Better system. Thank you very much. [applause] do we go straight to the second panel or short break . Enjoy a cup of coffee and well will be back for more fireworks. [inaudible conversations] [inaudible conversations] [inaudible conversations] ladies and gentlemen if everyone would take a seat we are going to get started. If everybody just wants to get a chair. Unlike the Payment System we run on time here. We will have to do this the bob barker way. Founding fathers set down to ride the constitution in the summer of 1887 had been scarred not only by war but by series of sales monetary experiment, experiments with money issued by the state. The scars of those battles are written in the pages of the constitution itself which has a narrow view of what money w is. This is going to get quickly. That view basically sought legal tender is the endpoint. The moment history they were on the three banks in the entire United States to the plate is secretly prominent t role in money. Gold and silver coins, no thanks. Think of how far we have come in 200e years. There is a lesson here about the durability of money and payments that i think is important to understanding the context of this nextta panel. The first panel they talked about the challenges we face in using technology that exists today in order to improve the systems money and payments that we offer americans. Wels also need to have conversations about what money is going to look likes tomorro. It took a supportive 100 years to figure out on the basis of the u. S. Constitution what a Monetary System involving banks would look like. Currently lesson to the decades and the log in to doubt what does it look like in the Digital World in a world where not only we have gold and silvernl coins. Paper money has long since gone the way of the dustbin. To help walk us through this conversation and be our guide we have none other than Chris Brummer and he needs no introduction. You know chris from the scholarships and some of you know chris from the it the incredible ball of energy from his podcast hunts and tech weaken some of you know him as one of the most creative and constructive policy advocates and financial law to please join me in welcoming to the stage Chris Brummer. [applause] im the guy never knowing whether to sit down or not. Okay, all right. For my next trick will bring the palace to the stage. The one and only brian brooks someone whod truly needs no introduction with the office of comptroller of currency and intellectual. He is a policy advocate. He has a huge brain. We have rajeev date coming to the stage. Im going to introduce you in order of being seated. He helped yesha yadav helped organize a panel and the conference and is a very good friend that dontt have forever from the world bank to vanderbilt in hes one of my intellectual partners in i crim. The managing director of Consumer Protection and at the frontlines of Government Service as well as a privatesector and finally my good friend Christina Skinner one of the leading professors and scholars and thinkers on Financial Regulation and policy. It really is a panel full of people. I adore them and look up to them and respect them and i tried to really learn from you in this conversation. As don mentioned the panel was bringing together a number of themes really going through the help 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 to jfks air force. I guess current renovation to go there and beat a little and the little slow. Its the heart of Global Commerce and there are certain kinds of similarities between our modern Payment System. Lets jump right into the conversation about what exactly are thear options on the table d what exactly can be said about the direction in which our system is evolving and i will start off with yesha and maybe you can kick us off with a professorial explanation of stable coins since that is really where the policy conversation is centering. You can schoolhouse rock us and jump into the sum of the critical point of the conversation. You want me to be the professorial and allow for professorial at that. On capitol hill. We are either too old or too young. To get professorial lets just take a step back. Thats just take a step back. I want to go back to what was said in last panel which is to raise the notion of public funding and since its a worthwhile starting with this definition in clarifying the difference between public andnd private money. We all know it but its worth being really clear about it. The full faith and credit of our government and thats issued by the fed indicates paper money in the treasury is notes and coins. Its fabulous. Then ofan course we have money with a the limited credit risk in that private money. These arek the claims removing all the time at banks nonbanks and others. We talked about the conversation on the Morning Panel about private money that is prevalent across our Payment System. Thats the basics here. When we are thinking about cfpb thats a way to digitize public money. For us the public money that we are addressing his people are basically coins and physical cache. As we talked about in the start of the whole thing most people today are moving towards a cash universe of the question for policymakers is do we need to digitize public money to put it into the form of cfpb and other potential w sophisticated cool things which is the potential for programmability to think about ways in which the money can be directly programmed to do certain things for sample be distributed in the concept of stimulus payments or your kids can only spend about certain things. Thats the accountability as well as the full backed by the government. Also potentially cheaply distributable to reach those who are financially excluded and that benefit from the cheaper access to services. And now in the world of private money and looking at stable coins. Thesele are tokens referencing e taught about earlier cardie assets, transacting of t payment rails that are global in their verifying transactions in very rapid moments in time and they are able to move money super cheaply. What they are offering is a vision of potentially delivering coins to nationals and thats referencing money supported by a number of assets but potentially able to move money much more cheaply and faster than the traditional Banking System is t able to do. Those are the functionalities that stable coin is looking to offer the big picture and theres a whole conversation we have about how they are regulated in talking through that. Those are the basic differences between public money and private money. That was excellent. In thinking about the definition of money and how the definition of money is changing from union of accounts and storage and instruments for moving value and questions like that. Brian do have a unique Vantage Point and firsthand experience from your time in government and also as someone who was working for quite some time. The points of emphasis from yesha were stable coins in cdpds end we see that continue. Particularly with circle, paypal and the conversation but where are the but where the bankson 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 interpret from that and is it a good or a bad thing and where do banksng fit n to the larger cocktail of both policy and Technological Solutions . Its a good metaphor for this conversation although i had to pick up on the airline metaphors in terms of our Airlines FinancialServices Company that are plans that offer financial services. They semi experienced this morning. Let me address the questionn and ill try to be super provocative because thats my role on the plan panel. I think you could makee an argument that one of the reasons for the increased demand for stable coins over the last lets just call it five years and stable coins or market capitol 3 billion of 100 million today so if you go from the begin of 2020 today thats roughly the trajectory. One of the reasons for the increase in demand is not because stable coins themselves are super awesome. It is because the United States is the only country in the developed world that doesnt have an open Banking System. What it means is you have banks that have Privileged Access to the Federal ReservePayment System and everybody else in the universe. What that means its in the United States the cost of operating the Payment System is four times the cost and say britain nor the eu. Thats because in those countries theres a licensing status that allows access to the settlement rails without being a bank. You had to be a depository to access the services that you have to be a depository of the United States so that creates this an enormous incentive for some nonbanking Settlement Solutions because the traditional payment processors to use banks and if that extra layer that makes everything so expensive but im going to argue there is a market need for settlement and it doesnt have to be outside of the Banking System. Theoretically that the reason it isut outside of the banking sysm is because we have not allowed anybody other than depository to connect to the Federal Reserve. Thats why. They are great things about stablexa coins separate from tht example the fact that they allow people to hold dollar equivalents without having to hold them in a bank account. Thats not in our country but as i argued its highly highly relevant in other countries so one of the big trends going on the world and crystal make this point and then shut up because its relevant to the discussion with that in a world where their strong geopolitical pressure in various parts of the world to be dollar rise. Sometimes its for purely aitoro logical reasons and sometimes its a legitimate fear about the way the dollar is handled by policymakers and the recent past. The example in the state froze a russian dollar assets because of the ukraine were on the one hand russia did invade a i sovereign nation and thats not okay but on the other hand money is money and its their money so when suddenly he can do that it causes holders of dollars to think they are by the grace of go i and maybe its time for me to hold the basket currency. Stable coins have been relative to the discussion because when governments want to be dollar iced every person in the world would prefer toly hold third was and dollars than any other currency so if you live in a country like ive been spending time in lately like brazil or argentina the day you earn your Wage Inflation starts the e like that and depending on whether its brazil or argentina or venezuela and starts to eat at it quickly or very quickly and if you can hold dollars instead of argentine pesos that would be a better strategy but the promise the Banking System doesnt support retail dollar deposit accounts so you cant get a bank account in sao paolo. What do you do . Wallet andur crypto use tokens. Thats the way for people around the world to use their wages in dollars which creates upward pressure for stable coin demand. Itsso likelyyearolds dollar something thats valuable. Im making two points. One is there is artificial settlement. Said the Banking System because we dont have banking that they could solve that but we wont and then theres demand from below global ruling for stable coins as an artificial status account. Those are secular and longterm. Its interesting the domestic demand and in the Global Demand arent necessarilyri the same ad in value propositions for these particular assets. Lets continue along those lines. Rajeev you are a venture investor and if obviously been at the forefront of a number of Consumer Protection issues with the cfpb. The cfpb. What do you number ones see when it comes to the question of uk and from a Consumer Protection standpoint what are you seeing from the technology and what are you seeing from the transactionh themselves that would lead you to kick the tires as to anything from safety and soundness to let me start by saying i question the abuse cases which candidly has been a frustration for 10 plus years. The relative is most of the places associated with stable coins today have a self referential quality to them that they have to do with the crypto business and once you exit the prayer of crypto harder to find two that said there were few things that im optimistic about. One ties to this notion of ubiquitous dollar d payment. It just so happens that are peripheral Banking System ties together a number of structural entities that arent necessarily logically compelled and it creates real problemscr for peoe within the u. S. It p was focused just on the u. Those privileged privileges of banks are for example access to the Payment System, access to choice of law and the great preemption for the Financial Bank preemption and liability. Banks are able to lever in a way that nonbanks are not to insure deposits. What that results in, because the commercial banking business i would argue principally a liability economic profit engine makes it hard to serve households that dont have much money and because banks have Privileged Access to payment it means that people that have lot of money find it hard to make payments and stable coins to me are a means m of delinking the access to leverage and the access to the Payment System and has impacts of giving realng benefit to 50 of the households in the country that pound for pound are not especially great at profit drivers and the like. One way of saying that is the smallma deposits customers arent necessarily profitable and to what degreee are they properly n incentive to create sufficient payment services. A longstanding question is where are thet incentives to preserve the little guy. Cbc is one potential solution. Its behind a value system and thereve been plenty o of people to quite literally waved the flag about cdc as a means of exporting not only u. S. Foreignpolicy influence as a means of not only helping to achieve a more effective Financial Inclusion but also exporting u. S. Values. Kristine i know you havent always been waving the flag but not necessarily for cdc. What are the tradeoffs in the kinds of things that come to mind when you talk about the policy conversation . It would help if i turned by mike on. Ive been thinking about cdc in the context of the global questions in domestic context and there there are allotted tradeoffs that havent been sufficiently look to especially because of the early phases. Weve been thinking about cdcs from a technological feasibility standpoint and an economic standpoint and i started to think about cbd sees in a critical economy. While im thinking about the implications domestically for the separation of power and begin about how he would shift power in a state and society and ive been skeptical of cbbc domestically and i want to qualify that. Maybe later we will have a chance to differentiate that from wholesale cbbcs. The reason im guarded in my viewpoint first theres this entire set of questions around Financial Market structural. We can anticipate what the reasonable degree of certainty that the introduction of a retail cbbc will intermediate the Banking Sector which is to say people are likely to swap their Bank Deposits for a cbbc to the extent that they are making a substitution. They know american still value cash for privacy related reasons. We know Central Banks are saying we arent going to get rid of your cash. We also know the way that Central Banks and are selling the projectld and saying cdbc would be safer for you because it doesnt come with that credit risk attached to a bank deposit. Some jurisdictions around the world might reiterate the cdbc to incentivize uptake so the point is we can expect some of the porsche populations will substitute Bank Deposits for a cdbc we know that Bank Deposits are anos important part of fundg for banks. So the biggerig question is what will be the effective at what will be the unintended consequencesst and will this mae loans more expensive and so on and so forth. I think cdbcs it been touted as Financial Stability enhancing to the extent that folks are worried about stable coin being the Financial Stability risk and perhaps cdbc might might be needed to do that but the jury is still out on that. We have got sort of a crisis so theres this whole ambiguity around Financial Market structure and the second thing that looked at is the question around individual economic rights and how many is really important part of the relationship between people and the state. Theres a question of who gets to