And so build a better system, man. Thank you very much. Do we have do we go straight to the second panel or short break . Five minute short break. You guys enjoy anu a cup of ce and will be back for more fireworks here [inaudible conversations] [inaudible conversations] [inaudible conversations] [inaudible conversations] [inaudible conversations] ladies and gentlemen, if anyone would take a seat were going to get started. Everybody just wants to grab a chair, unlike the as Payment System, we want to run on time here. Going to have to do this the bob work away. Rest in peace. When the Founding Fathers sat down to write the u. S. Constitution in december 1887 they had been scarred that only by war but by a series of failed monetary experiments, experience with paper money issued by the states and the continental congress. The scars of those battles are written on the pages of the constitution itself which has a very narrow view of what money is. Okay. This is going to get ugly quickly. That you basically saw legal tender as gold and silver coins. At the moment in history there were only three banks in the entire United States. None of them played at particularly prominent role in the money supply. Gold and silver coins, no banks. Think of how far weve come in 200 years. Theres a a lesson here aboute durability of money and payment that i think is important in understanding the context for this next panel. In the first panel we talked about the challenges that we face in using technology that exists today in order to improve the system of money and payments that we offer americans. But we also need to have conversations about what money is going to look like tomorrow. It took us upwards of 100 years to figure out on the basis of the u. S. Constitution what a monitor system that actually involve banks would look like europe where currently less than a decade into the 21st y analog of that question which of what is money payments look like in a digital world, in a decentralized world, in a world when it only gold and silver coins but paper money have long since gone the way of the dodo. To help walk us through this conversation and be our guide we have none other than impressive chris berman at georgetown law. Crisp on the people that for the show needs absolutely no introduction. Some of you know chris from a scholarship. Some of you know chris from the incredible ball of energy that create the fintech podcast. And some of you know him as one of the most creative and constructive policy advocates in financial law and Technology Picks up we shown in welcoming state chris brummer. [applause] [inaudible] [inaudible] okay. All right. Everyone can hear me. For the next trick i will bring the panelist to the states pick the one only brian brooks. The one only brian brooks come someone who truly needs no introduction as with the service we are at the office of comptroller of the currency. He is an intellectual. He is a policy advocate. He has a huge break and is we have professor yadav also coming to stage. Im going to introduce you in order of the way youre seated. Yesha is helping to both organizes conference, a good friend. Under forever for really forever from the world bank to vanderbilt and is one of my intellectual partners in crime. Managing director of Fenway Summer also with extensive experience in Consumer Protection really at the frontlines of both Government Service as well as the private sector. Finally my good friend Christina Skinner from the wharton school, also one of the leading professors and scholars and thinkers on Financial Regulation and policy. It really is a panel full of people above the door, look up to, respect, and it really excited to really learn from you in this conversation. Okay. So as dan had mentioned the last panel really was bringing together a number of themes, really going to the heart of the health of the economy and the critical nature of the Financial System. I think what we can certainly say is that todays Payment System is really a mix of the old and the new. I have likened it before to jfk airport. You know, its always before i guess current renovations you would go there and it would be a little bit old, a little smelly, a little slow, slightly embarrassing but yet the heart of global commerce. Theres a certain kinds of similarities between jfk and our modern Payment System. But lets jump right into the conversation about what exactly are both the options on the table, what exactly can be said about the direction in which our Payment System is evolving . From going to start off with yesha. Maybe you can kick us off with a professor oriel explainer of stablecoins and cbdc since that is really where the policy conversation is centering. You can schoolhouse rock us with the basics and then maybe jumping to some of the critical points of emphasis for the policy conversation. You want to do professorial crisp and of all per soil at that we could be of the whole hour. So we can just keep going. Either too young or too old. So to get professorial lets just take a step back. The stick a step back, i want to go back to it and said in the last panel, which was to raise the notion of public. Nothing is worth while to stop the definition and clarifying the difference between public money and private money. We all know it but i think its worth being very clear about it. Which is public money that is backed by the full faith and credit of our government, and that is issued obvious he by the fed in the case of paper money, the treasury, in the book case of notes and coins. Its wonderful, gorgeous, its items. And, of course, their money with a little bit of credit risk and that is private money. These are the claims were using all the time in the context of a banks can nonbanks and others. We talked about money. We have so conversation in the Morning Panel about sort of private money that is very prevalent across our Payment System. That is the basic dichotomy here. Here. When we think about cbdc, that is a way to digitize public money. For us the public money that were all interacting with as people are basically notes and coins and physical cash. Now as we talked about at the very start of the whole thing, most people today are moving towards a more cashless universe. The question for policymakers is do we need to digitize public money to put into the form of cbdc that can come with some of the potential sophisticated cool things, schoolhouse rocky dick, which is potential for programmability programmability to think that was a witch that money can be directly programmed to do certain things for example, be distributed in the context esteem as payments are maybe two kids that they dont spend it on certain things. Their set programmability element as well as a full kind of fullback by the government, potential programmable, and also therefore potentially very cheaply distributable to maybe reach those who are financially excluded and would benefit from very cheaper access to formal Financial Services. So thats the cbdc. Now we are in the world of private money and looking a stablecoins. These are tokens sort of referencing, we talked about earlier sort of hard assets, claims that are now transacted on payment rails settling on payment rails had a global call that are verifying transactions inserted very rapid moments in time, and are able to move in sets of money super, super cheaply. So what theyre offering is a vision of payments potentially that is a little more international this movie money superfast that is referencing money at the back and supported by a thick buffer of assets, but potentially able move money much more cheaply and faster than traditional Banking System has been able to do. Those of the functionalities the stablecoins and cbdcs are looking to offer in the big picture. Theres a whole conversation we would have about how to think that regulating and talking to them but those are the to make basic dichotomy circa public money come privately, cpcc stablecoins that come into play today. Was excellent, excellent. Sort of annually thinking about the definition of money at about how the definition money is changing from just a unit of account to storage instrument for really moving value and introducing questions like programmability. Brian, you have a really unique Vantage Point and really firsthand experience from the time in government and also as someone who usually been working on Digital Assets for really quite some time period the points of emphasis from yesha were stablecoins and cbdcs, right, and we are seeing that conversation continue. Particularly with circle, paypal and other cbdc conversation but where are the banks in the conversation . You dont really hear too much about the specific role that major banks can play in leveraging Digital Assets to improve payments. What should we be interpreting from that . Is at a good or bad thing . And then where do banks sort of fit in this larger cocktail of both policy and Technological Solutions . Cocktail is a good metaphor i think for this conversation otherwise would pick up on all these airline metaphors this morning in terms of like our airlines a Financial Services company that happens to fly planes here are the planes that offer Financial Services . Based on my expenses morning they are only Financial Services companies. But anyway, so let me address the question this way. Ill try to be super provocative because thats always my role on the panel. I think you could make an argument that one of the reasons for the increase demand for stablecoins over the last lets call it five years with stablecoins went from a market cap of about 3 billion of market cap of about 100 billion today. So you go from beginning of 2020 to debate that two debate that roughly the growth trajectory. One of the reasons for the increase in demand is not because stablecoins themselves are so super awesome. It is because the United States is the only country in the developed world and with that doesnt have an open Banking System. What it needs is you have banks that have Privileged Access to the Federal ReservePayment Services and then you everybody else in the universe. But that means is that the United States the cost of operating the Payment System is roughly 4x the costs of operating the Payment System in safe britain or the eu, and thats because in those countries there is a licensing status that allows access to the settlement rails with that being a bank. In other words, you have to be a depository to access the bank of englands Settlement Services but you do have to be a depositor to do that in the United States. That creates this enormous incentive for some nonbank instant settlement solution because the traditional payment processors have to use banks, and its that extra layer that makes everything so expensive. Im going to argue theres a market need for instant settlement and it doesnt have to be outside of the Banking System. Medically. But the reason it is outside the Banking System is because we have not allowause we have not allowe Federal Reserve. Thats why. There are some great things about stablecoins separate from that like, for example, the fact they allow people to hold dollar equivalents without having to hold them in a bank account. Thats not particularly relevant in this country but as argued in a recent wall street journal oped is highly relevant in other countries. What is the big trends going on in a world and to make this last point and ensure that but it think its relevant to the discussion is we live in a world whether strong geopolitical pressure in various parts of the world to deed all the rise. Thats sometimes for purely ideological reasons. Sometimes its because legitimate fear about the way the dollar has been handled by a policymakers in the recent past. So, for example, when the United States froze russian a dollar assets because of the ukraine war, its like on the one hand, russia did invade a sovereign nation of that is definitely not okay but on the other hand, money is money and its their money. So when suddenly you can do that it causes other holders of dollars to thank there but for the grace of god go i. Maybe its time for me to a basket of other currencies. Stablecoins become relevant to the discussion because even when governments want to grant you the truth is virtually every person in the world would prefer to hold the wages in dollars than any other currency and so if you live in a country like ive been spending a lot of time in we like brazil or argentina. The day you earn your wage, inflation starts to eat away at that. Tiffany and whether its brazil or argentina or venezuela it starts to eat added quickly or very quickly. If you could hold dollars instead of holding argentine pesos or ray eyes in brazil that would be a much better strategy if you accept the problem is the Banking System doesnt support retail dollar deposit against other so you cant go get a dollar bank account and sao paulo. What do you do . Which it is you open your cryptoware and hold u. S. Ct tokens. Thats a super easy way to his door the widget dollars which it creates upwards pressure for stablecoins event because its like a euro dollar a campy something that a supervalu. I money making two points. One is theres artificial pressure instant some outside the Banking System because we do have open banking. We could solve that but we wont. And then theres the man from below globally for stablecoins as an artificial Dollar Savings account. Those are secular, longterm and i will be here to stay. Its really interesting, really think about the domestic demand and international or Global Demand and how the two are not necessarily the same. There are different kinds of use cases and value propositions for this particular assets. Lets sort of continue along those lines. You are a venture you obviously been at the forefront of a number of Consumer Protection issues as a Deputy Director of the cfpb. When you think about that consumer interface with these instruments, what do you, number one, what do you see when it comes to the question of use case . And then secondly from the Consumer Protection standpoint, what are you seeing from the technology . What are you saying from the transactions themselves . That would sort of lead you to sort of kick the tires as to anything from safety and soundness to disclosure issues . Well, let me start with the question of use cases, which candidly i think has been sort of a frustration over the course of the last ten plus years because the reality is that most of the use cases associate with, for example, stablecoins today have faintly self referential quality to them that kind of had to do with the cook the business and what you exit the perimeter of crypto, these cases are quite a bit harder to find. That said, there are a few things im quite optimistic about. So one kind of ties to this notion of ubiquitous dollar payments. It just so happens our commercial Banking System ties together a number of structural advantages for banks that are not necessarily logically compelled to be to give any creates real problems are underserved people within the u. S. Its a global phenomenon though, not just focused on the u. S. Those privileged privileges the banks are for example, access to the Payment System, access to choice of law, so great preemption for example, National Bank preemption. And Privileged Access to liabilities obviously. Banks are able to leverage and weight nonbanks are not by virtue of insured deposits. What that results in because the commercial banking business is i would argue principally a liability economic profit engine, it makes it hard to serve households that dont have much money. Because banks also have privilege access to payments, it means people without a lot of money find it very hard to make payments in an efficient way. Essentially stablecoins to me are a means of delinking the access to leverage and access to Payment System and that has the impact of getting a real benefit to the 50 of the households in the country that pound for pound are just not especially great economic profit drivers for liability centric banks. Yet. One way of saying that is simply the small deposit customers over at banks are not business of the most profitable, so the question as to what degree are the incented if a menu correctly to what degree other probably incented to create efficient Payment Services . Which is been a really small extend the question i think in space is, what are the incentives to serve the little guys . Cbc these cbdcs are introduced as one potential solution because you have the government stepping behind both helping to create and stand behind a value system. There are been plenty of people to sort of quite literally waved the flag thinking about cbdcs as a means of exporting not only u. S. Foreign policy influence as a means of not opening not only helping to achieve more, more effective financial inclusion