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Good morning, everyone. It is such a pleasure as to welcome you all on behalf of the brookings institution, Cornell Law School and band of law school, erin, dan and i are truly thrilled, incredibly delighted and deeply honored that you join us today in person as well as online to talk about the u. S. Financial and Payment System. Given that it is a friday of a Holiday Weekend and you guys are here to talk about the Payment System on a dreary d. C. Day, i think its safe to assume that you are here for a completely unabashedly full on nerd experience for the day. And so that is exactly what were here to give you. Because the u. S. Payment system deeply, desperately needs it. It needs your ideas. It needs or technologies. It needs your policies. Needs your passion to get it ready and equipped for the digital century that we know is already here. We know i think in this room that the u. S. Payment system has undergone a structural transformation over the last three or four years concert in a sense of pandemic. And if we can do maybe a show of hands in the room, how many of you have been using cash may be in the last 24 hours to pay for anything . Anyone use cash . One, two, three, four. How many of you have forgot what cash even feels like in your wallet . Where did it go . As much a summary of us are moving toward the kind of cash was universe, especially after the big pandemic, the populations and communities across america, community of color, low income households, single parent households that have been left behind. A function of an banking and under making that is meant that the Payment System is not working as efficiently, as inclusively as fully and fairly as it needs to. Right . As much as were all looking forward and saying our money move, seemingly instantly, right . Money often takes several days to it our Bank Accounts and be ready for us to actually use. As much as the u. S. Is of course the uncontested, the uncontested issue were of the reserve currency globally, our international u. S. Dollars system remains as we all know incredibly unwieldy, slow, expensive, and globally becoming less and less competitive as we enter this new century. So this is becoming a situation which it is costing us a lot of money to move money. And things need to change. Take a as were entering this to technological era in a digital century two. So we have an incredible panel, incredible day for you, a full on nerd fest is nigh and with two diabetes panel. The first will be looking at the current Payment System followed by our later panel look at digital technology, stablecoins and cbc d. C. s of potential solutions to the problems were seeing with the upgrades we need for the u. S. Payment system. And in between whip thune remarkable keynotes from director chopra of the cfpb as well as governor waller of the fed, and most of all of course we want to hear from you. This is very much a conversation picked this is an issue uniquely and fabulously that affects each and every one of us. This is our experience. You have thoughts and opinions so please be part of the conversation. If youre joining us online you can email us with questions and comments at a fence brookings. Com if you want to send an email or on twitter if you want to use the hashtag, the handle at brookings econ hashtag future payments pick send us your questions submit your questions we really want to hear from you. All right. So with that im going to welcome and it is our fabulous wonderful first panel which will be led by victoria guida. You all know her. She is the brilliant reporter for politico who covers economics the really focuses her beat on the fed and the treasury market, and shes making and cuddly complex, opaque grey hard topics very intelligible and use for all of us to get. And hopefully she will do that with the first panel and the Payment System. So victoria and the first panel, if you like to join us on stage. [applause] thank you so much for the two kind introduction. As yesha was just saying weve seen a lot of ships in the Payment System just over the past few years so this event is very timely. Weve seen more nonbanks jump into spaces that are traditionally been filled by banks. We see more diverse institution tried to get access to the payment rails and weve also seen updates to the payment rails themselves. I have an excellent panel here with me today to talk about some of those things. So i have mark trotman, chief operating officer at china. Julie hill, vice dean at the university of Alabama School of law, and dan allred, a professor at cornell law. So lets jump right in. So dan, i would like to start with you. Youve written a bit about this sort of unbundling of payments and how we sang different sources have been traditionally formed by banks to have been perform at other institutions. So to what extent is the Current System working and to what extent our current policies holding us back . Thanks, victoria. I guess i would divide sort of the world into two segments here. One is, is it working functionally speaking . Are people getting paid and be able to make payments quickly, cheaply . And on the other side, is a working from a policy perspective . Are we making sure the system is governed in ways that enable us to advance social objectives . Like cheap fast and secure names but also in terms of things like competition and ongoing technological innovation over time period i think the answer is were not doing well on either count at this point, and with a look at that domestically so we can look at the cost of payments in the United States where for a very developed country with a worldclass Financial System we pay more for payments, especially poor people pay more for payments than they do in other countries. On the other side of the ledger we also have relative many of her peers and the g20 and the g8 and many emerging markets not really invested in the governess of payments. If you look to australia, if you look to brazil, singapore, china, the United Kingdom even the eu, that paragon of Good Governance when it comes to financial markets, they have invested more in building the infrastructure from a policy perspective to take advantage of all the technological change thats going on. So i would say were not doing great. The our roadmaps for doing better and i think what are the exciting things today is to have a discussion about which sort of lessons we can take from those roadmaps as we move forward. Mark, you had a very interesting perch where you at china. You have a Payment Service that you provide. Is a Payment System and a good place . How could it be better . Thanks, the tory. I think some come with look at the Payment System and our primary question is that is a working . Were consumeroriented company so me tag at that. I know nothing that businesstobusiness payments. We basically say is a american Payment System working well for consumers . And actually this is where you really do have a Digital Divide because if you look at middle to higher income members of the American Population are, you know i could be better. Still too expensive, too slow but actually its not working badly, here i think when you start look at people who live paycheck to paycheck, the american Payment System isnt working well for our consumers in any way. We still have 65 65 is 80 or population that is living paycheck to paycheck. By definition for us that an indication its not working. Just to give you an example of that, today would look at the Payment System very broadly and we include things like payroll. We have a lot of discussion from a policy perspective around how do we provide shortterm liquidity to underserved communities and what do we do with Overdraft Fees and payday loans and things . That actually takes two weeks for somebody to get their pay. American consumers are actually lending effectively lending money to their employers and then having to go and borrow it from banks and other financial institutions. At a high level i think my perspective on this would be its not working for our neediest consumers. And sort of on the back end, julie, you are a world expert in the Federal Reserve is master account system. We have gotten a lot more information about who actually has those accounts. What does that tell us about the current state of the Payment System . What have we learned from that . One thing we know is what the fed has said all along, that the bulk of the people using the fed payment rails are traditional banks, banks accept deposits and make loans. If you are making payments, chances are good that payment, even if you use a nonbank like venmo, is eventually get into a bank and is eventually getting to the feds payment rail. But the other thing that weve seen is that there are other businesses that want to make payments and i want to make them with a Business Model that isnt just accepting deposits in making loans. What weve not been very good about is inking about that space, about what pure Payments Companies might look like and whether they can safely use the feds rails. I think the Federal Reserve has so far been rather skeptical of that Business Model for some good reasons and for some bad reasons, but fundamentally as a matter of law im not sure that its the fed the decision to make. Congress is the one that creates the laws so men who gets access to fed accounts. So its a bigger question than just the question of what the fed has done. Yeah, so functional but not ideal sort it of seems to bee theme across all these answers. I did want to use your comments as a jumping off point about sort of Congress Role here and who is in charge. There was a lot of talk, as most of you all will know, about the office of the comptroller of the currency talked about potentially providing charters, limited charters to institutions that to provide for example, Payment Services. More recently theres been some talk, for example, from the Treasury Department about whether we should have a separate federal payments regulator. So julie, just taking with you, is there a way to make federal policy on payments a little bit more coherent on either of those fronts, or either of those a good idea . While i mean, i think that if you just asked an outside observer, the person who does, does nothing but a strap into the United States and said, Financial Regulation or is payments regulation done in a reasonable and efficient manner . They wouldnt say wow weve got all these regulators and thats just awesome, right . I used to way back in the day used to work in payments at a bank and my boss was fond of saying that if everybody is in charge, and nobody is in charge. Thats one of the things we kind of have going on here is that we have so many regulators that want to be, or feel like they need to be, in the conversation. Thats very hard to figure out who is actually in charge. And then i mean, i guess in d. C. It is probably sport, especially these days, Typical Congress and what they are doing or not doing. But really i think that the responsibility for the Regulatory Framework and the regulators falls on congress, and i guess you all are probably just as equipped as i am to make predictions about how likely it is that congress would be able to something more functional for us. But its a hard question and its a hard question for regulators to agree on because they all want a piece of it. Yeah. So from a private sector perspective what do you think would make the most sense . I think, well, first you think were proinnovation generally. I do think an example of this, we are a nonbank to your point, julie if you think about what sort of sponsor bank model has done for competition in America Financial Services its been amazing. Five years ago were talking about 30 plus billion dollars in Overdraft Fees. Thats more than half over the last five years. Large we believe because of the competition coming from syntax and nonbank participants. Our starting point is we as proinnovation and we think we should create opportunities for nonbanks to participate as fully as possible within the american Payment System because it will drive that competitiveness and drive down costs and improve members experiences. We are not wouldnt be using a federal payments charred ourselves just because thats not the Service SectorFinancial Services were in what we definitely proinclusion here. Yeah. They and come just to bring you in, i also dont want to forget that there is a whole mosaic of state regulations here, too, and dan i know that you look at this a bit. What do you think about making federal policy more coherent, and where are we at the state level with regulation of Money Service businesses and things like that . Mosaic is a good word, but mosaics can often be beautiful in their complexity, and to think its fair to say that there is nothing beautiful about having 49 different state regulators for payments. There are 27 federal countries on earth. 26 of them have federal regulation exclusively of payments, and then theres us. My work is done a lot i guess im shining light on exactly how different some of that regulation is at the state level, have at some of it is at the state level and a depute as a ticking time bomb that as nonbanks get bigger into payments as they start to amass more and more backing assets, that the inadequacy of these laws is going to cause a problem. It already has caused a problem. Anybody save Money Services business has been in his last 12 months. Thats ftx. Thats the same Regulatory Framework we used to regulate payment companies. Im a big fan of federal payment charter but it do think its own just the beginning of the more fundamental rethink. A charter is great but it doesnt do much for things like competition and innovation to be honest in and of itself. Its great for financial safety and soundness oversaw problems like the problems that julie is exposing her work about access to that system for nonbanks and around the governance of the networks themselves where, just to rip off the earlier part of your question, we dont need more regulators but gosh do we need more mandates. The occ, fdic, the fed are regular payment institutions for safety and soundness. None of the regulators had a responsibility for promoting technological innovation, competition or really consumer welfare let alone individual or personal privacy. And i would be loath to add number of regulars but theres a discussion to be had about adding to the list of things of regulars had to take account of. These other very important social policy issues. Yeah. So kind of drawing out a couple of strings from that. You mention ftx which is sort of a poster child for one of the issues and the Payment System which is whether the funds are there, right . When i think about institutions facilitating payments that are not thanks, i feel like it raises a lot of questions about how people can be sure that the money is actually going to be there and go through. Does there need to be who should look more into that . Will be any good place without . Dan, ill stick with you. Yeah, i think we should go with the crowd and make this a federal responsibility. I think existing, i think theres a lot to debate and one of the few things i dont have a passionate position on in payments is which federal regulator credential regulator should be responsible for this. All of them have their bright spots in dark corners. But i do think creating a single federal Regulatory Framework for this is great with a single regulator. Now from there i also think if you want to do banking, get a banking license, and the converse of the you want to do payments without banking i think what you should be able to do with customer money should be very limited. And we have structures that enable us to then put all of that money in one basket and watch it, to misquote mark twain. That is, we have thirdparty custodians. We have reserved accounts at central banks. We have master accounts where it b