| [{"text": "[SQUEAKING]", "start": 0.5, "duration": 0.961}, {"text": "[RUSTLING]", "start": 1.461, "duration": 2.435}, {"text": "[CLICKING]", "start": 3.896, "duration": 1.948}, {"text": "GARY GENSLER: We're going to go\nthrough payment systems, what", "start": 10.898, "duration": 2.542}, {"text": "is a payment system, in fact,\nsome trends around the payment", "start": 13.44, "duration": 3.45}, {"text": "system, which is a little\nbit of a statistical review,", "start": 16.89, "duration": 3.03}, {"text": "and then critically think\nabout the pain points, a list", "start": 19.92, "duration": 4.05}, {"text": "that I've been keeping\nas I teach FinTech", "start": 23.97, "duration": 2.88}, {"text": "and also as I think\nabout cryptocurrencies", "start": 26.85, "duration": 2.49}, {"text": "and how they might insert\nthemselves in this space.", "start": 29.34, "duration": 3.57}, {"text": "Some trends around\nthe globe with nations", "start": 32.91, "duration": 3.0}, {"text": "trying to move forward with\nreal-time gross settlement,", "start": 35.91, "duration": 3.12}, {"text": "the idea that you could\nsettle payment transactions", "start": 39.03, "duration": 4.17}, {"text": "instantaneously, 24 hours\na day, 7 days a week,", "start": 43.2, "duration": 4.51}, {"text": "which many nations don't do yet.", "start": 47.71, "duration": 1.94}, {"text": "Some do.", "start": 49.65, "duration": 0.63}, {"text": "We'll get into that.", "start": 50.28, "duration": 1.63}, {"text": "And then the landscape itself.", "start": 51.91, "duration": 1.39}, {"text": "What are the companies\ndoing and so forth?", "start": 53.3, "duration": 3.68}, {"text": "Harkening back to\nlast discussion,", "start": 56.98, "duration": 3.16}, {"text": "what are we seeing in the crypto\nprojects and tokenization?", "start": 60.14, "duration": 3.65}, {"text": "And then close out\non Facebook Libra", "start": 63.79, "duration": 2.58}, {"text": "and China's Digital Currency\nElectronic Payment project.", "start": 66.37, "duration": 4.14}, {"text": "So a lot to cover.", "start": 70.51, "duration": 1.08}, {"text": "But please, as I had\nsaid, video's on.", "start": 71.59, "duration": 4.23}, {"text": "So we can keep this sense\nof community and audio off.", "start": 75.82, "duration": 3.34}, {"text": "But anytime you have a\nquestion, raise the blue hand", "start": 79.16, "duration": 2.64}, {"text": "in the participant area.", "start": 81.8, "duration": 1.85}, {"text": "Engage in the chat room\namongst yourselves,", "start": 83.65, "duration": 3.48}, {"text": "or Romain would be\ngood enough just", "start": 87.13, "duration": 2.46}, {"text": "to interrupt me when\nhe sees something", "start": 89.59, "duration": 1.68}, {"text": "interesting in the chat.", "start": 91.27, "duration": 1.98}, {"text": "Or for that matter,\neven if you're a student", "start": 93.25, "duration": 2.445}, {"text": "and you see something\ninteresting in the chat", "start": 95.695, "duration": 1.875}, {"text": "that Romain's not raising, you\ncan raise your hand and say,", "start": 97.57, "duration": 3.04}, {"text": "I see three things\nin the chat room,", "start": 100.61, "duration": 1.82}, {"text": "and I want to capture that\nfor the class and so forth.", "start": 102.43, "duration": 5.86}, {"text": "So the readings\ntoday, I thought it", "start": 108.29, "duration": 2.66}, {"text": "was interesting to take a\nspeech by Lael Brainard.", "start": 110.95, "duration": 3.36}, {"text": "Lael is on the US\nFederal Reserve Board.", "start": 114.31, "duration": 3.9}, {"text": "And as they do in many\ncommissions and boards", "start": 118.21, "duration": 6.41}, {"text": "of central banks\naround the globe,", "start": 124.62, "duration": 2.42}, {"text": "they allocate\ndifferent projects.", "start": 127.04, "duration": 1.56}, {"text": "Now, Lael is part of the\nFederal Open Market Committee", "start": 128.6, "duration": 6.44}, {"text": "and helps set interest\nrates, but she also", "start": 135.04, "duration": 2.04}, {"text": "is that key player on the\nReserve Board around payments.", "start": 137.08, "duration": 5.49}, {"text": "So she gave a speech\nabout the updating", "start": 142.57, "duration": 2.31}, {"text": "and where we stand, and I\nhope you found that helpful.", "start": 144.88, "duration": 5.04}, {"text": "Along with Neha Narula, we did\na cryptocurrency online course", "start": 149.92, "duration": 5.28}, {"text": "last summer.", "start": 155.2, "duration": 1.07}, {"text": "And the payment system\nspace was something", "start": 156.27, "duration": 1.9}, {"text": "we wrote just as a background,\nas a primer in this area,", "start": 158.17, "duration": 4.17}, {"text": "and then some payment\ninnovations in the FinTech", "start": 162.34, "duration": 3.03}, {"text": "space, and a little map\nabout nine payment track.", "start": 165.37, "duration": 4.86}, {"text": "So I hope that was helpful.", "start": 170.23, "duration": 1.93}, {"text": "If you haven't dug into it, I\ndo think that Lael's speech is", "start": 172.16, "duration": 3.32}, {"text": "a good update as to where we\nare and particularly as the US", "start": 175.48, "duration": 4.95}, {"text": "Federal Reserve is thinking\nabout things like Facebook's", "start": 180.43, "duration": 2.73}, {"text": "Libra, thinking about going\nto real-time gross settlement", "start": 183.16, "duration": 4.89}, {"text": "in something called FedNow\nthat won't be rolled out now", "start": 188.05, "duration": 3.48}, {"text": "for three or four years.", "start": 191.53, "duration": 1.89}, {"text": "But I think Lael gives a good\nsense of where things are.", "start": 193.42, "duration": 2.82}, {"text": "So just if we can have a little\nbit of conversation here,", "start": 199.3, "duration": 4.08}, {"text": "and Romain will help facilitate.", "start": 203.38, "duration": 2.1}, {"text": "But what are the key\nchallenges and opportunities", "start": 205.48, "duration": 2.61}, {"text": "in the current system, just\nfrom your own perspective?", "start": 208.09, "duration": 3.66}, {"text": "In essence, what do\nyou think I will later", "start": 211.75, "duration": 2.58}, {"text": "have on that list\nof pain points,", "start": 214.33, "duration": 1.71}, {"text": "if you've not yet\ndownloaded the slides?", "start": 216.04, "duration": 4.34}, {"text": "But Romain.", "start": 220.38, "duration": 2.206}, {"text": "ROMAIN: Let's see who will be\nthe first volunteer for today.", "start": 222.586, "duration": 3.986}, {"text": "GARY GENSLER: Just to get\nit a little bit interesting.", "start": 226.572, "duration": 4.75}, {"text": "ROMAIN: Still waiting\nfor a blue hand.", "start": 231.322, "duration": 2.028}, {"text": "Hassan.", "start": 238.718, "duration": 0.5}, {"text": "GARY GENSLER: [INAUDIBLE] page.", "start": 239.218, "duration": 1.292}, {"text": "You might have to get one.", "start": 240.51, "duration": 1.31}, {"text": "What did you have, Romain?", "start": 241.82, "duration": 1.13}, {"text": "ROMAIN: Hassan,\nthe floor is yours.", "start": 242.95, "duration": 2.25}, {"text": "AUDIENCE: Thank you.", "start": 245.2, "duration": 1.12}, {"text": "Yeah, about the\npayment system, I've", "start": 246.32, "duration": 2.67}, {"text": "noticed that there is kind of\na monopoly, especially here", "start": 248.99, "duration": 5.04}, {"text": "in the Middle East.", "start": 254.03, "duration": 0.9}, {"text": "All the payments\nare, or I would say", "start": 254.93, "duration": 2.76}, {"text": "almost all payments are through\nVisa, and Mastercard, and AMEX.", "start": 257.69, "duration": 5.76}, {"text": "And if you can see\nthat, these companies", "start": 263.45, "duration": 2.67}, {"text": "take a percentage\nof the merchants.", "start": 266.12, "duration": 3.55}, {"text": "And I don't if you guys\nhave this in the States,", "start": 269.67, "duration": 2.0}, {"text": "but sometimes, for instance,\nin my country in Bahrain,", "start": 271.67, "duration": 4.83}, {"text": "if I would go and buy something,\nif I know the owner person,", "start": 276.5, "duration": 4.23}, {"text": "he would say, hey, listen,\nif you would pay me in cash,", "start": 280.73, "duration": 3.54}, {"text": "I could give you a discount.", "start": 284.27, "duration": 2.29}, {"text": "So I think that there are many\nopportunities for companies", "start": 286.56, "duration": 4.28}, {"text": "that could maybe take less money\nand exploit this opportunity.", "start": 290.84, "duration": 9.73}, {"text": "GARY GENSLER: So this\ncaptured two themes", "start": 300.57, "duration": 2.52}, {"text": "that you picked up there,\nand there were many others.", "start": 303.09, "duration": 2.8}, {"text": "And I see Andrea's hand up.", "start": 305.89, "duration": 1.65}, {"text": "So we'll have some\nother good discussions.", "start": 307.54, "duration": 2.09}, {"text": "Cost, you're saying that\nthe current payment rails--", "start": 309.63, "duration": 3.9}, {"text": "my word-- that the\ncurrent payment rails", "start": 313.53, "duration": 2.22}, {"text": "have a significant cost.", "start": 315.75, "duration": 1.95}, {"text": "And you also mentioned\nthe concentration.", "start": 317.7, "duration": 3.33}, {"text": "You said monopoly.", "start": 321.03, "duration": 1.83}, {"text": "Some might say oligopolies,\nbut there's a concentration", "start": 322.86, "duration": 3.63}, {"text": "usually in the payment systems.", "start": 326.49, "duration": 1.89}, {"text": "And this comes by\nand large not only", "start": 328.38, "duration": 3.36}, {"text": "because of the\nhistory of payments", "start": 331.74, "duration": 1.53}, {"text": "but also the significant\nnetwork effects,", "start": 333.27, "duration": 3.15}, {"text": "that if you have one central\npayment mechanism, whether it's", "start": 336.42, "duration": 4.08}, {"text": "a clearing house in days of\nold or, in the last 40 years,", "start": 340.5, "duration": 4.76}, {"text": "the credit card companies became\nvery significant in the payment", "start": 345.26, "duration": 4.99}, {"text": "space.", "start": 350.25, "duration": 0.93}, {"text": "They had network\neffects, scale, bringing", "start": 351.18, "duration": 2.73}, {"text": "merchants on the one side, the\nstore owners on the one side,", "start": 353.91, "duration": 3.9}, {"text": "and the consumers on\nthe other side together.", "start": 357.81, "duration": 2.59}, {"text": "And the platform economics\ncreate a significant network", "start": 360.4, "duration": 3.53}, {"text": "effect.", "start": 363.93, "duration": 0.52}, {"text": "So there's a lot\nof concentration.", "start": 364.45, "duration": 1.91}, {"text": "But Andrea or others?", "start": 366.36, "duration": 1.915}, {"text": "ROMAIN: Andrea?", "start": 368.275, "duration": 1.491}, {"text": "AUDIENCE: Yeah.", "start": 369.766, "duration": 1.064}, {"text": "So I'm not fully sure\nif this is related", "start": 370.83, "duration": 3.15}, {"text": "or if you count it\nalso as payment.", "start": 373.98, "duration": 1.67}, {"text": "But I think one of the\nbiggest opportunities", "start": 375.65, "duration": 2.24}, {"text": "and also challenges\nis still to resolve", "start": 377.89, "duration": 1.97}, {"text": "the international\npayments, so basically", "start": 379.86, "duration": 2.55}, {"text": "how you send the money\nacross the borders.", "start": 382.41, "duration": 2.13}, {"text": "There are many startups, like\neveryone knows TransferWise", "start": 384.54, "duration": 3.54}, {"text": "who are doing a great job.", "start": 388.08, "duration": 1.74}, {"text": "But when you think\nabout it, it's still--", "start": 389.82, "duration": 1.98}, {"text": "the way their business\nmodel or how it works,", "start": 391.8, "duration": 2.89}, {"text": "it's still not basically\ninstant sending of money,", "start": 394.69, "duration": 3.6}, {"text": "and there are a\ncouple of limitations.", "start": 398.29, "duration": 1.86}, {"text": "For example, you\nalso need to do it--", "start": 400.15, "duration": 3.57}, {"text": "you also need to\nor you're allowed", "start": 403.72, "duration": 2.12}, {"text": "to send the money\ninternationally", "start": 405.84, "duration": 1.71}, {"text": "if you have a bank account.", "start": 407.55, "duration": 1.51}, {"text": "But I, for example, know I\nwas working in the Middle East", "start": 409.06, "duration": 3.18}, {"text": "where, for example,\nthere is a lot of people,", "start": 412.24, "duration": 3.23}, {"text": "a lot of international people\ncoming and working there.", "start": 415.47, "duration": 3.81}, {"text": "And they are sending\na lot of money", "start": 419.28, "duration": 2.97}, {"text": "back to their families home.", "start": 422.25, "duration": 2.79}, {"text": "And, for example, a lot of them\ndon't have a banking account.", "start": 425.04, "duration": 2.82}, {"text": "So they're using services\nsuch as Western Union.", "start": 427.86, "duration": 2.855}, {"text": "GARY GENSLER: So let's--", "start": 430.715, "duration": 1.375}, {"text": "AUDIENCE: And [INAUDIBLE].", "start": 432.09, "duration": 1.14}, {"text": "GARY GENSLER: I think\nAndrea was good.", "start": 433.23, "duration": 1.583}, {"text": "She raised three\npoints in there.", "start": 434.813, "duration": 1.957}, {"text": "I see Ivy's hand,\nand then we'll close.", "start": 436.77, "duration": 1.96}, {"text": "But the three points I heard,\ncross-border, sending payments", "start": 438.73, "duration": 3.71}, {"text": "from one nation to another.", "start": 442.44, "duration": 2.65}, {"text": "Now that could be because\nit's moving from one currency", "start": 445.09, "duration": 4.25}, {"text": "to another, or even if\nit's in the same currency,", "start": 449.34, "duration": 3.33}, {"text": "if you're using US dollars\nand sending it cross-border", "start": 452.67, "duration": 2.74}, {"text": "or using Euro or yen and\nsending it cross-border,", "start": 455.41, "duration": 3.82}, {"text": "you're jumping between two\ndifferent payment systems, two", "start": 459.23, "duration": 3.28}, {"text": "different banking systems.", "start": 462.51, "duration": 2.23}, {"text": "And so cross-border same\ncurrency or cross-border", "start": 464.74, "duration": 3.62}, {"text": "cross currency, there's\na significant amount", "start": 468.36, "duration": 2.61}, {"text": "of cost embedded in that.", "start": 470.97, "duration": 3.19}, {"text": "There is time delays that\nAndrea mentioned until you", "start": 474.16, "duration": 4.22}, {"text": "can have settled money.", "start": 478.38, "duration": 3.0}, {"text": "Final settled money means\nthat you can actually use it", "start": 481.38, "duration": 3.54}, {"text": "in your commercial daily lives.", "start": 484.92, "duration": 3.69}, {"text": "And then thirdly, I think\nAndrea raised inclusion,", "start": 488.61, "duration": 2.88}, {"text": "whether everybody has\naccess to that system.", "start": 491.49, "duration": 3.19}, {"text": "So I thank you.", "start": 494.68, "duration": 0.89}, {"text": "And then Ivy, and\nthen we'll move on.", "start": 495.57, "duration": 2.582}, {"text": "AUDIENCE: Sorry.", "start": 498.152, "duration": 0.74}, {"text": "I actually had some\nearlier points.", "start": 498.892, "duration": 1.458}, {"text": "But I think just building up\noff of that, things like Plaid,", "start": 500.35, "duration": 4.81}, {"text": "I think, are quite interesting\nbecause you really need this--", "start": 505.16, "duration": 4.3}, {"text": "I guess I think about it as the\nplumbing of the payment system,", "start": 509.46, "duration": 5.01}, {"text": "if you will, because\nthey really need", "start": 514.47, "duration": 1.97}, {"text": "to plug into so many different\ntypes, the payment systems, all", "start": 516.44, "duration": 4.26}, {"text": "these different\nfinancial institutions.", "start": 520.7, "duration": 1.83}, {"text": "And just even thinking about\ninclusion and consumer--", "start": 522.53, "duration": 4.74}, {"text": "customer behavior and\nconsumer credit behavior", "start": 527.27, "duration": 2.85}, {"text": "or cross-countries,\nit's entirely different.", "start": 530.12, "duration": 2.7}, {"text": "Like people in the UK don't,\nor in Europe in general,", "start": 532.82, "duration": 3.7}, {"text": "I don't think, use credit\ncards as much as Americans do.", "start": 536.52, "duration": 4.82}, {"text": "People in Asia are really\nused to using Alipay, WeChat.", "start": 541.34, "duration": 3.48}, {"text": "QR codes have\nbecome a big thing.", "start": 544.82, "duration": 3.45}, {"text": "And in Canada, people\npay down their debt", "start": 548.27, "duration": 4.38}, {"text": "much faster than we do.", "start": 552.65, "duration": 1.775}, {"text": "So just trying to\nthink about how", "start": 554.425, "duration": 1.375}, {"text": "all these different players,\nboth on the consumer side", "start": 555.8, "duration": 3.15}, {"text": "as well as on the supply\nside, if you will,", "start": 558.95, "duration": 4.08}, {"text": "will fit into the entire\nsystem in the future.", "start": 563.03, "duration": 2.29}, {"text": "GARY GENSLER: So Ivy's\nmentioned a bunch", "start": 565.32, "duration": 2.36}, {"text": "of cultural and\ngeographic differences.", "start": 567.68, "duration": 3.7}, {"text": "Country by country,\nwe have differences", "start": 571.38, "duration": 1.91}, {"text": "in our payment systems.", "start": 573.29, "duration": 1.89}, {"text": "We have different cultural\nbehaviors about paying down", "start": 575.18, "duration": 2.34}, {"text": "our debt and so forth.", "start": 577.52, "duration": 1.89}, {"text": "And you mentioned one company,\nPlaid, that helps the plumbing.", "start": 579.41, "duration": 4.11}, {"text": "And what's interesting is\nthat the word \"plumbing\"", "start": 583.52, "duration": 5.13}, {"text": "in banking or plumbing and\npayment is an age old thought.", "start": 588.65, "duration": 5.52}, {"text": "Actually, when\nAlexander Hamilton,", "start": 594.17, "duration": 2.34}, {"text": "our nation's first\nSecretary of the Treasury,", "start": 596.51, "duration": 4.08}, {"text": "helped found one of the\nfirst banks in the nation,", "start": 600.59, "duration": 3.27}, {"text": "the Bank of New York-- it still\nis part of the Bank of New York", "start": 603.86, "duration": 3.3}, {"text": "Mellon-- this was in the 1780s,\nthey took as their logo--", "start": 607.16, "duration": 4.95}, {"text": "logo is a modern word.", "start": 612.11, "duration": 1.53}, {"text": "But they took as\ntheir symbol something", "start": 613.64, "duration": 2.73}, {"text": "that looked like\nplumbing, literally", "start": 616.37, "duration": 2.79}, {"text": "that they thought of\nbanking as like waterworks", "start": 619.16, "duration": 3.46}, {"text": "or a central utility, sending\nmoney around rather than", "start": 622.62, "duration": 4.19}, {"text": "sending water around.", "start": 626.81, "duration": 2.28}, {"text": "So I thank you for that.", "start": 629.09, "duration": 1.25}, {"text": "But yes, Plaid is\npart of that plumbing.", "start": 630.34, "duration": 2.23}, {"text": "And as Andrea said,\nTransferWise is", "start": 632.57, "duration": 2.01}, {"text": "trying to find a gap\nin the cross-border.", "start": 634.58, "duration": 2.91}, {"text": "They're not alone.", "start": 637.49, "duration": 0.95}, {"text": "There's Remitly and WorldRemit,\nand many other companies also.", "start": 638.44, "duration": 5.17}, {"text": "And so this is a long question.", "start": 643.61, "duration": 2.34}, {"text": "But just anybody want to\nsay, what lessons can you", "start": 645.95, "duration": 2.28}, {"text": "take from Big Tech in\nthis space, Alipay,", "start": 648.23, "duration": 3.93}, {"text": "WeChat Pay, M-Pesa, et\ncetera, just Big Tech?", "start": 652.16, "duration": 3.51}, {"text": "And secondly, any lessons\nfrom all the startups.", "start": 655.67, "duration": 4.12}, {"text": "So it's two buckets,\nbut it's what can you", "start": 659.79, "duration": 3.53}, {"text": "take from the competitive\nlandscape, either Big", "start": 663.32, "duration": 2.46}, {"text": "Tech or the disruptors?", "start": 665.78, "duration": 1.68}, {"text": "ROMAIN: Anyone?", "start": 672.564, "duration": 0.946}, {"text": "GARY GENSLER: I'm sure that\nsome of you use these companies,", "start": 677.956, "duration": 2.934}, {"text": "whether you're from Asia, and\nyou use many of the Big Tech", "start": 680.89, "duration": 3.59}, {"text": "ones, or even in\nthe US if you do,", "start": 684.48, "duration": 2.01}, {"text": "or you're bound to use Venmo,\nwhich is owned by PayPal,", "start": 686.49, "duration": 6.15}, {"text": "or something.", "start": 692.64, "duration": 1.3}, {"text": "ROMAIN: So we have\nLuke and then Yi.", "start": 693.94, "duration": 3.8}, {"text": "AUDIENCE: So one of the--", "start": 697.74, "duration": 1.3}, {"text": "GARY GENSLER: Which side\nare you [INAUDIBLE],,", "start": 699.04, "duration": 1.917}, {"text": "Big Tech or disruptors?", "start": 700.957, "duration": 1.508}, {"text": "AUDIENCE: I'm sorry.", "start": 702.465, "duration": 0.85}, {"text": "Say that again.", "start": 703.315, "duration": 0.625}, {"text": "Say that again now.", "start": 703.94, "duration": 0.792}, {"text": "GARY GENSLER: Are you addressing\nBig Tech or the disruptors?", "start": 704.732, "duration": 4.604}, {"text": "AUDIENCE: So let's\ngo with Big Tech,", "start": 709.336, "duration": 2.074}, {"text": "but I guess it's not to\neasy when I talk about,", "start": 711.41, "duration": 2.5}, {"text": "for example, KakaoPay, which\nis the payment platform made", "start": 713.91, "duration": 4.4}, {"text": "by Kakao Group, which\nis the largest--", "start": 718.31, "duration": 3.54}, {"text": "the tech company in Korea.", "start": 721.85, "duration": 2.88}, {"text": "And basically, it's\nWhatsApp of Korea.", "start": 724.73, "duration": 2.95}, {"text": "So whether it be KakaoPay, or\nWeChat Pay, Alipay, Apple Pay,", "start": 727.68, "duration": 4.52}, {"text": "the key thing is it's very,\nvery easy compared to the bank.", "start": 732.2, "duration": 5.01}, {"text": "Now, the banks are trying to\ncatch up with the API Open", "start": 737.21, "duration": 2.4}, {"text": "Banking system and all that.", "start": 739.61, "duration": 1.71}, {"text": "But basically, the\nUI user interface", "start": 741.32, "duration": 2.93}, {"text": "is pretty easy to use.", "start": 744.25, "duration": 2.78}, {"text": "And if you have a problem, if\nyou contact customer service,", "start": 747.03, "duration": 2.72}, {"text": "they'll contact you\nright away, versus banks", "start": 749.75, "duration": 4.39}, {"text": "make you wait 20 minutes,\nblah, blah, blah.", "start": 754.14, "duration": 2.0}, {"text": "Sad to say it as a banker,\nbut it is what it is.", "start": 756.14, "duration": 2.9}, {"text": "GARY GENSLER: So I think that\nthe key lesson you're saying", "start": 759.04, "duration": 2.417}, {"text": "is it's easier, it's\ngot a user interface", "start": 761.457, "duration": 2.783}, {"text": "that's quite convenient.", "start": 764.24, "duration": 1.48}, {"text": "And while you didn't use the\nword, it's also ubiquitous.", "start": 765.72, "duration": 2.63}, {"text": "And so KakaoPay in Korea,\nLINE Pay in Japan and Taiwan,", "start": 768.35, "duration": 8.45}, {"text": "WeChat Pay, Alipay,\nM-Pesa really", "start": 776.8, "duration": 3.19}, {"text": "leapfrog the banking system.", "start": 779.99, "duration": 1.86}, {"text": "But there is a very established\nbanking system in Korea.", "start": 781.85, "duration": 2.88}, {"text": "And yet still,\nKakaoPay leaped over.", "start": 784.73, "duration": 4.23}, {"text": "Not as much so in the US.", "start": 788.96, "duration": 2.13}, {"text": "I mean, yes, Google\nWallet is there.", "start": 791.09, "duration": 1.77}, {"text": "Yes, Apple Pay is there,\nand they're significant.", "start": 792.86, "duration": 2.79}, {"text": "Less so for Facebook actually.", "start": 795.65, "duration": 1.802}, {"text": "AUDIENCE: I think\nthat's because of the--", "start": 797.452, "duration": 1.708}, {"text": "GARY GENSLER:\n[INAUDIBLE] we're weaker,", "start": 799.16, "duration": 1.89}, {"text": "in a sense, adoption, Google,\nApple, Facebook in the US,", "start": 801.05, "duration": 5.16}, {"text": "than we find in Korea or China.", "start": 806.21, "duration": 4.385}, {"text": "AUDIENCE: But I\nthink that's more", "start": 810.595, "duration": 1.375}, {"text": "because of-- not\nbecause of overbanking", "start": 811.97, "duration": 1.85}, {"text": "or the power of bank.", "start": 813.82, "duration": 2.26}, {"text": "It's more because of\nthe telecom services,", "start": 816.08, "duration": 3.12}, {"text": "how reachable,\napproachable you are", "start": 819.2, "duration": 2.75}, {"text": "with the LTE speed or\n3G speed you have here", "start": 821.95, "duration": 3.92}, {"text": "in big land of America.", "start": 825.87, "duration": 1.855}, {"text": "GARY GENSLER: So\nwhat Luke's raising", "start": 827.725, "duration": 2.065}, {"text": "is there's also facts on the\nground about how developed", "start": 829.79, "duration": 3.81}, {"text": "the technology is, whether\nit was already at 3G or 4G", "start": 833.6, "duration": 3.18}, {"text": "or how developed the\ntechnology was on the ground.", "start": 836.78, "duration": 3.88}, {"text": "So it's not just about\nhow developed the banking", "start": 840.66, "duration": 2.15}, {"text": "system is but also technology.", "start": 842.81, "duration": 2.24}, {"text": "Romain, we had\nsomebody else that", "start": 845.05, "duration": 1.96}, {"text": "might take the disrupter side.", "start": 847.01, "duration": 1.77}, {"text": "Thank you, Luke.", "start": 848.78, "duration": 0.7}, {"text": "ROMAIN: Yes.", "start": 849.48, "duration": 0.4}, {"text": "GARY GENSLER: Good.", "start": 849.88, "duration": 0.792}, {"text": "ROMAIN: Yi, go ahead.", "start": 850.672, "duration": 0.922}, {"text": "AUDIENCE: Yeah.", "start": 851.594, "duration": 0.926}, {"text": "I just want to raise a trend,\nthe loss of the payments", "start": 852.52, "duration": 3.85}, {"text": "this time.", "start": 856.37, "duration": 0.53}, {"text": "GARY GENSLER: And then,\nYi, do we have a video?", "start": 856.9, "duration": 3.06}, {"text": "Do we have your face?", "start": 859.96, "duration": 1.315}, {"text": "AUDIENCE: Yeah.", "start": 861.275, "duration": 0.895}, {"text": "I'm just very ugly\nthis morning, but--", "start": 862.17, "duration": 2.2}, {"text": "GARY GENSLER: Oh, I'm\nsure you look fine.", "start": 864.37, "duration": 2.361}, {"text": "You look great.", "start": 866.731, "duration": 0.625}, {"text": "AUDIENCE: Yeah.", "start": 867.356, "duration": 1.064}, {"text": "So I just feel like there's\na key trend between the--", "start": 868.42, "duration": 5.82}, {"text": "even including the Big Tech\npayment firms as well as like", "start": 874.24, "duration": 4.15}, {"text": "the FinTech firm\nis social media.", "start": 878.39, "duration": 3.14}, {"text": "People want to pay\nvia the social media.", "start": 881.53, "duration": 3.09}, {"text": "This happened between\nthe Alipay, WeChat Pay,", "start": 884.62, "duration": 2.6}, {"text": "the KakaoPay, and\nalso the Venmo.", "start": 887.22, "duration": 2.77}, {"text": "You can connect with friends.", "start": 889.99, "duration": 1.48}, {"text": "You can send stickers.", "start": 891.47, "duration": 2.33}, {"text": "You can send--\nexpress your emotions.", "start": 893.8, "duration": 2.52}, {"text": "You can make your\ntransactions available", "start": 896.32, "duration": 2.91}, {"text": "to your social network.", "start": 899.23, "duration": 1.59}, {"text": "And I think there's also\nsimilar to M-Pesa in Kenya.", "start": 900.82, "duration": 3.88}, {"text": "So I feel like this\nis a huge trend", "start": 904.7, "duration": 1.76}, {"text": "that people don't\nwant to only make", "start": 906.46, "duration": 4.57}, {"text": "the transaction\nwith banks, which is", "start": 911.03, "duration": 3.02}, {"text": "very separate and individual.", "start": 914.05, "duration": 2.83}, {"text": "They want to make transactions\nwith their social network.", "start": 916.88, "duration": 4.23}, {"text": "GARY GENSLER: Yeah.", "start": 921.11, "duration": 0.92}, {"text": "I think that's right.", "start": 922.03, "duration": 0.93}, {"text": "I think that's probably a\nlarger factor with regard", "start": 922.96, "duration": 3.9}, {"text": "to the Big Tech companies,\nbut it is also true", "start": 926.86, "duration": 2.79}, {"text": "that it's a factor\nwith the startups.", "start": 929.65, "duration": 4.74}, {"text": "And then lastly, a\nquestion is, do you", "start": 934.39, "duration": 4.41}, {"text": "think stable value\ncoins, tokenized assets,", "start": 938.8, "duration": 2.94}, {"text": "even the initiative of Libra--", "start": 941.74, "duration": 4.29}, {"text": "what will that do on\nthis payment space?", "start": 946.03, "duration": 3.33}, {"text": "In essence, are they\nhype or a passing fad,", "start": 949.36, "duration": 2.475}, {"text": "or are they going to\ndo something here?", "start": 951.835, "duration": 1.625}, {"text": "Romain?", "start": 958.41, "duration": 0.5}, {"text": "ROMAIN: Any opinions on this?", "start": 958.91, "duration": 1.36}, {"text": "I'm still waiting.", "start": 964.68, "duration": 1.07}, {"text": "GARY GENSLER: We're\ngoing to help out.", "start": 965.75, "duration": 0.84}, {"text": "We're going to help out.", "start": 966.59, "duration": 1.0}, {"text": "We have a poll.", "start": 967.59, "duration": 0.69}, {"text": "This is exactly when we can\nask a poll to tease this out.", "start": 968.28, "duration": 4.47}, {"text": "You've done terrific, but no one\nanswer, because now, Romain's", "start": 972.75, "duration": 3.41}, {"text": "going to pull up a poll.", "start": 976.16, "duration": 2.03}, {"text": "And this is more broadly-- this\nis about blockchain technology,", "start": 978.19, "duration": 3.24}, {"text": "but curious what\neveryone thinks here.", "start": 981.43, "duration": 4.0}, {"text": "ROMAIN: So you\nshould now see a poll", "start": 985.43, "duration": 1.813}, {"text": "with three different\nquestions on your screen.", "start": 987.243, "duration": 1.917}, {"text": "GARY GENSLER: This is a\nlittle bit more broadly as", "start": 992.088, "duration": 2.522}, {"text": "to whether financial\nfirms will incorporate", "start": 994.61, "duration": 2.55}, {"text": "blockchain technology into\ntheir business models.", "start": 997.16, "duration": 3.57}, {"text": "As they've already incorporated\nAI and machine learning,", "start": 1000.73, "duration": 4.05}, {"text": "as they've been\nincorporating open API,", "start": 1004.78, "duration": 3.03}, {"text": "will this be a fundamental\nfeature in the next 2,", "start": 1007.81, "duration": 3.57}, {"text": "5, or 10 years, or not at all?", "start": 1011.38, "duration": 2.1}, {"text": "ROMAIN: 20% of the\nclass voted so far.", "start": 1017.304, "duration": 2.916}, {"text": "Please check the\nwindow and vote.", "start": 1020.22, "duration": 1.59}, {"text": "GARY GENSLER: Romain,\nI like your ability", "start": 1027.39, "duration": 2.929}, {"text": "to pull in the votes.", "start": 1030.319, "duration": 1.29}, {"text": "You might have a job\nto do come November", "start": 1031.609, "duration": 4.891}, {"text": "in our next general\nelection here.", "start": 1036.5, "duration": 2.28}, {"text": "ROMAIN: Are you confident\nit's going to take place?", "start": 1043.091, "duration": 3.069}, {"text": "GARY GENSLER: Yes.", "start": 1046.16, "duration": 0.87}, {"text": "I am confident under our\nconstitutional system", "start": 1047.03, "duration": 3.18}, {"text": "that we will have an election.", "start": 1050.21, "duration": 1.605}, {"text": "ROMAIN: Excellent.", "start": 1051.815, "duration": 2.195}, {"text": "OK.", "start": 1054.01, "duration": 0.52}, {"text": "We have 70% of the\nclass that has voted.", "start": 1054.53, "duration": 2.64}, {"text": "I'm going to let\n5 more seconds--", "start": 1057.17, "duration": 2.64}, {"text": "GARY GENSLER:\n[INAUDIBLE] 10 seconds.", "start": 1059.81, "duration": 1.71}, {"text": "ROMAIN: Yeah.", "start": 1061.52, "duration": 0.94}, {"text": "And we reached 80%.", "start": 1067.64, "duration": 2.04}, {"text": "Thank you, everyone, for\nsharing your thoughts.", "start": 1069.68, "duration": 2.525}, {"text": "I'm sharing the\nresults with you.", "start": 1072.205, "duration": 1.375}, {"text": "You should now be\nable to see them.", "start": 1073.58, "duration": 2.21}, {"text": "GARY GENSLER: So let's\nsee, that the class tends", "start": 1075.79, "duration": 3.33}, {"text": "to be optimistic that blockchain\ntechnology will be incorporated", "start": 1079.12, "duration": 5.03}, {"text": "in, even though it might\ntake 5 to 10 years.", "start": 1084.15, "duration": 3.16}, {"text": "It looks like the mode is\n5 years or 5 or 10 years.", "start": 1087.31, "duration": 7.94}, {"text": "In terms of, what\nwill it have will be--", "start": 1095.25, "duration": 5.56}, {"text": "beyond speculative digital\nstore valuable Bitcoin", "start": 1100.81, "duration": 3.75}, {"text": "become the currency of choice\nin some part of the economy,", "start": 1104.56, "duration": 4.156}, {"text": "that generally 60-some% say no.", "start": 1108.716, "duration": 4.424}, {"text": "And then, who is\nSatoshi Nakamoto?", "start": 1113.14, "duration": 2.13}, {"text": "Well, that was just\nmy one little question", "start": 1115.27, "duration": 4.17}, {"text": "because, of course, we don't\nknow who Satoshi Nakamoto is,", "start": 1119.44, "duration": 3.42}, {"text": "this woman or man who wrote\nthe eight-page white paper", "start": 1122.86, "duration": 5.04}, {"text": "and put it out on the\ninternet 12 years ago.", "start": 1127.9, "duration": 1.99}, {"text": "But it looks like\na third of you said", "start": 1129.89, "duration": 1.64}, {"text": "maybe it was a\nforeign state actor,", "start": 1131.53, "duration": 2.37}, {"text": "or 20% said US intelligence.", "start": 1133.9, "duration": 2.31}, {"text": "OK.", "start": 1139.55, "duration": 0.5}, {"text": "So let's get back to payments,\nI like this thought there.", "start": 1140.05, "duration": 5.04}, {"text": "If you want to take that\nwindow, you have to, I think,", "start": 1145.09, "duration": 2.91}, {"text": "get rid of the\npoll individually,", "start": 1148.0, "duration": 2.41}, {"text": "which I'm about to do now--", "start": 1150.41, "duration": 1.72}, {"text": "ROMAIN: Yes, thank you.", "start": 1152.13, "duration": 1.56}, {"text": "GARY GENSLER: --as well.", "start": 1153.69, "duration": 2.84}, {"text": "So what is a payment system?", "start": 1156.53, "duration": 3.51}, {"text": "Let's just dive in and\ntalk about what it is.", "start": 1160.04, "duration": 3.41}, {"text": "And it's been around a century.", "start": 1163.45, "duration": 3.31}, {"text": "So it's not a new thing.", "start": 1166.76, "duration": 2.07}, {"text": "But in a digital world,\nin a ledger-based world,", "start": 1168.83, "duration": 3.93}, {"text": "it's a method to\nchange a ledger.", "start": 1172.76, "duration": 4.41}, {"text": "Now, this isn't an\naccounting class.", "start": 1177.17, "duration": 1.5}, {"text": "I'm not going to bore\nyou with accounting.", "start": 1178.67, "duration": 1.75}, {"text": "But basically, if I'm\nmoving money to you,", "start": 1180.42, "duration": 2.06}, {"text": "somebody has to lower my\naccount, credit my account.", "start": 1182.48, "duration": 5.43}, {"text": "Remember assets or debits.", "start": 1187.91, "duration": 2.77}, {"text": "So credit means it's\ngoing down, a little bit", "start": 1190.68, "duration": 3.29}, {"text": "of accounting here.", "start": 1193.97, "duration": 1.71}, {"text": "And then somebody else's\naccount has to be debited.", "start": 1195.68, "duration": 3.36}, {"text": "So one debit, one credit.", "start": 1199.04, "duration": 2.31}, {"text": "One account goes down,\none account goes up.", "start": 1201.35, "duration": 3.24}, {"text": "It's also about authorizing\nthose movements and then", "start": 1204.59, "duration": 5.04}, {"text": "what's called clearing\nand final settlement.", "start": 1209.63, "duration": 2.64}, {"text": "And earlier we discussed that--", "start": 1212.27, "duration": 1.78}, {"text": "and sometimes final\nsettlement doesn't", "start": 1214.05, "duration": 1.91}, {"text": "happen for a couple of days.", "start": 1215.96, "duration": 2.12}, {"text": "And a long time ago, if\nyou wrote a physical check,", "start": 1218.08, "duration": 3.58}, {"text": "you might not have\nit settled, meaning", "start": 1221.66, "duration": 1.95}, {"text": "having money in your account\nfor five days or longer even.", "start": 1223.61, "duration": 5.7}, {"text": "Now it's closer to two days.", "start": 1229.31, "duration": 2.96}, {"text": "But it's basically amending\nand recording those ledgers.", "start": 1232.27, "duration": 3.73}, {"text": "That's what it is in\nan accounting system.", "start": 1236.0, "duration": 2.92}, {"text": "And so how did we do this?", "start": 1238.92, "duration": 1.86}, {"text": "This is just some\nfun background,", "start": 1240.78, "duration": 2.77}, {"text": "but Thomas Jefferson, the\nwriter of the Declaration", "start": 1243.55, "duration": 2.68}, {"text": "of Independence, actually\nyou can find online a check", "start": 1246.23, "duration": 3.45}, {"text": "he wrote to himself.", "start": 1249.68, "duration": 1.21}, {"text": "I'm not quite sure why he did.", "start": 1250.89, "duration": 2.48}, {"text": "This would have been the\nyear after he was president,", "start": 1253.37, "duration": 3.05}, {"text": "but he wrote a check to himself.", "start": 1256.42, "duration": 1.81}, {"text": "So physical personal checks\nhave been around a long time,", "start": 1258.23, "duration": 3.79}, {"text": "but they are basically\nan instruction", "start": 1262.02, "duration": 2.52}, {"text": "called negotiable\norders of withdrawal,", "start": 1264.54, "duration": 2.39}, {"text": "but an instruction to a\nbank to amend the ledger.", "start": 1266.93, "duration": 3.25}, {"text": "Lower my ledger, and\ngive me maybe paper cash,", "start": 1270.18, "duration": 3.41}, {"text": "or lower my ledger,\nraise somebody else's.", "start": 1273.59, "duration": 2.73}, {"text": "All of the sudden, the\ntelegraph comes along.", "start": 1278.925, "duration": 1.875}, {"text": "And a company, Western\nUnion, which still exists--", "start": 1280.8, "duration": 2.91}, {"text": "Western Union comes along,\nand it's a telegram company.", "start": 1283.71, "duration": 4.5}, {"text": "But they figure out how to\nsend money by telegraph,", "start": 1288.21, "duration": 4.05}, {"text": "the FinTech of its time.", "start": 1292.26, "duration": 2.19}, {"text": "And yes, there were\nmachines that looked", "start": 1294.45, "duration": 2.52}, {"text": "like this, telex machines.", "start": 1296.97, "duration": 1.74}, {"text": "These were ubiquitous across\nfinancial firms in the 1950s", "start": 1298.71, "duration": 4.29}, {"text": "to the 1970s.", "start": 1303.0, "duration": 1.59}, {"text": "I will admit I saw one or two of\nthese when I was on Wall Street", "start": 1304.59, "duration": 3.24}, {"text": "still in the 1980s.", "start": 1307.83, "duration": 2.19}, {"text": "But a telex machine\nexisted basically", "start": 1310.02, "duration": 3.69}, {"text": "to send instructions on\npayments around to another bank.", "start": 1313.71, "duration": 5.502}, {"text": "But what's it look like today?", "start": 1319.212, "duration": 2.468}, {"text": "Well, first, the\nimportant thing is", "start": 1321.68, "duration": 2.49}, {"text": "central banks sit in the\nmiddle of payment systems.", "start": 1324.17, "duration": 3.84}, {"text": "This was not as true\nin terms of the--", "start": 1328.01, "duration": 4.17}, {"text": "I'm just trying to move\na window out of the way.", "start": 1332.18, "duration": 3.72}, {"text": "This was not as true in the\nphysical coin and currency", "start": 1335.9, "duration": 5.37}, {"text": "world.", "start": 1341.27, "duration": 0.9}, {"text": "But here, this little chart puts\nthe central bank at the top.", "start": 1342.17, "duration": 3.66}, {"text": "And we have central banks around\nthe globe, 180 different Fiat", "start": 1345.83, "duration": 3.54}, {"text": "currencies.", "start": 1349.37, "duration": 1.41}, {"text": "The central banks are\ncentral to commercial banks.", "start": 1350.78, "duration": 4.95}, {"text": "And what's important to\nremember is our money system", "start": 1355.73, "duration": 5.76}, {"text": "has moved on from being\npaper money to basically", "start": 1361.49, "duration": 6.18}, {"text": "digital money.", "start": 1367.67, "duration": 1.38}, {"text": "And so today in the\nUS, if you think", "start": 1369.05, "duration": 2.31}, {"text": "about the total\nstock of currency,", "start": 1371.36, "duration": 3.09}, {"text": "the total stock\nof paper currency", "start": 1374.45, "duration": 3.24}, {"text": "prior to this coronavirus\ncrisis was about $1.8 trillion.", "start": 1377.69, "duration": 4.41}, {"text": "It's actually gone\nup in the last month.", "start": 1382.1, "duration": 3.51}, {"text": "It seems that there are people\nthat want to take cash out", "start": 1385.61, "duration": 2.7}, {"text": "of the bank, out of the\nATM as a store of value", "start": 1388.31, "duration": 4.99}, {"text": "around the globe.", "start": 1393.3, "duration": 0.9}, {"text": "We're not using it.", "start": 1394.2, "duration": 1.44}, {"text": "It's a disease vector, but\nit seems that the growth--", "start": 1395.64, "duration": 3.8}, {"text": "and it might be\nnow $1.9 trillion.", "start": 1399.44, "duration": 3.02}, {"text": "So it's gone up $100\nbillion or approximately.", "start": 1402.46, "duration": 4.61}, {"text": "But the digital money, all the\npeople's bank accounts, bank", "start": 1407.07, "duration": 3.78}, {"text": "deposits, money market funds\nis multiples of that, $15", "start": 1410.85, "duration": 4.14}, {"text": "or so trillion.", "start": 1414.99, "duration": 2.31}, {"text": "So about 90% of the\nmoney in the US,", "start": 1417.3, "duration": 4.05}, {"text": "depending upon your definition\nof money, is digital.", "start": 1421.35, "duration": 3.33}, {"text": "And most of that digital money\nis commercial bank money.", "start": 1424.68, "duration": 3.27}, {"text": "You and I, when we\ngo into Starbucks,", "start": 1427.95, "duration": 1.92}, {"text": "we're basically spending Bank\nAmerica dollars, or Citibank", "start": 1429.87, "duration": 5.4}, {"text": "dollars, or Wells Fargo\ndollars, or SunTrust dollars,", "start": 1435.27, "duration": 3.39}, {"text": "or Community Bank dollar.", "start": 1438.66, "duration": 1.92}, {"text": "That's what we're spending\nwhen we walk into Starbucks.", "start": 1440.58, "duration": 3.16}, {"text": "It might have some implicit\nor explicit guarantee", "start": 1443.74, "duration": 3.27}, {"text": "of a government here in the US,\ndeposit insurance and the like.", "start": 1447.01, "duration": 4.43}, {"text": "But we're in essence saying\nto Bank of America, please", "start": 1451.44, "duration": 2.7}, {"text": "change my ledger\nbalance and move", "start": 1454.14, "duration": 2.97}, {"text": "something to somebody\nelse's ledger balance,", "start": 1457.11, "duration": 2.46}, {"text": "maybe a Community Bank\nfor that local Starbucks.", "start": 1459.57, "duration": 4.89}, {"text": "So in between has to be\nsome electronic means,", "start": 1464.46, "duration": 3.09}, {"text": "some payments system, a\ndeferred net settlement system.", "start": 1467.55, "duration": 3.66}, {"text": "And this chart lists\nthe number of them.", "start": 1471.21, "duration": 3.18}, {"text": "These payment systems are\nthe domain of central banks.", "start": 1474.39, "duration": 6.44}, {"text": "Some central banks\nactually run them,", "start": 1480.83, "duration": 2.37}, {"text": "like the US Federal Reserve runs\nsomething called the Fedwire.", "start": 1483.2, "duration": 4.44}, {"text": "But some are run by a consortium\nof the commercial banks.", "start": 1487.64, "duration": 7.54}, {"text": "Some are private.", "start": 1495.18, "duration": 1.91}, {"text": "And in some countries, they\ncan even be for-profit.", "start": 1497.09, "duration": 2.83}, {"text": "But all of them\nhave some regulation", "start": 1499.92, "duration": 3.12}, {"text": "from the central bank.", "start": 1503.04, "duration": 1.12}, {"text": "So either the central bank\nowns them or the central bank", "start": 1504.16, "duration": 2.99}, {"text": "oversees them.", "start": 1507.15, "duration": 1.75}, {"text": "And usually then\nthe commercial banks", "start": 1508.9, "duration": 1.64}, {"text": "might run these\nsingle purpose payment", "start": 1510.54, "duration": 4.11}, {"text": "systems around the globe.", "start": 1514.65, "duration": 1.56}, {"text": "Some countries have\nmultiple systems.", "start": 1516.21, "duration": 1.89}, {"text": "The US, we have the\nFed system, and we also", "start": 1518.1, "duration": 3.24}, {"text": "have something called the\nautomated clearing house.", "start": 1521.34, "duration": 3.07}, {"text": "The clearing house was\nfounded in the 1850s", "start": 1524.41, "duration": 3.41}, {"text": "to give you a sense of its\nhistory, a long history.", "start": 1527.82, "duration": 3.63}, {"text": "Questions, Romain, any?", "start": 1531.45, "duration": 3.218}, {"text": "ROMAIN: None so far, Gary.", "start": 1534.668, "duration": 1.302}, {"text": "GARY GENSLER: All right.", "start": 1535.97, "duration": 0.34}, {"text": "So you'll see how\nthis fits together.", "start": 1536.31, "duration": 1.72}, {"text": "But let me say what the modern\npayment system looks like when", "start": 1538.03, "duration": 6.27}, {"text": "I think of it in terms\nof you go into Starbucks,", "start": 1544.3, "duration": 4.95}, {"text": "and you want to make a payment.", "start": 1549.25, "duration": 3.03}, {"text": "You're the consumer.", "start": 1552.28, "duration": 1.42}, {"text": "We're going to go across.", "start": 1553.7, "duration": 1.22}, {"text": "You have an issuing bank.", "start": 1554.92, "duration": 1.32}, {"text": "Let's use Bank of\nAmerica just to say.", "start": 1556.24, "duration": 2.47}, {"text": "And you're giving that\nbank, Bank of America,", "start": 1558.71, "duration": 2.63}, {"text": "a payment instruction.", "start": 1561.34, "duration": 2.81}, {"text": "Now, in an earlier day, you\ncould write a physical check,", "start": 1564.15, "duration": 2.55}, {"text": "like Thomas Jefferson's check.", "start": 1566.7, "duration": 1.73}, {"text": "You could use a credit card, a\ndebit card, some prepaid card.", "start": 1568.43, "duration": 5.35}, {"text": "But you have to give\nsome payment instruction.", "start": 1573.78, "duration": 3.24}, {"text": "Even that QR code\nthat you pass--", "start": 1577.02, "duration": 2.265}, {"text": "and we'll get to Alipay and\nWeChat Pay in a moment--", "start": 1579.285, "duration": 4.575}, {"text": "there is a payment\ninstruction somewhere,", "start": 1583.86, "duration": 2.43}, {"text": "digital payment instruction.", "start": 1586.29, "duration": 2.42}, {"text": "And then at the heart in\nthe middle is a network.", "start": 1588.71, "duration": 3.13}, {"text": "Now, these payment\nservice providers, PSPs,", "start": 1591.84, "duration": 3.45}, {"text": "in the middle or networks could\nbe associated with a credit", "start": 1595.29, "duration": 3.6}, {"text": "card company, the Visa\ncredit card network", "start": 1598.89, "duration": 3.48}, {"text": "founded in the late\n1950s by Bank of America,", "start": 1602.37, "duration": 3.495}, {"text": "a California bank at the time.", "start": 1605.865, "duration": 1.935}, {"text": "And it became ubiquitous\nby the late 1960s.", "start": 1607.8, "duration": 3.9}, {"text": "Visa, Mastercard,\nUnionPay in China", "start": 1611.7, "duration": 5.22}, {"text": "can both be credit\ncards and networks,", "start": 1616.92, "duration": 3.39}, {"text": "or there could be a network\nthat services the credit cards.", "start": 1620.31, "duration": 3.3}, {"text": "But you need something\nin the middle", "start": 1623.61, "duration": 3.64}, {"text": "because on the other side,\nthere's tens of thousands", "start": 1627.25, "duration": 2.64}, {"text": "of merchants or millions of\nmerchants if you go to China.", "start": 1629.89, "duration": 5.01}, {"text": "And on their side,\nthey have another bank.", "start": 1634.9, "duration": 3.23}, {"text": "But they need some way to access\nthis network, a point of sale--", "start": 1638.13, "duration": 4.74}, {"text": "POS is point of sale--", "start": 1642.87, "duration": 1.98}, {"text": "or by phone or by some\nmodern mechanism to access", "start": 1644.85, "duration": 3.72}, {"text": "that network.", "start": 1648.57, "duration": 1.78}, {"text": "And then the merchant\non the other side.", "start": 1650.35, "duration": 4.08}, {"text": "So you have consumer\nall the way to merchant.", "start": 1654.43, "duration": 4.4}, {"text": "You have banks,\nthe issuing bank.", "start": 1658.83, "duration": 2.91}, {"text": "The issuing bank is that\nparty that says, all right,", "start": 1661.74, "duration": 3.14}, {"text": "I'm going to take a\npayment instruction.", "start": 1664.88, "duration": 3.37}, {"text": "And you have the merchant\nbank on the other side", "start": 1668.25, "duration": 2.4}, {"text": "or acquire a bank,\nsometimes it's called.", "start": 1670.65, "duration": 2.66}, {"text": "But in the middle,\nthere's some network.", "start": 1673.31, "duration": 3.55}, {"text": "And it leads to a\nlot of concentration", "start": 1676.86, "duration": 2.97}, {"text": "because there's such\nsignificant economic and network", "start": 1679.83, "duration": 2.88}, {"text": "effects in a modern\ndigital payment system.", "start": 1682.71, "duration": 5.14}, {"text": "Questions.", "start": 1687.85, "duration": 0.5}, {"text": "ROMAIN: Yes.", "start": 1688.35, "duration": 0.45}, {"text": "We have questions from\nCarlos and then Jose.", "start": 1688.8, "duration": 1.833}, {"text": "GARY GENSLER: Please.", "start": 1690.633, "duration": 1.907}, {"text": "AUDIENCE: Hi.", "start": 1692.54, "duration": 0.92}, {"text": "So I wanted to ask, I know in\na lot of developing markets", "start": 1693.46, "duration": 3.64}, {"text": "now making the-- since\nyou mentioned the ACH,", "start": 1697.1, "duration": 2.91}, {"text": "making it real-time\nis a big focus", "start": 1700.01, "duration": 2.61}, {"text": "and using different\ntechnologies, right?", "start": 1702.62, "duration": 2.16}, {"text": "So could you explain, I guess,\nthe magnitude of difference", "start": 1704.78, "duration": 4.38}, {"text": "that having a real-time ACH\nsystem versus not makes?", "start": 1709.16, "duration": 3.96}, {"text": "GARY GENSLER: We're going to\ndive into this in about a half", "start": 1713.12, "duration": 3.78}, {"text": "an hour, but let me try\nit very quickly, Carlos.", "start": 1716.9, "duration": 2.34}, {"text": "And then remind me\nas we get back to it.", "start": 1719.24, "duration": 2.337}, {"text": "As a merchant, there's\na value to getting", "start": 1724.44, "duration": 4.56}, {"text": "final settlement when\nyou sell your coffee", "start": 1729.0, "duration": 4.83}, {"text": "or sell your produce or\na big machine, whatever", "start": 1733.83, "duration": 3.69}, {"text": "you're selling.", "start": 1737.52, "duration": 2.14}, {"text": "And there's the value\nbecause there's certainty,", "start": 1739.66, "duration": 3.66}, {"text": "and there's also timing.", "start": 1743.32, "duration": 1.47}, {"text": "So if you can get your cash on\nMonday rather than Wednesday,", "start": 1744.79, "duration": 2.85}, {"text": "there's a value to it.", "start": 1747.64, "duration": 1.5}, {"text": "Payment systems around\nthe globe historically", "start": 1749.14, "duration": 3.69}, {"text": "could give you final settlement\nif you used physical cash.", "start": 1752.83, "duration": 3.84}, {"text": "And physical cash under the\nlaws of the developed world", "start": 1756.67, "duration": 4.05}, {"text": "became final settlement\nfrom the earliest days.", "start": 1760.72, "duration": 4.26}, {"text": "There's a famous lawsuit\nfrom the Crawford case,", "start": 1764.98, "duration": 2.76}, {"text": "if you ever want to look it up,\nabout final settlement using", "start": 1767.74, "duration": 3.03}, {"text": "physical cash.", "start": 1770.77, "duration": 0.9}, {"text": "It's from the days of\nKing George II, I think.", "start": 1771.67, "duration": 5.13}, {"text": "But digitally, it was harder\nto get final settlement,", "start": 1776.8, "duration": 4.89}, {"text": "and we still have delays.", "start": 1781.69, "duration": 2.14}, {"text": "So what's happened\nin the last 25", "start": 1783.83, "duration": 2.93}, {"text": "years is many nations\nhave said, can we", "start": 1786.76, "duration": 2.34}, {"text": "get to real-time\nsettlement rather", "start": 1789.1, "duration": 3.69}, {"text": "than delayed settlement\nof one day, two days,", "start": 1792.79, "duration": 2.97}, {"text": "or, in the old days, five days?", "start": 1795.76, "duration": 2.07}, {"text": "And trying to get to\nthat real-time settlement", "start": 1797.83, "duration": 2.28}, {"text": "has been a challenge.", "start": 1800.11, "duration": 1.02}, {"text": "And we'll go through different\ncountries in about a half", "start": 1801.13, "duration": 2.53}, {"text": "an hour.", "start": 1803.66, "duration": 0.5}, {"text": "Let me hold that.", "start": 1804.16, "duration": 1.29}, {"text": "But a lot of countries,\ncentral banks around the globe", "start": 1805.45, "duration": 2.49}, {"text": "are trying to get to\nreal-time settlement.", "start": 1807.94, "duration": 2.19}, {"text": "But the value is to the merchant\nthat they have finality,", "start": 1810.13, "duration": 4.68}, {"text": "that they can then use\nthose funds in some way.", "start": 1814.81, "duration": 3.31}, {"text": "And I can tell you, even when I\nwas the chief financial officer", "start": 1818.12, "duration": 3.09}, {"text": "of the Hillary Clinton\ncampaign in 2016,", "start": 1821.21, "duration": 3.32}, {"text": "we had to deal with it.", "start": 1824.53, "duration": 0.96}, {"text": "We were the merchant\non the right-hand side.", "start": 1825.49, "duration": 3.27}, {"text": "We might get a donation.", "start": 1828.76, "duration": 1.92}, {"text": "But until that donation\nactually settled,", "start": 1830.68, "duration": 4.01}, {"text": "sometimes several days later,\nsometimes a day later--", "start": 1834.69, "duration": 3.15}, {"text": "it was different\nsettlement cycles--", "start": 1837.84, "duration": 2.28}, {"text": "but until that settled,\nwe couldn't actually", "start": 1840.12, "duration": 2.37}, {"text": "use it to buy advertisements\non, let's say,", "start": 1842.49, "duration": 4.14}, {"text": "Facebook or Google Ads.", "start": 1846.63, "duration": 2.22}, {"text": "So we needed-- even\nin that instance,", "start": 1848.85, "duration": 2.94}, {"text": "particularly when you get down\nto the last six or 10 days", "start": 1851.79, "duration": 2.79}, {"text": "before election time,\nthose days matter.", "start": 1854.58, "duration": 3.57}, {"text": "So I lived this as a--", "start": 1858.15, "duration": 2.43}, {"text": "other questions?", "start": 1860.58, "duration": 1.716}, {"text": "ROMAIN: Yes, Jose?", "start": 1862.296, "duration": 2.599}, {"text": "AUDIENCE: Yeah.", "start": 1864.895, "duration": 0.875}, {"text": "So I'm not sure if this is a bit\nout of the scope of the class,", "start": 1865.77, "duration": 2.63}, {"text": "but I've always been\nvery curious on,", "start": 1868.4, "duration": 2.16}, {"text": "why are checks so\nprevalent in the US?", "start": 1870.56, "duration": 3.98}, {"text": "So, for example, in Spain, I've\nnever used a check in my life.", "start": 1874.54, "duration": 3.265}, {"text": "And I think it\ndoesn't seem to be", "start": 1877.805, "duration": 1.875}, {"text": "a very efficient\nway of transferring", "start": 1879.68, "duration": 1.5}, {"text": "money versus, for\nexample, a wire transfer.", "start": 1881.18, "duration": 2.18}, {"text": "But in the US, it seems like\nbanks sometimes charge more", "start": 1883.36, "duration": 2.47}, {"text": "for wire transfers, and\nthey require more security,", "start": 1885.83, "duration": 3.685}, {"text": "passwords and things for a\nwire transfer than for checks.", "start": 1889.515, "duration": 2.375}, {"text": "GARY GENSLER: So it's--", "start": 1891.89, "duration": 0.33}, {"text": "AUDIENCE: And I don't\nreally understand why.", "start": 1892.22, "duration": 1.2}, {"text": "GARY GENSLER: --very much part--\nit's part of the pain points,", "start": 1893.42, "duration": 2.64}, {"text": "and each country has a little\nbit different heritage.", "start": 1896.06, "duration": 4.71}, {"text": "Of course, through the\n1960s, physical checks", "start": 1900.77, "duration": 2.94}, {"text": "were very a important dominant\npart of many payment systems.", "start": 1903.71, "duration": 4.53}, {"text": "It was only in the 1990s\nthat the US government", "start": 1908.24, "duration": 4.02}, {"text": "said by an Act of Congress\nthat the US government should", "start": 1912.26, "duration": 4.65}, {"text": "move to electronic\npayment of social security", "start": 1916.91, "duration": 5.49}, {"text": "and other important parts\nthat government pays money.", "start": 1922.4, "duration": 3.79}, {"text": "But even then, the\nadoption was supposed", "start": 1926.19, "duration": 2.36}, {"text": "to be by the late 1990s, and\nthere was various exemptions", "start": 1928.55, "duration": 3.84}, {"text": "and so forth installed.", "start": 1932.39, "duration": 1.89}, {"text": "And so we even see\nnow, in the middle", "start": 1934.28, "duration": 1.8}, {"text": "of the corona crisis, that you\ncan read in today's newspapers", "start": 1936.08, "duration": 4.35}, {"text": "that the $1,200\nthat's moving out", "start": 1940.43, "duration": 2.97}, {"text": "of our tax authority, the IRS,\nto individuals, while the bulk", "start": 1943.4, "duration": 5.58}, {"text": "of that's electronic--", "start": 1948.98, "duration": 1.29}, {"text": "80 or 90 million\nof those will be", "start": 1950.27, "duration": 1.8}, {"text": "electronic-- it's estimated\nthat there's still", "start": 1952.07, "duration": 1.98}, {"text": "millions of people that will\nget physical checks in the US.", "start": 1954.05, "duration": 5.1}, {"text": "So we still have this\nlegacy that's probably", "start": 1959.15, "duration": 3.09}, {"text": "a little bit more dominant.", "start": 1962.24, "duration": 1.26}, {"text": "I'm going to show\nsome statistics", "start": 1963.5, "duration": 1.39}, {"text": "on check uses in a moment.", "start": 1964.89, "duration": 3.44}, {"text": "Some of it's cultural.", "start": 1968.33, "duration": 1.44}, {"text": "Some of it's\nactually commercial.", "start": 1969.77, "duration": 2.55}, {"text": "At the middle of\nall this are banks.", "start": 1972.32, "duration": 2.57}, {"text": "And in the middle is these\nnetworks in the middle.", "start": 1974.89, "duration": 4.0}, {"text": "So it's not only\ncultural, but it's", "start": 1978.89, "duration": 2.37}, {"text": "also sometimes hard\nfor a merchant to say,", "start": 1981.26, "duration": 4.53}, {"text": "I want to pay--", "start": 1985.79, "duration": 1.5}, {"text": "the merchant, remember,\nhas to pay the 2 and 1/2%", "start": 1987.29, "duration": 4.15}, {"text": "cost if you're going\nto be accepting Visa.", "start": 1991.44, "duration": 2.99}, {"text": "So the cost of interchange\nfees, the cost the credit card", "start": 1994.43, "duration": 4.68}, {"text": "companies are taking here in the\nUS average around 2 and 3/4%,", "start": 1999.11, "duration": 5.394}, {"text": "2.75%.", "start": 2004.504, "duration": 2.076}, {"text": "So a lot of merchants\nstill would prefer", "start": 2006.58, "duration": 2.13}, {"text": "to take a check than that 2.75.", "start": 2008.71, "duration": 3.79}, {"text": "You go over to China,\nand you say, well,", "start": 2012.5, "duration": 2.27}, {"text": "within the Alipay,\nWeChat Pay systems,", "start": 2014.77, "duration": 2.52}, {"text": "the costs are\nsignificantly lower.", "start": 2017.29, "duration": 3.25}, {"text": "In fact, if you're all within\nservice, within system,", "start": 2020.54, "duration": 4.61}, {"text": "it's 0%.", "start": 2025.15, "duration": 1.8}, {"text": "In India, I think it's\naround 10 basis points.", "start": 2026.95, "duration": 2.74}, {"text": "So there's a lot of\nreasons a merchant might", "start": 2029.69, "duration": 3.11}, {"text": "say, all right, I might\nprefer if you can give me", "start": 2032.8, "duration": 2.58}, {"text": "an ACH or a check.", "start": 2035.38, "duration": 2.47}, {"text": "So gives you a\nlittle background.", "start": 2037.85, "duration": 2.78}, {"text": "But layered on\ntop of this system", "start": 2040.63, "duration": 2.67}, {"text": "is all these digital\nwallets, an invention really", "start": 2043.3, "duration": 3.18}, {"text": "just of the last 20 years.", "start": 2046.48, "duration": 1.44}, {"text": "And whether it's here in the\nUS or overseas, a lot of these", "start": 2050.929, "duration": 4.201}, {"text": "are related to Big\nTech, not only,", "start": 2055.13, "duration": 2.64}, {"text": "but a lot are\nrelated to Big Tech.", "start": 2057.77, "duration": 1.949}, {"text": "And then the question is, will\ncryptocurrency play some role?", "start": 2059.719, "duration": 4.831}, {"text": "Can crypto skip some of these\ninefficiencies and play a role?", "start": 2064.55, "duration": 6.629}, {"text": "And so with that, some of the\ntrends, just a quick look.", "start": 2071.179, "duration": 3.661}, {"text": "And this goes to the--\nthis is from a report.", "start": 2074.84, "duration": 2.79}, {"text": "Worldpay, which is a\nbig payment company,", "start": 2077.63, "duration": 3.299}, {"text": "puts out an annual\nreport each year.", "start": 2080.929, "duration": 2.761}, {"text": "And this is their most\nrecent report that", "start": 2083.69, "duration": 2.88}, {"text": "came out in February of 2020.", "start": 2086.57, "duration": 3.39}, {"text": "But around the\nglobe, mobile wallets", "start": 2089.96, "duration": 2.37}, {"text": "are estimated to already be\n42% of global e-commerce.", "start": 2092.33, "duration": 4.292}, {"text": "Now, this is important.", "start": 2096.622, "duration": 0.958}, {"text": "This is e-commerce.", "start": 2097.58, "duration": 1.5}, {"text": "If you go off to the\nbig wholesale payments", "start": 2099.08, "duration": 2.37}, {"text": "or large value payments,\ndifferent story.", "start": 2101.45, "duration": 2.77}, {"text": "But this is electronic payments\nin the e-commerce space", "start": 2104.22, "duration": 4.19}, {"text": "and then point of sale payments.", "start": 2108.41, "duration": 2.55}, {"text": "Cash is still a pretty big\npiece of the worldwide global", "start": 2110.96, "duration": 4.41}, {"text": "environment for point of\nsale, whereas e-commerce,", "start": 2115.37, "duration": 3.87}, {"text": "basically online using your\nmobile phone or your laptop--", "start": 2119.24, "duration": 3.93}, {"text": "can't really use cash much--", "start": 2123.17, "duration": 2.16}, {"text": "cash on delivery is still 4 and\n1/2%, though, interestingly.", "start": 2125.33, "duration": 4.23}, {"text": "That's Worldpay's\noverall view, but they", "start": 2129.56, "duration": 2.88}, {"text": "say credit card will\ndecline, debit cards", "start": 2132.44, "duration": 4.07}, {"text": "decline, bank\ntransfers about even.", "start": 2136.51, "duration": 4.47}, {"text": "And so what's increasing?", "start": 2140.98, "duration": 1.59}, {"text": "Digital mobile wallets.", "start": 2142.57, "duration": 1.5}, {"text": "And then, of course, at point\nof sale, cash declining.", "start": 2144.07, "duration": 3.27}, {"text": "And there you will see\nincreases in their estimation.", "start": 2147.34, "duration": 4.11}, {"text": "But the US is a\nlittle different.", "start": 2151.45, "duration": 2.2}, {"text": "The US or North America,\nwhich is the best statistics", "start": 2153.65, "duration": 3.56}, {"text": "I can grab off the\nWorldpay, we still", "start": 2157.21, "duration": 2.85}, {"text": "have a significant\namount of credit card.", "start": 2160.06, "duration": 2.61}, {"text": "Look at that.", "start": 2162.67, "duration": 1.02}, {"text": "Credit card's still a third.", "start": 2163.69, "duration": 2.34}, {"text": "Digital mobile wallet's 23%.", "start": 2166.03, "duration": 3.01}, {"text": "And from a merchant's\npoint of view,", "start": 2169.04, "duration": 1.65}, {"text": "they would prefer actually\nto have something that", "start": 2170.69, "duration": 2.87}, {"text": "takes the less bite out of it.", "start": 2173.56, "duration": 2.61}, {"text": "Here in the US,\ndebit cards by an Act", "start": 2176.17, "duration": 3.24}, {"text": "of Congress after\nthe 2008 crisis--", "start": 2179.41, "duration": 4.57}, {"text": "Carl Levin, a Senator\nfrom Illinois,", "start": 2183.98, "duration": 1.98}, {"text": "said, we should make sure\nthat debit cards do not--", "start": 2185.96, "duration": 4.05}, {"text": "and banks issuing debit cards\ncan't charge more than the cost", "start": 2190.01, "duration": 5.22}, {"text": "of actually issuing\nthat debit card.", "start": 2195.23, "duration": 1.86}, {"text": "And after a series\nof rule makings", "start": 2197.09, "duration": 1.98}, {"text": "by the central bank, the Federal\nReserve, that settled out.", "start": 2199.07, "duration": 3.27}, {"text": "But debit cards are\na little less costly", "start": 2202.34, "duration": 2.34}, {"text": "than credit cards for the banks.", "start": 2204.68, "duration": 4.77}, {"text": "And in terms of trends just\nin the US specifically,", "start": 2209.45, "duration": 3.33}, {"text": "this is from the Federal Reserve\nin December of this past year.", "start": 2212.78, "duration": 3.75}, {"text": "But this just gives you\na sense, 20 year history.", "start": 2216.53, "duration": 5.02}, {"text": "And this is overall\npayment trends.", "start": 2221.55, "duration": 2.06}, {"text": "This is not just e-commerce.", "start": 2223.61, "duration": 1.48}, {"text": "Checks were 45% 20 years ago.", "start": 2225.09, "duration": 3.07}, {"text": "And you can see that line just\ndecline, decline, decline.", "start": 2228.16, "duration": 2.57}, {"text": "So to Jose's point, we're\nnot quite there yet.", "start": 2230.73, "duration": 2.52}, {"text": "Spain might be down to 5%\non checks or something,", "start": 2233.25, "duration": 4.08}, {"text": "but you can see where we are.", "start": 2237.33, "duration": 2.41}, {"text": "And this is the number\nof payment instructions.", "start": 2239.74, "duration": 3.95}, {"text": "This is dollar amounts.", "start": 2243.69, "duration": 2.08}, {"text": "So in terms of dollars,\nchecks only went--", "start": 2245.77, "duration": 3.38}, {"text": "lost this parade\neight years ago.", "start": 2251.69, "duration": 4.95}, {"text": "So one is volume of payments.", "start": 2256.64, "duration": 1.64}, {"text": "One is the actual\nchecks and so forth.", "start": 2258.28, "duration": 3.33}, {"text": "And large value payments\nare included here.", "start": 2261.61, "duration": 2.88}, {"text": "The other charts did not.", "start": 2264.49, "duration": 2.52}, {"text": "And just one last thing in terms\nof the e-commerce side of it", "start": 2267.01, "duration": 3.57}, {"text": "and card payments,\nthis just gives you", "start": 2270.58, "duration": 2.28}, {"text": "a sense of remote\nand in-person, that I", "start": 2272.86, "duration": 4.26}, {"text": "like this right-hand chart.", "start": 2277.12, "duration": 2.46}, {"text": "But the trillions\nof dollars we move,", "start": 2279.58, "duration": 2.58}, {"text": "we are moving on\nour physical cards", "start": 2282.16, "duration": 3.36}, {"text": "more remote than\nwe are in person.", "start": 2285.52, "duration": 3.51}, {"text": "This gives an\nopportunity to startups.", "start": 2289.03, "duration": 2.0}, {"text": "Startups can say, wait, Visa,\nMastercard in many countries", "start": 2291.03, "duration": 6.15}, {"text": "has this 2 and 3/4%.", "start": 2297.18, "duration": 2.875}, {"text": "Maybe we can get\ninside that pricing.", "start": 2300.055, "duration": 2.685}, {"text": "Maybe we can get\ninside especially", "start": 2302.74, "duration": 2.28}, {"text": "as we move from in-person\nto remote payments", "start": 2305.02, "duration": 3.27}, {"text": "as an opportunity.", "start": 2308.29, "duration": 3.19}, {"text": "So that brings us to\na list of pain points.", "start": 2311.48, "duration": 3.753}, {"text": "What point are--", "start": 2315.233, "duration": 0.667}, {"text": "ROMAIN: Gary?", "start": 2315.9, "duration": 0.35}, {"text": "GARY GENSLER:\n--these pain points?", "start": 2316.25, "duration": 1.417}, {"text": "ROMAIN: Perhaps--", "start": 2317.667, "duration": 0.754}, {"text": "GARY GENSLER: Please, Romain.", "start": 2318.421, "duration": 1.209}, {"text": "ROMAIN: Actually,\nbefore we move there,", "start": 2319.63, "duration": 1.44}, {"text": "I think Hassan had a question.", "start": 2321.07, "duration": 1.14}, {"text": "GARY GENSLER: Please, Hassan.", "start": 2322.21, "duration": 1.26}, {"text": "Hassan, you might need\nto take your mute off.", "start": 2328.64, "duration": 2.832}, {"text": "AUDIENCE: Yeah.", "start": 2331.472, "duration": 2.628}, {"text": "About payments,\nso, for instance,", "start": 2334.1, "duration": 2.71}, {"text": "you could see we have the\nbank transfers and e-wallets.", "start": 2336.81, "duration": 4.94}, {"text": "So my question is,\nfor instance, I", "start": 2341.75, "duration": 3.45}, {"text": "was trying to pay my landlord\nwhile I was in Bahrain,", "start": 2345.2, "duration": 3.66}, {"text": "because I still have my\napartment in Cambridge.", "start": 2348.86, "duration": 3.39}, {"text": "And if the amount\nexceeds a certain number,", "start": 2352.25, "duration": 4.14}, {"text": "they have to send me a\nmessage, which can be annoying", "start": 2356.39, "duration": 4.66}, {"text": "because if my mobile\nisn't working,", "start": 2361.05, "duration": 3.69}, {"text": "they would not send me an email.", "start": 2364.74, "duration": 2.13}, {"text": "So is it like the\nsystem, the whole system,", "start": 2366.87, "duration": 4.53}, {"text": "the whole payment system\nsupports bank transfers", "start": 2371.4, "duration": 4.26}, {"text": "when it comes to big\npayments and small transfers", "start": 2375.66, "duration": 3.39}, {"text": "when it comes to e-wallets\nand mobile payments?", "start": 2379.05, "duration": 5.606}, {"text": "GARY GENSLER: Well, I'm\nnot sure of your question.", "start": 2384.656, "duration": 3.944}, {"text": "It is true that ultimately\nsitting in the midst of this,", "start": 2388.6, "duration": 5.64}, {"text": "with the risk of going\nback a bunch of slides,", "start": 2394.24, "duration": 2.76}, {"text": "there has to be something--", "start": 2397.0, "duration": 2.37}, {"text": "well, I'll just stay here.", "start": 2399.37, "duration": 1.77}, {"text": "There has to be an instruction\nthat moves it from an issuing", "start": 2401.14, "duration": 5.34}, {"text": "bank to an acquiring bank.", "start": 2406.48, "duration": 1.69}, {"text": "So your landlord would\nbe the merchant here.", "start": 2408.17, "duration": 3.26}, {"text": "Your landlord's bank has to\nget an instruction somehow.", "start": 2411.43, "duration": 4.65}, {"text": "So even if it's in this orange\nbox, the digital wallets", "start": 2416.08, "duration": 3.295}, {"text": "at the top, you have to send\nan instruction somewhere", "start": 2419.375, "duration": 5.065}, {"text": "that takes funds from your\nbank, which is called an issuing", "start": 2424.44, "duration": 4.65}, {"text": "bank, and somehow moves those\nfunds to the landlord's bank.", "start": 2429.09, "duration": 5.97}, {"text": "And what you're finding\nis that your merchant", "start": 2435.06, "duration": 5.97}, {"text": "bank, the acquiring bank\non behalf of your landlord,", "start": 2441.03, "duration": 3.87}, {"text": "is saying, listen, if it's\ngreater than a certain dollar", "start": 2444.9, "duration": 2.64}, {"text": "amount, we need a\nsecond security check.", "start": 2447.54, "duration": 3.96}, {"text": "And the mobile wallet companies\nbasically inserted that check,", "start": 2451.5, "duration": 6.67}, {"text": "I think is what\nyou're telling me.", "start": 2458.17, "duration": 2.135}, {"text": "You could have that\nsame similar thing.", "start": 2460.305, "duration": 1.625}, {"text": "Venmo has a limit.", "start": 2461.93, "duration": 1.19}, {"text": "I don't think you could move $1\nmillion on Venmo, for instance.", "start": 2463.12, "duration": 3.21}, {"text": "Venmo is a PayPal subsidiary,\nand Venmo is actually--", "start": 2466.33, "duration": 5.31}, {"text": "avoids those credit card fees.", "start": 2471.64, "duration": 1.98}, {"text": "Venmo is a form of\naccount to account", "start": 2473.62, "duration": 2.91}, {"text": "transfer, your\naccount at your bank", "start": 2476.53, "duration": 3.27}, {"text": "to somebody else's account.", "start": 2479.8, "duration": 1.35}, {"text": "And account to account transfers\nare a very important feature", "start": 2481.15, "duration": 4.02}, {"text": "of the competition.", "start": 2485.17, "duration": 1.56}, {"text": "But still, Venmo is not\ngoing to move $1 million", "start": 2486.73, "duration": 2.25}, {"text": "without having additional\nsecurity checks.", "start": 2488.98, "duration": 4.09}, {"text": "So that's probably what's\nhappening here, I fear to say.", "start": 2493.07, "duration": 4.585}, {"text": "AUDIENCE: Yeah.", "start": 2497.655, "duration": 0.775}, {"text": "I, mean my point is it's a\nbit annoying because I would--", "start": 2498.43, "duration": 5.19}, {"text": "for instance, because my\nmobile is a prepaid mobile.", "start": 2503.62, "duration": 3.96}, {"text": "So I could not receive\na message from my bank.", "start": 2507.58, "duration": 2.73}, {"text": "GARY GENSLER: Oh, well, I\ncan't solve that for you here,", "start": 2510.31, "duration": 4.05}, {"text": "but I think that's part\nof what you're saying.", "start": 2514.36, "duration": 2.67}, {"text": "That's part of these pain\npoints is that fraud.", "start": 2517.03, "duration": 5.82}, {"text": "Basically, when you think\nof all the pain points,", "start": 2522.85, "duration": 4.41}, {"text": "you and I, as users, we want\nsomething that's easy to use,", "start": 2527.26, "duration": 6.99}, {"text": "nearly costless.", "start": 2534.25, "duration": 1.29}, {"text": "We're willing to\nspend something,", "start": 2535.54, "duration": 1.71}, {"text": "but we'd prefer not to spend\n2% to 3% of our purchases", "start": 2537.25, "duration": 3.42}, {"text": "on the payment system.", "start": 2540.67, "duration": 1.98}, {"text": "And we want it not\nto have complexity,", "start": 2542.65, "duration": 3.66}, {"text": "the cross-border payments\nthat we talked about earlier.", "start": 2546.31, "duration": 3.9}, {"text": "We kind of know that\nthey're tracking us,", "start": 2550.21, "duration": 2.67}, {"text": "they're getting our data,\nbut we're a little concerned", "start": 2552.88, "duration": 2.25}, {"text": "about data privacy.", "start": 2555.13, "duration": 1.81}, {"text": "And so you're capturing one of\nthe pain points around fraud.", "start": 2556.94, "duration": 4.43}, {"text": "And that's from\nthe merchant side.", "start": 2561.37, "duration": 2.14}, {"text": "The merchant doesn't\nwant the fraud,", "start": 2563.51, "duration": 1.64}, {"text": "but also you don't want it.", "start": 2565.15, "duration": 1.35}, {"text": "You don't want somebody to be\nable to tap into your account", "start": 2566.5, "duration": 3.96}, {"text": "and move your money out.", "start": 2570.46, "duration": 1.65}, {"text": "And the pain point sounds\nlike the fraud detection", "start": 2572.11, "duration": 2.97}, {"text": "system that your bank is using\nis requiring your mobile phone", "start": 2575.08, "duration": 3.99}, {"text": "in a way that's friction.", "start": 2579.07, "duration": 3.15}, {"text": "It's frankly friction.", "start": 2582.22, "duration": 2.43}, {"text": "It's similar to a pain point--", "start": 2584.65, "duration": 1.92}, {"text": "it used to be until\nvery recently,", "start": 2586.57, "duration": 3.24}, {"text": "if you traveled overseas, you\nwere better to tell your bank", "start": 2589.81, "duration": 5.97}, {"text": "that you were going to be using\nyour credit card in Spain,", "start": 2595.78, "duration": 3.84}, {"text": "or France, or Asia, or Bahrain.", "start": 2599.62, "duration": 4.17}, {"text": "But now no longer\nbecause now they have--", "start": 2603.79, "duration": 4.1}, {"text": "they use our mobile\nphones to say--", "start": 2607.89, "duration": 2.38}, {"text": "they track us.", "start": 2610.27, "duration": 1.23}, {"text": "They know that we're in Spain,\nor France, or Asia, or Bahrain.", "start": 2611.5, "duration": 3.84}, {"text": "That's part of the reason we\ndon't need to call any longer,", "start": 2615.34, "duration": 4.06}, {"text": "but that's part of their\nfraud detection programs.", "start": 2619.4, "duration": 3.32}, {"text": "Let me keep moving on if I can.", "start": 2622.72, "duration": 3.99}, {"text": "So there's a series\nof pain points.", "start": 2626.71, "duration": 1.92}, {"text": "And I don't necessarily have all\nof them, but these are also--", "start": 2628.63, "duration": 3.36}, {"text": "you can think of them\nas opportunities.", "start": 2631.99, "duration": 3.28}, {"text": "These are opportunities\nfor disruptors to say,", "start": 2635.27, "duration": 3.08}, {"text": "maybe we can provide\na better service.", "start": 2638.35, "duration": 2.88}, {"text": "Maybe we can provide\nsomething at a lower", "start": 2641.23, "duration": 5.25}, {"text": "cost and more inclusive.", "start": 2646.48, "duration": 4.89}, {"text": "These are the possibilities\nfor any startup in a sense.", "start": 2651.37, "duration": 4.72}, {"text": "So I talked a little\nabout the cost.", "start": 2656.09, "duration": 3.72}, {"text": "This is a couple of years ago,\nbut this Bloomberg article", "start": 2659.81, "duration": 3.98}, {"text": "broke down the cost, and\nI find it very helpful.", "start": 2663.79, "duration": 4.18}, {"text": "Often in the US and\nin Europe, we think,", "start": 2667.97, "duration": 2.28}, {"text": "all right, I pay\n$100 for something.", "start": 2670.25, "duration": 3.63}, {"text": "You think you paid $100 for it.", "start": 2673.88, "duration": 1.83}, {"text": "Well, actually you paid\n$97 roughly for it,", "start": 2675.71, "duration": 4.14}, {"text": "and $2.75 went to\nthe payment system.", "start": 2679.85, "duration": 3.81}, {"text": "And that $2.75 that went to\nthe payment system, most of it", "start": 2683.66, "duration": 3.69}, {"text": "goes to what's called\nthe issuing bank.", "start": 2687.35, "duration": 2.32}, {"text": "And again, the issuing\nbank is the purchaser.", "start": 2689.67, "duration": 4.43}, {"text": "The acquiring bank\nis the merchant.", "start": 2694.1, "duration": 3.29}, {"text": "So that merchant bank is\nonly getting $0.19 on average", "start": 2697.39, "duration": 4.58}, {"text": "two years ago, the acquiring\nbank, Bank of America,", "start": 2701.97, "duration": 4.91}, {"text": "or whomever issued\nthe credit card.", "start": 2706.88, "duration": 2.67}, {"text": "So the dominant part\nof the economics", "start": 2709.55, "duration": 2.55}, {"text": "here is on the credit card side.", "start": 2712.1, "duration": 2.56}, {"text": "There's seven big companies\nin America being the big four", "start": 2714.66, "duration": 4.43}, {"text": "banks of Bank of America,\nand Wells Fargo, and Citi,", "start": 2719.09, "duration": 4.05}, {"text": "and Chase.", "start": 2723.14, "duration": 2.04}, {"text": "But then Cap One is a\nvery big credit card bank.", "start": 2725.18, "duration": 3.96}, {"text": "And then, of course,\nAmerican Express and Discover", "start": 2729.14, "duration": 3.0}, {"text": "and the like.", "start": 2732.14, "duration": 1.53}, {"text": "Those seven big banks are\nthe big issuing banks.", "start": 2733.67, "duration": 3.54}, {"text": "But community banks, even\nsmaller banks across the land,", "start": 2737.21, "duration": 5.46}, {"text": "will issue credit cards,\nand they get that roughly $2", "start": 2742.67, "duration": 4.77}, {"text": "out of $100 purchase.", "start": 2747.44, "duration": 3.102}, {"text": "Now, what do they do with it?", "start": 2750.542, "duration": 1.208}, {"text": "Part of it is the\nrewards program.", "start": 2751.75, "duration": 2.93}, {"text": "And wrapped up inside of all\nthis is an incentive system", "start": 2754.68, "duration": 3.99}, {"text": "that issuing banks are using\npart of that $2.20 on average,", "start": 2758.67, "duration": 5.76}, {"text": "on average about $1--", "start": 2764.43, "duration": 2.73}, {"text": "I think the national\naverage recently was $1.06.", "start": 2767.16, "duration": 3.33}, {"text": "If you take all the\ndifferent rewards programs,", "start": 2770.49, "duration": 3.06}, {"text": "they come back.", "start": 2773.55, "duration": 1.88}, {"text": "So you buy something for $100.", "start": 2775.43, "duration": 2.08}, {"text": "$2.20 goes to your issuing bank.", "start": 2777.51, "duration": 3.61}, {"text": "$1 might come back\nto you as a reward.", "start": 2781.12, "duration": 4.25}, {"text": "And it makes behavioral\nsciences important", "start": 2785.37, "duration": 2.57}, {"text": "and makes this stuff sticky.", "start": 2787.94, "duration": 2.07}, {"text": "It makes us loyal to our cards\nin a way that pure economics,", "start": 2790.01, "duration": 5.53}, {"text": "you would think, that\nit would be easier", "start": 2795.54, "duration": 1.97}, {"text": "to disrupt this space.", "start": 2797.51, "duration": 1.95}, {"text": "So I wouldn't put aside some\nof these reward programs", "start": 2799.46, "duration": 2.66}, {"text": "when you're thinking\nabout, all right, I'm", "start": 2802.12, "duration": 1.75}, {"text": "going to be a disrupter.", "start": 2803.87, "duration": 1.05}, {"text": "I'm going to break\ninto the payment space.", "start": 2804.92, "duration": 2.94}, {"text": "The credit card companies, they\nhave a point of view on this,", "start": 2807.86, "duration": 4.78}, {"text": "too.", "start": 2812.64, "duration": 0.5}, {"text": "And they're going to want to\nprotect their market share.", "start": 2813.14, "duration": 3.63}, {"text": "Questions, Romain?", "start": 2816.77, "duration": 1.865}, {"text": "Anything there?", "start": 2818.635, "duration": 0.625}, {"text": "ROMAIN: Let's give\nit a few seconds", "start": 2819.26, "duration": 1.622}, {"text": "just in case someone\nwants to raise their hand.", "start": 2820.882, "duration": 1.958}, {"text": "Yeah.", "start": 2825.44, "duration": 0.5}, {"text": "GARY GENSLER: I'm going to--", "start": 2825.94, "duration": 0.29}, {"text": "ROMAIN: We have Luno.", "start": 2826.23, "duration": 1.27}, {"text": "Luno has a question.", "start": 2827.5, "duration": 1.27}, {"text": "GARY GENSLER: Sure.", "start": 2828.77, "duration": 1.18}, {"text": "And then I'm going to do\nan overview of the cost.", "start": 2829.95, "duration": 2.985}, {"text": "Luno?", "start": 2832.935, "duration": 0.5}, {"text": "AUDIENCE: It's actually\nnot a question.", "start": 2833.435, "duration": 2.545}, {"text": "It's just in Europe,\nit's a bit different.", "start": 2835.98, "duration": 3.03}, {"text": "The interchange fee\nis actually capped", "start": 2839.01, "duration": 2.94}, {"text": "to 0.3% if it's a credit card\nand 0.2% if it's a debit card.", "start": 2841.95, "duration": 5.34}, {"text": "I'm not sure about the numbers.", "start": 2847.29, "duration": 2.23}, {"text": "And so I think this has\ninteresting spillovers in terms", "start": 2849.52, "duration": 2.96}, {"text": "of rewards programs in\nEurope are definitely not", "start": 2852.48, "duration": 3.69}, {"text": "as good as in the US.", "start": 2856.17, "duration": 1.71}, {"text": "And then you can also\nsee that the credit card", "start": 2857.88, "duration": 2.54}, {"text": "usage is much smaller.", "start": 2860.42, "duration": 3.13}, {"text": "And that might be one\nof the reasons why.", "start": 2863.55, "duration": 1.96}, {"text": "GARY GENSLER: No.", "start": 2865.51, "duration": 0.708}, {"text": "It's a very good point\nbecause around the globe,", "start": 2866.218, "duration": 4.252}, {"text": "the official sector inserts\nthem self from time to time.", "start": 2870.47, "duration": 3.54}, {"text": "And because of the\nnatural network effects--", "start": 2874.01, "duration": 4.59}, {"text": "remember that chart--\nright in the middle,", "start": 2878.6, "duration": 2.04}, {"text": "there's powerful,\npowerful economics", "start": 2880.64, "duration": 2.22}, {"text": "around network effects.", "start": 2882.86, "duration": 1.76}, {"text": "Think of plumbing again.", "start": 2884.62, "duration": 1.18}, {"text": "We only have one--", "start": 2885.8, "duration": 2.55}, {"text": "we usually only have\none electric company,", "start": 2888.35, "duration": 2.28}, {"text": "one waterworks company\nper city because", "start": 2890.63, "duration": 3.24}, {"text": "of that incredible network\neffect of the plumbing.", "start": 2893.87, "duration": 2.76}, {"text": "Similar here.", "start": 2896.63, "duration": 1.72}, {"text": "And so what some official\nsectors have said", "start": 2898.35, "duration": 2.09}, {"text": "is, so now we have to put a\nlimit on what can be charged.", "start": 2900.44, "duration": 4.02}, {"text": "In the US we did do that.", "start": 2904.46, "duration": 2.31}, {"text": "Senator-- did I say Levin?", "start": 2906.77, "duration": 4.93}, {"text": "It was Senator Durbin\nactually of Illinois.", "start": 2911.7, "duration": 2.4}, {"text": "I'm sorry.", "start": 2914.1, "duration": 1.02}, {"text": "But Senator Durbin, the\nDurbin Amendment, we", "start": 2915.12, "duration": 3.87}, {"text": "did that in debit cards.", "start": 2918.99, "duration": 1.47}, {"text": "But credit cards, not the case.", "start": 2920.46, "duration": 3.06}, {"text": "And then in other\ncountries, like", "start": 2923.52, "duration": 1.62}, {"text": "in Asia, which really Alipay\nand WeChat Pay and others", "start": 2925.14, "duration": 4.74}, {"text": "leapfrogged.", "start": 2929.88, "duration": 0.84}, {"text": "And then the official sector\nis involved in a different way.", "start": 2930.72, "duration": 2.8}, {"text": "So you're absolutely right.", "start": 2933.52, "duration": 1.73}, {"text": "So rewards programs\nwould be lower.", "start": 2935.25, "duration": 2.13}, {"text": "Credit card users\nmight be lower.", "start": 2937.38, "duration": 2.55}, {"text": "If you're going to be\nstarting something,", "start": 2939.93, "duration": 2.28}, {"text": "you have to think of those\nseparate dynamics country", "start": 2942.21, "duration": 3.27}, {"text": "by country, very much so.", "start": 2945.48, "duration": 2.97}, {"text": "The worldwide-- an\ninteresting report, and this", "start": 2948.45, "duration": 4.8}, {"text": "is from a McKinsey report\nfrom September of last year.", "start": 2953.25, "duration": 5.16}, {"text": "McKinsey puts out an\nannual report of payments.", "start": 2958.41, "duration": 5.16}, {"text": "If you're interested\nin the area,", "start": 2963.57, "duration": 1.62}, {"text": "I didn't assign it as a reading.", "start": 2965.19, "duration": 1.35}, {"text": "It's a remarkable\nreport once a year.", "start": 2966.54, "duration": 2.88}, {"text": "But this is one chart that\nI pulled from this McKinsey", "start": 2969.42, "duration": 3.36}, {"text": "report.", "start": 2972.78, "duration": 0.96}, {"text": "The worldwide revenues\nin the payment system", "start": 2973.74, "duration": 3.21}, {"text": "add up to about $1.8\ntrillion, $1.9 trillion.", "start": 2976.95, "duration": 4.875}, {"text": "Now, I should caution,\nMcKinsey includes what they", "start": 2981.825, "duration": 4.305}, {"text": "call account-related liquidity.", "start": 2986.13, "duration": 2.91}, {"text": "And this quote,\n\"account-related liquidity,\"", "start": 2989.04, "duration": 4.23}, {"text": "is earning interest for the\nbanks on your credit card", "start": 2993.27, "duration": 5.74}, {"text": "balances.", "start": 2999.01, "duration": 1.29}, {"text": "Earlier World Bank statistics\nwould say the payment system", "start": 3000.3, "duration": 3.72}, {"text": "around the globe takes\nabout a 1/2 a percent", "start": 3004.02, "duration": 2.28}, {"text": "to 1% of the economy.", "start": 3006.3, "duration": 1.98}, {"text": "The worldwide economy\nbefore the corona crisis", "start": 3008.28, "duration": 3.03}, {"text": "was hovering just\nshort of $100 trillion,", "start": 3011.31, "duration": 2.31}, {"text": "the US economy\nabout $22 trillion,", "start": 3013.62, "duration": 3.15}, {"text": "the world economy\nabout $95 trillion.", "start": 3016.77, "duration": 3.49}, {"text": "But of that $95 trillion,\nwe've probably been spending,", "start": 3020.26, "duration": 4.49}, {"text": "McKinsey would say, nearly\n2% on our payment system.", "start": 3024.75, "duration": 5.62}, {"text": "World Bank would say this--", "start": 3030.37, "duration": 1.46}, {"text": "the figure is more like a\nquarter to a half of that", "start": 3031.83, "duration": 3.1}, {"text": "because McKinsey includes\nall the interest that we're", "start": 3034.93, "duration": 3.48}, {"text": "paying on our balances.", "start": 3038.41, "duration": 1.84}, {"text": "So this is the opportunity.", "start": 3040.25, "duration": 1.89}, {"text": "This is the opportunity.", "start": 3042.14, "duration": 1.13}, {"text": "If you're saying, aha, what did\nStripe, what did TransferWise,", "start": 3043.27, "duration": 3.33}, {"text": "what did Plaid see?", "start": 3046.6, "duration": 2.31}, {"text": "This is anywhere from a half a\ntrillion dollars at the low end", "start": 3048.91, "duration": 4.26}, {"text": "to $2 trillion at the high end.", "start": 3053.17, "duration": 3.02}, {"text": "1/2% to 2% of the\nworld economy relates", "start": 3056.19, "duration": 3.34}, {"text": "to just moving these digital\npayments back and forth", "start": 3059.53, "duration": 4.71}, {"text": "plus the\naccount-related activity", "start": 3064.24, "duration": 2.79}, {"text": "liquidity, the\nstarting, the lending", "start": 3067.03, "duration": 3.6}, {"text": "balances on top of that.", "start": 3070.63, "duration": 2.81}, {"text": "Romain, I see the\nchat room seems", "start": 3073.44, "duration": 2.17}, {"text": "to be lighting up quite a bit.", "start": 3075.61, "duration": 2.33}, {"text": "Are there questions\nthere, or do I keep going?", "start": 3077.94, "duration": 2.275}, {"text": "ROMAIN: You can keep going.", "start": 3080.215, "duration": 1.125}, {"text": "It's mainly students sharing\nadditional resources.", "start": 3081.34, "duration": 2.76}, {"text": "GARY GENSLER: All right, great.", "start": 3084.1, "duration": 2.13}, {"text": "So I was asked earlier--", "start": 3086.23, "duration": 2.23}, {"text": "I'm sorry, I can't\nremember now who asked it.", "start": 3088.46, "duration": 3.86}, {"text": "Was it Carlos?", "start": 3092.32, "duration": 0.84}, {"text": "But I apologize-- about\nreal-time gross settlements.", "start": 3093.16, "duration": 4.53}, {"text": "Real-time gross settlements\nis this conceptual framework", "start": 3097.69, "duration": 4.2}, {"text": "that we are all familiar\nwith in one way or the other.", "start": 3101.89, "duration": 2.51}, {"text": "Can I move a digital\ninstruction to move money", "start": 3104.4, "duration": 8.78}, {"text": "and to have the settlement\nbe relatively fast,", "start": 3113.18, "duration": 5.22}, {"text": "real-time gross settlement?", "start": 3118.4, "duration": 3.33}, {"text": "What's the word \"gross\" mean?", "start": 3121.73, "duration": 1.36}, {"text": "It means that we're\nnot net settling.", "start": 3123.09, "duration": 2.66}, {"text": "If you run a settlement system\nwith millions of checks coming", "start": 3125.75, "duration": 3.54}, {"text": "into a warehouse-- and that's\nliterally how the system", "start": 3129.29, "duration": 4.38}, {"text": "of check clearing used to\nwork in New York and elsewhere", "start": 3133.67, "duration": 4.41}, {"text": "in this country--", "start": 3138.08, "duration": 2.76}, {"text": "you can actually net settle.", "start": 3140.84, "duration": 1.81}, {"text": "You can say, well, there's\nthese checks coming in", "start": 3142.65, "duration": 3.29}, {"text": "from Bank of America to\nWells Fargo and these checks", "start": 3145.94, "duration": 3.6}, {"text": "from Wells Fargo\nto Bank of America.", "start": 3149.54, "duration": 2.1}, {"text": "Let's net these settlements\noff against each other.", "start": 3151.64, "duration": 4.05}, {"text": "But if you do\nsomething in real-time,", "start": 3155.69, "duration": 2.01}, {"text": "if you do it almost\ninstantaneous,", "start": 3157.7, "duration": 1.98}, {"text": "it has to be gross.", "start": 3159.68, "duration": 0.99}, {"text": "You can't net the\npayment instructions", "start": 3160.67, "duration": 2.64}, {"text": "between the various banks.", "start": 3163.31, "duration": 2.16}, {"text": "Real-time gross settlement is\nused for large value payments", "start": 3165.47, "duration": 3.96}, {"text": "and has been used\nfor large value", "start": 3169.43, "duration": 1.65}, {"text": "payments for quite some time.", "start": 3171.08, "duration": 1.7}, {"text": "In fact, the early large value\nmodel is the Fedwire, 1970.", "start": 3172.78, "duration": 5.92}, {"text": "That's 50 years of\ntechnology that we've", "start": 3178.7, "duration": 3.12}, {"text": "had the Fedwire,\nmeaning I can do", "start": 3181.82, "duration": 2.76}, {"text": "what's called a\nwire instruction.", "start": 3184.58, "duration": 2.18}, {"text": "But in the United\nKingdom, we had CHAPS.", "start": 3186.76, "duration": 3.19}, {"text": "And in China--", "start": 3189.95, "duration": 3.75}, {"text": "I'm going to mispronounce\nit, but C-N-A-P-S high-value", "start": 3193.7, "duration": 6.0}, {"text": "payment system, the\nEurozone TARGET.", "start": 3199.7, "duration": 2.55}, {"text": "2002 is actually when\nthe Eurozone was created.", "start": 3202.25, "duration": 4.05}, {"text": "So we've had large value models.", "start": 3206.3, "duration": 2.82}, {"text": "Coupled with that is\nsomething called SWIFT.", "start": 3209.12, "duration": 2.61}, {"text": "SWIFT is just a\nmessaging company.", "start": 3211.73, "duration": 2.67}, {"text": "SWIFT, the Society for\nWorldwide Interbank Financial", "start": 3214.4, "duration": 3.81}, {"text": "Telecommunications,\nI think, it's", "start": 3218.21, "duration": 3.42}, {"text": "basically to send messages to\nfacilitate these interbank.", "start": 3221.63, "duration": 5.1}, {"text": "The question in the\nlast 10 to 15 years", "start": 3226.73, "duration": 2.58}, {"text": "is, can we move from\nlarge value to just", "start": 3229.31, "duration": 3.735}, {"text": "you and me, in essence, what we\nthink we're doing with Venmo?", "start": 3233.045, "duration": 5.595}, {"text": "Can I move you money\nrapidly instantaneously?", "start": 3238.64, "duration": 4.68}, {"text": "And some countries have\nactually moved forward.", "start": 3243.32, "duration": 2.655}, {"text": "It's called real-time retail.", "start": 3248.66, "duration": 2.35}, {"text": "And the important thing is\nit's retail instant payments.", "start": 3251.01, "duration": 3.44}, {"text": "Now, a lot of people don't call\nit real-time retail instant.", "start": 3254.45, "duration": 4.16}, {"text": "A lot of people would just\ncall it 24 hours a day,", "start": 3258.61, "duration": 2.54}, {"text": "7 days a week, or some\npeople might call it RTGS.", "start": 3261.15, "duration": 4.28}, {"text": "But fundamentally, the\nquestion is, can we", "start": 3265.43, "duration": 2.31}, {"text": "do what the Fed the Reserve\nof the US did 50 years ago", "start": 3267.74, "duration": 6.92}, {"text": "and the United Kingdom\ndid nearly 40 years ago?", "start": 3274.66, "duration": 4.38}, {"text": "Can we do that for\nthe retail public,", "start": 3279.04, "duration": 2.86}, {"text": "and can we do it 24\nhours a day, 7 days", "start": 3281.9, "duration": 2.63}, {"text": "a week, every day of the year?", "start": 3284.53, "duration": 2.41}, {"text": "And the answer is yes,\nthe technology exists.", "start": 3286.94, "duration": 2.78}, {"text": "I'm listing here seven\nor eight countries", "start": 3289.72, "duration": 2.73}, {"text": "that either have\ninstantaneous payment", "start": 3292.45, "duration": 3.66}, {"text": "systems or near instantaneous.", "start": 3296.11, "duration": 2.89}, {"text": "Some of these are not\nliterally instantaneous.", "start": 3299.0, "duration": 2.84}, {"text": "A couple of them are\nthree cycles a day", "start": 3301.84, "duration": 4.12}, {"text": "where they do this\nthree times a day.", "start": 3305.96, "duration": 2.54}, {"text": "And I can't remember\neach country,", "start": 3308.5, "duration": 2.1}, {"text": "but you can see it's\nrelatively recent.", "start": 3310.6, "duration": 2.82}, {"text": "And then the US.", "start": 3313.42, "duration": 1.87}, {"text": "With the US projects, we\nhave this split system.", "start": 3315.29, "duration": 3.92}, {"text": "The clearing house is owned\nby 24 major banks in the US,", "start": 3319.21, "duration": 5.13}, {"text": "and it's been around\nsince the 1850s.", "start": 3324.34, "duration": 4.04}, {"text": "The clearing house\nby 2017 said, we", "start": 3328.38, "duration": 2.92}, {"text": "want to provide a\nreal-time payment network.", "start": 3331.3, "duration": 3.45}, {"text": "But it's really buying\namongst these 24 major banks,", "start": 3334.75, "duration": 3.81}, {"text": "all the big banks in the US.", "start": 3338.56, "duration": 3.0}, {"text": "The Federal Reserve at first\nseemed comfortable with that.", "start": 3341.56, "duration": 4.71}, {"text": "And then frankly, the rest\nof the banking community,", "start": 3346.27, "duration": 3.42}, {"text": "the banks that weren't the\ntop 24 said, no, not really.", "start": 3349.69, "duration": 5.05}, {"text": "And they went to Congress.", "start": 3354.74, "duration": 1.43}, {"text": "They went to the US Congress,\nand many members of Congress", "start": 3356.17, "duration": 4.02}, {"text": "got involved on behalf\nof community banks.", "start": 3360.19, "duration": 3.3}, {"text": "There's 5,000 or\n6,000 banks that", "start": 3363.49, "duration": 1.95}, {"text": "are not direct members\nof the clearinghouse.", "start": 3365.44, "duration": 3.36}, {"text": "And so now the Federal Reserve\nis standing up FedNow service.", "start": 3368.8, "duration": 4.77}, {"text": "And you can see this in\nLael Brainard's speech.", "start": 3373.57, "duration": 2.5}, {"text": "Now, FedNow service\nis also meant", "start": 3376.07, "duration": 3.76}, {"text": "to be like a public\nutility rather than", "start": 3379.83, "duration": 2.73}, {"text": "controlled by these 24 banks.", "start": 3382.56, "duration": 2.49}, {"text": "And so there's some interesting\ndynamics back and forth", "start": 3385.05, "duration": 2.76}, {"text": "in the competition.", "start": 3387.81, "duration": 1.33}, {"text": "The clearinghouse real-time\npayment network probably", "start": 3389.14, "duration": 2.72}, {"text": "will up its game, and FedNow\nwill come along as well.", "start": 3391.86, "duration": 4.56}, {"text": "Some said that the announcement\nlast year by the Federal", "start": 3396.42, "duration": 3.0}, {"text": "Reserve was in reaction\nto Facebook Libra,", "start": 3399.42, "duration": 2.55}, {"text": "and maybe that spurred\nthis a little bit,", "start": 3401.97, "duration": 3.15}, {"text": "that the official\nsector was then", "start": 3405.12, "duration": 1.47}, {"text": "competing with Facebook\nbecause the announcement came", "start": 3406.59, "duration": 2.97}, {"text": "just weeks after.", "start": 3409.56, "duration": 1.59}, {"text": "Now, I would imagine the Federal\nReserve was working on it", "start": 3411.15, "duration": 3.33}, {"text": "a long time beforehand.", "start": 3414.48, "duration": 1.83}, {"text": "And we'll close out\nthis lecture today", "start": 3416.31, "duration": 1.96}, {"text": "on when China's digital currency\nelectronic payments program.", "start": 3418.27, "duration": 5.51}, {"text": "China and the Federal\nReserve in the US", "start": 3423.78, "duration": 2.34}, {"text": "both had major announcements\nright after Facebook Libra.", "start": 3426.12, "duration": 4.23}, {"text": "This project, FedNow, and\nChina's, both had been--", "start": 3430.35, "duration": 4.59}, {"text": "work had been done, but it\nfeels like the announcements", "start": 3434.94, "duration": 3.39}, {"text": "were accelerated and\nin reaction a bit.", "start": 3438.33, "duration": 3.81}, {"text": "We don't know for\nsure, of course.", "start": 3442.14, "duration": 3.15}, {"text": "Questions, Romain?", "start": 3445.29, "duration": 2.196}, {"text": "ROMAIN: None so far, Gary.", "start": 3447.486, "duration": 1.399}, {"text": "GARY GENSLER: All right.", "start": 3448.885, "duration": 1.155}, {"text": "So what's the payment landscape?", "start": 3450.04, "duration": 1.77}, {"text": "Who are the companies?", "start": 3451.81, "duration": 1.2}, {"text": "Well, we've talked\nabout Big Tech.", "start": 3453.01, "duration": 1.68}, {"text": "And I'm glad, Luke,\nI think I have", "start": 3454.69, "duration": 3.98}, {"text": "KakaoPay on there thankfully.", "start": 3458.67, "duration": 3.25}, {"text": "I should have had\nLINE Pay as well.", "start": 3461.92, "duration": 2.4}, {"text": "But Big Tech, OK, we've chatted\na little bit about that.", "start": 3464.32, "duration": 4.17}, {"text": "And then there's, of course,\na bunch of unicorn startups.", "start": 3468.49, "duration": 4.43}, {"text": "I could have put another\nhalf dozen to a dozen,", "start": 3472.92, "duration": 2.64}, {"text": "unicorn being $1 billion\nof value or more.", "start": 3475.56, "duration": 4.69}, {"text": "But each of these startups\nhave a little bit different way", "start": 3480.25, "duration": 3.24}, {"text": "that they've broken\ninto this space.", "start": 3483.49, "duration": 2.73}, {"text": "Plaid, which we've chatted\na little bit about,", "start": 3486.22, "duration": 4.06}, {"text": "Plaid is in this space because\nthey came in through open APIs", "start": 3490.28, "duration": 4.58}, {"text": "and facilitating the\nsoftware in the system.", "start": 3494.86, "duration": 3.81}, {"text": "Ripple is a cryptocurrency\ntype company.", "start": 3498.67, "duration": 4.69}, {"text": "One97 is in India.", "start": 3503.36, "duration": 2.54}, {"text": "It's really-- I could even\nhave put that in the Big Tech", "start": 3505.9, "duration": 2.64}, {"text": "because they started,\nI think, Paytm.", "start": 3508.54, "duration": 2.67}, {"text": "NewBank addressed it a little\nbit from being a challenger", "start": 3511.21, "duration": 4.64}, {"text": "bank, and we're going\nto be talking about that", "start": 3515.85, "duration": 1.95}, {"text": "in a couple of lectures.", "start": 3517.8, "duration": 1.0}, {"text": "Toast picks a sector,\nand they really", "start": 3518.8, "duration": 3.57}, {"text": "dominate the restaurant sector.", "start": 3522.37, "duration": 3.17}, {"text": "But they initially were\ngetting into payments", "start": 3525.54, "duration": 2.74}, {"text": "because they were into tablets.", "start": 3528.28, "duration": 1.38}, {"text": "So each has a bit of\na different story.", "start": 3529.66, "duration": 4.23}, {"text": "Brex was about startups\nand facilitating", "start": 3533.89, "duration": 2.76}, {"text": "credit for startups.", "start": 3536.65, "duration": 1.17}, {"text": "TransferWise was cross-border,\nas we talked about earlier.", "start": 3537.82, "duration": 4.48}, {"text": "So they each found a\nstrategy to build themselves", "start": 3542.3, "duration": 3.74}, {"text": "into this place.", "start": 3546.04, "duration": 1.52}, {"text": "But let's just talk about Alipay\nand WeChat Pay for a moment.", "start": 3547.56, "duration": 4.6}, {"text": "This is even dated because\nthis is nearly a year old,", "start": 3552.16, "duration": 2.91}, {"text": "but this is their user base\nin the last seven years,", "start": 3555.07, "duration": 3.99}, {"text": "this remarkable growth\nof usage between Alipay", "start": 3559.06, "duration": 4.14}, {"text": "and WeChat Pay in China,\nboth with approximately", "start": 3563.2, "duration": 4.2}, {"text": "a billion users.", "start": 3567.4, "duration": 1.59}, {"text": "It's thought that WeChat\nPay and Alipay now", "start": 3568.99, "duration": 2.19}, {"text": "have 92% of the retail\npayment space in China.", "start": 3571.18, "duration": 6.13}, {"text": "And one of their\nstrategic approaches", "start": 3577.31, "duration": 4.08}, {"text": "is that if you have a store\nof value on an Alipay wallet", "start": 3581.39, "duration": 4.71}, {"text": "and you move it to somebody\nelse within the Alipay system,", "start": 3586.1, "duration": 4.77}, {"text": "as I understand it,\nit's still 0 cost.", "start": 3590.87, "duration": 2.37}, {"text": "If you jump out of service,\nout of system, 10 basis points.", "start": 3593.24, "duration": 4.74}, {"text": "But this conceptual framework--\nand their pricing model", "start": 3597.98, "duration": 3.6}, {"text": "could change at any time,\nbut their pricing model", "start": 3601.58, "duration": 3.12}, {"text": "has been historically, if you\nstay within the Alipay wallet", "start": 3604.7, "duration": 3.6}, {"text": "system, heck of a\nbenefit in cost.", "start": 3608.3, "duration": 4.39}, {"text": "So merchants then start to\nwant to pay their vendors.", "start": 3612.69, "duration": 3.88}, {"text": "And merchants and customers\nwant to stay within those wallet", "start": 3616.57, "duration": 4.05}, {"text": "systems to keep\nthose costs down,", "start": 3620.62, "duration": 3.3}, {"text": "significant network effects.", "start": 3623.92, "duration": 2.64}, {"text": "Romain?", "start": 3626.56, "duration": 0.785}, {"text": "ROMAIN: Sijin has her hand up.", "start": 3627.345, "duration": 2.495}, {"text": "GARY GENSLER: Please.", "start": 3629.84, "duration": 1.015}, {"text": "AUDIENCE: Yeah.", "start": 3630.855, "duration": 0.915}, {"text": "Hi.", "start": 3631.77, "duration": 0.85}, {"text": "Just want to add one point.", "start": 3632.62, "duration": 2.13}, {"text": "I think the social platform\nbase is really important,", "start": 3634.75, "duration": 3.37}, {"text": "but another thing that\nAlipay is so successful", "start": 3638.12, "duration": 3.41}, {"text": "because it's working\nclosely with the government.", "start": 3641.53, "duration": 2.73}, {"text": "For example, right now in China,\nwe can use a QR code in Alipay", "start": 3644.26, "duration": 5.91}, {"text": "when we try to get\non the shuttle bus", "start": 3650.17, "duration": 3.74}, {"text": "or we want to get a phone.", "start": 3653.91, "duration": 2.08}, {"text": "We can use the Alipay\nto pay that bill.", "start": 3655.99, "duration": 2.7}, {"text": "So actually, the government is\nencouraging all of the citizens", "start": 3658.69, "duration": 3.78}, {"text": "to use this Alipay\nand WeChat Pay.", "start": 3662.47, "duration": 3.288}, {"text": "GARY GENSLER: Yeah.", "start": 3665.758, "duration": 0.792}, {"text": "So there's incredible\ncollaboration,", "start": 3666.55, "duration": 3.18}, {"text": "what you're talking\nabout, between government", "start": 3669.73, "duration": 3.72}, {"text": "and these payments systems.", "start": 3673.45, "duration": 2.61}, {"text": "And we've seen this\nin India as well.", "start": 3676.06, "duration": 2.08}, {"text": "India really\nencouraged the uptake.", "start": 3678.14, "duration": 2.9}, {"text": "And I could have put various\nstatistics in for India.", "start": 3681.04, "duration": 3.66}, {"text": "They're a couple or\nfew years behind.", "start": 3684.7, "duration": 1.89}, {"text": "They're not as robust\nand developed in India.", "start": 3686.59, "duration": 4.86}, {"text": "But this encouragement by the\nofficial sector or the banking", "start": 3691.45, "duration": 4.56}, {"text": "sector--", "start": 3696.01, "duration": 0.66}, {"text": "sometimes in other countries,\nit can be by the banking sector.", "start": 3696.67, "duration": 3.21}, {"text": "But what's interesting in China,\nand we'll close out on this,", "start": 3699.88, "duration": 3.45}, {"text": "is now the Chinese\ngovernment is offering", "start": 3703.33, "duration": 3.97}, {"text": "what one might say is a\ncomplement or a competitor", "start": 3707.3, "duration": 3.47}, {"text": "to WeChat and Alipay through\nthe Chinese digital currency", "start": 3710.77, "duration": 3.96}, {"text": "electronic payment\nproject or DCEP.", "start": 3714.73, "duration": 2.97}, {"text": "And so they've facilitated the\nramp up of Alipay and WeChat", "start": 3717.7, "duration": 4.53}, {"text": "Pay, but now they're going to\nhave an alternative as well.", "start": 3722.23, "duration": 5.05}, {"text": "So it's very interesting.", "start": 3727.28, "duration": 1.22}, {"text": "And I think in part,\nthis is to facilitate", "start": 3728.5, "duration": 2.73}, {"text": "the commercial banks were\nlosing a significant market", "start": 3731.23, "duration": 3.33}, {"text": "share to Alipay and WeChat Pay,\nthat the Chinese government", "start": 3734.56, "duration": 3.51}, {"text": "may well have been encouraged\nto build their own--", "start": 3738.07, "duration": 4.38}, {"text": "they call it the central\nbank digital currency--", "start": 3742.45, "duration": 2.4}, {"text": "but their own wallet\nsystem, digital wallet,", "start": 3744.85, "duration": 4.26}, {"text": "digital yuan that will look\na lot like Alipay and WeChat", "start": 3749.11, "duration": 7.14}, {"text": "wallets.", "start": 3756.25, "duration": 0.81}, {"text": "And in fact, this is all\nbeing rolled out in 2020.", "start": 3757.06, "duration": 3.69}, {"text": "But in fact, the\ninitial pronouncements", "start": 3760.75, "duration": 3.81}, {"text": "say that it must be\naccepted, so just", "start": 3764.56, "duration": 3.81}, {"text": "as we have had multiple\ncenturies of laws that", "start": 3768.37, "duration": 3.6}, {"text": "are called legal tender laws.", "start": 3771.97, "duration": 1.83}, {"text": "And the legal tender\nlaws go all the way", "start": 3773.8, "duration": 2.79}, {"text": "back to Genghis\nKhan in China, where", "start": 3776.59, "duration": 3.45}, {"text": "under the coercive\npower of the state,", "start": 3780.04, "duration": 3.31}, {"text": "you must accept in those\ndays the paper bark", "start": 3783.35, "duration": 3.71}, {"text": "currency of Genghis\nKhan, or in the US,", "start": 3787.06, "duration": 3.0}, {"text": "you must accept the US\ndollar for all debts", "start": 3790.06, "duration": 3.01}, {"text": "public and private.", "start": 3793.07, "duration": 1.37}, {"text": "Those are called\nlegal tender laws.", "start": 3794.44, "duration": 1.92}, {"text": "Something similar is\nhappening right now in China", "start": 3796.36, "duration": 2.61}, {"text": "that this DCEP will\nhave to be accepted,", "start": 3798.97, "duration": 3.51}, {"text": "at first in certain cities.", "start": 3802.48, "duration": 1.57}, {"text": "They're going to start,\nI think, in two cities,", "start": 3804.05, "duration": 2.828}, {"text": "and then they're\ngoing to roll it out", "start": 3806.878, "duration": 1.542}, {"text": "over time in other places.", "start": 3808.42, "duration": 3.46}, {"text": "So now let's look\nhere in the US.", "start": 3811.88, "duration": 2.39}, {"text": "And I picked\nFacebook because they", "start": 3814.27, "duration": 2.4}, {"text": "haven't been as successful.", "start": 3816.67, "duration": 2.04}, {"text": "This remarkable platform,\nFacebook is so ubiquitous,", "start": 3818.71, "duration": 6.06}, {"text": "over 2 billion members\naround the globe.", "start": 3824.77, "duration": 2.7}, {"text": "They've tried multiple\ntimes to get into payments", "start": 3827.47, "duration": 2.66}, {"text": "starting 11 years ago.", "start": 3830.13, "duration": 2.5}, {"text": "Virtual currency\nin 15 currencies", "start": 3832.63, "duration": 2.22}, {"text": "terminated in four\nyears, Facebook credit.", "start": 3834.85, "duration": 3.48}, {"text": "They came about in 2015\nFacebook Messenger.", "start": 3838.33, "duration": 3.96}, {"text": "They started in the\nUS, UK, and France.", "start": 3842.29, "duration": 2.49}, {"text": "By 2019, they rolled out\nof France and the UK.", "start": 3844.78, "duration": 4.45}, {"text": "They, in India, had a pilot\nthat for the longest time", "start": 3849.23, "duration": 4.17}, {"text": "was in pilot\npurgatory, in a sense.", "start": 3853.4, "duration": 6.3}, {"text": "Facebook could not\nget the approval", "start": 3859.7, "duration": 1.86}, {"text": "of the Indian government to go\nbeyond one million accounts.", "start": 3861.56, "duration": 2.94}, {"text": "They only recently in the early\nspring of 2020, late winter,", "start": 3864.5, "duration": 5.55}, {"text": "got approval that they\ncould move up to 10 million", "start": 3870.05, "duration": 2.73}, {"text": "and so forth.", "start": 3872.78, "duration": 1.6}, {"text": "But it's pending further\ndata standardization,", "start": 3874.38, "duration": 4.79}, {"text": "and it's conditional on\ndata standardization.", "start": 3879.17, "duration": 3.51}, {"text": "And then last November,\nthey announced Facebook Pay.", "start": 3882.68, "duration": 3.06}, {"text": "Now, that puts aside\nFacebook Libra.", "start": 3885.74, "duration": 2.43}, {"text": "I'm just saying their\nefforts to do Facebook Pay,", "start": 3888.17, "duration": 3.57}, {"text": "bringing together\nFacebook Messenger,", "start": 3891.74, "duration": 2.34}, {"text": "Instagram, WhatsApp\nis their new effort.", "start": 3894.08, "duration": 5.0}, {"text": "You can decide whether you\nthink they'll be successful.", "start": 3899.08, "duration": 2.44}, {"text": "But it's interesting that\nin some circumstances,", "start": 3901.52, "duration": 2.78}, {"text": "Facebook has been very\nsuccessful, but not so much", "start": 3904.3, "duration": 2.64}, {"text": "in the payment space.", "start": 3906.94, "duration": 1.2}, {"text": "And even Google Wallet and\nGoogle Pay has more adoption,", "start": 3908.14, "duration": 5.04}, {"text": "and Apple Pay has more adoption\nthan we've seen in Facebook,", "start": 3913.18, "duration": 3.96}, {"text": "as I understand it.", "start": 3917.14, "duration": 1.42}, {"text": "It's hard to get\nall the statistics.", "start": 3918.56, "duration": 3.0}, {"text": "So it gives you a little bit\nof a sense of these challenges.", "start": 3921.56, "duration": 3.98}, {"text": "What's the landscape?", "start": 3925.54, "duration": 1.95}, {"text": "Going to do it a little\nquickly, but this", "start": 3927.49, "duration": 2.23}, {"text": "is to give you that landscape.", "start": 3929.72, "duration": 1.25}, {"text": "First, commercial banks and\nthe bank-owned networks.", "start": 3930.97, "duration": 3.69}, {"text": "I put here thousands of banks.", "start": 3934.66, "duration": 2.31}, {"text": "They've been around since 1784.", "start": 3936.97, "duration": 1.8}, {"text": "I like taking 1784\nbecause that's", "start": 3938.77, "duration": 1.89}, {"text": "the Bank of New York here in the\nUS, Alexander Hamilton's bank.", "start": 3940.66, "duration": 4.23}, {"text": "But the clearinghouse\nliterally has been around", "start": 3944.89, "duration": 2.4}, {"text": "since the 1850s.", "start": 3947.29, "duration": 1.53}, {"text": "It was a place where people\ntook physical checks,", "start": 3948.82, "duration": 3.06}, {"text": "negotiable orders\nof withdraw, and had", "start": 3951.88, "duration": 1.98}, {"text": "to take them into a\nwarehouse and clear them.", "start": 3953.86, "duration": 3.43}, {"text": "But even UnionPay\nin China, which", "start": 3957.29, "duration": 2.57}, {"text": "was formed amongst\n85 banks initially--", "start": 3959.86, "duration": 3.15}, {"text": "and some say maybe the\nPeople's Bank of China", "start": 3963.01, "duration": 2.7}, {"text": "owns something of it, too--\nbut UnionPay, these bank", "start": 3965.71, "duration": 3.75}, {"text": "consortium.", "start": 3969.46, "duration": 2.66}, {"text": "Next in this architecture\nof the payment landscape,", "start": 3972.12, "duration": 3.87}, {"text": "the card companies.", "start": 3975.99, "duration": 1.47}, {"text": "I would note that\nVisa was a consortium.", "start": 3977.46, "duration": 2.59}, {"text": "Bank of America was\na California bank.", "start": 3980.05, "duration": 2.33}, {"text": "It was not a national\nbank at the time.", "start": 3982.38, "duration": 2.43}, {"text": "And Bank of America wanted to\noffer its California credit", "start": 3984.81, "duration": 3.42}, {"text": "card across the country\nand formed a consortium.", "start": 3988.23, "duration": 3.48}, {"text": "It later became an\nindependent company.", "start": 3991.71, "duration": 2.31}, {"text": "It later went public.", "start": 3994.02, "duration": 1.68}, {"text": "And it's got a $373 billion\nmarket value as of last Friday.", "start": 3995.7, "duration": 5.62}, {"text": "Now, we sometimes talk about the\nBig Tech firms, the big four,", "start": 4001.32, "duration": 4.55}, {"text": "Microsoft, and Google,\nand Amazon, and Apple.", "start": 4005.87, "duration": 3.39}, {"text": "They all have market\nvalues above this.", "start": 4009.26, "duration": 2.34}, {"text": "But Visa is one of the\n10 highest market cap", "start": 4011.6, "duration": 3.33}, {"text": "companies in the country,\nmaybe in the world.", "start": 4014.93, "duration": 4.54}, {"text": "And then, of course, Mastercard\nand so forth, Discover", "start": 4019.47, "duration": 2.66}, {"text": "and the Dow.", "start": 4022.13, "duration": 0.87}, {"text": "So that's the base\nlayer, but then there's", "start": 4023.0, "duration": 2.85}, {"text": "something that you and I\ndon't think a lot about,", "start": 4025.85, "duration": 2.64}, {"text": "is payments service providers.", "start": 4028.49, "duration": 2.55}, {"text": "And these companies have gone\nthrough a significant wave", "start": 4031.04, "duration": 3.72}, {"text": "of consolidation.", "start": 4034.76, "duration": 1.41}, {"text": "These were data\ncompanies basically,", "start": 4036.17, "duration": 2.1}, {"text": "expounded around 20 years ago.", "start": 4038.27, "duration": 2.43}, {"text": "Fiserv is an agglomeration\nof three or four", "start": 4040.7, "duration": 3.33}, {"text": "different companies\nthat have come together", "start": 4044.03, "duration": 2.07}, {"text": "over the last few years.", "start": 4046.1, "duration": 1.23}, {"text": "But these dominant\ncompanies here in the US", "start": 4047.33, "duration": 4.23}, {"text": "are the backbones of\nthe payment network", "start": 4051.56, "duration": 2.94}, {"text": "right in the middle of\nthat earlier chart that we", "start": 4054.5, "duration": 2.61}, {"text": "talked about, $45 billion to\n$80 billion market value each.", "start": 4057.11, "duration": 4.65}, {"text": "And now we get to the\nstartups starting with PayPal", "start": 4061.76, "duration": 6.41}, {"text": "at $124 billion of value, and\nSquare, and then some companies", "start": 4068.17, "duration": 5.57}, {"text": "you might not be\nas familiar with.", "start": 4073.74, "duration": 2.22}, {"text": "But each one of these companies\nfounded usually in the 20-year", "start": 4075.96, "duration": 4.42}, {"text": "timeframe--", "start": 4080.38, "duration": 0.5}, {"text": "I'll put Western\nUnion to the side.", "start": 4080.88, "duration": 2.22}, {"text": "Western Union was that company\nthat started in the 1850s.", "start": 4083.1, "duration": 5.52}, {"text": "These are publicly\ntraded companies.", "start": 4088.62, "duration": 3.97}, {"text": "You can look at\ntheir financials.", "start": 4092.59, "duration": 1.45}, {"text": "If you were actually going to\ngo and compete in this space,", "start": 4094.04, "duration": 3.46}, {"text": "I'd largely recommend you've\ngot to pull these financials,", "start": 4097.5, "duration": 2.58}, {"text": "read their public statements,\nsee how they make their money.", "start": 4100.08, "duration": 3.87}, {"text": "But then there's the\nprivate companies.", "start": 4103.95, "duration": 2.369}, {"text": "And all I could do to\nvalue these companies that", "start": 4106.319, "duration": 2.531}, {"text": "go to Forbes and Crunchbase\nand some other sources to say,", "start": 4108.85, "duration": 3.799}, {"text": "what was their\nlast funding round?", "start": 4112.649, "duration": 2.79}, {"text": "Stripe has not gone public yet.", "start": 4115.439, "duration": 2.63}, {"text": "Paytm in India has\nnot gone public yet,", "start": 4118.069, "duration": 3.37}, {"text": "but these are their\nlast funding rounds.", "start": 4121.439, "duration": 1.771}, {"text": "Plaid was purchased for\n$5.3 billion by Visa.", "start": 4123.21, "duration": 6.67}, {"text": "But it gives you that\nsense, putting aside", "start": 4129.88, "duration": 3.24}, {"text": "whether these values\nwill persist or not.", "start": 4133.12, "duration": 2.67}, {"text": "And there's hundreds,\nthousands of other companies", "start": 4135.79, "duration": 2.73}, {"text": "in this space competing.", "start": 4138.52, "duration": 3.9}, {"text": "As I said, there's a\nlot of consolidation.", "start": 4142.42, "duration": 3.059}, {"text": "And one of the consolidations\nis around payment service", "start": 4145.479, "duration": 3.481}, {"text": "providers.", "start": 4148.96, "duration": 0.87}, {"text": "Just in the last 18\nmonths, four big mergers,", "start": 4149.83, "duration": 3.48}, {"text": "one in Europe, three\nin the US, basically", "start": 4153.31, "duration": 3.509}, {"text": "consolidation in the\nmiddle of this technology.", "start": 4156.819, "duration": 4.351}, {"text": "First Data, which was one of\nthe biggest companies, that", "start": 4161.17, "duration": 3.21}, {"text": "basically was on\nthe merchant side,", "start": 4164.38, "duration": 3.45}, {"text": "helping merchants with\ntheir point of sale,", "start": 4167.83, "duration": 2.01}, {"text": "Worldpay that does this annual\nreport that I talked about,", "start": 4169.84, "duration": 4.4}, {"text": "and Total Systems Services all\nbought in the last 15 months.", "start": 4174.24, "duration": 4.239}, {"text": "And then in Europe, Worldline\nbought Ingenico, which", "start": 4178.479, "duration": 4.681}, {"text": "was like a cross-Europe merger.", "start": 4183.16, "duration": 3.21}, {"text": "But we're seeing\na lot of mergers", "start": 4186.37, "duration": 1.44}, {"text": "also in the data\naggregator side.", "start": 4187.81, "duration": 2.549}, {"text": "Visa bought Plaid,\nas we talked about.", "start": 4190.359, "duration": 1.771}, {"text": "And SoFi recently announced for\nover $1 billion buying Galileo.", "start": 4192.13, "duration": 4.17}, {"text": "Galileo is a smaller\ncompetitor of Plaid", "start": 4196.3, "duration": 3.05}, {"text": "that is in this API\ndata aggregators", "start": 4199.35, "duration": 3.54}, {"text": "space, a really important\nspace in payments.", "start": 4202.89, "duration": 3.31}, {"text": "SoFi, which we'll talk about\nin our next couple of classes,", "start": 4206.2, "duration": 3.69}, {"text": "started as a credit provider,\nnot in the payment side.", "start": 4209.89, "duration": 5.92}, {"text": "But here it's interesting that\nSoFi is going back and saying,", "start": 4215.81, "duration": 3.29}, {"text": "we want to get to\nthat payment side.", "start": 4219.1, "duration": 1.83}, {"text": "We want to acquire\nGalileo and the API side.", "start": 4220.93, "duration": 5.69}, {"text": "And so a little talk, and we've\nonly got a few minutes left.", "start": 4226.62, "duration": 3.54}, {"text": "We already talked\nabout crypto projects,", "start": 4230.16, "duration": 2.26}, {"text": "but the crypto land is here.", "start": 4232.42, "duration": 2.72}, {"text": "And they're saying\nmaybe a digital token", "start": 4235.14, "duration": 4.77}, {"text": "backed by US dollars\nor backed by Euro", "start": 4239.91, "duration": 2.8}, {"text": "or yen would be the way to\naddress these pain points.", "start": 4242.71, "duration": 4.46}, {"text": "Some are retail projects.", "start": 4247.17, "duration": 2.07}, {"text": "Mostly tether and others\non the retail side", "start": 4249.24, "duration": 2.52}, {"text": "are about cryptocurrency\nexchanges.", "start": 4251.76, "duration": 2.52}, {"text": "But the wholesale\nprojects are interesting.", "start": 4254.28, "duration": 2.46}, {"text": "14 large banks\nhave come together", "start": 4256.74, "duration": 2.34}, {"text": "and formed this\nthing called Fnality", "start": 4259.08, "duration": 2.31}, {"text": "without an I. It's F-nality.", "start": 4261.39, "duration": 3.03}, {"text": "JP Morgan has said\nJP Morgan Coin.", "start": 4264.42, "duration": 2.88}, {"text": "These are trying to use digital\ntokens representing Fiat money", "start": 4267.3, "duration": 6.25}, {"text": "to smooth out pain points.", "start": 4273.55, "duration": 2.07}, {"text": "And then the messaging\ncompanies, Telegram,", "start": 4275.62, "duration": 2.28}, {"text": "the world's largest secure or\nencrypted messaging company", "start": 4277.9, "duration": 4.26}, {"text": "with 400 million\nmembers or customers,", "start": 4282.16, "duration": 3.51}, {"text": "they're trying to have a token\ncalled GRAM, even though it's", "start": 4285.67, "duration": 2.82}, {"text": "held up in the\nsecurities law case", "start": 4288.49, "duration": 2.16}, {"text": "that they have with the\nSecurities and Exchange", "start": 4290.65, "duration": 2.04}, {"text": "Commission here in the US.", "start": 4292.69, "duration": 2.22}, {"text": "And that sets the stage--", "start": 4294.91, "duration": 1.51}, {"text": "I'm going to skip over--", "start": 4296.42, "duration": 1.78}, {"text": "that Bitcoin and all of these\npayment tokens are out there", "start": 4298.2, "duration": 4.03}, {"text": "and talk about the goals\nthey're trying to do.", "start": 4302.23, "duration": 2.13}, {"text": "The goals they are trying\nto do are the same things--", "start": 4304.36, "duration": 3.45}, {"text": "addressing pain points,\nextending settlement", "start": 4307.81, "duration": 2.43}, {"text": "to 24 hours a day, 7 days\na week, and lowering costs.", "start": 4310.24, "duration": 4.65}, {"text": "That's why JP Morgan\nhas JP Morgan Coin.", "start": 4314.89, "duration": 4.11}, {"text": "It might be a\nlittle bit of hype,", "start": 4319.0, "duration": 2.1}, {"text": "but there's some\nreality, too, that they", "start": 4321.1, "duration": 1.83}, {"text": "think that between their project\nand this competitive project", "start": 4322.93, "duration": 4.32}, {"text": "Fnality at the\nwholesale payment space,", "start": 4327.25, "duration": 2.37}, {"text": "they can lower cost in\nthe cross-border space.", "start": 4329.62, "duration": 4.65}, {"text": "So Facebook comes along, and\nFacebook says, well, maybe we", "start": 4334.27, "duration": 3.12}, {"text": "can do it.", "start": 4337.39, "duration": 1.44}, {"text": "Maybe we can do it with\na worldwide currency.", "start": 4338.83, "duration": 3.21}, {"text": "They announced it was--", "start": 4342.04, "duration": 1.96}, {"text": "it didn't lack ambition.", "start": 4344.0, "duration": 1.715}, {"text": "Mark Zuckerberg and Facebook\nannounced a new global currency", "start": 4345.715, "duration": 5.145}, {"text": "to meet the needs of\nbillions of people.", "start": 4350.86, "duration": 2.22}, {"text": "They talked about\nfinancial inclusion.", "start": 4353.08, "duration": 2.19}, {"text": "They talked about\ncross-border pain points.", "start": 4355.27, "duration": 2.64}, {"text": "And they said, this is\nthe wave of the future.", "start": 4357.91, "duration": 3.33}, {"text": "It's run into a lot of central\nbank concerns around the globe.", "start": 4361.24, "duration": 4.12}, {"text": "It's run into\nsignificant public sector", "start": 4365.36, "duration": 3.23}, {"text": "concerns around the globe.", "start": 4368.59, "duration": 2.17}, {"text": "It's still uncertain\nwhether it will take off,", "start": 4370.76, "duration": 3.14}, {"text": "but it's a significant\nfeature of this payment space", "start": 4373.9, "duration": 3.03}, {"text": "that one needs to\nunderstand, even if it's just", "start": 4376.93, "duration": 3.36}, {"text": "a catalyst for change.", "start": 4380.29, "duration": 1.77}, {"text": "Both China and the US reacted\nquickly with the FedNow project", "start": 4382.06, "duration": 4.44}, {"text": "here in the US and the\ncentral bank digital currency", "start": 4386.5, "duration": 3.99}, {"text": "project in China.", "start": 4390.49, "duration": 2.25}, {"text": "So I'm going to close on\njust a little chart that", "start": 4392.74, "duration": 2.31}, {"text": "shows Libra versus central\nbank digital currency", "start": 4395.05, "duration": 2.955}, {"text": "and just say something\nabout China's project.", "start": 4398.005, "duration": 3.225}, {"text": "China's project, not yet\nlived, digital currency", "start": 4401.23, "duration": 4.08}, {"text": "electronic payment\nprogram, the issuer", "start": 4405.31, "duration": 3.6}, {"text": "is the People's Bank of China.", "start": 4408.91, "duration": 1.74}, {"text": "And this is a really\nimportant question that", "start": 4410.65, "duration": 3.15}, {"text": "is on a lot of people's mind.", "start": 4413.8, "duration": 2.61}, {"text": "If a central bank issues a\ndigital representation of money", "start": 4416.41, "duration": 4.11}, {"text": "directly, what's the role\nof the commercial banks?", "start": 4420.52, "duration": 6.1}, {"text": "Commercial banks\nin most countries", "start": 4426.62, "duration": 1.86}, {"text": "are the issuer of digital money.", "start": 4428.48, "duration": 2.82}, {"text": "I know we think about central\nbanks in the 180 countries", "start": 4431.3, "duration": 3.18}, {"text": "that have money, and\nthey're really important.", "start": 4434.48, "duration": 2.85}, {"text": "But it's commercial banks\nthat keep those ledgers.", "start": 4437.33, "duration": 3.03}, {"text": "The commercial banks with some\nbacking of their governments,", "start": 4440.36, "duration": 3.72}, {"text": "either implicit or explicit\nwith deposit insurance,", "start": 4444.08, "duration": 3.66}, {"text": "you and I have a liability to\nour banks, to Bank America,", "start": 4447.74, "duration": 4.2}, {"text": "to Barclays, to\nsome bank in Asia.", "start": 4451.94, "duration": 3.71}, {"text": "The People's Bank\nof China is saying,", "start": 4455.65, "duration": 1.9}, {"text": "no, we will issue this\ndirectly, but we'll", "start": 4457.55, "duration": 3.18}, {"text": "have the commercial\nbanks involved.", "start": 4460.73, "duration": 3.15}, {"text": "And the commercial banks,\nyou'll get your digital wallet", "start": 4463.88, "duration": 2.7}, {"text": "from the commercial banks.", "start": 4466.58, "duration": 1.2}, {"text": "There were announcements\nas of early April 2020", "start": 4467.78, "duration": 3.27}, {"text": "that update us, but we don't\nyet have the full picture.", "start": 4471.05, "duration": 5.28}, {"text": "It looks like it's basically a\ncentralized private network run", "start": 4476.33, "duration": 3.69}, {"text": "by the PBOC.", "start": 4480.02, "duration": 1.65}, {"text": "It does look like\nAlipay and WeChat Pay", "start": 4481.67, "duration": 2.88}, {"text": "will have to use this system.", "start": 4484.55, "duration": 2.29}, {"text": "So some question is, how\ndifferent will it really be?", "start": 4486.84, "duration": 3.89}, {"text": "It looks like by government Fiat\nrolled out by city and region", "start": 4490.73, "duration": 5.34}, {"text": "that merchants will\nhave to accept DCEP.", "start": 4496.07, "duration": 3.18}, {"text": "So the QR system\non those buses will", "start": 4499.25, "duration": 2.37}, {"text": "have to have DCEP,\nAlipay, and WeChat Pay.", "start": 4501.62, "duration": 4.62}, {"text": "Alipay has taken out\na bunch of patents", "start": 4506.24, "duration": 2.46}, {"text": "already on how to\ninterface with DCEP.", "start": 4508.7, "duration": 3.51}, {"text": "So it's a work in\nprogress, but it's", "start": 4512.21, "duration": 2.16}, {"text": "an important feature of this.", "start": 4514.37, "duration": 1.61}, {"text": "And if you're thinking\nabout payments,", "start": 4515.98, "duration": 2.65}, {"text": "this is really important.", "start": 4518.63, "duration": 1.08}, {"text": "And what's fascinating is\ncentral banks around the globe", "start": 4519.71, "duration": 2.73}, {"text": "are then looking to\nsee what China's done.", "start": 4522.44, "duration": 2.93}, {"text": "Sweden was already looking at an\nelectronic digital central bank", "start": 4525.37, "duration": 5.35}, {"text": "currency, the E-krona.", "start": 4530.72, "duration": 2.58}, {"text": "And they were at the forefront.", "start": 4533.3, "duration": 2.22}, {"text": "But now you can go central\nbank around central bank.", "start": 4535.52, "duration": 2.67}, {"text": "France has made announcements.", "start": 4538.19, "duration": 1.59}, {"text": "The United Kingdom has\nmade announcements in 2020,", "start": 4539.78, "duration": 3.24}, {"text": "all in this milieu of, how\ndo we address pain points?", "start": 4543.02, "duration": 5.16}, {"text": "Do we as a central bank have a\nresponsibility to our citizens", "start": 4548.18, "duration": 3.21}, {"text": "to continue to offer a digital\ncurrency when the paper", "start": 4551.39, "duration": 3.9}, {"text": "currency is going away?", "start": 4555.29, "duration": 1.77}, {"text": "And important public\npolicy questions of,", "start": 4557.06, "duration": 2.07}, {"text": "what does this do?", "start": 4559.13, "duration": 0.96}, {"text": "Does it destabilize\ncommercial banks?", "start": 4560.09, "duration": 2.86}, {"text": "So I think that's\na bit of a wrap.", "start": 4562.95, "duration": 4.28}] |