 Good afternoon everybody and welcome to the session on resetting digital currencies. The theme of this year's forum as you know is a crucial year to rebuild trust. And of course for those of you working in the digital currency community, it has indeed felt like every year has been a crucial year to build trust. My name is Elizabeth Rossiello and I am the founder and CEO of ASA. We are the largest non-bank currency broker in Africa and I was a technology pioneer at the World Economic Forum for the last forum. We were the first company to make a market for digital currencies in 2013 in Africa. So I have not only worked with the asset class and the technology where trust has been scarce to say the least, but also in a geography that has suffered from de-risking in the global banking sector quite severely, which is also resulting from a lack of trust. And the guard spoke extensively about the de-risking and how that affects the financial system globally at the last forum. But this Monday the forum's daily theme is designing cohesive, sustainable and resilient economic systems. So I look forward to this conversation where we can discuss how and more importantly when our digital currencies going to be part of the sustainable and resilient economic system. It will be important to hear from stakeholders on all sides of the topic. Clearly, at the technology startup in a frontier geography, digital currencies are part of my reality and the reality of my customers. But I acknowledge my experience is still not that of the majority. We are lucky today to hear from both the public and private sector, the regulatory and investment perspective, the for-profit retail and development sides of the square. And the timing could not be better. Just last week, Janet Yellen, the U.S. Treasury Secretary, announcing the old fears about cryptocurrencies being used mainly for criminal transactions. But at the same time, we have a retail and institutional investor bull market for cryptocurrencies driving the price of some to an all-time high close to $40,000. On the policy side, we have continued work being done even throughout 2020 when we saw COVID-19 dominate the central bank digital currency memo that came out from the Bank of England in March 2020. And of course, Governor Bailey's September 2020 speech on the topic in support of innovation, caution, and moving forward together. So before we get into this great discussion today with our panelists, let's just take a minute and talk about the structure of today's discussion. The first 30 minutes will be a public forum and all comments will be open to the public. We have Sheila Warren, the head of Blockchain Digital Assets and Data Policy at the World Economic Forum, going to come on for the second 30 minutes, where we'll be able to have a question-and-answer session by invite only for the participants who are part of the forum. So let's get to our panel. The first panelist, and we're going to get quite a brief introduction. Of course, all of our panelists have an esteemed background in history, but let's just stick to the introduction today. So we have Her Majesty Queen Maxima of the Netherlands, the United Nations Secretary-General's Special Advocate for Inclusive Finance for Development. Welcome, Your Majesty. We'll have Andrew Bailey, the governor of the Bank of England. Welcome, Governor. We have Hikmet Ersek, the president and chief executive officer and director of the Western Union Company. And finally, but last but not least, Glenn Hutchins, chairman of North Island Ventures, a crypto venture capital investment fund, as well as the co-founder of Silverlake. So let's get to the discussion. The first question will go to Her Majesty Queen Maxima of the Netherlands, the United Nations Secretary-General's Special Advocate for Inclusive Finance for Development. So Your Majesty, let's put this topic into context. Can you share any historical examples that come to mind that could provide us with some lessons for the design and governance of digital currencies? Thank you very much, first of all, for having us here and being able to discuss this very important issue, which is very much part of the future of all of us and very important financial inclusion. And do you know what history, I mean, where in Holland? I would say the first sort of neo-central bank was probably here from 1609 to 1820, the Bank of Amsterdam. If you can imagine all these traders in the golden age, they were actually were handling different coins and different letters. And there was a lot of confusion about it. So they actually set up the Bank of Amsterdam and they put themselves. But first I would actually say early stablecoin. So they actually put their gold and their silver and they created a stablecoin. It, of course, made us much cheaper. They had a single currency finally and they made it much easier in handling coins. Now, this, of course, was trade flourished around the world and the gilder kept on growing all around Europe and the world. Now, at one point, it was quite rigid. So they had to go into a more flexible role of it. They have to not only have the small payments, but also give liquidity to the much bigger payments and also acting as a lend of last resource during crises and, of course, always trying to maintain this stable value of the gilder. So these are the two issues that are very important. Number one, the design of the stable and all the features they're in to actually make it stable, flexible and actually giving them the last resource, et cetera. And the other issue is the governance because as the bank started to give much more credit and taking deposits, it was actually the governance of the Bank of Amsterdam that gave the trust, not so much, basically, the assets that were backing this gilder. So that's extremely important to realize that we've actually went through these situations. And what is actually very important is that what happened in the end is that going back to the governance issue is that the Bank of Amsterdam, they were actually very charming with some of the traders and they overstretched their indebted system of the trades. And of course, that meant the fall of the gilder at that point in which the Bank of England took over as a European, I would say currency of the day, which basically gave us again how important the governance on a stable current. How important the design is, but it has to be stable, but at the same time flexible enough. And it has to be able to provide sufficient liquidity. So, and the last thing is some kind of fiscal backing because that's actually what happened with the Bank of Amsterdam when their run started going. There was no merchant that wanted to even put more capital there to really make the situation be stable. So maybe some of the lessons not from history for us to maybe apply in the future and new types of currencies that come along. Interesting. The first stablecoin from Amsterdam. So we'll be referring to also CBDC, so central bank digital currencies. And we talk about some of the things you mentioned going forward in this discussion. It's interesting to hear from a historical contest. I'd be interested for the next panelist to discuss also whether the centralized or decentralized aspect of what you just mentioned. So this next question is for Governor Bailey and Glenn Hutchins, who perhaps might have the same the same point of view on this. But let's hear it. Are we here to stay now with digital currencies as part of the financial ecosystem? I mean, there are definitely advocates strongly believing this and some on the opposite side. But there has there been a turning point over the last one to two years, for instance, from COVID-19 or the popularity of some crypto currencies has sentiment turned a corner for those of us who have been involved in technology for seven years, we've seen sentiment ping pong back and forth. And where are we now with the thinking on how digital currency takes its place in the financial system? And I'd love to hear your perspective, not just on CBDCs, but on other forms of digital currencies. Governor Bailey, would you like to start us off? Yes, I mean, thank you. And I think I mean, first of all, I think that the lessons of history are fascinating here. I think the answer to the to your question is, are we, you know, are we here to stay is for digital innovation and payments? Yes. I mean, there's been huge innovation and payments in recent years, and rightly so, but we still have some very big gaps to fill. Cross-border remittances, cross-border payments, being the obvious one where the cost of making payments is too high. Now, are we here to stay in terms of digital innovation? Yes. But what I think the history, the lessons of history, so fascinating as Queen Massima laid them out is, have we landed on what I would call the design governance and arrangements for what I might call a sort of a a lasting digital currency? No, I don't think we're there yet, honestly. I don't think cryptocurrency is as originally formulated. Are it one? Because I think that as the history shows us this whole question of people having assurance that their payments are going to be made in something with stable value, which as the history lesson says, ultimately links back to what we call fiat currency, which is a link to the state. Now, you can you can organize that, I think, in quite a few ways. And here's where the innovation comes in. And that's why we're right still to debate stable coin. We're right to debate central bank digital currency. Those issues, I think, are very much up the grabs, and I'm sure we'll be discussing them today. But is digital innovation here to stay? Yes, I think my my presumption is my best guess is yes, it is. And it should be because, as I said, we've got challenges, big challenges still to solve where it should help us. It'll be interesting to hear also, you know, what is the designated life span of the currency in 2020? And going forward, well, is it 100 years, 200 years? What will that lifespan look like? Glenn, do you want to comment? Yeah, let me take up where you, or rather repeat what Andrew said, which I thought was spot on, take up where you alluded to digital currencies and other digital currencies. Take a step back for a moment. The currency is one is one of three elements that are the fundamental innovation here. The other two are the blockchain and the protocol, in this case, the Bitcoin protocol. They work together in a way that makes them inseparable if you analogize it to a railroad. The token or coin is the boxcar, the blockchain is the cargo manifest and the protocol are the rails. And so that's kind of how you think about it. The talk about coins just by themselves, they're talking about protocols or the accounting ledger is kind of, really only understands part of the problems. It's like talking about a battery, but not the whole internal combustion engine. The, let's point one point two is as we develop the use, what's going to be driven here, all of this can be driven by use cases that consumers find useful. And then that will allow the adoption of those technologies and adoption of those coins that are associated with the technologies. So the first, for instance, I should disclose that I'm an investor in Lozba's company, have been there for happy investor for years. And so she's found a use case and the original use cases for the tokens were in fact payments, people talking about payments. But then there, when Ethereum was created, a different kind of token, a different solution, that became the use case there became smart contracts and opened up a whole new way of using this digital currency technology and a whole new set of products and be created around that. And we're now evolving into each particular company or each particular network that's created with the set of use cases has its own token. So we're at a place now where there are gonna be a proliferation of tokens run on that networks based upon certain protocols. And so there will be multiple tokens that'll be used. And my guess is, and those will be driven by the use cases that would present the consumers to use those tokens. And then they'll come back in my view into things like protocol, into things like Bitcoin and stable points for purposes of being a store value. Is that like the euro for the euro? Sorry. Is that like a Europe before the euro with all of our national currencies with a lot of similarities and fungibility? Sort of, but it's also like, imagine, it's more like another way of looking at it is more like if you're a artist and you own the rights to a song or to a movie, each time that movie is created or you send the movie is shown, you get paid a little bit and it's got more valuable the more people watch the movie. Tokens will grow in value as the network that they're attached to has more use cases. And then those tokens will themselves be more valuable and since, but since they're multiplicative around the networks, they'll need something to come back into stable coins, Bitcoin and fiat currency. So we're already setting the scene here with a very different, a large spectrum of options where we have fewer currencies that have a lot more trust and a lot more buy-in to a place which a land where Glenn is describing of not only multiple currencies, but reissuance of the same currencies maybe per transaction or per use case. So it's quite a large spectrum here that we still have to explore. Let's look at it from the for-profit, the retail perspective with HICMAT. How specifically is the arrival of digital currencies? And as we've seen, it's hard to just lump together all the digital currencies. It's the technology, it's the actual issuance. How specifically is the arrival of this technology affecting your current or future strategy specifically at the Western Union, perhaps with respect to product or a business model, regulatory approach. And I know we've been in touch over the years and it's interesting to see how the sector, and I work also in remittances has evolved. We definitely haven't seen majority buy-in but we have seen longevity. So how is it affecting a company of your scale? Well, Elizabeth, I think first of all, at Western Union, we are very excited about innovation as we go to our own digitalization, own innovation and really adopting our systems of the new environment. But as Glenn mentioned earlier, use cases do matter. And use cases do matter because, don't forget that they're about, when we talk about cryptocurrency or digital currency, they're about eight billion people worldwide. They want to be a part of a payment system. They want to part of the global economy. And when we talk about digital currencies, we should not talk about exclusivity, we should talk about inclusivity. And inclusive currencies will make the success. And then words and definitions matter. We are talking here about fiat currency, digital currency, E-money, stablecoin, cryptocurrency, virtual currencies, and these are all different terms actually, different definitions for different use cases. And that's important when we talk about digital currency. We really have to understand which digital currency serves which use cases. We at Western Union, obviously, serve about 200 million customers worldwide in 200 countries. And from different with different currencies, we in every second, we kind of process 21 transactions, 137 currencies. And as her Majesty Queen, Maxima mentioned that that was first stablecoin was at Niederland, Central Bank of Niederlands. But I can tell you also that, when we settle that currencies on 137 currency, we have a kind of a VU coin, Western Union coin, which we translate one currency and another currency immediately and we keep the stable currency in the middle. And we do that 21 times every second. So I think that while I'm coming back, its definitions are extremely important. And at Western Union, we really look at definition use cases. And you know, Elizabeth, very well, when you are in Africa, when you talk about certain use cases and the certain use cases. And a certain use case in New York, maybe, or in Geneva, it's different than a certain use case in Cairo or in Uganda in Gulu. And these are big differences and we have to understand that one. And that's what Western Union tries to really combine that and really serve about customers, millions of customers in 200 countries with different needs. And it's complex as Governor mentioned, it has to be regulated. You know, that's funny to hear it maybe from a CEO, which is entrepreneurial, which drives it, right? But in that case, the regulations is really in favor of people, in favor of consumers and in favor of corporations like Western Union. Interesting. So to date, Western Union has found a use case internally, operationally, perhaps using some of the technology for efficiency for operations. And I'm dying to ask you some questions in the second half, specifically about, you know, Nigeria, one of the largest remittance markets in Africa, which has enough trouble with its own currency, fiat currency in the US dollar and trying to find fungibility and accessibility for that and liquidity there. So how can we even begin to go into the spectrum of digital currencies when we're still struggling with monetary policy for remittances in local currency? We'll talk about that one later. So the next question is about, you know, what are we still afraid of in venture capital speak? What keeps you up at night? And going to your majesty, and then later in Glen Hutchins, what is your biggest concern still about digital currency technology or aspects of it? Are we still in the place where we've been earlier in the cycle where, you know, Janet Yellen describes fear about criminal activity? Are we still there or have we moved forward? What are we still worried about? Yeah, well, first of all, my work predominantly has been centered on trying to increase financial inclusion across a broad, fantastic 2.5 billion people who have actually gone into the system in the last 11 years, we have to progress mostly in the bank of mobile money. So we're in for innovation. So let me start by saying that. The issue is whether stable coins or whatever digital currency will promote greater financial inclusion will be used by the force. I like the fact that, you know, user case is too massive and that the poor people can actually be very disgruntled. Number, I will mention two things that may be by technology advance by two things that are still very, very important. First of all, speed and lack of technology for the poor. And the case of speed, if I see bitcoin, it actually does a maximum of 700 transactions per second, while mobile money is doing about 900 transactions per second. So in the situation, we actually bring in the people into this financial service and they really need to have trust and, you know, have these instants being of actually paying or sending the money to the mother and the mother after that day or about 10 minutes, having to go to this, you know, you're going to send it again. This is not very good at giving the trust. So that's one thing that's very important and certainly very important for the digital retail transactions. Because if we want to get people out of cash into, you know, transacting digital, this has to be a very, very fast, very quick type of retail transaction as well. One thing is, is the, what I say, what it takes to run this, sometimes, you know, when you get the confirmation, the thing that went through, that actually leaves people sort of in this trust issue. But, you know, you can actually say, well, maybe the speed can go up and the speed issue is, of course, because you are doing a bit of part of the blockchain. You don't need to have the blockchain part because you have a center that's going to have a digital currency. So that's also in the design. The other issue is the lack of technology. Most of the digital currencies do depend still on smart phones. And I have to say that 60% of the Sahara Africa people have actually got feature phones. About a half of all the transfers actually done through feature phones in all the larger markets. So, you know, we are still not there unless we actually promote some type of digital currency that can be handled by a feature phone. It's going to take a long time so people can afford these kinds of cards. So that's something, you know, I would also like to stress. Then in the issue of cross-border payments, it's very nice that Western Union is the inverse of today because we know that cross-border payments is the most promising part of financial inclusion. It makes that today it's just so expensive to send money to your loved ones abroad and the cost so high is actually complicated, et cetera. But even if, I mean, even if the emitter of these stable coins were actually 30-0, I still, I'm aware where the payments or the tariffs, the hidden tariffs would actually be. Because I have to put my salary into the digital currency and I send it to my family for in a hard currency and then it goes, my family has to extract it again and take it out. So these in and entry and exit points were to be that difference between this buy and sell. So transparently, I know the world will be extremely important. And there's also, I think for financial inclusion, I like the fact that, you know, these are the words and definitions to matter because the design doesn't work. If it is only designed as a mirror of exchange, it will have some very positive effects. But if it's designed as a store of value, it will have other effects. It is interesting bearing. We might end up having less intermediation, because I mean that money goes to the digital currency and in fact it's not less money touching down to the needs, which is another part of the group of people that I worry about. If it is encrypted by using blockchain, these are points, you know, how much electricity do you need to have? It becomes unsustainable. We're trying to calculate small quantities, how much do they actually need for them to actually have a type of Bitcoin in their own country. But also the process, it might be having done by large numbers once. I mean, that is actually abroad, or to currency to be abroad. And then if you decide for a centralized system, we've actually seen countries like Bahamas, you know, that also has privacy issues. It might be very fast, it's done with reals that are combined, but then you have to even have privacy issues. So these are some of the issues, and I didn't even talk about them on common issues, civil rights issues, et cetera. These are the issues that are from a financial improvement perspective where I'm at right now. Definitely. And it's interesting to hear your perspective on, you know, waiting for the full P2P retail effectiveness of a currency, you know, we use digital currencies for the wholesale part, and then we use it with money distribution. So, you know, removing some parts of the vertical or innovating some parts of the vertical and keeping others, because as you've said, it's difficult right now to completely end to end with something, but there's a lot of efficiency to be gained, you know, up the vertical on the wholesale front. Glenn, how do you see this? What are you so afraid of at night when you go to sleep and eat out this? I'm worried about two, primarily about companies building products that can build, whatever on which you can build profitable businesses, and a little bit of regulatory piece, which we can come back to in a minute, but on the first, the arc of creation of technology companies goes from math problem, the math solution, the engineering problem, the engineering solution to product creation, to business model construction around the product to company formation around the business model. And in the digital currency world, we have the math problems, of course, the business general's problem, the Bitcoin was the solution to the math problem. We spent much of the last five years taking that solution and trying to engineer products around it, which sort of solved a lot, but not all the problems that came out of that. And now we're at the point where we're actually designing products and trying to see if they find business models. And so what I spend most of my time worrying about is can we construct business models around some of these cool products that are being created as you've done inside your company? Can we do that across the industry? That's where the industry is in this development. That's where I spend most of my time working. Right? You know what I'm talking about. Secondly, I would say that on the regulatory front, I think it's very important. I've emphasized enormously as I've entered into this industry. That it needs to work inside a regulated environment, both from the central bank point of view and the securities industry point of view and the United States, that would be the Fed and the SEC. But the regulators also need to understand that they need to construct a set of regulations that fit this new industry, just the way that we construct a set of regulations. That's what Green was talking about, that fit those new currency industries and then the way we later created regulations to fit something brand new called stocks. We can't take the old regulatory model and put it on top of this. And my friend, Rick Ken Rogoff, professor at Harvard former chief economist at the IMF and has booked a curse of cash, writes that 80 to 90% of all US $100 bills are used for organized crime and tax evasion. The single largest vector along which organized crime operates is US $100 bills. Because they are untraceable essentially and they're fungible and people can use them anywhere they want. The Bitcoin in contrast, leaves a permanent auditable record called the blockchain. And that's why almost all the Bitcoin criminals are caught because they leave footprints that are permanent and unauditable. And most people from law enforcement understand this. The consequence is just an example. As a consequence of which I think it's wrong to say that Bitcoin transactions are primarily used for in criminal enterprises because if you look at the US statistics right now, that's just fundamentally wrong. And so I think those sort of understandings of kind of where this, what happens in this industry and how it operates, how it compares the economy that we're proceeding need to be overcome with a fair amount of education. So that's my second thing I'll worry about. Interesting. So we hear also, I agree with you, a lot of the business models are hybrid models because it is still difficult to go end to end. But I think I hope we have turned the corner on the criminal activity argument because there is so much innovation and it has been almost a decade of innovating in that space. But how do you regulate some things so innovative when it can be argued that we haven't mastered regulation on the traditional financial sector? And certainly it's part of the FinTech community. There's a lot of complaints in the FinTech regulation that it's not keeping up to pace with innovation. So it seems an insurmountable task, how, and I'll ask this directly to Governor Bailey, and again, to Hikmat, how do you regulate something like this that's beyond the curve of innovation that we've seen before and comes in so many different forms as your Her Majesty has discussed? How do you go about balancing all of the factors and considerations involved in regulation and specifically seeing as this is a global innovation and once you become digital, it is essentially cross-border. How does that work between regulatory jurisdictions? I have entities in three continents and every regulator is different. So where do we even begin? Governor Bailey? Well, I think we begin actually, and the history guides us here by defining where the public interest lies because that's what regulation is about. It's about serving the public interest. So I think the public interest here, I'll pick out three things quickly. One, stability of value. I think the public interest for payments, for facilitating a payment, relies on defining how we have stability of value. By the way, that stability of value is also important for underpinning interoperability. Second, as we were just talking about, how to ensure that we can tackle potential use of financial crime. Thirdly, and this is a big one, I think, that's obviously now coming onto the landscape. The whole question of a privacy standard for access to the personal information will go with transactions made in any form of digital currency and how we, yeah, what, where the public interest lies in terms of the balance between privacy and obviously the benefits to the public that come with reduced transactions costs, use. As a minister, we're saying use across borders, which I think is hugely important and a lot of work is going on, by the way, in the international community. So the answer on regulation is, in a way, it's not changed. Define the public interest and then build it out to fit the context of the technology, but don't think the technology becomes before the public interest, it doesn't. And do you see a quick follow-up question here? I can't hold back. Do you see the public interest dividing with the new digital divide in this revolution that we're having here in technology? Do we see for the first time in history, or is this maybe history repeating itself, a true divide in what the public interest is in terms of absorbing, utilizing, adoring, and implementing technology? I think at root, no it doesn't. I think there are always potentially different interpretations of what the public interest was. It may be, as the minister was saying, if you go back and look at the Bank of Amsterdam, you may have found different interpretations of these sort of issues that, in a sense, guided its success and its eventual downfall. But ultimately, actually now I don't see a fundamental division of the public interest, but I think you can go through very noisy periods. I think, let's take the third example I gave, the question of privacy of information and access to personal information. I think you can go through periods when that is hotly debated, rightly so in a way, because we've got to define what the public interest is. But I would be surprised if there was ultimately a fundamental difference of view on where the public interest lies. You have to come to some of my dinner parties then. Do you hear that? Well, you're debating, that's great, we're debating it, don't we? I'm not having any dinner parties during lockdown, I promise, Governor, really. Okay, so Hickman, how do you see this from a business perspective? Do you agree with the governor? Is it business as usual in terms of creating regulation? Is there something new that we have to consider using this technology? You know, as a business leader of a company which transacts so many transactions, I don't see regulations are different than innovation. You have to innovate within the regulator environment. The regulator environment is in the public interest, obviously, protecting the consumers in our cases. And protecting the consumers means also including a lot of consumers within our system. With that, you have to be very innovative in investing in the regulator environment. The last years, West Sweden has been investing hundreds of millions of billions of dollars in the anti-money laundering on the regulator environment being active in 200 countries. And by the way, Glenn, I'm not sure if cash is the biggest laundering environment. I'm not really sure of that because, you know, we know that we are working very close with the regulators in 200 countries and we get admired for catching bad money. And we at West Sweden don't want to have bad money in our system. So the cash, you could put also in a way of how you really track the transaction, how you settle the transactions, how you convert the transactions within the environment. And that's something that we really do in that environment. Now, the digital currency environment, Elizabeth, is new, right? It's relatively new. And as I mentioned earlier, the definition and the words matter how we define what do we regulate in the beginning? Do we regulate the stable coin? Do we regulate the currencies in the front line? Do we have an impact to the monetary policies? You know, people are even mixing the monetary policies with the anti-money laundering regulations, which has nothing to do with each other. I think we should start with the monetary policies, which has a big impact of a country. Like we're going to talk about Nigeria in a second, or also countries like Argentina, where the high inflation rates are huge and the automatic switch to another asset is given within the population because they want to have the hard currency in digital currencies. And some countries like Nigeria, the central bank says that you have to switch it to dollars. You can't pay out in Nigerian currency. So these are more complex environment. And within that environment, I think, I agree with Governor Bailey earlier, said the central banks have to talk to each other also. It's not like, you know, we are talking about the regulation of the monetary policies, about the currencies, really controlling how much money is flowing out, flowing in. It's not like only, you know, we are not talking about the digital innovation. We are really talking about economical change and economical changes and inclusive economies. Wonderful. And on that note, Higman, thank you so much for wrapping that up, but this is a broader discussion and we will have to move to the second part of this discussion right now, which will be behind somewhat closed doors. And I'd like to hand over the discussion to Sheila Warren to take us further into that second session.