisy Sharma and violently provided
Speaker 1: additional assistance.
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