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INTERNATIONAL TELECOMMUNICATION UNION
FOCUS GROUP ON DIGITAL CURRENCY INCLUDING DIGITAL FIAT CURRENCY
 
13 JUNE 2018 

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>> CHAIR: I guess we're good to go.
Good afternoon, everybody.  Thanks for those that came back in time from lunch.  I hope we'll make it worth your efforts to get back in the room. 
We have an interesting panel ahead of us which is supposed to look at wholesale.  Actually, when central banks are looking at digital currencies, generally they do so for a variety of moderations, which are trying to respond to a reduction of cash in circulation to financial inclusion conservations, multipolicy concerns, potentially looking for a new, more effective type of settlement assets.
Depending on the motivation, of course, the way they look at it, the decide choices they're considering do vary.  The side choices can entail quite a number of aspects whether you have a variant which allows certain letters, whether you foresee holding a transfer peer‑to‑peer or using intermediaries, also whether you are targeting the general public or on the limited range of counterparts, in particular, the wholesale domain.  The wholesale domain, we're looking at traditional financial institutions, financial participants, possibly also corporates which are in the financial sphere, and here, of course, we're in a domain that's less close to what was traditionally covered by cash, but more closely covered by what used to be the domain of large value payment systems and other wholesale payment mechanisms.
If we look at this, the questions, of course, why should several banks look at this particular variant.  There are a couple of drivers.  We have been discussing these kind of issues internationally, for example, in the level of the BIS at the CPMI to find out what could be really the issues that should make the central bank look at wholesale currencies and some carry around Xs, whether you should provide for modifications to a safe settlement asset and if safe settlement in the case of digital currency use, it could be central bank money, it could be about in‑house efficiency, allowing for 24/7 settlement, so extending opening hours, opening days compared to current infrastructures to have a more harmonized messaging standard or to enhance the ability across different networks.  Of course, last but not least, it is a response to developments where other types of assets are moved on to ledgers, tokenized and the question is, should we respond by also putting cash on ledger.  We'll look at this through a variety of perspectives, before introducing to you the wide range of the panel, it is my pleasure to turn to you to give a keynote speak on this topic.  I look forward to hearing from you.
I should say, of course, the Chinese academy of Social Studies.
>> Thank you.
First, I work in Chinese social science academia, but I'm Chairman of the modern digital ‑‑ STO, yeah.  We have discipline.  We have the special ‑‑ so my speech, it is based on my observation of the it Chinese Digital Economy and Chinese digital payment practice.  It is focused on issues, insurance and digital money, ensuring and digitaling money, it brings out countless questions such as demand and digital technology who will be assured and a decider of the operation and account, DFC, it is the cornerstone.  What is the relationship between DFC and the currency in the system, what are the relationships between operating DFC with currency policy and financial stability, is this singular or diversified, how will financial activities, the whole economic system of society, I had certain restraints as follows, one, it is a deciding of the DRC, but the currency demanded in the reality.  The Digital Economy is developed with the digital payment, it is the scale and the level of the system and which is a real economic foundation for this.  The real currency demands of DFC is a describing force for ensuring and operating related digital technologies, it is a supplement for digital currency at some level, but not for generating the demand for currency.
So why can't private currency become digital currency to satisfy the demand for the currency.  So the difference between the private digital currency and the DFC, one, private digital currency cannot achieve a fixed rate of 1 to 1.  It is also the case for the jeopardizing of the singularity and stability of a con currency.  Two, it is not a fulfiller for currency stabilization, it is separate from private, three, enterprises, and the departments, the digital currency as booking, the fact that they can hand over any currency besides the digital science which is the private digital currency, it is a blog date for public science.  Take China as an example, the total number of mobile payments in 2018, it is 277.39 trillion.
They mostly rely on private digital payment platforms.  However, you have the ‑‑ in other words, there are digital payments, but non‑are digital currency.  For probably the digital currency, you have the digital assays due to the reason and they're unable to draw interest demand and they cannot satisfy the digital currency demand in the real world, although they are in terms of technology perspective, it is a point that means construction and you consider the digital currency, it is more advanced, technology respect and this covers the central bank.  Probably the virtual currency and this does not develop a full replacement, a replaceable relationship, and therefore auxiliary that pays for central bank to issue a legal aid in the digital currency, independently, they wish to fulfill the need for the development and will stabilize the digitalization of the socioeconomic system.  Two, to ensure and operate the digital currency is based ‑‑ it is an old account system.  Digital payment and bank payment belong to two distinct categories.  They rely on the different account system.  It means that the balance in the digital accounts, it is digital currency.  The residual balance in the bank account, it is not.  Digital payment and back payment are based on different account activities and there are no crossover payments and only exchangeable with each other.  So same as the money in a bank account, it represents that residue in the digital account, it represents a digital currency build in the bank process, in the independent digital label and calling on the ‑‑ and calling on the number labels.  You have the residue, in bank account, it is only a digital number, which does not represent any identity as independent entity.  Digital currency, it only existed in accounts, showing in the account balance.  There is nothing with that money as digital money is existing from the five account system.  The transactions are found between the digital currency accounts, they are a digital payment activities.
In practice, they are booking account activities through the central bank directly or indirectly according to the account owner instructions.  It is not unnecessary for independent currency, but book keeping currency, the units, it has to be ensured, while implementing booking activities.  It is not necessary to make it independent for central bank, the actual issue, the digital currency, it does not even return the money circulation liking bank system outside of the the digital currency system.  Only responding to the digital currency system and ledger system is it required.  Digital account system is therefore the key to understand the issue and operation of the DFC.
Three, DFC does not change the ways of keeping currency.  It issues lieu through the exchange process.  It does not have a total ‑‑ does not affect the total amount of currency.  Currency has to guarantee, it will cause unnecessary and vulnerable currency turbulence, therefore, you have the exchange between the DFC and the bank note, it has to be fixed as one to one, there are three minus corresponding exchanges of currency after ensuring this, one, book keeping currency, it is the similarity and you have the national changes that will not happen with the DRC issues.
It is widely known, probably the digital currency, it is only for asset, circulation due to the prize partly between the private digital policy and the DFC table and now it is suitable to circulate that as a currency.
Two, the two‑dimensional structures including the payment and the bank currency payment, digital currency replaced that payment and the digitalization of the economic system and exchange rate between the the two parties, it is one to one.
The exchange and the speed of the deep mind and market.  Three, the clearing procedures changes when the it was appears.  The difference between the two, the ex it change relation, DFC is a process issue, demands the bank money, whether there is a demand circulation or in the market for the DFC.  Therefore, the total amount of currency will not change.  Because of that, and in principle, there is no need to change currency policy if central bank issues the DFC.
Ensuring means that the DFC partially replaces all bank money in the market and there will be no change with book keeping currency.
No dramatic change of total currency amount.
Four, DFC and currency policy adjustment, and the financial stability, the DFC money in digitalized form, meaning at any time DFC is confirming to be opposed by one certain holder.
So completely different from the case of back money.  No one pays anyone else money with interest.  DFC is considered to be equal to 0 interest.  In terms of interest rate, the two‑dimensional system, DFC and bank money, they're entirely different way to change foundation of the interest rate for the currency policy.
The pressure of interest payment will be a dramatically reduced by the large amount of capital transfers and the supportives by DFC.  It is expected to be enacted partially.
It is demonstrating that to ensure the DFC, it will have the central bank carry out the currency policy model accurately and effectively.  It also has the stability of the operation.  Not only does it is largely relieve the capital cost of the financial systems operation and it structurally reduces the financial system risk to be predictive and the completion and the corporation relation between the currency and the central bank system.  Ensuring and operating the DFC will promote the diversity of the financial system of the system and the digitalization of finance, ensuring that DFC can be diversified, which is not restricted to central bank.  Not just the CBDC.  If physical authority can be shown, physical response, then the possibility, it can also ensure that digital stamps and also you have the value of the bonds issued in individualized form before, they're all considered to be the legal aid digitalized, and therefore central bank will not only issuing the one DFC but will ensure that the DFCs depends on different circulating renders.  So the satisfaction of the digital currency and the digital securities, it is as it occurs and the requirement of the stabilization and development of Digital Economy which is now exposed to two technical obstacles and enlargements.  At the same time, the currency, it will be singular and the basic digital account system, it will be based on the central bank DFC bank system which is diversified and showing in the digital currency.  It makes the account system structural and you try to file in combination with the bank, it is the same system that will be more flexible, complicated, and adaptable.
This is a feature of the 24‑hour operation in absence of ONI approval.  High pressure the timely keeping, it is completely differentiated from bank money and it is not in the future.  The financial activities being digitalized, realtime and you have the accounting titles, financial accounting standards, they'll all be substantially revolutionized with the issue and operating of the DFC.  Under the current economic system, financial time is set by human, and relies on bands and scales.  The future Digital Economy is working in realtime operational of currency and economy.  It shows that digital currency, it is DFC, it is unavoidable for change in the history of over finance development.  You have the progress for social it economic history.
Thank you. 
>> Thank you so much for this highly stimulating setting of the scene.  You have very nicely highlighted some key features and the implications and I appreciate the Outlook, you have taken a bold statement.  You may pick up some of the aspects in the discussions.  Many thanks for this.
Let me see.  I would suggest that we give opportunities for questions, but perhaps at the end of the session so if you can wait for the immediate questions for a bit.  Bop as a further stimulant for the panel discussion, here the presentation by the Canadian central bank who has kindly agreed to actually step beyond his geographical borders and present the project outside the Canadian sphere, but many thanks for having taken on this.
>> While the presentation is coming up, I should say we give a usual disclaimer that these ideas are not those of my employer.  In this case, that's really the case because this is not even my employer!  So nevertheless, I will try to do this justice, I'll attempt to not do it an injustice.
Okay.  This is a deity experiment with a little wider scope than just an experiment as I'll show in a second, that they completed last year, and it is easy for me to say as an outsider no, sir would working with the South African reserve bank that it is nicely executed, designed experiment, and I urge anyone interested to actually look at their very readable report.  It is excellent.
So this experiment, it is really around wholesale digital payments, really investigating DOT in a number of dimensions and whether it brings value to wholesale payments.
One of the things they emphasized here is how the project sits in the context of many other experiments that are going on around the world and I don't know how clear it is for you to see ‑‑ doesn't really matter ‑‑ I'll speak to it ‑‑ they categorized the various experiments that central banks have done around blockchain and DOTs in the threat‑way.  So we have the first wave dating back to 2016 where they had these experiments done by Bank Of Canada, the Brazilian central bank and Singapore.  This was really the first way we're trying to build a realtime system built around blockchain, very simply no functions like liquidity saving mechanisms, so on, really just to kick the tires and to look at the ledgers, see if they had essentially one choice, which was a theory and then after that, a system of high‑level if a Rick and the system was at its infancy at that time.
Then we had the second wave, some of the issues that couldn't be addressed, when you had new platforms, such as quota coming along, where we could try different platforms.  We could extend the functionality, there was a second set of experiments done in 2018, 2017/2018 timeframe.  In the third way, I built again on top of the second wave where we started to introduce functions such as liquidity savings, mechanisms, importantly moving beyond just having cash on ledgers, central bank digital currency on ledger to having other instruments on ledger, essentially securities and there are a few central banks that you can see who delved into these experiments.
A nice thing about this, it is that in a way, because these are public institutions, there is a great deal of competition really between them.  It is quite cooperative, in sometimes, it is explicit with the banks, forks, now we have the EMES, and each sort of builds on top of previous experiments, just pushing it a bit forward, it is a very nice way of working.
As I said, this not is just ‑‑ as for the SARB, really it is just about doing an experiment with DOT, they have a bigger vision of what they want to do around fint ech.  You see on the left, this is 1, 2, 3, there are three sort of pillars of what they want to do, so first of all, that they have ‑‑ that they have some policy research around what to do about these private currencies such as crypto, work is going on around that and what the regulatory response, if anything, finishes and then you have to understand and engage with various private sector parties so they're trying to understand how could they work with innovation, incubators, so on as part of their Agenda in trying to drive innovation I guess both in the financial system and also at the reserve bank itself.  Finally that the focus of the presentation is to really get their hands on ‑‑ to distribute the latest teening knowledge, understanding more fully, try to understand what it is capable of, how it is limited and what can be used from these technologies.
On the right there, they have these four aspects of what they want to do, as I mentioned, education, educating themselves is a key part of it, increasing the ecosystem, you see that reinforced in the center panel there, creating an ecosystem and really a collaborative approach was really important.  If I could just look at the experience of the Bank Of Canada, this too, it was actually very important, in some ways more important than we realize the because, of course, to do anything practical you need to include the ecosystem that you're trying to influence.  Not only that, there is side benefits because you start to understand the ambitious, the fears of other actors in the ecosystem and they're learning and building the relationships of trust which is really quite an important benefit.
I'm not sure what they mean by development of contract and solutions, but I assume that this is the nitty gritty work of building kind of legally binding relationships between the ecosystem.
Finally, the footer kiss of this, it is around the performance testing of this particular specific experiment.
Before I'm into the details of this particular project, I will explain simply what this is about from a technology perspective.
So I mentioned that this was one of the first ‑‑ this is actually the first general purpose distributed to the ledger program, distributed ledger platform out there.
It is actually produced ‑‑ it has limitations, in the case of Jasper for example, we used this in Jasper one and we had some significant issues, transactions, it was one, you have the order of 12 of these a second, it that's not changed much, due to my knowledge.
And the other one, perhaps even more significantly, it is a lack of transaction of settlement identify Nallty, you have this problem of finality, you buy a cup of coffee, fine, if you transfer 5 to 100 billion to that institution, not quite so good.  So we have an Open Source platform, and there are many derivatives of this.  People take this code‑based and they try to fix what they see as problems.  In the case of this experiment, they used a platform called Cora, a derivative of ather EO n and initially, it was actually created not by a technology company, per se, but JP Morgan, but by JPM, the banks say we're technology companies now, but in trying to address some shortcomings and creating a platform that they considered really fit for financial institutions and financial market infrastructure.  Trying to plug some of the gaps in the the public etheroum platform and they're suitable for a private permission network of regulated financial institutions.
Here what they're showing is that the partners who are involved, so we have ‑‑ I think there are six, seven banks, the three on the left, the three on the right, the one in the top, in the middle at the bottom there, it is the South African reserve bank itself and that is sort of in a bronzy color and the consensus, it is a technology company, a New York‑based technology company that understands the ecosystem really well.  Furthermore, this is trying to show that ‑‑ we're trying to show how distributed the system is here.  You have three types of ‑‑ so each of these I wanted institutions, including the reserve bank, and consensus, they run a node on the system.  Three on the left there, they run their nodes in‑house.  So I presume the house has a server, running in‑house.
But there are five that run on Microsoft, you say this is a cloud offering from Microsoft and one, ABSA, they hosted their node on amazon web services. 
I don't know if it matters to anyone, but those ‑‑ some of the aspects you see there, the 16 gigabytes of memory, 100 gigabytes of storage, so on, it is really quite modest as IT infrastructure goes.
Okay.  So personally, this is really about the objectives.  Now we have a list of what some 20 something PFMIs, principle for financial market infrastructure.  For this experiment in the project, they decided to focus on just three of them, and I think one was simply the scale of the proof of concept and the other one, it is that many of those PFMIs, you can only really measure if you have a system in production.  For example, governance.  What was actually ruled out.  There was no point in looking at that.
Did they consider these things critical.
Settlement finality.  As I mentioned, it was a failing eth EO reum and they want to make sure that there is a point in time in which you can say that that settlement is complete, the obligation has been extinguished and the payment, it is irreversible.  I also want to make sure that in the money settlements, the PFMI there, that either this is settled in central bank money, or if not, that the requisite credit risks were put into place.  Finally, they want to understand some of the operational risks around resilience, especially.
Now, to be a little bit more specific on the right there, we have a list of the key measures.  So if you're going through them, they want to make sure that ISO222 could be enabled here.  They wanted to make sure that it could process a day's worth of transactions, the specific number is 70,000 transactions t the target, it was titled to that and they want to do it over two hours, you have the recovery objective in the case of a failure of the day's processing.  It has to be there in two hours.  70,000 transactions two hours, for something like this, it is a challenge.
The speed propagation time, you have this number that you can see most within one second, the 95% of the transactions should be propagated within one second, privacy, it is a key ‑‑ one thing I didn't mention here, a problem with the eth EO roum, that's a system that has transactions in the open.  They're not ‑‑ they're not encrypted in any way, they are replicated across all of the nodes.  If I'm bank A, one someone else is bank B, we see all of the transactions in the clear.  We may not know who the transactions belong to, incomer a small system like a financial market, they're compared to the retail system and it is easy to figure out who is who and ‑‑ what transactions belong to Whoohooo.  They wanted to see if there is a way in which they could ensure confidentiality of the information.
The final one, of course, they wanted SSRB, they needed to see the transactions as the operating authority.
On the left there, this is just some of the qualities of the korum platform.  I won't go through them.
I will speak to them in a second.
The way they executed, I don't know how long the iterations worked, it was an Agile approach for iterations, presumably each of two, three weeks, so we really, really are quite quick.  The experiment, the transactional stuff is straightforward, the transaction from bank A to bank B, they don't need a great deal of functional richness to get to their core objectives.  So this ‑‑ I can't speak to the commitments, because I didn't have time to read up on them.  But this is a particular type of crypt graphic mechanism that enables this confidentiality and privacy.  So the idea being that even though the information is replicated across different loads, it is nevertheless remaining confidential.
It is actually quite an advanced crypt graphic scheme that dates back to the '90s and it is only recently with the event of relatively cheap computers that they're able to do this practically.
Okay.
So they implemented, you know, if any of you know the way around blockchain and the distributed ledgers, these are consensus mechanisms that the nodes have to come to some agreement about the validity diversity of a particular transaction.  Many of these different types of consensus schemes are out there, the most famous being proof of work which has all sorts of down‑size to it.  In this case, they use something called in a tolerance, which is essentially a type of voting mechanism that allows about 30% of the nodes to be malicious, nevertheless still working.
I have the question about the messaging, it is but the fact that it relates to confidentiality and alloys the SSRB to actually see the transactions.
Okay.
So in terms of the results, there is no table on this, on this slide, but pretty much all the requirements that they met, can you go back maybe one more page ‑‑ yeah. 
On the right there, every sing as well one of those questions, they started out with, it was met.
So it $manage 70,000 transactions in under two hours, the propagation times, they were mostly sub second, and it did meet the confidentiality requirements.  On the left there, settlement finality was met.  You could say that it was final.  The obligation, it was extinguished.  Similarly, the settlements were done using central bank, central bank money, that was met.  The only thing outstanding were the operational risks, what I felt was this really difficulty to measure in a meaningful way until you have a system that looks like production.  There are lots of other things you have to do beyond proof of concept in a real system.  Our experience with project Jasper, it was exactly the same, trying to measure that, trying to measure that governance, it is meaningless until you get much closer to production.
So then you go back to ‑‑ then they mention that these again, building on existing work, this BIS framework around benefits of risk and presumably the PFMIs, they found it very useful, and the case of South Africa, I'm not sure what the industry groups were, I assume it is some association of banks p I guess I give them an easy way to get on and collaborate with some of these actors.
I mention some aspects were operational risk were not completely met.  So they need you to do more work on completing that.  I guess there are macro economic and macro considerations, of which we didn't get to.  I assume that this means, for example, provision of liquidity, so on in the realtime system compared to deferred net settlement, so on, sorry, I don't have the details of exactly what they're getting to.
Any way, undoubtedly I left lots of gaps, so on, I encourage you to read the report, it is well written, very accessible.
Thank you. 
>> Many thanks.  Particular that this is not your own project, you have done a marvelous job in conveying the key findings of what the colleagues in South Africa have been doing here.
I thought what was quite impressive, it was at the beginning of the project that was underway, and, of course, that picture, it was far from being complete, but it has basically shown the advancement and expanding focus of the experimentation.  What I find reassuring, looking across all of the experimentation, the findings, they're very much converging.
I think to the extent that these explore the technological capabilities, we now have a rather good picture on what's possible, where are the limitations, and where is the potential needs to seek further enhancements.  Of course, and that's something which you also very nicely conveyed, you cannot just look at it in isolation because all these projects, if they were to have a real meaning, they would have to be integrated into existing financial and payment ecosystem if all of the interdependencies and relationships that do exist, so perhaps before I open up to the panel, let me just add one further consideration there from my own experience and the discussions with the colleagues in the various ways.  The technical side, it is one component.  If you look at central bank digital currency and particular wholesale, central bank digital currency, the other component is the settlement asset side that you're using.  Again, like the reference we have had here, the benchmark to look at the technology when it comes to payments, infrastructure, they're the principle investigators, and similarly for settlement assets, you have the benchmarks that have been set some time ago by the CCPS at had that time and some elements that need to be considered here, they have been clearly spelled out, that settlement asset to be acceptable, it needs to be safe, it needs to be liquid, it needs to be mutual, and it needs to provide finality to the players.  That's part of that you can achieve by the technology side and the other, you can achieve only by having a appropriate design feature in the currency, the settlement aspect side involved.  That is the subject matter for a wider discussion.
Let me start with the panel discussion.  I would like to turn first to my colleague from the central Bank Of Brazil, another colleague who I have had the pleasure to collaborate with a very long time and the central Bank Of Brazil is not only a very active player here, but it also has already a very good long track record now by looking at these matters.
Your perspective, it would be very much appreciated.
>> Thank you.  Thank you for having me here on this panel.
Our idea today, it is looking to use cases and I think we should start looking at ‑‑ we definitely have a case for this, for this use cases.
So I have the knowledge that we have to look at innovation.  So the world is under transformation, some time ago, I presented here a graph showing the correlation between the ICT development and the financial development in Brazil and you can see the growth in financial, in digital financial systems, corelated with ICT development in Brazil.  There is no ‑‑ I think there is no argument saying innovation is not needed.  If the marketing is developing, the central bank should also follow what is going on in the market to be related and also to adopt innovation to systems.  I would like first to touch on our new Agenda at least for the next four years.  We just did an Agenda hashtag for the central bank.  If you look at it in four basic dimensions, inclusion, transparency, financial education, competition, and definitely what we understand innovation is doing, it is kind of improving the computation into the market.  So the first idea of this when looking to this wholesale CBDC, it is looking at what we have been understanding and what are the grounds for the wholesale.  We try ‑‑ I used to be known in the CPMI, the large value payment systems, they're years ago.  So we have the one side and then we have the panel discussed this morning, and then we have the large value, which is looking, by the definition, you're looking into the systems which transfer funds and these are large value and high priority payments.  I think we should look into this kind of payment system and if there is exactly any development that a CBDC that can be brought to these systems and they're settled in realtime and on a gross basis.  Currently we have accounts that are being updated with each participant and there is no transfer ‑‑ no talk and transfer.  So our question here, it is to answer if there are any case where it is a talking transfer between participants that improve the current large value payment systems.  Is there a case for it.
So I think in the end the question on wholesale CBDCs, what for are we going to use a wholesale CBDC.  If we're looking to current IGSS, they are kind of efficient and resilient and that's exactly what we expect from them.  Money is already digital.  If you look into the Brazilian figures, we'll see that 97% of money is already digital.  Only just a small part of this is not digital.  Brazil, a voluntary deposit, at the central bank, they are safeguarded.  So what we have today is an economy that is sufficient in digital and with the accounts that are digital, we would translate efficiently and resiliently the money between all participants.
Eventually I think we have already touched on the case and now I learn that this project Coco, it was always ‑‑ it was ‑‑ it wases in one dimension into these cases and we should maybe have a case to look ‑‑ okay.  If you had issued and you had this balance that you're supposed to have on the grounds that you have and the central bank and the commercial bank depending from jurisdiction to jurisdiction.  That would be kind of a use case that is different from exactly updating the RTGS systems.
Looking to the Brazilian case, we look to SCR, our system, we have 288 participants, 87 are known banks.
If you look into the efficient side, we can look into how payments are currently settled.
In average, I have six seconds to settle every message that is on our system and on 7 seconds, they're to settle elementary 90% of all payments made in our RTGS.
If you look into the resiliency side, you look into the availability, which is over 99.85% 
Sorry, there is a comma there, in Portugal, comma is the decibel point.    of course, you can get that.
So the question then becomes to understand ‑‑ so should we kind of have this centralized system which you can see in the left‑hand side, or you get it kind of distributed.
How could we contribute for that.
So when I was kind of drawing it, I would trial to do the 288 participants, and the drawing, it got a bit messy.  I think that shows that maybe we are putting too much complexity in a world that's already settled and kind of efficient.  But we'll stop that discussion for the time being.
One experiment we did, it was on the DLT side, it was it trying to understand if DLT could be absolute discretioned as a backup system ‑‑ could be used as a back up system, a second backup, we have currently two sites with I are synchronized to provide the RTGS system, the same case that we can see in other areas.  You have two different sides, one being the back yum for the other.
The same happens in Brazil and then DLC, it is the second become‑up system.  What would happen then, would be if the central bank is taken out from the system, what is the system ‑‑ is the system sufficiently resilient to go forward?  What are the IT staff, what could they take from their experiment?  What kind of test?  Many, many possibilities, including M.Kota, they're known for the notary, they were not able to get privacy together with having ‑‑ meaning that you wouldn't have any other entity taking it's central bank shoes when the central bank is out from the system and you couldn't have at the same time no negative balances.
So in that case, which we can see that these requirements weren't met, eventually, that's the question I would pose, would that be a case for the wholesale   CBDC, so you have the central bank in the system, maybe it is something that has its own value or it is containing their own value, it could be a transaction between participants having some guarantee for no negative balances and having transactions privately from the other participants.
We won't go much further than having this finding and kind of having this question raised.
So sometimes we have Brazil on a fancy table of saying who has already tested CBDC, but the fact is, we have tested DOT and our ‑‑ we finished it that, finished having a question that eventually CBDC would be a solution for this issue that we found.
A second possibility, for our DLT, and what would be ‑‑ what ‑‑ which was not tested, it was on the cross‑border.  So we have a system that is immigration since 2008 which can settle the credit transfer orders from Brazil to Argentina, and then later it gets to Paraguay which are the four countries that are currently operating the systems.  The system has no DOT and the system has no CBDC or wholesale CBDC and it works.
One thing that I always want to put on the table, and I think we should discuss is which are exactly the updates that we have in the current systems, so when we ‑‑ when we say that we were having a fancy cross‑border blockchain, a fancy cross‑border DLT system, what exactly is being updated?  Is only the technological side of the system or is there some enhancement on the overall business case that has been doing?  So I think from all these points that I pointed here, we should take that innovation is fairly welcomed in Brazil, but what we see from wholesale systems, it is that they're currently efficient and resilient, and any updates to them with the wholesale CBDC should prove itself as being more efficient and more resilient than the systems that we currently have.
So innovation, we should look if it is just innovating into some processes, and then there setup that we have for cross‑border, for example, it is being updated because we are having better business processes taken from five days to one day instant payments on the cross‑border basis, or is it the technology that's providing this outcome.
I would say maybe that's the business case that's been updated.
So which use cases we would have, eventually some use cases for compliances, for compliance, but I'm ‑‑ I'm secretary Cal on seeing that these new systems, they could currently have the RGSs we currently have on the centralized databases.
It should have a nice ending here, but anyway, thank you. 
>> Thank you, Daniel.
Of course, I take away from your presentation a with somewhat mixed picture.  Here we focused strongly on CBDC in a setup where it would be a kind of a replacement, a large payment infrastructure which I found particularly striking you emphasized at the beginning very much the competition point, and here, of course, the competition unusually would be between a traditional or new central bank services with I the central bank would provide competition to itself.
Is it the only issue here or would you also see a wider angle to this?
>> This is a part of innovation.  One part, it is to be following what has been developed in the markets, and then you can kind of regulate what's going on.  That's basically why we should get always looking to the different variance that are kind of being raised in the market.  The other thing, you have to update your own systems, you say it is a new system to compete with our previous system, that's basically how research is done and development, you try to improve what you currently have and trying to get a better city government than you used to have and then you can replace it.
Once more, I think I kind of am skeptical to have any CBDC systems at this time currently being able to replace what we currently have with the current technology. 
>> Thank you.
Some attempt to follow‑up directly here with a question, but I would park it a little bit.  We have exposed him to two, three central bankers on on the podium and you're bringing in a different dimension coming from law school and being the director of the log money initiative.  Of course, we have been emphasizing now here in a couple of interventions the wider interactions and the setting of wholesale CBDC in a more comprehensive financial ecosystem.
I would be very interested in hearing your particular take on where you see particular issues, benefits, challenges. 
>> It is a privilege, honor to be on this panel, I'm not sure if I'm bringing the naivety of youth or the idealistic of someone that feels if we're having these conversations, in a world where climate change may make a next move in the next 20 years we may as well think otherwise what are we doing here.  I'll try to connect innovations in this CBDC space to border developments in macro financial kind of ecosystem in which the wholesale actors are primarily operating because I think it is important to think about not just the immediate benefits of digital currency but the second, the third, the one that's implemented in the areas that may be relevant today and I appreciate the framing and sort of the vision and I can hopefully tie that back in to people that have the luxury and the burden of being more tied to what we're doing today and tomorrow.
So the fist thing I want to bring up, I think, it is an issue or an area that we have not talked about in this conference, we talked about it a bit in July last year in New York, it is the implications of digital currency for the safety of the banking system, particularly the deposit insurance.  I think what the 2008 crisis revealed is that even the formal limits on deposit insurance, they don't really hold off in moments of crisis, and when we're talking earlier and John was talking about synthetic CBDC, the idea that the government could issue CBDC and then a second actor could issue an instrument that was backed by that, my mind was going immediately to the legal commitment that is behind the deposit insurance.  If you have banks issuing deposit insurance, there is not an explicit asset backing it, but there is a legal commitment backing it and that functions in a way that collateral functions up until the point of deposit insurance caps where you can be sure that those are values, they'll be guaranteed by the government.
So, if we're going to think about an interoperable system where the funds can get between actors that arage Maaing these, one of the questions to me, it is how does this go into the heat rye of depositing the insurance and maybe it needs to be updated.  Maybe we need to think about a common deposit across the banking system as the inevitable conclusion or the logical outcome of the CBDC system that is incorporated into the way that we use banks today.
The second thing that comes out in the last ten years to me, it is the expansion on central bank's balance sheets no non‑bank actor, non‑bank financial institutions in particular through facilities like the overnight reverse repurchase facility that have meant that rather than an institution‑specific framework, increasingly today, liquidity, it is certainly sophisticated financial markets that are provided on the basis of collateral.  Rather than just government issued securities being eligible for collateral, we have a range of corporate debt, government sponsored and back securities, things like that, providing direct within this the rest of the financial system, the banking system, so the question to me starts to become what are the range of collateral classes regarding or considered to be eligible for lending in the emerging macro framework and should a digital system think about a similar form of lending against collateral given that the risk would be essentially the same as providing reserves today.  If that's the case, while we have a non‑convertible fee of currency sort of underlying the technology, we start to come up with something with various forms of collateral, private instruments, the exchange value into the government currency in some way and the recent innovation that's relevant here, it is that the Bank Of India, moving to the prepositioned accounts where banks submit a certain section of their assets to be evaluated and then a discount rate given against the assets so in the moments of crisis, those are the first assets pledged as collateral together and we could imagine a Sim peculiar framework emerging for digital field currency under which in addition to simply selling government cash or bank deposit or something that other instruments would be able to be pledged for DFC balances at some sort of discounted rate to account for the risk.
What we also see in that kind of model, sort of connecting the dots a little bit between that and some of the concerns that have been raised around digital field currency, it is the idea of deposit outflow.
There are sort of certain credential reasons why there are benefits to having bank deposits.  The most obvious reason for banks to track deposits, it is a cheap cost of funding.  A discount window, a direct lending facility in the central bank could also be a cost of funding depending on the way that the central bank chooses to lend.  If we want to make sure that there is a cheap source of funding available for banks in the case of this, we could do that, we could have that conversation and that is a part of the kinds of monitoring policy development that are actually occur kindergarten already in the last times after the global crisis.  The question of deposited output being a bad thing, its one that we need to see how did we go in the structure to consider that.  If it is true that a central bank digital currency is going to improve the interoperability, safety, accessibility, and the only thing we need to do to counteract the negative effect of that, it is to slightly tweak our monetary policy framework, that's the variable that should be considered to change rather than to throw the potential of digital currency under the bus in the name of preserving the existing bank lending structure..
Going a bit further into that, we could also look at the way that treasury and central bank interactions today are a historical out growth of a system where a bond market historically provided something different to what they are providing today under the gold standard of fixed exchange rate, those bond markets were providing the capital that we didn't know if it existed.  If we look at the Bank Of Japan, the Bank Of Japan, it is buying up the institutes in ‑‑ under a situation like that, the issue, it is the treasuries and the placing of the bond market in the middle of that, it may not actually be the most efficient way to set up that interaction.
The fact that we're introducing a digital currency, it allows us to reimagine the possible interactions.  We can also see this as the way that monitoring policies is implemented.  Once upon a time, interest rate management, it was through open market operations where certain amounts of government securities would be bought or sold.  So whereas in the last ten years there is an increase in the direct payment and interest on certain balances, interest rates, access reserves, things like that, so in a world where that is a viable policy tool, it could be possible to look at the interest rate management in a DFC regime without the need to incorporate bonds at all, if you want a saving instrument, a risk‑free marketable security as was said, we could develop those subsidiary kinds ever digital field currency assets, the fact that the asset is so easily programmable, it means that we can add those features on top of our that rather than consuming them as fundamentally different instruments.
Lastly, on that idea, I think that there is very interesting potential in terms of consolidation of different forms of government securities, markets, today that currently are considered different.
So based in to the United States, just using an example from there, there is an entirely different market and training infrastructure for government‑sponsored entity it is, securities, Fannie Mae, Freddie Mac, versus the treasury security market whereas from an investor point of view, they're both government guaranteed, both securities, both paying a rate of interest.  The question of why these should be considered fundamentally different kinds of instruments rather than saying, for example, two subcategories of digital field currency, simply with a different issuer on one table on the data layer.  It is again, a question of how far we're willing to sort of reimagine the existing framework.  One last big point, a lot of the realtime systems today are functioning in ways that will be performed.
That said, there are reasons why further integration of the systems and or a way you're providing some sort of complement to the systems that connects them up to retail systems, could be valuable, but also there may be contexts in which for various reasons we want some delay and we want a batching, a netting process to happy before the realtime settlement comes in.  Again, this is where starting with a universal interoperabling extremely flexible technology gives us more options on the table to think about best outcomes than simply starting from the range of tools that we have today and seeing whether we could possibly fit one of the policy goals into those tools.
So rather than proposing that this is necessary or likely to happen, my point is just that the potential here goes I think even beyond the efficiency and the direct benefits for consumers that have been the focus of this conversation.
>> Thank you for adding another picture, another angle to this point of view.  I would very much take away from what you said, to the extent that we're looking at digital field currencies which are not directly issued by the bank itself, indeed, the questions about constructs, it is similar to what's come along, as I said at the beginning, the ultimate aim, it is to have an ultimate safe settlement asset and to reduce the credit risk that you have from private sector constructs.  However, why look for that to the original, which is the digital currency.  I'm very much aware that time is quite advanced.  I do not want to deprive you of the opportunity to raise questions or comments to the excellent presentations we have made.  Before I would put some of my own questions that I have, and I have actually quite a bit after all of I have heard, I want to see if you would like to intervene. 
(Poor quality of audio).
>> I appreciate the presentation and the outcome, if you would, right, the outcome of this t.
Let me suggest a couple of things.
First one, the reason is that you completely control this, it you're the sole controller and you built it to a very specific particular function.  If you agree with that, I guess the question is would you translate your outcome to also retail DFC or CBDC?  I hope you don't say yes, right.
I see retail CBDC as a very different beast in which the whole ecosystem is highly decentralized and I view the CBDC in a sense as an extension of this to the general public without creating an account on this for everyone of us.  Thank you. 
>> If wic ‑‑ looked at different options of looking into tokens, we would be looking at a different side.  We're in a different panel and we're looking exclusively on wholesale, wholesale, it means updating what we currently have.  You have to take into account what was said, what was said that, wow, we could have assets looking into the integrating systems and I think that the question here, how a CBDC, the CBDC meaning the exclusive token carrying some sort of value or more information than only the account balances, what you can improve on that.  You can kind of link a live value system, target one, it is an example, whether you could integrate different systems, and it was improved to target 2 and then you had a new system for that, but it is kind of making different system it is and you have any problems with that, it is ‑‑ you can have many challenges for that, and then you can ask the question of how CBDC is linked.  It is on the wholesale side, not only on these systems that you're kind of updating, but you can link the better bonds market, the bond systems, they're mostly treasury, and in Brazil, they have one exclusive system, which is for the bonds market, you could integrate that with this but you could do it with different technologies.  We can do it with centralized data banks and we can do it with CBDC.  What's yet to be proved, using a CBDC is more efficient than not using it.  I'm not saying there is no room for it, I hope there is room for it, but it is not clear to me that it is exactly the case.
Just to take kind of a drive ‑‑ a ride on this, I think there are many points that can be on the table, but the one policy discussions, they're not exactly where the wholesale CBDC is being discussed.
You have a technology partner, you have to protect one technology and update what we have or often give you more possibilities.  As we have been discussing here, I think it is kind of difficult to add at some point that the Ecuador case, it was an implementation for many reasons, I wish for a larger time, bunny way, you see, you see that accounts were provided to individuals and it may have worked or not, but that's not the case, but it was provided with the current technology.
With the CBDC, will they make difference on this experiment?  I don't think so.  I don't think one can prove that it could be improved with that.  It could be different with the CBDC, that's the question to be answered.  And applying to wholesale. 
>> Thank you.
I saw a secondhand raised. 
>> To me, a comment, maybe two questions, the first comment, it is the sentiments that we're getting, I think, it goes back to the point raised yesterday that it is not very easy to make a case for CBDC, the commercial business case.  Especially for maybe the high‑level payments.
Now if you look at the low‑value payments, which these are normally ‑‑ maybe that's the case.
And what I'm trying to figure out, it is that we don't send panic out there t it would be nice, maybe we'll look at ITU to help us with this, to have a view that just says for the payment, CBDC compared to the USSD‑based kind of payment systems.  If you get developing world USSD and it has a lot of risks and challenges.  Even just to compare those two, is there no case that we can easily sell to get security and so on?  An open ended comments.
A question, I really do understand what you meant when you had said on the government's side, I just couldn't ‑‑ you need this specifically related to governance, I wasn't sure what we're talking about there.
Thank you. 
>> I can speak to the governance question.
I'll say what I gather from the reserve bank and give my own view on that.
I think they're simply saying until you construct a system that's in production, and not only the system, but if you think of the operational processes and the government processes, so on, you can't really evaluate thought and we didn't go that far.  The scope of what they were ‑‑ the scope of what they were trying to do, it was purposefully reduced because they need to have those conversations, trying to design the governance, so on, it is very difficult.
My own view on that, it is that for the distributed systems, truly distributed systems, meaning that there are multiple legal entities running Part of the system, it is for DLT, with the kind of elephants in the room, right, there are all of these hundreds of concepts being done around the world, they really do get to a point where you actually have to address the governance problem.  That only comes when you get close to production.  Trying to get a roomful of folks that are cooperators, competitors, they have their own internal dynamics and so on within the organization, they operate at different speeds, so on, they try to get a common governance structure to address issues like what happens when something goes wrong.  Who do you call?  The Henry kessinger problem, who do I call?  Right.
One of the ways that some of the consortiums are trying to address dress that, you say, okay, what we do, we have an operating company.  You operate the company, and that's the one that you call.  But that leads to a second problem which is if the operating company is legally liable when things go wrong, why would that ‑‑ what's the incentive for that operating company to allow further distribution.
So this is I think a problem that's really not been followed through and I suspect that you won't until someone really tries to put this into production.
>> I know the colleagues are I having to add but time is flying rapidly, about the settlement and the expectations, I mean, what we have with this, it is in the whole stale digital currency domain, there is a multitude of industry projects.  This is snot the case if there is not perceived meet of business demand for the projects.
If you look at them, if you ask them, you find indeed some key conservations, one aspect is very obvious, if you have a move to tokenize the assets and settlement of the tokenized assets, there is a logic for delivering that payment by paying cash also on the ledger.  That's a clear aspect.  The other aspect, it is more responses to limitations of the current value systems like limited opening hours, limited access where private sector solutions want to respond.  There are different ways to address it from a central bank perspective, you can enhance the existing issues or you can move into the CBDC setup.  Now that I have been probably asked to stop the panel, let me just use the opportunity for a last, very quick question to everybody here, to just dodge whether you see us in two, three years from now.  Really see wholesale CBDC as a particular rollout, and I'll start to my very right. 
>> Good question.  Three years from now ‑‑ we have so many start people in the room here.  Maybe they'll be able to prove that there is some good use case and you're able to develop something that is proving to be more resilient, efficient, can deliver ‑‑ can deliver this and I would say three years, it is a short time for being able to do that.
You know, innovation, it is all about it.  I think that if ‑‑ if something really comes up and proves itself to be better than what we have now, I think that it might be really adopted quickly.
>> Yeah.  I'm reminded of that, when I ask my customers what they wanted, they would have said a faster horse.  When we think about the range of digital technology we had before the Internet, we had a phone that worked well for calls, we had a pager that worked for paging, a fax machine working well for documents, we had, you know, morse code working for certain kinds of information, but I don't think anyone here has experienced the Internet today, that they would say that we were completely fine with all of the technologies back then and if we can get a digital con September, I think you have the effect tough an Internet system on all of those other functions.  I suppose the only question then is how far are we willing to push, it is somebody that push bad a car out of the world of forces into existence and someone pushed the Internet out of the world of the telegraph and the phone.
So I guess the question of how far we are in three years, its a question of how much the people in this room and the colleagues choose to push. 
>> The payments in China, it is high, so after ‑‑ so maybe this is issued, the digital currency, this number could enlarge three times, the departments, they will have methods out to have digital payment.
Thank you.
>> Thank you. 
>> I'm going to cheat.  I think there was a misunderstanding, I think there is one central bank that committed to ‑‑ I think Cambodia, Thailand, they committed to building out a system using blockchain technology.  Whether it is truly distributed, that's another question.
Just to say, I think a lot depends on either being on the part of the central bank, policy innovations, or there are parts of the economy that are more and more tokenized, creating a demand for a tokenized cash ledger.
Who knows.
Perhaps just to tie together, because you have so many references turning back to you in the room and the contributions and efforts, I believe that the discussions we're having here, they will be highly conducive for us to make a recent decision on moving forward and with this, I thank the panelist of the keynote speaker very much for the interventions and thank you for the excellent contributions. 
[Break]
 
  (Audio issue)  (Audio issue)  (Trying to reestablish audio)  ‑‑ we have other banking alliances on an international scale facilitating or planning to facilitate payments with blockchain, reducing costs, increasing trust and, you know, with various benefits we can expect.  That's ‑‑ that's what we have been discussing with my dear fellow panelists.  You know, to go along the lines of what we're all thinking.  What makes it exciting, we'll provide as much interesting information to the audience as possible, perhaps controversial even in light of digital central bank digital currency initiatives.  Are we not too late, are we catching up with technology and technology development, and the solutions that have been provided on the market right now, or there is room ‑‑ there is room for us and so on.
So without further ado, I would like to introduce fellow panelists.  We have the Bank Of Canada, we have the future of currency at Stanford and we have CAAS and another.  Welcome.  Round of applause. 
We start with a presentation from you. 
>> Thank you.  I have enjoyed being here today.  Listening to the presentations this morning.  My tone will be a little bit different from what I think you have heard.  The topic, it is called financial inclusion for world travelers.  I should probably put down inclusion and actually have that in ‑‑ what I really mean, it is financial acceptance of our domestic or anyone's domestic currency regardless of where they go in the world.  What's happening, as has been suggested here, is that there is a rampant digitalization of payments and payment systems and we have already heard about the R3 and rhythm and other things, and ‑‑ and ripple and other things I and there is also there is a very vast use of QR codes throughout the world versus credit cards.  Classic is vanishing quickly and for good Rio de Janeiro.  Among those reasons, it is expensive, the fees, they're high, particularly if you're traveling overseas, there are additional fees that are charged by the likes of MasterCard and visa.  We also have this issue of what's happening in China.  Let me point out something to you, you all heard last year at the ‑‑ if you were not here, but if you were at the presentation in New York, the PDOC gave a very, very impressive presentation I thought, and they said China had three very serious goals when it came to technology.  One, they would be the leader in AI, two, they would be the leader in data science, and three, they would be the leader in robotics.  I was in china two weeks ago, and I'm going to share a story with you through this presentation, which is actually very similar to the experience that I had when I was in China and I'm sure that some people in this audience have had.  Finally, what we'll talk about, it is how do we actually enable people to travel throughout the world in a very seamless manner just by using their phone to pay for things, whether it is food, whether it is ‑‑ whether it is something from a retail store, whether it is something from a hotel, actually checking had into a hotel.
With this slide, it shows what's really happening in terms of rapid growth of online social media applications.  You can see that in 2014 we could see the percentage of retail payments, what they were in China.
Today you could see that probably 40% of the payments in China, probably even exceeding that, they are through retail, Aba pay takes a large portion, what you're seeing is very, very little use of actual paper currency in China today.  Okay.
So we're also seeing the QR code is replacing   the credit card.  This is not only happening in China, it is happening in other parts of the world, and it is going to probably continue to happen based upon all of the discussions that we're even having here today.  So let's give you a very sad story.  We have a businessman who decides to go to China, and he brings along with him his 8‑year‑old daughter.  It is not uncommon.  Right, for ‑‑ for probably everyone in this room to travel worldwide, I'm sure all of you have been to China in the last year or two.  The daughter wants to go, and his daughter, although she is excited to go, has some problems.  One problem, she is a diabetic.  They land in China, the first place they go to, a Buddhist temple, a nice place, a place that would welcome you as a traveler, it is a spiritual place, a place of inspiration.  What happens along the way, as you see from some of the text, is that they have difficulties.  They want to take a ricshaw ride and find suddenly that ‑‑ I don't know what you call sun what pulls that, the puller ‑‑ they won't accept paper money and the father doesn't know what to do.  The father also doesn't have All ipay and the reason why, in order to have those in China, you need a bank account.  Guess what, it is very hard to get a bank account if you don't live in China or if you're not a chinese citizen.  What happens, they have to walk, they have to walk to the temple, then they get to the temple and they find out that they have to pay to get in, but they have to pay using a QR code and, again, there's no QR code.  Obviously, there's a disappointment.  It is an unanticipated disappointment.  There was something worse that then happens, the daughter who was diabetic, now she needs food.  Right.  The father takes his daughter to a local vendor UI navigation guess what, he can't get food.  Terrible.
The reason why, again, because the way that vendors accept money in China is through QR codes.  Here we have the difficulty and pain, and we have listed here you will a of the different categories.  You can't get transportation, condition get food, can't get retail and we probably can check into a hotel, but it will probably be a good hotel and it is probably the only way we can spend on our credit card.
What we have here, it is basically a fundamental problem.  It is interesting to me that, you know, we're talking about standards for digital fiat currency and affectively what's happened in China, they have a form currency.  In addition to what's happening, we are going to be in a situation in the short future where there will be a complete elimination of visa as ‑‑ visa as a form of payment, and the only thing that will be accepted, they're credit cards ‑‑ excuse me, QR codes.  On top of that, we have got China with this problem that they'll be hosting the Olympics in 2022, and hundreds ever thousands of people will be there, not only there visiting, but millions and millions will want to view the events that are happening there.  However, China kind of prohibits the use of WhatsApp, YouTube, so it will be hard in some ways for people that are there to record the events and to send them back home.
Where does that leave us?  Okay.  It leaves us in a very interesting position.  That's the following:  We have to look at what we have already to solve this problem.  What we have been doing up until now, we have been looking to the future and trying to figure out and anticipate problems.  What we have in front of us is a real problem that has to be solved now.  Okay.  So we have to use the tools that we have now to solve the problem that we have now.
Interestingly enough, we're sitting in an organization that actually sets the standards for communication.
They set the standards for telephone communication, we have got these roaming services and devices, and we also have a digital identity, we all have one in this room, we all have a phone number.
So the logical solution is to use a mobile system, a mobile telecom system and then simply build upon it by linking to our phones our wallets.
In this case, these will be again wallets that we can find here, you know, in the United States, our origin ‑‑ our country of origin is, and we can probably use that wallet through the telecommunication systems throughout the world.
How do we do that.
Again, from what you can see from this slide, again, we have got in the lower green, we have got the communication system already in existence.  What we really have to do is overlay on top of that a gateway, and it is simply a blockchain‑based gateway and it could be even in the form of hardware.  Basically what that gateway is going to do, it will provide realtime verification of a customer.
The customer's identification, it is going to to be getting realtime verification of, you know, basically K, Y, C, A, M, L, it eliminates any kind of delay that a potential customer may have in converting the currency from one country's currency to another country's currency.  In essence, what we're going to build, what can be built quickly, and as we speak today, it is a phone application which enables anyone to travel around the world and basically, you know, use their money wherever they go as as passing through the gateway, as they pass through the gateway it's, they're in compliance with the local country law, Number one, and Number two, the currency, it will be usable, converted from whatever local currency they had to the local currency in the country that they are traveling to.
So in terms of future work, this type of idea has to be implemented.  It is going to be ‑‑ there is a path of implementation we're going to use.  Part of it is Stanford, that's why I'm here, because Stanford is going to be a center that will be working closely with organizations like the ITU and we'll talk about that further.  Basically validating any particular type of digital ‑‑ digital fiat currency mechanism.  Whether it is again a chip, some other form of digital fiat currency.
We'll also hopefully be working with the ‑‑ you know, with the the bricks in order to set up nodes for communication, among the countries so that we have a decentralized system of, you know, for the transfer of money, that's a topic that I think has not come up and, you know, it should be talked about frequently.  It is that we do not want nip one particular country controlling the transfer of money or on ‑‑ around the world without picking on China, that will ‑‑ I will make the statement, it is a factual statement, right now China has laid fiber optics across the oceans.  Those fiberoptics are carrying approximately 40% of the data between the continents.  Should we have a situation like that ‑‑ probably in my opinion ‑‑ again, just my opinion ‑‑ the answer is no.  So setting up a system of telecommunications with nodes around the world so that one particular country can now control the communication is probably essential.
Besides against, you know, Stanford, the way that we're setting it up there hopefully, we'll have the participation also of Oxford, they have a blockchain security center there and we're talking to them as well.
That's the end of my presentation for now.
>> Very impressive.  I have had so many people travel to China, myself included, and you have the pay, nothing is available as a foreigner.  You know, you don't have a local bank account.  You know, in many countries you can use your mobile phone, your smartphone with the wallet as a means of payment, you can't do that in China.  Hopefully it will be solved in the near future.  Thank you so much for this amazing presentation.
The next presenter, it is going to be...  Welcome.
>> Thank you so much.
So disclaimer, my views, not those of the employer.
I guess I can give you something quite differently, but the boring, back to technology, back to blockchain, but something of the story of the evolution of the experiments and how we really got to thinking about using blockchain in the context of cross‑border payments.  Okay.
So we'll start with ‑‑ as I mentioned before, when presenting the project, there is work from what seems forever ago now, 2016, we started to think about the operational DOT for wholesale payments and we first started with this domestic, we saw a few problems, but then we carried on with phase 2 to try to eliminate the problems and each time we went through this, there is a kind of hanging hypothesis in the background that we still haven't really solved even going to phase 3 where we have a DOT that has securities, on ledger, cash on ledger, it has a liquidity mechanism, it meets many of the requirements around the transaction input, so on, yet we're still struggling to see and as Daniel had pointed out earlier in the previous conversation, really Al very clear business case for blockchain.  Besides, it was crystal clear, are we talking about a 10% improvement, frankly, who cares, right?  We're trying to reach for something ‑‑ for something bigger than that.
There sure one reason why ‑‑ and in some, it is very obvious, there is no revolution to everybody ‑‑ revelation to anybody, but it is worth restating.  The original promise of blockchain, what wasn't things like, you know, it will give you Brazilians for free, that it would had increase transaction, some think the opposite.  It is the idea of solving what they call the trust problem.
You know, you have many transactions that have some kind of intermediary in the middle and as with bitcoin, you try to ‑‑ it is not just remove trust but shift trust.  I shift trust from institution, I have some kind of intermediary in the middle to the system.  So this trust appears, now you're trusting that the system, right, and the algorithms, so on, underneath it.
So in the case of the domestic environment, there is always a thing in the back of my mind, well, what's the transformational things here.  I think it is fair to say that there hasn't been one up until now.  There is not a hypothesis that we have had that the value of the ledgers in the domestic situation, it is really a function of scale.  If you start putting, you know, everything, right, on to ‑‑ organizing everything, putting it on to blockchain, the Federation of Blockchains, then you start to see the benefits as things move around or friction is near, so on.
That's maybe the hypothesis in the future.  There's something nearer, which is really it gets to the trust problem.  Right.  Right now we have a situation where they don't let us look at CLS, it is really about effects and in the world of cross‑border payments, there really isn't a system of such.  You have these arrangements in the corresponding banking world.  This arrangement between institutions where you have a corresponding bank that has presence in two geographies, two jurisdictions, that really provides effectively the trust.  Presumably these two entities trust one another, they're part of the same group.
So the obvious question is, well, is it worth eliminating the need of that trust in the institutions by using distributed ledger.  So that can add ‑‑ what year are we, 2019?  Last year.  Sorry.
Last year we completed some work with the monitory authorities of Singapore to have a proof of concept, which with he call Jasper a little bit, which is the combination of our thinking and Jasper and the ALSs, they're working with their project which is similar, different in interesting ways.  As you said, just before, there was actually a paper with the management authority of Singapore and bankful England that's really looked at digital review of the issues that are present in cross‑border payments such as these.  These are just the highlights if you want to see more details, have a look at the report.  You know, anyone trying to send upon money, even as an individual, you probably are seeing this, we saw it a few years ago with not the most recent services, you don't know where the money is, lack of transparency, it is expensive, pretty simple, you can just transfer money, that's it.
And for, you know, for the providers themselves, you know, they're sitting on top of the legacy infrastructure, they're burdened by compliance and so on.  There is all of these different challenges.
This is past repeating what I already said.  Imagine there is no trusted third‑party in the middle, is there a way to engineer the trust not so much in a particular entity in a corresponding bank but somehow a crowd of institutions.
So that goes back to the foundational drivers of blockchain.  Of course, we have some supplemental benefits, the fact you have non‑repeedable messaging, resilience depending on the architecture, so on, the common data and processes which perhaps isn't played up enough that, you know, you have two institutions that have exactly the same understanding of data which can reduce costs and reconciliation, so on, quite dramatically.
Okay.  So for this, we have the proof of concept, here is a chilly length, rather than just think about two different jurisdiction, we want this to work in two different jurisdictions across two different currencies, Canadian dollars and Singapore dollars, on two different platforms, we purposely chose two quite dissimilar platforms, in the earlier presentation I mentioned quorum which is a drive active and quota, it is not, quota they say, it is blockchain inspired, but it has very, very different roots and we have chosen these two on purpose because they were dissimilar.  So we have the proof of concept.  If it works, fantastic.  If it doesn't, at least we know this is a challenge and it will be very difficult to quite impossible and we move on, right, to something else.
So we have used this as a background.  The heart of this presentation, it is supposed to be a technique ‑‑ excuse me.  I forget ‑‑ I forgot to mention something.  The word atomic here.  It is very important.
What typically happens in a cross‑border payment, you have two sets of ledgers.  You have one ledger in one country.  Another in another, and there is no central ledger a I cross them.
The trick, it is without these trusted parties to make sure that both of the ledgers are updated, and that they're updated correctly, now ideally what this requires, it is an atomic transaction, all or nothing.  This ledger, it is updated and this ledger is updated correctly or neither of them are.  That's where we want to ‑‑ what we want to achieve.
To do that, we want to use a technique Hash time lock, right, this has been around for a little while.  It has been invented, its in the literature.  It is quite involved to explain how it works in 2, 3 minutes.
I can use this to try to set up the idea.  Here what we have, the the two jurisdictions, one country, another, and typically if you have a trusted party, so bank A wants to send money to bank B, bank A chooses this intermediary with presence in both countries.  Typically what happens, a bank, bank A will send money to bank C, this intermediary effectively in escrow.  It is telling the bank to ‑‑ and it is trusting the bank to hold this money and not release it until certain conditions have been met.
You know, goods have been received, whatever it is.  In escrow.  That's something that is legally binding.  In the case of Hash time log contracts.  What we do, we make use of the smart contracts on the blockchain.
Now, many stop the term spot contract and I wish it was called something else, they to have a value.  They're not smart, they're not contracts, fine, but they have value still.
It is that they allow a type of computation of binding.  That they have a commitment.  You can program a smart contract, you tell it to do something, it does something, that's it, you're committed to it.  There is no way to back out of whatever things all being requestal.
Instead of using an escrow where you hand money to an entity that you trust to release that money until certain commissions.  You do have the smart contract.  Now you're trusting the smart contract and you're trusting the system.  That's the heart of this technique, HTLC, the time logged contracts.
I'll just go to the conclusion.  Right.
Where do you find it?  Basically it worked.  It actually worked.  We have tried scenarios to break it, so on.  You can indeed trust this in the middle.  So whatever it implies, there is ways in which you can have updates in two different jurisdictions without needing an intermediary like a corresponding bank in the middle.  It doesn't mean this by itself is a solution.  This is one element of addressing many of the issues in cross‑border payments.  It does give the possibility of removing friction in one way.
So it is not perfect, the only ‑‑ the one thing that's an issue, there is a mechanism which you have to pass the see yet across the jurisdictions, not only the blockchain, and that transfer, it has to be extremely robust, if it is not, things can go wrong there.  After that, it works.  I see someone that understands.
That's what I have, thank you. 
>> Good afternoon.  I'm from world economics and Chinese academy of social science.  Today I'm going to introduce my reason to work about stable coins with the director of my department.  I'm glad to see that we have talked about stable coins this morning, but the difference between his presentation as mine, my institute, it is a think tank in China, we pay more attention of macro issues such as international monetary system and global financial balance.
As mentioned yesterday, stable coins have emerged as a new way of digital currency, but there are many challenges and will not be broadly used in the short or medium term.
We would leak to discuss the relationship between stable coins and CBDC in the short, medium, long term.
We now that CBDC has lots of advantages in cross‑border payments from the economic perspectives, security perspective, also the global guidance perspective, which are many focuses.  As of two years ago, in the first meeting of FGDFC, held in Beijing, we're proposed to three Patents to reconstruct the global cross‑border payment system, but as time is limited,ish I won't risk that here.
However, we know that CBDC has still long way to go since there are still many issues that have not have been solved, that's why we're gathering here for the three days.  Although we know that while the most promising application areas of digital failed currency may be cross‑border payments, specifically CBDC cannot be directly used crossborder because it is ‑‑ it should be firstly used in the domestic market.  In the shortened, the medium term, we think stable coins brings you this to be used in cross‑border payments.
We know that since last year our coins have been coming up like become boo shoots after a spring rain.  The developers of startups to global financial giants and IT giants and it is from the company developer and it is moved to government regulated.  We know that stable coins have both advantages of cash currencies and digital currencies and most ensurers of the stable coins, they have stressed the application, the cross‑border payments so in the short‑term CBDCs cannot be put into practice, civil coins are actually a subsidy of CBDC, at least in some areas such as cross‑border payments.
I have to stress there will some principles here and they think that the stable coins meet such principles as strictly defined as TFC.  First, they should be fully backed by ‑‑ they must be able to be conferred to grants or payments and converted by law.  Second, they're issued by priority commercial banks or enterprises that should be included in commercial it banks regulatory system, that means that they become part of the currency regulate tore system and third, the interest rates which can be similar to the current, in the commercial banks, to support the mandatory policies and the last central bank should be   the vendor of the last resorts.  Hence, this kind of stable coins meet about conditions that are backed by national credit and they can be widely accepted in global, financial markets. 
From the perspective of payments, we think that they have the following influences, and the coins will be more competitive in global financial market than others since they're backed by national and are more competitive than traditional as they possess the properties of digital highlights and enhancing ‑‑ and sheens, H. ensuring.  The civil coins will be more recognized globally and eventually the financial power of the countries with the stable coins, they'll be further enhanced when the CBDC is developed. 
In the long term, we'll still compete with the coins, we still have many advantages, for example, the central bank can control currency in insurance and circulation easily and they can urge expert mechanism.  Mandatory policies and conduct the macro credentials, the provisional more effectively and the financial institutions may also provide more in the flexible applications, and we have the stable coins, so we think CBDC and the coins will succeed and cooperate with each other in the long term to promote the technological innovation.
That's my presentation.
Thank you. 
>> Thank you, nice to see you all again.  I'll keep it brief.
A couple of things, first of all, I'll try to just provide a perspective as a lawyer, someone interested in the international trends right now.  I think when we're talking about cross‑border flows as one thing that we should think about, it is the lessons we have learned domestically on how to deal with interinstitutional transactions and that historically have been done through a central bank.  The wait we managed this problem, the domestic level between different banks that couldn't trust each other, it is to develop a central clearinghouse and allow that entity to maintain some of the risks associated with those settlements.
Right now we do have entities that settle between governments and between international financial systems, the Bank Of international settlement it's, they're well represented here, they do have a global framework for considering the kinds of collateral that's acceptable.  Again, the basic community, it is a real thing with a significant influence and national level financial regulation.  We also have an international legal regime that determines the context in wisdom stick jurisdictions apply, a choice of law approach or framework that's the dominant framework for most of the international corporate resolution and the undelaying framework for the state investor treaty system, dispute resolution system, it relies on usually one of two jurisdictions, New York and London.
We have international companies choosing where to they had quarter themselves again in relation to that international legal regime.
If they're starting from the point of view that we're sort of an actor and there is some actor out there, on the other side of the world, and we don't really kind of know who they are and they're anyone and you start from an observation of 0 trust, I think that's missing some of the relevant international infrastructure that would be potentially helpful as we think about the best which to build out cross‑border transactions.
The other development post crisis that I think is relevant here, it is the central bank arrangements which began as a series of bilateral arrangements intended for emergencies and have evolved into what I would argue is sort of the emerging post‑rules arrangement moving from a system of largely fixed exchange rates to one of failing exchange rates to one of largely failing exchange rates in a bounded range set by the agreements at the line networks.  There was a point after 2008 where the euro dollar market sort of collapsed and the trust in the euro dollar market collapsed and the federal reserve system was on the hook for over 500 billion‑dollars against the European central bank.  That wasn't determined as a matter of legislative policy, that wasn't determined on the basis of budget imbalances between the two countries, that was a matter of financial flows between the countries banking systems.  So we have a framework to think about cross‑border payments against some sort of centralized clearing system and that's probably the best starting point here.  I don't go tore far further on that.  There are a lot of moving Parts on that question and there are a lot of   em that are working in the individual aspects of that.  So moving to another point, I think it is relevant here, when we want to think about cross‑border regulation and law enforcement around security and safety, there are a couple of different sources of lessons we can sort of take, one is the history of regulation of cash.  So we have rules right now that prevent 10,000 being transferred on planes and notably, the money, it doesn't really sort of call the police if you take 100 # 0001 #, the money is done, we have forms of law development on top of that monetary system to trace and ensure enforcement of that rule.  But we have made a commitment at least historically to the idea that cash itself is not engaging in that regulatory activity.  We do put legal regulations on top of cash.  If we want to think about, for example,ish the context in which someone may want to travel, for example, we might want to think about what restrictions we want to put on those accounts distinct from what restrictions we want to put on the wallets and think about the regulatory enforcement regime as something we want to keep separate from the question of the design of the monetary instruments and the wallets themselves.  Maybe we won't, maybe there are different views in this room or elsewhere, but it is something worth thinking about.  The other thing, obviously, there is general agreement in this room, starting with a digital resolution, it is very important to think about the broad infrastructure that can be built on top of it.  We have cash today, we have checking accounts today, yet most people put their money into credit cards?  Partially, you have the benefits and kickbacks,er things you get, partially people appreciate the additional legal support that comes with a trusted intermediary taking responsibility in the event something goes wrong.  If you're thinking about cross‑border transactions purely in the sense of how to make sure that somebody gets a no thrills checking account or a no thrills cash account we may be missing some of the more important aspects that come with things like travel insurance or an entity having accountability if they're ripped off, particularly in the economic jurisdiction that they're unfamiliar with.
When we think of front end, back end, we think not only about the ability of giving people balance as they are used to making payments, but also the kinds of third‑party intermediaries that could provide that additional layer of credit support transactional insurance and things like that that again we may need to be thinking about both nodes in that network as not just completely independent untrusting entities, but rather two nodes in the larger network with a theory of that network and insurance and regulatory scheme that applies across that network.
If we were in the 1700s, the big idea of traveling over the seas, you thought you may die coming back, but that Ma have made sense but there is no dark Turner now, you start to travel, you end up back on the other, you have to think tough the planet as a holistic system first and foremost and working our way downwards.
Er at least when it comes to the thought line network, the bilateral world given that it seems like there is some U.S. ECB network with the Chinese network, they're doing everything they can to stay separate at least for now.
The last thing I would say here, is that when we think about the cross‑border payments of large financial institutions, one area that needs to be taken into consideration here, it is macro credential be stability, it loses an ideological point, people in the 70s, I think everybody after 2008, it is aware of the financial stability risks that come with the whys of the euro dollar deposits or the deposits in one country demanding the liabilities of another.  And if we're going to start creating new arrangements between domestic banks in one country, wallets in another, we have to be very careful about not only effects risk but international risks between the two countries and that's again why I think things are back to discussions of swap line networks and drawing rights.  Luckily digital currency, it has some contribute takings to those conversations as well.
>> Thank you.
To sum up, we have a couple ‑‑ we're concerned about payments in different countries, retail side, you know, like we have very interesting information, the experiment ran with an MAS in sending power, Bank Of Canada.  So it is quite interesting actually and seemingly involved.  Connected chains like quota and permission version of the therom can communicate with one another and the point of when our power is on the digital concept.  I hope everybody enjoyed.
Let's take a couple of questions from the audience.  We'll round out that discussion. 
>> Anybody from the panel?
>> I have ‑‑ it could create a question, this is a response to this discussion, I may have misunderstood you, you made a very good point, that there are ‑‑ I'm not ‑‑ I'm not a lawyer, let alone a payment system specialist.  There are these sort of foundational legal constructs on top of what we can build and produce these safeguards.  I think a thing about these experiments that central bank as are doing, there is so much about saying do this this way, it is a technological possibility.  But the driver, to try to inform policymakers and if you look to expand this set of potential tools to have at their disposal, you're right, this is technological driven, right, they're not socially driven, the things that were mentioned.  And does sit on this, you know, this bedrock of the ‑‑ you know, it is interesting legal constructs.
I guess it wasn't much of a question, right. 
>> I agree.  I don't think this is an argument against the efforts of the cross‑border payments, again I think this ‑‑ there is so much to do and consider even in the short term, even if we're just getting this talk so people can take it seriously, the idea of what happens next, what are the implications of these, it is hard to sort of deal with in the moment.  Just to take a step back, okay, where are we going?  There is ‑‑ it is ‑‑ I was on a high school council wall, if you don't end up where you're going, you'll end up somewhere else, the challenge is that we're fighting the wharf today that will end at 5:00 p.m. tomorrow and tomorrow we peak wake up and fight another one, we don't necessarily have a clear vision of what the long term build out is, let's get the next step done and think about what happens afterwards.  I think my provocation, it is just an intent to try to connect it to the larger spread.  I think in the same way as we're in the moment now, where digital and decisions we're making in rooms like this, they're not going to have an impact for generations, what happens there, it will impact the cross‑border conversation. 
>> There is a general comment I would like to make to the audience and panel regarding the U.S. regulatory system, particularly the U.S. central bank which I worry about, and that is the central bank as well as I would say all of the other financial regulators like the SCC, it is the security exchange commission, they take a very passive, aggressive approach to new technology.  In other words, you know, we have new systems out there, we have the ICOs, for example, then we had ‑‑ obviously we have the other forms of payment, typically what happens, to the the regulators, they will watch the systems develop and they'll say nothing.  The developers and the startup, they may talk to the regulators, again, the regulators may say nothing, and then some point, they come along at some point and decide, well, we really don't like this.  Okay.  All of a sudden, you know, the founders, the startup companies, they're being criminally prosecuted for violating the law.
Certainly what that does, its two things, it is discouraging ‑‑ it definitely discourages the experimentation, but it also ‑‑ it ‑‑ it also kind of takes the wrong approach.
Again, the approach that I see happening here at the ITU is very ‑‑ it is a very futuristic and approach and a prospective approach.  We have to realize as a group that if we're going through the efforts, coming to a conclusion, I hope we have some conclusions at the end, obviously at the end of this forum, that we actually go through the effort of sharing those conclusions with the central banks, particularly the U.S. federal reserve, as well as probably the European central bank, I guess the PDOC, and some other large economies.  The second thing I will say, we should actually put together people to actually take on that task.  I don't want to be so bold in saying that.  It is essential enough that we actually make sure that that's a follow‑up item.
Thank you. 
>> My main question, its kind of radical, I'm thinking again of the fact that central bank, the currency, it may be a change in the banks, it was a change in the structures in the bank, that is that maybe the banks, they're having a department, they look at the innovations and technology, do you think it is a problem for us to say that the mandates of the digital currency, they're managed and they are in the central bank.  The digital currency, it may require countries to help people in charge of the digital money that's a little bit younger, innovative, willing to invest in the technologies, so that the bottom of the money, it being a mandate of poor, old, conservative, it is ‑‑ therefore I'm proposing that we as a group, we look at the following, that the structures of the bank changes so that they can embrace technology or you vouch for the authority that's in charge of the currencies, so those with the currency, they're willing to look at the technology and have the special digitalization. 
>> I'm not an economist, I guess just to point out that there are groups like positive money that you have in the U.K., so this is I guess an activist group that's proposing exactly that.  The role of money creation be taken away from the central bank.  I think underlying your question, it is something that is really important.  It is a public policy discussion.  Right now, this tends to happen I guess largely in central banks, and who are confined to the particular mandate and typically central banks are careful not to step out of the mandate and if there is a wider I guess really what is a political discussion, that it needs to go outside of the central banks.  It includes other government agencies, including Civil Society, right.  So it is much easier conversation but before we get to a radical change, I certainly don't think it is in the power of the central banks to determine that.
>> Also I guess in the U.K., you have encrypt U.K., people have active and the same type ‑‑ you know, talking to the government, talking to the technology inputs, you have the development, the technology, especially blockchain, crypto, to add to this point.
>> A quick comment, it is just that I think this question of money creation, it is also interesting if you factor back through the recent developments in shadow banking regulation or understanding the shadow banking, on one hand and I have a lot of respect for a the Rhode Island of people involved with positive money and I know a few of them.  The focus, it is on commercial banks, and right now there is an increasing understanding that there is a range of non‑bank financial institutions that issue instruments that have properties that are similar to market and they're also expanding the range of institutions and getting access to the central bank access sheets.  So at the same time, you take away the money more creation from commercial banks, we recognize that moneyless is an adjective right now and there is an adjective of this and the real question is under what conditions do they have support from central bank, when, how, and we need ‑‑ rather than drawing a line between money and not money, we need to think about that whole spectrum in the relationship to the public system. 
>> It is interesting.
In this room, there is no discussion whatsoever with the algorithm table and exactly that, you know, the organizations, they are not the commercial banks having ‑‑ who are planning to issue ‑‑ you talk about the basis, so basis, it is like for 11 function case and they have to deliver things back to investors and not a small amount.
If we have more of those cases, then the power of something, backed by this, but not backed by physical assets, and that's sounding future resiliencic maybe for some people sitting in here.  There are more and more people that are inspired by this, having a stable coin type to the global G tuberculosis and there are several scenarios and several cases, and that's very interesting that, you know, the shift of ‑‑ the shift of the money issues is going from the hands of the central bank, commercial banks, to a third party.  Whether it is going to be allowed at global scale, it is yet to be seen.  So far it looks futuristic. 
>> On this note, let's finish up this panel.  Thank you so much.
>> Now we're shifting to the fire side chat with the ‑‑ with the spotlight on the security aspect.  I have two panelists with me, real world security validation expert at the Oxford University, and we have the it security Working Group coChair.
>> Correct.
>> So how would you like to have the fire side chat?  You want to start with opening remarks on the views of digital fiat currency, then we have the Q&A?  Let's focus on Q and a A.  No more presentations, I'm tired of them myself of the perhaps ‑‑ how much of this is ‑‑ this is it 5, 10 minutes?
>> Okay.  Sure. 
>> We have to get the audience to participate.
>> What I want to be able to say is how did I get to the point where I was able to ‑‑ what I think, solve the problem, it the problem I'm solving, and it is related to a 20‑year journey from Montreal to Silicon Valley in 99 before the European directive on privacy, where the problems that Quebec had, the European directive lack of policy regulations in place and laws in place, I had a privacy bug, I went to the United States, at a conference, it I was hired on the spot and they said do you want to go to Silicon Valley.  I said absolutely.  I made a beilein down to California and never looked back.  20 years later, I started in security and shifted ‑‑ I started in privacy, shifted to security.  But it is really as a result of the observations that are seen in terms of how people are conducting security on a daily basis and how painful, unreliable it was, asking individuals to author policy statements and how is that correlating to control objectives, it is ‑‑ it is not easy.
You really are heavily reliant on the further depth of expertise.  I kept seeing this work being done and then in Silicon Valley, the average duration time of any given company, it is 18 months, there is a lot of movement of people and when they walked out, they took everything with them.  All of the institutional knowledge of what had ‑‑ what they had done for a good year, and the cycle of wasting started all over again, then there is a bandwidth of non‑advisability between objectives and policies and actual controls.  I couldn't believe what I was sighing.  So I'm ‑‑ seeing.  So I'm in advanced materials, why am I here?  They both look like molecules.  I think it is, in fact, ‑‑ the fact that I came from left field to a it new field that I brought in a new perspective.  A new way of looking at something.  When I was trying to solve the language problem, what I solved was the language communication problem from the executive suite to the implementation and execution of security office.  You look at the pain and suffering that people were having from going from management objectives and regulations that we have to demonstrate we're compliant to and buying all of the stuff that you have to put in place and measuring its effectiveness and then you have sorted that back to the regulators.  Wow, that's 40 billion a year in the United States for that process.  In terms of security inclusion now, how will the rest of the world even afford that kind of money for very little protection?  You know, we get compromised all the time.  At the end of the day,cy saw this big wastage problem, a complexity problem, slow to respond problem, and then I have this idea, this delusional idea that creating a situational awareness, visibility, I want to see the security, I want to travel through it like a game.  You have to be delusional way out there to kind of make it, you know, 10% better.
So did that, did so ‑‑ put the head down for 10 hours a day, there is no corporation that would pay somebody to do that.
But I had for some silly reason, and I wanted to solve the problem, I go out, I'm supposed to be a startup, making money, I'm sort of talking about this, I'm getting a blank look.  Nobody wants to improve.  We have a need to improve if we enter this kind offer digital currency economy.  Its great, it will happen, the trust, it will disappear and we're all in trouble.
On that note, I'll stop. 
>> Okay.  Thank you.
>> Thank you. 
>> Thank you for inviting me.  I'm a outsider here.  I'm a professor from the sales department looking at the disability systems that's underlying this ‑‑ well, this support of this great vision that we have heard today here.
Most of my work, it is on various types of analysis of systems in the system way, the disability technologies, so on, it comes naturally, you know, the blockchain, it is probably one topic that describes the department from the incentives to hard core crypto and guarantees provided by the technologies.
So what I have seen, it is, of course, this change from something that started this very popular crypto currency, blockchain, Bitcoin that's now something very different, quite a set of different types of digital ledger technologies and they all.
Could with the advantages and disadvantages.
So my work, it is mostly in trying to understand the advantages and disadvantages and underlying trust models because they're all ‑‑ basically you have to have to make trade‑offs, today we heard about some ways and previous panel was quite interesting.  Some ways to establishing the central bank digital currency, we talked about some challenges, so I'm interested to hear hour about the challenges and to find out whether the innovation in the technology Cal level will be used to solve them.  I'm happy to talk more about this various insight I have made.
>> Let's be more specific, we're talking about digital fiat currency.  Maybe to simplify the threat parameter, envelope, or domain, you have a device, you have the communication, you have the communication between the device and the servers that are storing these digital currencies.  What's different in securing the digital fiat currency than any other security systems, what ‑‑ is there ‑‑ is there anything special in the threat model to digital fiat currency or in the solutions to mitigate against the threats? 
>> We're all so different.  The trust requirement level, it is certainly different, right.  The insurance level, the confidence level in that currency that's here today and tomorrow, at the end of the day, they come down to the same things, devices, data, applications.  Just because of being configured in a new way, performing in a new function, the way you protect those things really don't change.  What does change is that, of course, it is a tax surface and unknown tax surface, it is a new construct that was designed and architected by some other people, and it is exchanging value, therefore it would it be attacked.
Wherever this value, you're attack.  It is not different from the point of view from the things that make it up, the level of securing verification, the insurance level, the confidence level, the measurability, that's why the construct that I proposed, the precontrolled expression is a construct that is in general with parent, child relationships and that's measurable, how can you mush a paragraph that's blah, blah, blah, blah, you can mesher an expression which is explicit and unambiguous.
So measurability, it is at the foundation of confidence and trust, so if you can't measure and exert with confidence, again we have problems. 
>> Whenever we try to write, CBDC, it it is kind of as I understand it, it is probably being improved.  It is an attempt where one approach, it is an attempt to replicate a physical money in terms of the digital money, right.
And that is the most straightforward approach.
Clearly, there is more space for innovation in that sense and as we, for example, have heard here today, that there is always this kind of trade‑off between centralized versus decentralized systems in that sense.
And here, there are problems, of course.  If you look at how the Bitcoin has emerged and why we all talk about digital ‑‑ you know, digital money today, the concept of digital money has been known in computer science for decades and it decades.
It was all being based on a centralized entity, the infrastructure, so on, it never completely kind of was thrown.
Okay, today, PKI was established and this was the main protocol of Internet, so you see change there.
So what is important here, it is that bitcoin and digital ledger technologies, it started to show big advantages in terms of the decentralization and the change in the trust system.  Trust, if you have it a center, the trust, it is usually very declare active.  Somehow I have the authority and I'm regulated and you will trust me in what I'm doing.  A nice kind of fresh approach from, you know,ish that bitcoin and it is broad and wide and it inspired many other projects, it is that you don't need that trust.  Right.  This trust, it is not really declarative and it has the energy investment.  That has certain disadvantages.
On the other hand, it does give guarantees which are different from what we know now.
So even I understand here that we want to go step by step, and there are many Mr. I indications and complexities inherently to this topic, not just from a technological perspective.  Of course, you know, I'm keen to understand, you know, where could we innovate here to enable a new kind of a system.  Not clearly just one to one building of the physical money to the digital money.
I mean, one of the ‑‑ you know, one of the main problems here, it is, for example, in a digitalrd would, it is, you know, you can replicate the information easily.  Right.  It is digital.  In that sense, you know, it is either a central bank then or a central authority making sure that you have the problems of double spending, right, and which someone says, okay, if I pay you, then I'll be the central authority that will remove a certain amount from the account to make sure you can spend it.  Right.  There are all kind of opportunities and ways to decentralize that.
>> Earlier, when talking about the example of Singapore, Canada, you mentioned the atomic action where the money is debted from one account and then added to another and the notion of this intermediary, this has to be in both countries, if I understand correctly.  On the presentation.
Could the distributed ledger, could it replace intermediary bank?  Is that essentially what you're saying?
>> I don't see any obstacle with that, clearly, you know, the way to do that, it is not an easy one, there are many trade‑offs between scalability, privacy, and many other things.  Some sort of proxy banks, atomic properties, it is a distributed system that's been known and we have worked on that for many years.  And, you know, now we have the distributed system.  Who cares where it.  We can actually handle well the synchronization.  It is a system that works.  Synchronizing, all of the peers, you see all of the same state of the system.  So I see that you have just spent the money, not just that you spent the money, but you got money into the wallet because you have done something.
In the context of the cross‑border remittances or the exchange of digital currency, if that distributed ledger is not necessarily public but between the banks or transacting cross‑border, that may be a way to make those cross‑border instantaneous and limited in one goal, you don't need that enter mediation, I think ‑‑ was it ‑‑ was it the slide ‑‑ I can't remember the number, but it was the time, the cost of cross‑border transactions that I think it was ‑‑ if you have a distributed letter among the banks, internationally, then you can remove all of those current challenges.
>> I want to move to the cryptography and you mentioned the public infrastructure.  In the age of Cloud computing, which are imminent, maybe the next five to 7 years, and the fact that the traditional cryptography is easily broken by the content computers.  Are there other techniques that we could ‑‑ or central banks could be looking forward to to secure the communication.
>> Quantum computer ‑‑ I mean, quantum computing ‑‑ certain parts of quantum computing have a list for some time.  There is quantum computing, they could do many good things.  We're worried that you may want to ‑‑ you have the quantum, the crypto, it is completely lost.  That's not ‑‑ I mean, it is clear and this is what you have mentioned, the public encryptor, we have this with the private and public, that is actually ‑‑ you know, it has been used these days on the various blockchains and related technologies.
That is mostly effected.  We also have many protocols related to this crypto.  Clearly with the central limitations, there is some kind of something policies established but we have to talk about how that happens.  But that is effected by the cloud computer, what they're ‑‑ you know, it is usually used to achieve that.  Now we can't.
As you know, I mean, research goes on and, you know, the first time we get a quantum computer ready to break the estimate of crypto, we have the algorithms and other mechanisms that could replace the crypto now.  Interesting point, it is easy to ‑‑ is it 5 to 7 years, and quantum computers, they exist today, the question is just how, when we'll approach the computation capabilities that basically we'll be able to start breaking large numbers.
>> Thank you.  Last week, I was in Shanghai at the ITU workshop on quantum information technologies. 
One of the topics, it was computers but the other, it was content communication.  How the quantum key distribution, how it is used to secure critical communication and we have seen demos from Shanghai to Beijing that are not just over fiber optics but through the free space, there is a satellite launched in 2017 by China to do exactly that.  To have those entangled distributed from the satellite to the two endpoints so that a quantum key could be distributed and as you know, the quantum communication, if you try to visual or tap into that photon, you disdestroy that, there is no eavesdropping, it is a secure communication.  Maybe something that's to keep in mind as we move into looking for, you know, the theoretically secure communication to consider the quantum key distribution as one of the mechanisms.
We also saw the trial in the United States, in the eastern corridor from Boston down to D.C., there was another network in Russia with Moscow going through Moscow with a quantum key distribution.  Usually on the fiberoptics, it is limited for 8al 0 kilometers or so because of the continuation, it limits how long you can have ‑‑ how far you can go.  We are seeing this quantum key distribution experiments around the world and really a lot more ‑‑ you can ‑‑ we have had one phone call, for example, in Shanghai over quantum key distributed network where the communication was completely secure. 
>> Okay.  It is interesting in the sense that the quantum, computing, its a threat and a counter measure, you see the quantum capabilities, it is clearly a threat.
Some aspects of it, they're very strong, counter measure mechanisms as well.  You have to remember that you have to split into two.  It is behavior as a had threat and behavior as a counter measure.
And make sure you use it on both sides of protecting that target.
>> I would like to start asking questions myself, turning to the audience, seeing if you have any burning questions..
I see a hand raised over here. 
>> As discussed now in the security, its an area that ‑‑ (audio quality poor, maybe too far from microphone).
>> In fact, it was demonstrated, but you could ‑‑ any factor, it is that there is a provider on one way that does the effects anyway, you could, you know, you could use the same currency, of course, there is no difference.
There is a make up that, in fact, what we have actually demonstrated, it is two completely separate networks.  Its two different blockchains.  On a similar blockchain.  It is done for you anyway.  This is really about connecting to two different blockchains.  The sums, it was that we would live in a world of heterogeneous ledgers that there is not just one global ledger to rule them all.  We're supposing in this world of heterogeneous ledgers that we can make this.
So the other question, it was around whether there is ‑‑ I'm not sure ‑‑
>> Actually, a good point.    the fact that there was no actual connection to the domestic switches, because we just wanted to focus on this axe DPs and the assumption, it was that either the ledger itself is the RTGS system itself or would have an on word connection to the system.  But we left that out, it wasn't really Part of the experiment.  We know it is doable.
>> Thank you.
We have time for one final question.  Then the Chairman tells me I have a minute to go.
Please. 
So actually it is a very general question that may be hard to answer.  We're teaing about the advanced technologies, ‑‑ speaking ‑‑ and we talked about the quantum, so on, and one thing, you know, if you accept that there is a security or vulnerability or function of the complexity, you have to accept that, right, it was ‑‑ I worry the more we have systems that extremely complex, the more vulnerable they inherently are, that we can't build sufficient security around them.  Do you think that's a real danger, if so, how should we address that problem.
>> Well, should ‑‑
>> I mean, I agree with this observation.  I think, you know, complexity, it is not such a negative property, I would say that complexity ‑‑ it is more interesting than complications.
So in the system, they're complicated, and they're vulnerable more, having purely just complex systems, but that are visible to analyze, they're just complex.  By itself, it is not a negative property of the system.
So it is crypton based on complexity, and without that complexity, we wouldn't be able to talk about this nice things.
But they have the systems, the digital life, it is getting, of course, more dependent on various technologies, these technologies, by itself, it may all be fine, but clearly systems are based on mixing them and having various ‑‑ again, that's why ‑‑ you know, assuming that the straight‑up, just for example, once you create this one, if you object association some of the properties of the the public blockchain that's highly energy inefficient but nevertheless, you give certain properties that are an enter variable, suddenly you want to improve the efficiency of the system by creating permission private ledger and you actually lose many of the important properties such as, for example, interoperability of the records.
I think that this is the big catch now.
The women, they're not very good in handling complex, complicated things.  We usually obstruct away.  That's what comes with the modeling things.  What are good models that extract away the unnecessary details but don't lose the properties that are very important for us.  You know, that is something that indeed may result in a philosophical conversation.
In my opinion, the complexities, they're a root cause of the failure of security.
I'm not referring to whether cryptography is complicated but the entire system, end‑to‑end.
And add the fact that we don't have a lot of security by design, so you have security by Band‑Aid and that makes it even more complex and again, I had mentioned one of the fundamental problems with security, it is advisability.  So they have noddiesablety of a boundary between anything.  I shouldn't be so harsh!  You need to know when things sister and end and how they interconnect.  In a complex system, a lot of those things are going on.  The attack, the expert will create a boundary, it won't occur at any one point of the system, they'll circumvent that and go to the weekest ‑‑ weakest point of the system that you from not even aware that existed because of that advisability challenge. 
>> We have been building complex systems, this phone, it is a complex system.
However, we are used to the system based, usually from a safety perspective.  Right.  A safety perspective, it has been there to build systems that are very complex and still needs to be resilient and immune to the behavior of the components.  Now, it that's safety.
Technically, we have the force and the nature, which could be cruel, but it is not malicious in itself.  Right.  Now in the last couple ‑‑ we have actually seen the Rights of security, it is different from the safety.
Right.  So we are ‑‑ we are ‑‑ you know, we do need ‑‑ methods, you know, security, it is about that, not at a behind, but somebody that understands the system and probably wants to look at the protocol.  We'll call it user ‑‑
>> I hope this has educated your mind with all these questions.  But they will be with us during the cocktail reception at 6:00.  Between that and now, it is the closing session.  I would like to hand it back over to David and thank our panelists.  Thank you.  (Audio issue)  (Audio) 
>> Unlike most gatherings, this is the most exciting session, because it is going to help us answer what's next on the eve of the closing of this focus group.  Before I go further, you see we have a missing body on the panel, our Chairs that completely lost his voice, so with apologies from David, we'll speak on your behalf.  So look out!  Wave if you don't agree and we'll look the other way.  The purpose of this session, it is to propose a few ideas for how we're thinking about moving the work forward, but also to stimulate a conversation with you all about your ideas for how you can continue to country bought in this ecosystem that we have build before I indulge me before turning it over to the panel, I would like to just take a few moments to give you a historical view of the focus group and take you back in time a bit because there is a ‑‑ quite an evolution since this focus group began.  In the spring of 2017 there were efforts by people in this very room to get this focus group established.  And that was in no small part I think because of a real global misunderstanding, not understanding of what this all even meant, much less the concept, the models, but even the terminology was just not well understood.  If we think about that in the contrast to today, to what we have seen presented, even over the past two days, I think that's been quite a remarkable, a remarkably quick evolution in the global understanding and acceptance not only of the terms but the models.  We have seen huge advances in the what, the whys, and increasingly, the hows, the hows of CBDC, again, thanks to many of you in to the room and the work you have done as members of this focus group and on your own, in your own home institutions.  We have seen a proliferation of research.  We have seen the unsealing of private pilot testing and now lessons that we're able to share and learn from collectively.  A huge expansion in the ecosystem of who is in this conversation, even comparing to the early days of our first meeting in Beijing, we have seen familiar faces and new ones.  I think that's quite a testament to the enthusiasm around the topic and with our thanks for you being here today.
I think, even perhaps more importantly than the expansion of ideas and opinions and thought pieces around this topic, it seems that we're also moving towards a it consolidation and certain consensus points around how we're talking about a central bank issue, digital kurincy, how that differs from crypto assets and this consensus, it is allowingings us to have nuanced, vigorous conversations moving us towards actually implementationings on behalf of central banks taken their partners in building these systems.
For those of you that weren't in the room yesterday, a high‑level articulation of what this group has accomplished, right, we now have a taxonomy that's presented in New York by Daniel, a tack taxonomy of definitions, hugely important that's been referenced by us in our work, building on some core foundational texts from the likes of C,   MI, the world economic forum, the IMF, we have a repository of the documents now by the ITU that will be hugely useful as a touchstone and not only for our work but as we explain it to others, we take it to central banks and explain it up and down the various chains. 
We have got a survey of legal environments for 16 jurisdictions who may be considering the issuance of the distribution of a CBDC.  We have a comprehensive look at process security and assurance framework and thanks to the hard work and the 11th hour drafting of the reference architecture group, some really Corzine principals and cases for reference architecture models.  I think that's quite impressive, and our thanks on behalf of the procurement to everybody in the room for your participation in getting those deliverables over the finish line.
So bravo to you.
That's enough of the conference.  Let's get back to work!  Let's think about what happens the day after tomorrow.  I would like to start by asking, you have the institutional view here, sitting at the ITU, you have seen this remarkable advancement over the last two years, I'm curious what you find the most interesting, important evolution in the conversation and thinking, and secondly, what have we not accomplished that seems most pressing.
>> Thank you very much, Caroline, for the session, for the information you have provided, it is helpful, it is useful, I think what we have been able to pleasure as a group, it is the dialogue between the central banks and the technologists, so through the process of getting to this deliverable, you mentioned the architectural document, the security Document, the regulatory guidance, it is not just the document itself, the deliverable, but the process that got us here, the open Channels of communication between bankers and technologists, so on that, I would like to see in the room, how many are from central banks or from banking institutions.  How many are technologists? 
Okay.
And how many are something else?  Maybe you can explain?  I didn't see all of the ‑‑ okay.  Yeah. 
Okay.  Very good.
So I think that the indict log, it is strictly one element of the deliverable of the focus group that's quite remarkable.  I saw a lot of heads in the central banking, banking aside, be and conversations with colleagues from the banking industry, they found this focus group extremely helpful because there is no other forum that brings the banking, the central banks and banking institutions and the technologists together to have an open dialogue and how the digital ‑‑ in the digital fiat currency could be addressed.  I think that our role in the ITU is to bring the digital in that equation.
As we do in other sectors, digital, agriculture, digital transportation and digital health and so on.
So the documents that have been completed, they'll be published by this focus group as they ‑‑ if they'll be agreed in the closing Plenary.
They will then be sent to the Parent Group of the focus group, the telecommunications standardization advisory group that created the focus group in the first place, to be considered by our Study Groups to perhaps become components or pieces of international standards that the ITU published as well as to be liased or sent to other organizations, banking institutions that may be interested in the topic.  They'll be published and available in open PDF form in our website, anyone can download that.  That's the procedural side of the next step.
I think there is tremendous momentum in this room of the next level of detail so so far in this 2‑year period of being able to lay down the architecture, talking about the security aspects in the regulatory framework, and now we start to build on it, we have to go to the next level of detail in discussions with the colleagues from the IMF, John, for example, you know, he said this is the 20,000 level view, now we have to go really deeper and perhaps Working Groups that might go to the next level of detail.
We need to have that reflection are on the next steps of transferring this work to our Study Groups and to sister organizations that might be interested in it, and think of continuing and maintaining the momentum of this open dialogue to be able to achieve the next steps.
>> Thank you.
So let's ‑‑ let's think about peeling that ONION.  Let's get it a bit more specific.
Sammy, this morning we heard a bit about the case in Tunisia, building on the precedent from the post and then moving to think about a new kind of pilot test there.  We have also heard in the hallways about a lab, so could you tell us more and kind of clarify what we should be watching coming out of ITO and colleagues?
>> So thank you for giving me the floor.
This is the organization as I said today, it is a promotion of ICT and the evolution.  So since three years, they started to work on the inclusion, the initial inclusion, and it worked through many programs and initiatives and marked them, we're organizing many sessions of training and capacity buildings for the region.
Also organized this year, the first banking awards, which was composed of five main categories, best digital bank, services, mobile application, digital inclusion and best website.  So we have the business, and this year, then in April, we had the honor to collaborate with the industry of knowledge economy Tunisia and the Arab Laboratory for digital future currency.  This lab, as we have had been in discussions, should in our thinking give many types of actions, make them setting up some test steps of the international supplier and technology suppliers.  Setting it up, setting up the projects in the region, and the first one, it is the project in Tunisia, which today I think we presented the phases of this project.  In addition to that,ers as we are developing this, we focus on an education, training, certification, on the major solution for the technology implementation to the community.
To move forward with the achievement of this, I think that there is a need to think about the follow‑up mechanism.  It can be ‑‑ it is a proposal from us by setting up another meeting, a big meeting, a big workshop, we have all stakeholders that are invited to present their findings and status related to the projects and then you have the sharing experience meeting, so the Committee will be invited to present their findings related to the projects and their initiatives related to DFCO.  I do not think ‑‑ they'll take the lead of the initiative on our side, we're a regional organization and working in addition, working on some regional events that can also try to share our findings from our projects to the region.  I think ‑‑ yeah. 
>> Thank you.
That's very exciting.  Congratulations on the establishment of that lab.  I think it is the first we have seen of that type.  I know I'll be waiting in anticipation to see how the case in Tunisia plays out.  I go us that many of us may have contributions to that work, whether it is technical or helping to evaluate that solution as it comes out.  So thank you.
>> Let me turn to you, I'll ask a question that's maybe a bit higher level.
You are here in part representing Stanford University.  That's another kind of stakeholder, the academy.
As we think about this conversation we have heard from several academics today and in the past couple of days, what do you see as the role of an institution like Stanford, it is academic, but also in the heart of Silicon Valley, what rule could a University like that ‑‑ what role could a University like that play as we think about the continuation of this kind of work?
>> Sure.  Thank you.
That's an important question.
As mentioned, this whole motion that the ITU, it is ‑‑ it is a place where people with safely convene to share thoughts and ideas, Stanford I think will ‑‑ can also provide that possibility, it is a mutual meeting ground and it could be one of many Universities throughout the United States and throughout the world, where work will continue to be done with regard to the ITU's efforts.
Stanford is also a very well‑known University for technology in the United States.  It has very, very strong convening power which means that if we decide to host a conference, Stanford decides to host a conference it will get the attention of ‑‑ I assure you of every major technology company in the United States as well as every major payment company and every major banking institution in to the United States.  So when you combine I think the Stanford brand along with the ITU mission I think what we really have is a rocket ship in a way that can continue to move forward.  That's I think an exciting concept to me to think about it that way. 
We have a lot of momentum going in the cocktail hour on that rocket ship.
Maybe a follow‑up more specific question then about that, because I hear the contours of a proposed partnership between Stanford and the ITU, are there ‑‑ should we watch this channel, staying tune for more ‑‑ will you keep us as an ecosystem ‑‑
>> You're asking me ‑‑
>> You go first. 
>> Okay. 
>> Well, we certainly are seeing the ‑‑ you know, the first steps towards that partnership since the lab is considering joining the ITU as an academia member.  As you know, the ITU membership is composed of the 193 Member States, so pretty much all of the governments of colleagues, the industrial ‑‑ they're represented as members of the ITU.  The second category of membership, it is our sector members, private companies, companies either in the traditional telecom sector, be the ICT Sector and as well as I mentioned in the optic statement today, we have companies from different industries, automotive, so on.  And there are about 700, 800 private sector entities that are members of the ITU that can develop the standards and guidance as to ‑‑ as to finding the international agreements.
The third, and very important category of membership, it is the academia.  Since 2010ITU is the only United Nations agency to open its door for direct membership by academic and research institutions because of the belief of the Intellectual Property that comes from Universities, it is a key enabler to new international standards and new agreements and now we have 150 of those academic and research institutes globally in the U.S. alone, since we're talking about Stanford, we have five other Universities, George Mason University, Georgia tech University of New Hampshire, Florida, Atlantic University, in Canada, we have Concordia University in Montreal, so just in North American side, but it is really quite global.
So we're very excited about the fact that Stanford lab, you know, the lab is considering joining us and that is the first cornerstone of the relationship.  We have a similar model in Georgia tech wherein addition to the membership, we have an agreement on the MOU on the IoT on the Internet of Things, so we're looking forward to perhaps forging an agreement with Stanford on best work in the future currency.
 
>> Thank you.  I think from Stanford's perspective, it is we recently formed a blockchain center within the computer science school.  We have a tremendous amount of resources.
Besides having some money, we have a vast array of students in post graduate work, both studying for the masters and studying for the Ph.D.es who are looking for problems to solve.  They're looking for topics for dissertation, looking for topics for the thesis, so from an academic perspective, it is a nice ‑‑ it is a nice Union.  Okay.
I think also, there was a culture within Stanford which is one ‑‑ I think a very strong culture of Entrepreneurship, probably one of the strongest cultures for Entrepreneurship in the United States, studies have been done in terms of the number of new companies that have been formed by Stanford graduates, there is also a culture of collaboration within the different departments within the University.  When I thought about this Union, between the ITU and Stanford, the Stanford future of currency lab, it made total sense, I think this rocket ship could take off in a meaningful way.  The goal we would like to achieve in terms of research, developing the problems, the encryption problems, the security problems, and it is that we would like to continue to work with you in terms of setting standards.  We would like to again not only set the standards but educate the community within the United States and we have begun discussions from different parts of the federal reserve system.  We're hoping for and aiming for is that other international bodies would join along with the ITU and I would say performing a memorandum of understanding, it is not a legal contract, but it is a gentleman's agreement that we have very similar goals and objectives, and the goals and objectives, they're sent jointly by the ITU and by Stanford, and by other international bodies and I think we know where year going, it is towards a set of standards and me strikes that can be used to evaluate different models that are being built around the world and being applied potentially through different central banks, so basically the central banks, they have a place to come to get an opinion on the technology that they're putting in place and they have the best systems available at that point in time.  We have been active in forging partnerships with the Stanford lab and with others and other at the ITU thinking practically about how to move this work forward and it is important to us, the idea of creating metrics that are vigorous, that are coming from a community of vigorous a academia, from security professionals, from regulatory experts legal experts and the law, it is important as particularly we see there will be a growing preponderence ever proposed solutions out there and we know central banks are knocking on various doors asking for inputs and evaluations, we're committed to helping further that work t a couple of practical items, we're hoping as an institute to continue some kind of symposium which would allow us to gather in this sort of manner to explain information, it was mentioned that at a regional level, we would like to find a way to do it globally and then for those that can't travel, once‑a‑year, even more frequently, we're exploring a virtual seminar series, something that we would like to do to highlight the work of you all that's coming from the various institutions, coming from various geographies, from cases all over the world that would allow for a more frequent, virtual connection for all of us.  That's a small, quite practical, valuable way for us to stay up on things, since we know that there is no sign that this movement is slowing.  So I think that's a practical way to keep it moving forward.
I'll do a quick time check.
So with our last 15 minutes, I would like to turn the mic over to the floor.  With a request, actually, so let me ask questions of the panel, but also of what seems most pressing to us as an ecosystem to you, what questions have we not solved for that we can leverage each other in the community to do, and what do you volunteer to sign yourself up for!  Let me pause, turn it over to you.  I don't believe ‑‑ please, go ahead. 
>> So for us, being a fairly small economy surrounded by a fairly huge giant it is important that we expose ourselves, to the rest of the world outside of this huge neighbor that we have.  So this has been very, very useful for us.  I'm sure we have people online as well participating from back at home.
While we have had the first session, I was worried that we ‑‑ that we're allowing this so‑called crypto currencies to go all over and expose the world to a potential crisis and I was very excited that we're starting to talk digital fiat.  Today and yesterday, I have been saying to colleagues around that, I'm a little bit worried that we have digressed from sticking to digital fiat to starting to think broadly about the distributed pleasures and all sorts of things which are not really central bank money.  But it is fine, the amount of work, that's been produced.  Central banks, the industry, we can pick and choose where they want to channel their energies.  It is fine that there is also work around distributed leisures, so on, but if you want to Zoom in to the digital central bank money, you're able to do that.  So this is fairly useful for us.  There are experiments starting out, Bev seen the Central African bank have been able to do, we have been able to engage with them with more confidence, we have gathered that from these sessions.  Had it not been for this, it would be engaging small economy, big economy, but with this, we're able to engage with more confidence.  This has been fairly useful. 
>> I'm from the Bank Of Uganda.  In terms of what is next after today.  I have a up can offal proposals.  The first, to.
Can up with a communications.  So we can look at the digital currency, we can talk to the public about the currency and that is because at the moment, there are a lot of noise going on and it is very, very important as my partner has pointed out, to have a plan that will bring the currency to a high, high‑level.  I would suggest having similar ideas for the governors of the central bank, many of us, we're here at foot soldiers, it doesn't help a lot if we do not buy in from the governors to the governors.  The way central banks operate, a.
In of them, they want to have such thing, you must organize special conferences for them and maybe people can get the governors to attend.  Its very, very important that they do understand and buy in.
In addition to that, the ministries of finance, for which are the main Ministers for the banks, they have to have the bye in, you have to have a conference for both of them, you have the Ministers of finance. 
>> Anyone else?  I'll start cold calling.  Please go I a head.
>> I'm from ‑‑ we're trying to implement the same things after having the first meeting in China, and then in the roadmap also, in the ‑‑ in the digital roadmap, I have included this project in the roadmap also.  The first few years, we're working on, we have the ‑‑ the digital wallet, the digital mechanism and the digital payment system, it is implemented in the country.  In this forum, it is very much getting inputs, outputs from the forum, of course, you tie in with the discussion and the last few days of discussion, it was very, very important to us too.  Inform, the top management in this one, and you look at how you can have implemented this CBDC, for example, you have the respective of ‑‑ so any ‑‑ so any that's in the best money, it is impact for the interstate and if you have the impact on checking out the variable, you have the impact for the economic rate and also the variables of the economy.  So that aspect, you want to get help.  We have published many papers, but this kind of impact, you analyze that in detail.  So that's what I'm thinking.  Again, I want to thank the ITU for having discussion on this one.  Also we're waiting for the other countries, of what's happening in other countries.  You have the experience, you can also get the experience and you have the interesting ‑‑ you have the experience from the other countries, we're waiting for Canada and some other countries and then we move forward, you do the implementation within the country.  You have also management, you're getting that, getting some output from this forum.
Thank you. 
>> CHAIR: Thank you.  I just wanted to take a moment and the power of the mic to actually invite John from the IMF, you have done a lot of work tracking countries that may have comparable lessons, and I would invite those in the room that don't know about the forthcoming publications, giving you an opportunity to discuss on where you're heading.
>> Sure.  The paper that I'm working on, Sonny a is part of the team, its a ‑‑ Sonja, it is a part from the ‑‑ it is involving people from legal, other departments, my own departments, capital markets, it is a very broad team that is working on a paper that will focus on the implementations details of CBDC, so in a way, it will have a checklist for all of the considerations that a central bank should consider before issuing CBDC.  I'm with you on the first set of comments, I think that we shouldn't do that, there should be a call to arms for academics to do serious work on the impact of the digital currency generally on policy.  There is a matter offing, but nothing really deep and serious I have seen so far.  There were some things mentioned this afternoon in the sessions that touched on the potential, the monitoring policy and implementations aspects of the CBDC and so on, and I just don't see much of that.  In the November paper, we did touch on it, it is not meant to be a serious deep dive into the prospects and it should be theoretical.  We'll talk about what will happen if something happens and then you draw on the theory that we have.  Every time I have a chance, I was on a stability call yesterday and with a major ‑‑ a major commercial bank, an investment bank in fact.  And they were complaining that ‑‑ it was the same complaint I had, nobody was working on this at all.  They had great fears about the effect of for one thing, the synthetic but the digital currencies, the Facebook coin coming down the pipeline, they have them shaking in their boots.  Part of them, I think it is they're looking out for their own interests here, that's part of it.  But you have a clear idea of the repercussions on the whole financial system.  There is a whole area that I think is not the ‑‑ everybody is so excited about talking about the technical aspects and the crypto aspects, all exciting stuff and maybe in our context, we can add our voices to that if everyone agrees.  I was going to mention, the format of expected technical assistance I think will take the form of workshops or regional workshops and so on, they could implicate some people in this room, when they do the workshops, what we typically do, we don't have enough people, specialists to run a one one‑week workshop which covers a lot of different areas.  You need to have legal specialists, IT specialists, macro economists, micro economists, so on, you have to have the range.  We just don't have enough of them to cover, so we usually draw for our workshops on people from outside, finding experts from outside of the fund.  This is an area that we don't have many of those.  In the workshop, we see this as an opportunity for people to share ‑‑ to share, to share their ideas.  So even ‑‑ we may even say this is a little fuzzier than the normal workshop, but there won't be worth renown expert that knows everything telling everybody how to do it.  It is ‑‑ it may be more of a real workshop for people sharing ideas, sharing their pain in some cases. 
>> That's great.  I certainly would invite your voice and I think everyone should be happy to bism implicated in that work.
There is an ‑‑ you outlined sort of a way to think about piggy backing on infrastructure that the ITU has, Stanford has, IMF has, it it could be quite a wise way to move the work forward.  I had seen a couple of hands ‑‑ yes.  Yes.  Please.  Okay. 
>> Thank you.
Thank you for the work, you have new faces, Stanford University, others, it is important to have people with young brains, with money, it is important for ITU.  I mean, people that are behind you.  I would like to also make a disclose for people that are not so the aware regarding ITU, that we're heading through the same problems.  In fact, all the success on behalf of ITU versus supported by just ‑‑ I'm sorry, only 20% of the time is spent on this activity.  This is a real issue, because it is extremely important items, subjects, the issue was raised, I remember, first time we raised this issue, 11 # years ago, it was by the way Russia that brings the financial services, to attention to ITU because it should be secure and reliable.  And then with this focus group that continues, there were some serious follow‑ups, and now I would suggest, I really fully agree that it is necessary to do what you suggested, but we both have to be aware that it is still one that we appreciate the involvement, but I know that you have so many different Study Groups and focus groups, so my suggestion, it is very practical for people that if you would really like ITU to do a good job, and ITU can do a good job, you have to bring to your administration a proposal that the world conference, I will give you information when it will take place, your administration, should propose that this issue of financial services should be an important item in the work of ITU.  This will allow ITU to allocate some money, maybe entice some people and provide the support that's necessary.
Otherwise, they are ‑‑ they are looking at the activity and I sense we have to close.  Thank you.  Thank you.  Thank you very much.  Let's do this, let's have to deliver this, what we can do.  Thank you. 
>> Thank you.
I'm going to ask for five more minutes to finish the hands that were already up.
>> We'll do it really quick.  Thank you for having me here.  One observation, I think you did a tremendously good job.  At the very start, I would ‑‑ perhaps I can overview what you took, because, you know, it is ‑‑ it seems like it is very important for everybody, but the landscape of stable points is so huge, and it is changing tremendously, on a weekly, monthly basis, you know, you have a new table coin, you have a new development in Japan, so I was on a first panel, and it was asked did you ever use a stable coiny you are self, the answer was no.  And that comes as a ‑‑ well, it doesn't come as a surprise because it was a part that there were three ideas that people didn't use crypto currencies at all so my ‑‑ it is not ‑‑ it is a suggestion to not sound noisy or anything, but it is to be very ‑‑ it is to be very beneficial if people understand how it works, how you can convert that to tiat so people are hands on not only understanding, hey, we're doing it for central banks about up how they're existing in the landscape, you know, the functioning and hey, I have a wallet, I can transfer to another wallet.  That's just an observation to share.  Thank you. 
>> Thank you.
I'm from Egypt.  I think my friend has said all that I wanted to say.
Exactly!  This group has set a real model for the dialogue between different stakeholders in a diverse situation.  Not only ‑‑ this role model should be set not only for the financial service, any services that we have.  We have many stakeholders involved in this.  We have stakeholders on the banking side, central banks, the commercial banks, the Ministry of Finances, also on the technology side, we have the technology providers, and all of the telecom sector, we have the regulatory authorities, and we have the mobile operators.  I think due to the importance of this, the work, it should continue.  It should continue the collaboration between these stakeholders, also here in the ITU.
And I agree with you that the work that's been done now, I'm a Vice‑Chair of Study Group 3 and I ‑‑ I am the Chair of the Rapporteur group on mobile financial services.  I think this ‑‑ I think we have done a good job and we have already issued recommendations lately on the mobile financial, but this is not enough.
There should be more elaboration and more involvement from other sectors and other stakeholders in this matter, not only for members, but from other sectors like the banking sector and the technology providers, all of this.
In view of my colleague from Uganda, when you were saying that there should be an have event, some sort of event that hosts all of the ‑‑ all of the stakeholders, but not only ‑‑ but to do the higher level, the ministries, the central bank, the governors, this will give the work a push and a strength to continue and to commence what we want to do.
Thank you. 
>> We have 30 seconds for the final comment.  Go I a head. 
>> I'm from India.  I want to congratulate you for organizing this type of thing.  We're a Vice‑Chair in this DFC also.  Initially, India was not already you could say in sync with the proposal because we're the committee, the growing committee and we have the developing committee, now we have ‑‑ we have the issue of ‑‑ I want to share the good news, that we'll have the local office with ITU as far as Southeast Asia countries, so I'm very ‑‑ I'm happy to ‑‑ I'm happy to see the progress in this line.  I propose that with the help of Stanford and with this, they'll be running a lab in their place so I propose that for the southeast level, we want to establish this and we'll definitely talk to the administration and we'll look forward to further new work in the area of the DFC and the LD that thank you.  Thank you for the enthusiasm. 
>> We have a couple of labs, maybe mushrooming labs, we have events, we have a communication plan, we have trainings, they start from virtual up to the government office, we have a call for experts, arm, a call to join the rocket ship!  Start watching the mailing list and we use the focus group mailing list to concrete these ideas and send you some updates and for now we'll continue with a cocktail list.  Thank you and we'll continue it all.