The discussion hosted by the Brookings Institution is about an hour. [inaudible conversations] ladies and gentlemen, if everybody would take a seat we are going to get started. Everybody just wants to grab a chair. We would like to run on time here. When the Founding Fathers sat down to write the u. S. Constitution in the summer of 1887, they had been scarred not only by war but by a series of failed monetary experiments 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 that has a narrow view of what money is. That viewic basically saw legal tenderness gold and silver coins. At the moment there were three banks in the entire United States. None played a prominent role in the money supply. Gold and silver coins, no banks. Think of how we come the last 200 years. Theres a lesson about the durability of money and payments that i think is important to understand for this next panel. In the first panel we talk about the challenges we face using technology that exists today in order to improve the system of money and payments that we offer americans. But wee also need conversations about what money is going to look like. It took upwards of 100 years to figure out on the basis of the constitution of the Monetary System that involved banks would lookld like. Currently less than a decade into the 21st century analog of that question which is what does the money payment look like in a digital world, in a i decentralized world and where not only gold and silver coins but paper money have long since gone the way. To help walk us through the conversation and be our guide, we have none other than the professor at georgetown law. Chris is one of the people in the room that needs absolutely no introduction. Some of you know chris from his scholarship. Some of you know chris from the incredible bowl of energy that created the podcast. And some of you know him as one of the most creative and constructive policy advocates and financial law and technology. Olplease join me in welcoming chris. [applause] [inaudible] for the next trick i will bring the panelists to the stage. The one and only brian brooks, someone who truly needs no introduction with the service over at the office of comptroller of the currency he is an intellectual, he is a policy advocate. He has a huge brain and is over at myers. We have raj also coming to the stage. Im going to introduce you in the order seated. In helping to organize the panel and the conference, a very good friend. Ive known her forever, really forever from the world bank to vanderbilt and is one of my intellectual partners in crime. Raj the managing director also with extensive experience in Consumer Protection and at the front lines of Government Service as well as the private sector. And then finally, my good friend Christina Skinner from the Wharton School also one of the leading professors and scholars and thinkers of one Financial Regulation and policy. It really is a panel full of people i both adore, look up to, respect, and im excited to learn from you in this conversation. Okay. So, as mentioned, the last panel was bringing together aum number of themes going to the heart and health of the economy and the nature of the Financial System. And i think that what we can certainly say is that todays Payment System is a mix of the old and the new. Ive likened it before to jfk airport. You know, at least before the current renovations, you would go there and it would be a little bit old, a little smelly in a slow, slightly embarrassing but yet the heart of global commerce. And theres a certain kind of similarity 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. So im going to start off. Maybe you can kick us off with a professor explanation since that is really where the policy conversation is centering. You can schoolhouse rock us with sort of the basics and then maybe jump into some of the critical points of emphasis for the policy conversation. Ro a law professor at the data, we could be here the whole hour. [inaudible] either too old or too young to know what youre talking about. [laughter] so, to get professorial, lets take a step back. Lets take a step back and go back to what was said on the last panel, which is to raise the notion of public money. Starting with this definition and clarifying between public money and private money. We all kind of know it, but its worth being clear about it. Public money backed by the full faith and credit of the government that is issued by the bvfed and in the case of paper money, the treasury that was eluded to in the case of notes and coins that public money is wonderful and fabulous. Then of course we have money with credit risk andit that is private money. These claim we are using all the time in our banks and we talked about this whole conversation in the Morning Panel about sort of private money that its very prevalent across the Payment System. When wee think about cbbc, that is a way to digitize public money. For us, the public money that we are all addressing is people are basically notes and coins into physical cash. Asca we talked about in the very start of the whole thing, most people today are moving towards a more cashless universe. So the question for policy makers is do we need to digitize public money to put it into the form of the cbbc and other sophisticated things which is the potential for programmability for example. To think about ways in which the money can be directly programmed to do certain things and mpdistributed in the context of stimulus payments or may be on kids they can only spend on certain things. So as well as being a back by the government, therefore distributable to maybe reach those that are financial excluded and would benefit from them cheaper assets to Financial Services. The cdbc. And in the private money looking at stable coins. These are tokens of sort of referencing we talked about earlier hard assets, claims that are transacting on payments rails are global, verifying transactions and sortl of very rapid moments in time and they are able to move super, super cheaply. So so what they are offering is a vision of payments potentially a little bit more international, moving the money superfast, referencing and supported by but potentially able to move the money much more cheaply and faster than the traditional Banking Systems have been able to do so. Those are the functionalities that they are looking to offer in the big picture and theres a whole conversation we will have about how to think about regulating, but those are the two basics here, public and private money, stable coins that are coming into place today. That is excellent. And in really thinking about the definition of money and how the definition of money is changing from a means of an account, storage, moving value andpr questions like programmability. Brian, you have a really unique Vantage Point and really firsthand experience from your time in government, and also someone whos worked on Digital Assets for quite some time. The point of emphasis were coins and a cdbcs and we see that conversation continued. Particularly with circle, paypal and then this cdbc conversation. Buton where are the banks in tht 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 that a good or bad thing and then where do the banks sort of fit into this larger cocktail of both policy and Technological Solutions . Cocktail is a good metaphor for the conversation. I was going to pick up on all these airline metaphors this morning, like the Financial Service company that happens to fly planes or those that offer Financial Services based a on my experience this morning they are only Financial Service companies. [laughter] so, let me address the question and i will try to be super provocative because that is always my role on the panel. Ihi think you can make an argumt that one of the reasons for the increased demand for stable coins over the last, lets call it five years, when they went from the Market Capital of about 3 billion to a Market Capital of 100 billion today. As at the beginning of 2022 today that is roughly the growth trajectory. One of the reasons for that increase in demand is not because stable coins themselves are so super awesome. Its because the United States is the only country in the developed world any way that open bankingan system. So what it means is you have banks that would have Privileged Access to the Federal ReservePayment Systems and everybody else in the universe. What that means is in the United States, the cost of operating the system is roughly four acts and the cost in say britain or the eu, thats because in thoset countries there is a licensing status that allows access to the settlement rails without being a bank. In other words you dont have to be a depository to access the bank of england Settlement Services but you have to be a t depository to do that in the United States, so that creates an enormous incentive for a nonbank settlement solution because thedi traditional paymet processors have to use banks, and its that extra layer that makes everything so expensive. So im going to argue that there is a market need for the settlement, and it doesnt have to be outside of the Banking System theoretically. But the reason it is outside ofe Banking System is because we have not allowed anybody other than depositories to connect to the Federal Reserve, so thats why. There are some great things about stable coins 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 i argued in a wall street journal oped, its highly relevant in other countries. One of the trends going on in the world, and i will make this last point and then shut up but i think its relevant to the discussion, he is we live in a w world where there is strong geopolitical pressure in various parts of the world to dwis. That iss in place for purely ideological reasons. And sometimes its because of legitimate fear about the way the dollar has been handled by the policymakers in the recent past. So for example, when the United States froze russian dollar assetsne because of the ukraine more, its like on the one hand russia did and baileys alternation and thats definitely not okay but on the other hand, money is money and its their money. When suddenly you can do that it causes other holders of dollars to think for the grace of god maybe its time for me to hold a back basket of other currencies. Stable coin is relevant to the discussion because even when the governments want to be dollarized virtually every other person would prefer to hold their wages and hours than any other. So in a country like ive been spending a lot of time in brazil or argentina the day you earn your wage, inflation starts to eat away at that. Depending whether its brazil, argentina, venezuela, it starts quickly or very quickly. And if you could hold dollars instead of the pesos, that would be a much better strategy except the problem is the Banking System doesnt support retail dollar deposit accounts, so you cant go get a dollar bank account in the sao paulo. What you do is open your crypto wallet. That is an easy way for people around the world to store their wages and dollars which then creates upward pressure for stable coin demand because its like a euro dollar account. Something super valuable. Im making two points. One is there is artificial pressure to have instant settlement outside of the Banking System because we dontn have open banking. We could solve that but we wont. And theres demand from below globally for stable coins as an artificial dollars savings account. They aree secular, longterm and probably here to stay. Its interesting thinking about the domestic demand and then the international or the Global Demand and how the two arent necessarily t the same. And that there are different kinds of use cases in the value propositions for these particular assets. What sort of continue along those lines. Raj, you are an investor, youve obviously been at the forefront of a number of Consumer Protection issues since the deputy director. With the consumer interface of these instruments, what do you number one, see when it comes to the question of second from the Consumer Protection standpoint, what are you seeing from the technology, what are you a seeing from the transactis themselves that would sort of lead you to sort of kick the tire as to anything from safety and soundness to disclosures . Let me start on the question of the use cases, which candidly i think is sort of a frustration for the course of the last ten plus years. Because the reality is most of the use cases associated with stable queens today, had a referential quality to them that kind of has to do with of the crypto business and the perimeter of crypto. Its quite a bit harder. That said, there are a few things im quite optimistic about. One kind of ties to this notion of ubiquitous dollar payments. It just so happens that our commercial Banking System ties together in a number of structural advantages for banks that are not necessarily logically compelled to be together and it creates real problemsms for underserved peope within the u. S. Its a global phenomenon though it is focused just on the u. S. Those privileges of banks for example or access to the Payment System. Access to the choice of law. Great preemption for example, the National Bank preemption. And Privileged Access to liabilities, obviously. Banks are able to leverage in a way that nonbanks are not by virtue of the insured deposits. And what that results in, because the commercial banking business is i would argue principally a liability economic profit engine, it makes it kind of hard to serve households that dont have much money. And because banks also havels privilege access to payments, it means people without a lot of money actually find it very hard to make payments in an efficient way. And essentially stable coins to me are a means of delinking the access to leverage and the access to Payment Systems and that has the impact of getting the real benefit i think to the 50 of the households in the country that pound for pound are not especially great at the mom and profit drivers for the banks. The one way of saying that is simply the small deposit customers over at the bank arent necessarily the most profitable in the question what degree are they properly incentive to create efficient Payment Services. A longstanding question i think is where the incentives are to serve the little guys. Cdcs are one potential solution because you have the government stepping behind to create and standing behind a value system. There have been plenty of people to sort of quite literally wave the flag thinking about cdbcs as a means of exporting not only u. S. Foreign policy influence as a means of not only helping to achieve more, the more financial effect of inclusion but also as sort of exporting u. S. Values. Christina, i know you havent always been waving the flag for cdbc. Maybe you can lay out what are the tradeoffs in the kind of things that come to mind when you think about the policy conversations . Sure. Waving a white flag. It would help if i turn my mic on. Okay, yes, i have been thinking about cdbc in the context as the global questions of the domestic context and i think there are a lot of tradeoffs that havent really been sufficiently wrestled with especially because of these early phases weve been mostly thinking about cdbc from a technological feasibility standpoint from the economic standpoint. And i started to think about cdbcs in a more political economy lens and thinking about the implication domestically for the separation of power, and thinking about how the cdbcs could really shift power in the state and society. And ive been pretty skeptical of cdbcs domestically, and i want too qualify that. Im really going to speak for the nextxt couple of minutes abt retail cdbcs and maybe later we will have a chance to disentangle that from wholesale cdbcs. And i think the reason that i have been quite guarded in my viewpoint on cdbcs are sort ofr threefold. First there is this entire set of questions around Financial Market structure. So we pretty much know or we cai anticipate with a reasonable degree of certainty that cdbcs, the introduction of the retailti cdbc is going to do so and remediate the Banking Sector, which is to say that people are likely to slap their bank deposit for a cdbc to the extent they are making a substitution. We know that Americans Still