 Thank you for joining the virtual Central Bank of the Future Conference. Our program will begin shortly. In the meantime, we have a short video to kick things off before our main sessions today. Having a central bank wasn't always the most politically popular idea. But now, most countries have central banks to conduct monetary policy, to regulate payment systems, and with other regulators to oversee that country's private financial institutions. Central banks should look at the big picture to make sure that the economy is working nationwide for everyone. But we know that many people, especially low-income people, women, immigrants, are being left out. This isn't just a social issue, it's an economic one. For a country to stay financially healthy, we need widespread participation across all sectors. Central banks are well positioned to advance financial inclusion, to help ensure a robust economy. Some banks, in fact, have already begun to take on this role. For example, the Reserve Bank of India has combined regulation and financial technology to promote financial inclusion. With their Aadhaar system, citizens can open an account with just a fingerprint. From there, biometric identification can be used as identification for state-provided services and financial transactions. Or look at Mexico, which is using fintech to move towards a more secure and accessible cash-free national payment system. And in Ghana, the central bank there has prioritized mobile banking as a way to reach populations without access to physical bank branches. As more and more countries work to improve financial inclusion, it becomes more important to understand what financial inclusion really means, and why people can't get access to the services they need. Join us for a series of conversations around the future of central banking. With the IMF, the World Bank, SEGA, the Financial Health Network, and central bankers from around the world. Hello and welcome. On behalf of the University of Michigan's Center on Finance, Law, and Policy, and our co-hosts at the Federal Reserve Bank of San Francisco, welcome to the second Central Bank of the Future Conference. My name is Michael Barr, and I am the Joan and Sanford Wildein of the Gerald R. Ford School of Public Policy at the University of Michigan, as well as the faculty director of the Center on Finance, Law, and Policy. Thank you for being here with us today. Our theme for this year's conference is building a financial system for a more inclusive economy. Before I get into the details of the conference, I want to provide you some context for how this conference fits into the larger central bank of the Future Research Project. My co-lead on this project, Professor of Practice Adrian Harris of the University of Michigan's Ford School of Public Policy and I have been working on this project in partnership with the Bill and Melinda Gates Foundation for about two years. At the highest level, the goal of the research project is for us to identify specific ways that central banks could evolve to make our economy work better for all of us, especially for the poor and most marginalized in our societies. As we look at how central banks can better foster financial inclusion, we define that as having access to affordable, safe financial services and products that meet their needs, regardless of their gender, income, socioeconomic status, race, ability, or nationality. The goal is for finance to serve households, businesses, and the economy for inclusive growth. More specifically, we're examining some of the technologies, policies, practices, and programs happening all around the world that foster financial inclusion. Building on research done by CGAP, the World Bank, the IMF, ASPIN, the BIS, and dozens of financial regulators, fintechs, and think tanks from around the world, we're looking at innovations in both developing and advanced economies. We're surveying financial inclusion mandates where those exist to look for patterns. We're conducting case studies. Throughout this conference, you'll hear about initiatives undertaken, for example, by the Reserve Bank of India, the Monetary Authority of Singapore, the People's Bank of China, the Central Bank of Kenya, and so many others. And for the last two years, we've convened small group discussions of regulators, fintech leaders, bankers, policymakers, and other stakeholders so that we can understand how new technologies work and don't work to fostering financial inclusion. From digital IDs to mobile banking to innovations in payments and beyond. What experiments are underway around the world and what early results show? Next, we're looking at what's actionable. The project explores the three traditional pillars of the Central Bank mandate, setting monetary policy, overseeing financial institutions, and in most countries, facilitating payment systems. And we're asking whether those mandates should be expanded or refined to specifically include financial inclusion. We're exploring how central banks can make the economy work for everyone by infusing financial inclusion into their work, by facilitating real, safe, real-time payments, altering the structure of how banks and non-banks are regulated, investing in fintech solutions, and thinking inclusively when conducting monetary policy. Needless to say, this is a wildly ambitious project, particularly because there is no one answer for what will work for all central banks around the world. Economic and political context matters a great deal. Infrastructure, the ability to create infrastructure matters. Individual countries' culture and history and traditions matter. Increasingly, the effects of climate change matter. In doing this work with you, we hope to disrupt the current economic trajectory of increasing wealth and economic inequality and to help the most marginalized in our societies by providing some paths forward for central banks to consider how to advance economic inclusion. So what have we learned thus far? Throughout the course of the project, we've learned about new technologies being deployed around the world. We find promise, for example, in emerging identity verification and AML KYC systems. We've seen a wide variety of innovative advances in payment systems, open banking using APIs and interoperability, and mobile apps that permit seamless integration of finance. We're exploring whether properly designed digital currencies and distributed ledger technology could be deployed to help financial inclusion, and we're also studying the risks from many of those such approaches. We've learned that we can develop a financial system with lower costs, increased functionality, and better access. We have relearned something we already knew, which is that our financial system is built on trust, and that technology is not a substitute for trust. Privacy, consent, and strong consumer protections are essential as well. We've also relearned the lesson through the COVID-19 pandemic that the most disadvantaged among us, including low-income workers, racial minorities, mom-and-pop business owners, who bear the burden of a financial system not well designed to serve them. For example, in the U.S., a disproportionate number of the small businesses that suffered the most were minority-owned businesses that couldn't get access to credit, that didn't have a pre-existing lending relationship with a big bank. Many households couldn't even receive relief payments in a timely way, or even at all, because they were unbanked or had difficulties signing up. Seeing the disproportionate impact of this pandemic on those who can least afford it only makes our work all the more urgent. From planning this conference, we're reminded that something as simple as time zones can be an impediment to good communication across borders. Here, I must specifically thank the many speakers who joined panel prep calls or recorded or are conducting live sessions for this event early in the morning or late at night in their own time zone to make this work for all of you and all of us who are watching and participating in this event. Fortunately, we have an outstanding lineup of 45 speakers over the course of the next three days who will be appearing here on the virtual stage or leading interactive breakout sessions in the Engagement Hub to help offer new ideas that we can take back to our own communities. You will hear about efforts undertaken to mitigate the financial consequences of COVID-19 from Governor Patrick Jiroge of the Central Bank of Kenya, from Deputy Governor Fernanda Neckio from the Central Bank of Brazil, and from Sir Paul Tucker of the Systemic Risk Council, formerly of the Bank of England. You will hear from San Francisco Fed President, Mary Daly, and head of Supervision, Tracy Bassenger, about the San Francisco Fed's efforts to increase financial inclusion into their work. Daniel Gorfine will offer a primer about how Central Bank digital currencies work, followed later by a deep dive on Central Bank digital currencies in a panel discussion, and a fascinating discussion of China's new digital RMB efforts with Mu Chengcheng of the People's Bank of China. Many of our speakers have ideas for how we might better integrate technology into regulation and supervision. And you will hear a lot about data, how to better capture, store, organize, and disseminate it to safeguard consumer rights, to offer credit to the smallest of our small businesses, and to reach out to those who do not have an internet connection or government identification, but still need financial services. This includes a keynote address from her accidentally Che Onsure of the National Bank of Cambodia that will discuss digital currency, data, and cybersecurity. While I'm the one appearing before you today, the Central Bank of the Future project has benefited from the efforts of many people. First, I would like to thank my partner on this project, Adrian Harris, a true leader in the field. Adrian and I have benefited immensely from our collaboration with Chris Calabia and Michael Wiegand of the Bill and Melinda Gates Foundation. The Gates Foundation has provided financial support for the project, and more importantly, Chris in particular and the whole team at Gates have approached this project as a true partnership, acting as thought partners making introductions and sharing research and advice with us. Thank you. We have been aided in our work by a small team of research assistants and consultants from the University of Michigan's Center on Finance Law and Policy who have helped refine our thinking throughout this research project and to commit some of our early learnings to paper. Let me thank Lev Menand, Patty Cow, Daniel Gerstein-Rice, Mandira Sarma, Ryan Bernard, Brian Ricketts, Office on Asnilev, Emma McFarlane, Karen Thrasher, Megan Kelly, Will Meiser, and Jay Campbell. We are also grateful to the guest authors who have contributed to our What If? blog series, which is posted on our website. It takes a large team of people to put together an event like this. We're tremendously grateful to the San Francisco Fed for their partnership with us over this long last year working to make sure all of this happened. I want to say a particular thank you from the San Francisco Fed to Caitlyn Azaro, Anna DeSousa, Lionel Magino, and Shelly Luke. From the University's Ford School of Public Policy, let me thank Chris Myers, Liz Smith, and Kelly Brown. From the Center on Finance Law and Policy, Tracy Van Dusen, Christy Baer, and research assistant Ashton Smith. Ashton has been the technical producer for the prerecorded segments of this conference and all of the tech rehearsals, and he's behind the camera now. Thank you all for this incredible teamwork that it was required to make this conference possible. We expect that our audience today will include central bankers from at least 22 countries, along with every U.S. Regional Federal Reserve Bank and many other financial regulators from the United States and all over the world. We'll also be joined by people for many state and municipal government organizations, fintechs, banks, think tanks, law firms, and a wide variety of financial institutions. And we have researchers and scholars from universities all over the world. If you registered in advance, you're likely watching this from the engagement hub using the personalized link that was emailed to you. Please note that you will need to reenter your verification link each day. You can also use that same link to attend one of the interactive breakout sessions that follow the live stream portion of each day, and download speaker papers and videos. If you did not register in advance and you're watching via YouTube, welcome. Today's conference will be streamed on YouTube in its entirety on the Ford School of Public Policy's channel. Tomorrow you will go to the same channel to watch via a separate link. The YouTube links for all three days are listed on the Center on Finance Law and Policies website, financelawpolicy.umich.edu. Now I'm delighted to introduce you to our first keynote speaker, Dr. Claire Nelson of the Futures Forum. Dr. Nelson is an engineer, a storyteller, and a futurist. She is the chief ideation leader of the Futures Forum, a research and education practice specializing in bringing the power of strategic forethought and the discipline of sustainable engineering to challenges facing organizations and communities. Named by Forbes as one of the top 50 female futurists, she is editor at large of the World Futures Studies Federation's Human Futures Magazine. Before establishing the Futures Forum, Dr. Nelson held a variety of positions at the Inter-American Development Bank over a distinguished 30-year career. Originally from Jamaica, she holds a bachelor and master's degree in industrial engineering from University of Buffalo and Purdue University, respectively. She received her doctorate in engineering management from the George Washington University. Dr. Nelson has received numerous awards for her leadership and in 2012 was honored by President Obama as a White House champion of change. I'm excited now to turn this over to Dr. Claire Nelson. Forward in this generation triumphantly won't you help to sing these songs of freedom for all I ever heard redemption song the immortal words of Bob Marley and in that I express the idea first of that at some point in time we humans were also considered goods and chatter to be sold in this business of making money money money money money what is it that makes money I truly admit that I am not essential banker you ever heard my background indeed I consider it a cosmic joke that I should be asked to open this conversation but I am an advocate for development equity and therefore your topic about moving the groove towards creating financial inclusion and a role of the central bank in that is near and dear to my heart imagine with me if you will 2030 and in that 2030 which is the year pull here for the sustainable government goals a headline could read that smart cars collide with dumb drivers in traffic snuffle because the collider's avoidance system has failed to prevent a pile up because just enough solar flare and a glitch in the GPS which caused a cascading wink out of the cars radars or perhaps you might imagine another headline in which the risk insurance facility for small island states declares that there's new standards for financial accounting because of the rising cost of insurance globally or into severe weather events the international accounting board and international reporting standard system in partnership with alliance for small island states have created new standards for small island relevant states with financial reporting for disaster recovery I started these two headlines to just make note of the fact that we have to begin to think about and I'm glad you're gathering to think about how might we explore a new future for the central bank I must say that my first awareness of the central bank as a space of power was when I as a student at Buffalo University experienced the first Jamaican dollar devaluation back in the early 1980s you see back in the day when Jamaica still was indexed a pound we had strong money right and that money enabled us to borrow money almost on par with the US dollar so I left Jamaica to come to college with four thousand dollars Jamaican equal to almost four thousand or four point two thousand dollars US pounds and was confident that for the next three years I'd be able to go to school low and behold in my third second year which is my actual junior year I arrived to school go to the suit um go to the financial office and I'm told but you don't have enough money to come to school I'm like what but four thousand dollars was supposed to be sent it says yes well we all want to receive two thousand um something dollars my world came crashing down I knew what then what people in Jamaican other countries around the world face day-to-day that what a dollar could buy yesterday it could not buy today as I sat there hurt angry distressed bewildered wondering what I would do to pay my school fees I called to memory simply because I want to begin this conversation with the knowingness and with you understanding the pain that the average person in developing country feels whatever our dollar is devalued so why are we here we're here because we want again more clarity as to how we take central banks might might help to create a more flourishing future how we're here to move away from our assigned purge of superiority if you will in these next 72 hours this idea of certainty and the centrality of the current standards and look at how we might move to the fringes to explore what could be different so that we might begin to tell a new story we need to tell a new story because as we look at where we have become because of COVID in this volatile uncertain complex ambiguous world we look at the future and we recognize that there's time for a reset we're being called to make a reset we're being called to tell a new story and to craft that story together so how might we recreate the story we are in the fourth industrial revolution and don't have much time to go over that but we all know we're in the fourth industrial revolution and it's fusion of AI and robotics and internet of things and 3d printing and genetic engineering and quantum computing big data machine learning we're actually now even more so because of the fact that we're having this conference probably for the first time or virtually in the state of future shock the future is now we are here so are you ready are the institutions that govern or global uh human security architecture ready because the more I thought about it is I recognize oh my god we cannot do anything about the sustainable movement goes if the central banks are not on the table everything you do every move you make makes a difference under every other goal you talk about sustainable goals 16 on partnerships you are there clearly a lot of your focus has been the one on financial inclusion but beyond that we cannot separate financial inclusion from issues of poverty and access to food and access to education and access to water wherever it is money is you are like the air we breathe you govern what we do you govern what we experience and this is the first thing that I want to make sure the great challenge of our time is to ensure that we create these financial systems and economies that accommodate the demands of resources while maintaining a living planetary ecosystem and a safe just place of humanity again a planetary planetary ecosystem and I say that because I have asked economists at my institution the IDB questions like how is it that we're using the same theories when in fact the systems have changed and economics of our forefathers no longer hold why is it we're using these same things and they said they laugh me off quite frankly oh the rules will still hold I don't know how that is but I am saying that the fourth industrial revolution with its quantum computing means that we have to think about new ways of recognizing peril and risk there are going to be new needs for new plans for regulations that ensure our security regulations that ensure that increasing under employment because of the move to air and robotics don't create greater distance between the haves and the have nots and therefore create more security and human security risk I like to use my concept of human security based on the idea of saying that says development is freedom freedom from fear and freedom from want unfortunately most of the world's people do not yet experience that freedom when we think about the post-covid evolution of the workplace we recognize that remote work for those of us were privileged to work with quote unquote good desktops and we become more common and robots and automation will even begin to take away some of the low-end jobs in countries in Europe and and in the US and Canada as we look towards more social distancing and creating more jobs for robots to do the unsafe work the unclean work right what then becomes to those at the bottom of the pyramid that they are now considered essential workers what choices will we make as governments and advisors to governments which central bank people often are I don't think the average person most countries recognize the power of the central bank so it's all always on the MP the minister of finance when in fact many times the hands of the minister of finance are tied not just by the central bank but in fact the central bank of many countries are tied by the central bank of central banks so perhaps my conversation is not just to those of you who might be listening where central bankers in developing countries were or even people in the federal reserve banks of united states of America at the state level where some states still exhibit the poverty rates because of inequality equal to those in developing countries think about this in the central bank of central banks where I'm in Washington DC a lot of rules are made that do not I believe take into account the pain and suffering of people who fear the day-to-day impact of the continual devaluation yes Jamaica has been doing well and we have had our our interest rate and our inflation rate to whatever is required by the IMF but what about the ability to put a chicken in every pot my god where are we why are we using equations that no longer that do not measure well-being and do not take into account the fact that there's no social system and so people remain on the fringes and the margins of hunger so here we are in this post-covid world the volatile uncertain complex ambiguous world the virus unhinged complex an anagram if you will analog world unhinged by the coveted me are we ready now to accept that the volatility is the new normal I hope we are are we a central banker's structure to deal with this new world reality do you understand what will be expected of your industry 10 years from now but get ten years from now five years from now do you understand and have you thought about what new partnerships do you need to make in order to mitigate against the increase in risks and to bear resistance we know what the mega trends are we've talked about them the flow to global accelerating technology accelerating connectedness in the future we're talking about a smartphone in every hand the smartphone which is more powerful than the computers that put the man on the moon so in 23rd year we're talking about probably the average person on in 15 connected devices this is the world in which you are now operating as partly bake or put together the ingredients we're talking about moving from the era of big data of the zetabyte the zeta zone and people are saying that the zone is being moving even faster into the other zone we're talking about who came to the 24 zeros amount of data and this is the world in which we want to create a safe just space for all a future of well-being a sustainable economy a moral economy a more prosperous economy a more equal economy and a more cohesive society it all comes down to what we believe do we believe the litany that what has been should continue to be i would hope not do we understand that we have an opportunity now to rethink the systems the system that have created the inequality in the first place the system that made it that someone that looked like me could have been enslaved 400 years ago the system that retains the rules and algorithms and the equations that no longer hold in a quantum mechanic universe the interest of the future the industries of the future bio factories electric cars smart cities give us room to rethink if these equations that we've been using really matter give us room to rethink are we measuring actually the impact of waste in our society do our equations that determine the financial models and algorithms that drive interest rates setting also measure what really matters my vision is that we all move towards a smart future and i'm using the word smart with great liberation because we all carry a smartphone so if we can only move towards a smart future meaning that we have asked the question how might we create sustainable systems how might we recognize as leaders that we are dealing with complex system of systems and begin to become better system thinkers turn off the norm of the economists being separate from society and holding themselves apart and put yourself a moment into the shoes into the feeling of a mother who is getting below a minimum wage and has to take care of children how can we create moral metrics metrics that have meaning that matter how can we create agility and ability and anticipatory agency how can we create robust resilience how can we create and move towards transformative use of technology as i wrap up let me say that we have to see yourself as central bankers as minding the development effectiveness gap the future of central banking will have more complexity will have more regulations but we need more individual differentiation we must ensure that we pay attention to the emerging problem space and it meets the teleological effectiveness of the emerging set up solution space i'd like to close by saying but molly's song one love one heart became the words anthem because it is the call towards a new thinking and i like to say i love capital that allows us to create a future of well-being from all a flourishing future i invite you them to believe and vision and know that you can and you must as central bankers be a part of co-creating the flourishing futures we want remember the future is embedded in the landscape of the present and the future favors the bold so go out and seize the day and face the future with faith one love one heart let's get together and be all right one love i wish you blessings as you begin your journey to creating the future we want