Hello, everybody. I'm Sarah Eisen. I'm a host at CNBC. I'm thrilled to be back here at the IMF for the IMF World Bank meetings and to moderate this incredible IMF World Bank panel on the future of finance on crypto. And what I have here is, hot off the press, the finance and development issue of September, cover story, stablecoins and the future of finance. I think it's also very telling that we are here in this blockbuster headline panel with so many folks here to talk about crypto. I think it's the first time that it's really had top billing like this. So I'd love to introduce our distinguished panelists for this discussion. Omar Farouk is the Co-Head of Global Payments at J.P. Morgan. Durjan Chia is the Managing Director of the Monetary Authority of Singapore. You know Kristalina Gorgieva, the Managing Director of the IMF. Jeremy Allaire is the CEO and founder of Circle. And Ajay Banga is the President of the World Bank.

Thank you, thank you, thank you.

And it's really great that we have everybody here because I think everybody comes from a very different perspective. We've got the stable coins and the traditional old school banks and the central bankers and the IMF and the World Bank. So it's really great for us to talk about the future of finance, crypto, regulations, opportunities, risks. Managing Director Gorgieva, is the future of finance crypto?

The future of finance for sure is digital. We know that digitalization is moving very rapidly. We know from history that finance is very quick to take advantage of technology. Remember the telegraph? Telegraph comes, it impacts finance. Internet, it impacts finance. Now we have a technology, the technology that makes it possible to get blockchain to underpin finance, and I am convinced that we would see a bigger role in the future. I want to make three points why I think there would be a bigger role. The first one is when you look at digitalization in the world of financial assets, so much has happened so fast. It was year 2008 when the famous paper of author Unknown on Bitcoin was published. Today, Bitcoin is a dominant part of the crypto assets. And crypto assets represent 7% of assets in the United States. $4 trillion from zero to $4 trillion over a relatively short period of time. And actually, when I go back in history, remember 2009, Bitcoin comes to life. 2010, 2011. How much was one Bitcoin? One cent. Should have bought it. One cent. So how many of you here are saying, I wish I bought $100 of Bitcoin then? But the message I want to convey is that at that time, it was a completely new thing. Not much trust was put into it. And over time, we got to a point when crypto assets, these digital assets from a decentralized blockchain without central authority, are $4 trillion equivalent. My second point is that aside of this unbacked digital asset, we now have backed and sometimes fully backed digital assets as stable coins. and stable coins, one of them represented on this panel, they are still tracking Bitcoin and Tether, but not by a long margin. Today, stable coins are $300 billion. You would say, well, $4 trillion here, $300 billion there. but the speed with which stable coins are expanding is actually much more rapid than what we have seen with the unbacked assets. And my third point is that we now see much more attention to regulating stable coins, regulating this world. Now, we have to recognize we are in early days. We have the Genius Act here in the United States. Europeans have their own approach to regulation. You have in Singapore, you have done your part. There is a lot of catch-up to be done because these different regulatory frameworks don't yet quite gel, so there is a real risk of fragmentation. But the trajectory is one towards digitalization of the world of money and the clear separation between those assets that are backed, stable coins, and those that are not. And within the universe of stable coins, can I say that? Some stable coins are more stable than others, and we have seen this last week. I think we will be, we all as international community, we are interested to see stability, regulatory environment that is fit for the future and one that delivers advantages to whom? to people, to households, to businesses, to decision makers. So, yes, we are moving, but there's work. There are risks, and I, you know, here at the IMF, we are paid to worry about risks. So let me finish with this. The biggest risk I see is actually risk of fragmentation and confusion for the consumer side. and that if we are at the fund, if we are to be obsessed with one thing, it is how to minimize this particular risk.

Okay, so let's get into all of this. So Jeremy runs a company called Circle. I was just looking. So you priced your IPO this year at $31 and now trading around $132, $33 billion market cap. Good job.

Thank you.

Where does Stablecoin fit in to the future of finance as the MD described it? And what is it going to be used for?

So I think, you know, from my perspective, we're still in the very early stages of the development of this. And I think for a long time, you know, I've advocated for this idea that we could have full reserve money. So very safe, fully reserved money, fiat money, dollars, euros, RMB, pick your currency, but fully reserved money that could be utilized on the open internet, just like we can utilize protocols on the internet for information and data and communication. So essentially, imbuing in the dollar or the euro or others, the technological utility of the internet, and getting to a world where you had this ultra-safe, fully-reserved money that could effectively move at no cost with incredible velocity and speed, and that we could create an infrastructure where not only could money move as frictionlessly as data and information moves, but that you could actually begin to write contracts and intermediate that money in powerful new ways so that in a sense the internet itself gets upgraded to provide an economic coordination layer. We haven't actually had that. There hasn't been a way to actually do economic coordination on the internet. And so when I think about stablecoins today, 300 billion in circulation, credible analysts, whether it's the U.S. Treasury Department or major global research firms thinking that this will itself go to four trillion dollars potentially over the next five years. So stablecoin money becoming a larger part of the electronic money supply. But I think the thing that it's not apples to apples. I think that this money will be the highest utility form of money that we've ever had. And as we enter the age of machines and of more and more of work and labor and intermediation happening with machines, we're going to need to upgrade this economic infrastructure and the monetary infrastructure to contemplate that world. And I guess, again, when we look at it today, you know, USDC has, there's 76 billion in circulation. Now that's grown over 80% year over year. It's growing very steadily. But the amount of the velocity of that money is also extraordinary. So we see sometimes, you know, well over $2 trillion a month of transactions done with USDC. And so that gives you a sense for the money stock to the money velocity. And that phenomenon, very high velocity money that can any person in the world can connect to and utilize that's just never been possible so i think we're in the early stages i think that we need to be thinking in several orders of magnitude in scale in terms of like like transactions and utility similar to like you know when when information could be published and shared at no cost when the cost of deploying software went to zero and when communicating with video when the cost went to zero, the net world output of those things like million X. So I think we'll see, I don't know if it's five years or 10 years or 15 years, but we'll sort of, I believe, see like a million X increase in the amount of transactional activity in the world. That poses completely new challenges for how we think about regulation in that world. And so there are a lot of new things to think about, but we're in the early days, very, very early days of this monetary phenomenon um and um you know it's it's great to be collaborating with everyone who's who's here in fact because we're all thinking about this together um it's not a solved problem uh it's like where the internet was in maybe the early 2000s like lots of opportunity but not a solved not solved and scaled yet i mean i think the fact that you're sitting here in between the president of the world bank and the imf you know tells us something about where the that how much of this This is the future of the financial system.

So, Ajay, how do you see the opportunities here around digital payments, around stablecoins or Bitcoin or other crypto? I know you focus heavily on the developing world, for instance.

Yes, I've been hanging around with this guy for too long. And I've known him from my prior career at MasterCard when we actually used to meet and talk frequently because he was one of those who understood that the way forward for this idea and this technology where he's just described as a redefining of the Internet to make it more user for this kind of work. He was the one who was willing to do this within the realms of guidelines and regulation, always, from day one. And I think that's a distinguishing feature of Jeremy Ann's circle that we should not forget to acknowledge as we discuss this, which is why I'm glad he's on this panel.

Why didn't you buy his company then? Why didn't you buy his company then?

Why didn't I buy his company? Because he didn't want to sell, because he's bloody smart and knew he was going to make a lot more money if he stuck it out, right? Which is why I was patting him on the hand, because my last board meeting as Mastercard CEO, he was the guest speaker, and the logic was, this is only the beginning. There's more to come. Listen to him. It will be interesting. That's how I introduced him. So I understand what he's trying to do. Let me come back to what you asked me. So it's very early days, but think about the power of what he just said about reconciling our contracts and payments for small businesses. When you talk to JP Morgan, they will tell you every month on their cash management platform, what's the level of unreconciled bills between what they're getting as payments of invoices versus what's actually getting paid out. And it gets settled every month, but it's a nightmare for these guys. It becomes easier with this because of the way data can flow. From my point of view, the main use currently that stablecoins will really come into interesting space for is cross-border movement of money. Domestic movement of money, less so right now. And I'm adding right now for a reason. But cross-border is very interesting. So when you look at it from my perspective, financial inclusion is kind of what I care about. But financial inclusion is not just getting your remittance money or your SME payment quicker, faster, cheaper. That's very important. But what really matters after that is what can you do with that history, that knowledge, and that capacity. For that, you still need an on-ramp and an off-ramp into the banking system because that's from where you get building of credit histories and building of an insurance history. That's real financial inclusion. But this could be the plank that enables that to get done so much better. So my way of thinking about what Jeremy is doing and people like him are doing is once you have the right regulations in place and the regulations are patchy, as Kristalina said, but they are there and they're beginning, then you could start thinking about how to use this platform to enable quicker, faster, cheaper movement of money. And then from there, to build upon that to include real financial inclusion with credit histories and insurance histories. And I can see that coming in relatively short order.

Dershing, I'm wondering what you have found, because you were very early in implementing a framework for crypto and digital currencies in Singapore. So what have you found about what works and where the opportunity has been?

So we've had a long association with some of the panelists here. So certainly with Uma and his team, there's been a long association from the start of the digital asset team right from the beginning in J.P. Morgan. And certainly Jeremy and I have been talking for a very long time. So in the space, we've seen tremendous interest for wholesale business. Now, at the very beginning, I think the proposition was always put, do you see a case for digital money and digital CBDC for retail purposes? Our position and our belief has always been, no, not really. We think, like Kristalina says, the future is digital, but DLT is not the only digital means to do it. And for the retail space, we've seen tremendous improvements in digital reach through commercial bank money and through e-wallets and so on. And that's been quite efficient and quite low cost. And we've also had fast payment systems and an interlinking of fast payment systems across countries and providing that low-cost channel for quick settlement. Now, in the wholesale space, I think, is where we have received feedback that there is a lot of promise and interest for putting multiple currencies on chain, for putting multiple different kinds of assets tokenized on chain and having these transacted and settled. And suddenly, for a lot of the early takeoff in terms of the wholesale use cases has been in the cash management space, multi-currency cash management. and we see a lot of strong corporate interests and financial institution interests to offer into that service. In fact, out of some of our early experiments in this, a joint venture company was launched in Singapore comprising a few important institutions in conventional finance, but they have launched this. They're offering this as a multi-currency platform for settling cross-border payments, but also settling securities, tokenized, and so on. So, yeah, so we see promise in the wholesale space.

Omar, you at J.P. Morgan, head of payments, are in charge of what? Explain your job, and how much of it is building the infrastructure of the blockchain, for instance, which I know is an increasing part of your business on payments.

So, I mean, just to start, I think it's a bit hard to explain your own job, But, you know, I run the...

Well, I could explain it.

I mean, we basically essentially do for companies, governments, banks, financial institutions, what a retail bank does for consumers. So we store their money, we move their money, we help them accept money, we help them send money. So all those things. We run the biggest payments platform in the world. On any average given day, we will move between $10 and $11 trillion, dollars, with a peak going above 15, which I don't think any bank actually has ever gotten to anywhere close to that number. Now, that results in, you know, a couple of things. Obviously, you're a scale player, but then you meet friends like Jeremy and Jeremy's team. By the way, you know, we were, you know, we were the lead on their IPO, and they are good friends of ours and good partners. But doesn't he compete with you? No, but I'm saying that basically shows you the future. In reality, it is innovation is a given. You will always have innovation. You'll have innovation in the means of payment. You will have innovation in infrastructure. I mean, just look at countries even. Forget DLT. Look at India from 10 years ago. Look at Brazil from 10 years ago. Look at China from 20 years ago. Look at any of these places. They have gone from a heavily paper based, generally grayish type economy to a much more transparent, almost zero cost electronic economy in each of these countries. So innovation is happening all the time. And in our mind, I think all that basically shows us is when we looked at DLT 10 plus years ago, this is when Ethereum came about, we looked at it as a technology that could potentially disrupt JP Morgan, not just from a payments point of view, but from a securities point of view. The number of companies who were leading in their space and then they went extinct in 20 years is quite high over history. So we wanted to make sure we were ahead of the cycle. We basically started to build our own solutions at that point in terms of payments. Now, in our mind, stable coins, commercial bank money, central bank money, all these things will coexist. In reality, things coexist. Even if you're sitting in the U.S., PayPal coexists with banks who coexist with the Fed. In Singapore, Grab coexists with DBS, which coexists with MAS. Like, these things just coexist and work with each other. You know, you can decide if one thing is going to be 5% of payments and one thing is going to be 25% of payments, but these things will coexist, and they will form an ecosystem. Certain things, as has been said already by most of the panel, are done potentially better with stablecoins. For instance, today, if you want to actually trade on crypto rails, there is no better means than a stablecoin. And I would argue that Jeremy and Jeremy's team run probably one of the most controlled, most compliant stablecoins that exist today. Similarly, if you are talking about store of value outside the U.S., stablecoins are probably an easier way to go than anything else. Retail, it's fruitful for disruption, especially end-to-end global money movement, though it remains to be seen what the reaction on the KYC front will be. And to Ajay's point, can you actually use this stablecoin on the other end? Would central banks want to get dollarized? I mean, there's a lot of questions that come in. On the wholesale side, too, there's interest. But I think we feel that our clients, and we serve basically pretty much everyone in the Fortune 20, and most of them Fortune 50, They want to use the upsides, the stuff that Jeremy mentioned in terms of programmability, always on, 24-7, no cutoffs. They're not actually concerned about whether they use stablecoin or commercial bank money or whatever. Whoever provides them the right solution, they will use it. So I think that's how we thought about it. We'll sit in the money stack between M0, which is central bank, and M2+, which is essentially where stablecoins are. We are the middle of the stack.

So do you see, I mean, Kristalina raised the risk of fragmentation as one of the bigger risks.

I think it's actually probably the primary risk to stable coins is having too many stable coins. Because at some point, you might get into a singleness of money issue, which becomes overwhelming. So if I have to go to Starbucks outside and then figure out which dollar I'm going to pay with, that's a problem. And at that point, I will go, you know what, I might as well use the U.S. dollar cash versus going to anything. So I think we need to preserve singleness of money. Right now, we have a few big players. But I think one of the side effects of Genius and others is there has been a bit of a Cambrian explosion of everyone and their uncle who wants to launch a stablecoin. Who knows how many will survive, but I think that becomes a threat.

So, Jeremy, what do you do about that? How do you get rid of all the others?

Yeah, I mean, I think stable coins today are actually their Internet platform utilities and networks. So if you think about something like USDC today, it's a platform in that it's an open protocol anyone can build on top of. So tens of thousands of developers who are building software, who are building financial products and services, can openly just connect to this network and connect to this protocol. And then they have a nearly free dollar storage and settlement system that they can plug into. And so it has classic platform network effects. It has classic developer flywheels. As developers build applications that integrate to the network, it increases the utility of the network, which attracts more developers to build to the network. And it's why if you're building a product that needs digital dollars on a blockchain today, you're going to support USDC because you would be at a competitive disadvantage if you don't. And so one is that you have this platform utility network effect model. The other is that stable coins today have liquidity network effects. So ultimately, you have an asset that has to be liquid against another asset. And the liquidity is a network effect. The depth of liquidity, the width of liquidity, the reach of liquidity, the actual primary liquidity with the existing banking system, the secondary market liquidity with banking systems and electronic money systems around the world. And those liquidity network effects are huge as well. And so the marginal value of a net new dollar stablecoin is effectively zero. Like it doesn't bring any liquidity. It doesn't bring any utility. Now, there will be people who have distribution or utility who bring that and say, hey, I've got a new dollar stablecoin and I have this other utility. And we've seen examples of that. You know, some of the biggest payments companies in the world have launched dollar stable coins with, you know, where they have hundreds of millions of users, but there's only a billion or two in circulation and the actual amount of transactions that happen with it is in the tens of millions of dollars a day versus the tens of billions of dollars a day. So I think that my view is that the stablecoin market, at least in the dollar world, is a winner-take-most market structure, not a winner-takes-all market structure. So that means like other internet networks or card networks or major utilities on the internet, there are like three to five players that achieve scale. And then there's a distribution across those three to five players. We think we'll be one of those. We are one of those. we think will remain one of those, but I actually think that there's probably two or three that don't exist yet that will exist over the next five years. And so I think that the market will evolve because of compliance, because of regulation, and that we're seeing now, I think, major companies who have utility or distribution or who can bring their own liquidity, who can provide more there. But I don't see a world where there's hundreds of these. I think the singleness of money issue is there, but I think the underlying issue is that these are platforms and networks and utilities and they behave like that. And that's the nature of internet software utilities. And this is an internet software platform game, not a classic monetary system game. It has aspects of both. But I think, you know, this is as much shaped by the internet's DNA than it is by the monetary systems DNA.

Ajay, what do you see as the, so fragmentation, what do you see as the big risk as we sort of barrel into this future?

I'm kind of where he is on this. I think of this like a rail. It's rails. And there are alternative rails that will exist. So that's the point that we were making just now. These are strong rails because they've got certain benefits to them in terms of faster, cheaper, better. But other rails are getting faster, cheaper, better too. So this It's going to be an interesting, competitive and coexisting move over a period of time. I don't think Jeremy and his people have ever said that they're out to replace everything What they're trying to do is to create a utility using the internet, which did not exist before they started thinking about it this way, which is why he's such an interesting guy in the way he thinks about it differently from some of the others. The challenge here is at the end of the day, you still need this on and off ramp that I referred to earlier. That's the point they were all making. That's because you still have to connect back into the banking system. I can't see myself walking into a Starbucks where I already have to choose between 27 different types of coffee to now add 14 types of payment systems into it. It's not going to happen.

So what, is this going to be the dollar? So is it just going to be the dollar?

I mean, effectively as of today or some other two or three choices will emerge where the USDC will feed into a wallet that becomes the principal use point there. and I can see him doing something like that pretty cleverly. I think that'll be a good move, things of that nature. But I don't want to give away part of his business strategy because I know how he thinks, but that's what he's going to do. And I think that's a good competitive move. So the challenge at the end of the day is, in the world of finance, trust is everything. Regulations are interesting and important to create the level playing field that enables players to play on it, but eventually it's built around trust and the monitoring of the regulation and its enforcement. If that trust breaks down, there'll be a problem. If you are dealing with the emerging markets, which is my primary focus, my focus is not the developed world, that's Kristalina as well. She does the whole world. I actually am called the World Bank, but I should be called a developing markets, emerging markets bank. That's where my focus is. In those markets, regulators have an interesting challenge ahead of them. It's unlikely that each of those countries will create their own stable coin. Unlikely. If that be the case, how do they operate in their country with stable coins that are regulated in a jurisdiction outside of where they are? So you'll end up with an interesting discussion that Jeremy is already having, I know, but we've been having this for a few years, is that those guys are going to have to say, I can trust the regulations and the proprietary systems of the United States over this country, over that country. So if it's regulated in the U.S., I'll accept it. If it's regulated in Singapore with high quality of regulation, I'll accept it because that's what the MAS stands for and so on. That's going to be an interesting issue for these countries to work with. They can also choose, therefore, what amount of a stablecoin can be transacted at any point of time. So they could create barriers that enable them to bring a degree of regulation around something which they don't know how to regulate today. But over the coming three to five years, they're going to have to come to terms with this topic. And that, to me, is where I'm focused.

I mean, it sounds like, Kristalina, a job for the IMF. Can you do some sort of central regulation or a way to bridge the gap in different countries having different regulations around crypto so that there can be trust in places that Anji is talking about?

For the IMF, at this stage, which is still things are developing, actually our most important job is to clearly define what is what and why. and then work with our members so they can see themselves in this rapidly changing environment. First, recognize that we need to differentiate between the underlying technology and the functionality of this technology. So we have a distributed ledger technology. We have blockchain. Blockchain can be used for all kinds of things. blockchain can be used to get other assets, to get securities, to get other things on the blockchain. So not necessarily blockchain equals crypto money. And yet many people confuse these two things and we actually have to help countries to see through the possibility of moving towards tokenization of other things. So one day, money, let's call it money, and assets may be moving on the same blockchain. How do we cope with this? Second, it is very important to differentiate there is digitalization going on in fiat money. And it is very good and very powerful. Then there is unbacked crypto. Most famous, of course, in the unbacked crypto is Bitcoin. And then there is stablecoin with different degree of stability. And on top of it, we have CBDC, Central Bank Digital Currencies. I saw actually, and I'm sorry, I should have waved immediately, Madame Digital Euro, Christine Lagarde, moved in this corridor. The debate around CBDCs from countries that say absolutely not never to countries that say, hey, that's a useful thing to have. So we have multiple developments that complement but sometimes possibly contradict each other. And the third issue for our membership is to anticipate the impacts of developments elsewhere. I see the governor of the Central Bank of Kazakhstan. Kazakhstan, very advanced. they actually are experimenting with Tenge stablecoin. They are experimenting with Tenge CBDC because they want to understand this new world for themselves and other countries are doing it. We know that U.S. dollar-backed stablecoins are overwhelming. 97% of stablecoins today is U.S. So countries have to ask this question. What does it mean? Are we going to then have monetary policy paralysis because of currency substitution? What do we do? And then you hear very different opinions from let's just ban this, ban this guy. To know we are going to experiment, learn on our own, have something that is ours in that same universe and deploy it. And we as IMF, we need to help countries understand their choices, understand the risks, understand the opportunities. And frankly, when I talk about risks, we have to also concentrate on the risks that really matter. First, interconnectedness. Are we going to be in a fragmented world in which these things don't talk with each other, cannot operate across, and the regulatory environment is so messed up that we actually create more frictions. Second, currency substitution, and actually to everybody here, remember that countries even with fiat money, if they have weak fundamentals, often rely on somebody else's currency. In the Caribbean, 25% is dollar, not the national currency. Is this going to get worse, or is it actually worse, So it may be not so bad. And the third one is how payments are made. Today, digital, let's call it crypto for simplicity, is to a high degree used for investment purpose. Like Bitcoin is an investment opportunity first and foremost. There is a little bit of use for payment, but that's not the main purpose. are we going to move to a world in which stablecoins would be a big part of the payment, cross-border payments? And if we go in this world, what does it mean for the international monetary system? What does it mean for our members? So I'll tell you, I look at this audience, and what amazes me is how many people have chosen to come here even standing because these are big unanswered questions and what we do at the fund is to systematically identify what the question is, what are potentially the answers, and help our members walk through those answers carefully.

But generally you tell them to embrace it? I'm telling countries, accept reality.

Fiat money is moving digital. The developments in crypto, both unbacked and backed, they're happening with exponential speed. So, yeah, you can try to lock your country away from this. Good luck with it. So, yes, I'm telling my members, understand it, and then decide for yourself how you're going to operate in this world. But do not close your eyes to reality.

Georgine, one of the questions that the MD raised was on monetary policy and what the implications are for that. She raised it a few times. It's something that I wonder a lot about. as the adoption grows of digital money, digital currency? Is that a threat to central bank policy?

So that's an important question. And before I get there, I thought I'd pick up a few points from the panelists as well. We've been thinking about this quite hard. And just picking up Jeremy's point about the race to liquidity, which is what is happening. So Circle is building its own application-specific network. JP Morgan is building its own application-specific network. And there are other coalitions that are forming, that are building their own networks in a race to scale. They want to attract developers, they want to attract products, and they want to attract participants onto their networks and to scale that. Now, from a public policy perspective, I think we're not indifferent to the outcomes of this competition and this race. If the outcome of this competition and this race is a small number of monopolies, I think that would be a public policy preference on that point. Or if it results in a fragmented landscape of subscale wall gardens, I think that would also not be optimal from a public policy point of view. So actually, we've been thinking about this together with the regulated side of the industry about pre-positioning in terms of the outcomes, that it's much better to start building bridges and start putting in place the conditions that bridges are built between networks, even as different networks now race to scale. And this is critically important. If you want tokens on one network to be able to port over to another network, you need to design this right from the start with the same consistent principles and standards. And so a lot of the work that has been started through what we call the Global Layer 1 Initiative, and this is a coalition of private and public sector policymakers and private sector regulated institutions, to start having these standards in place so that networks can be interoperable. And so we have that optionality for tokens to port over one another. So that's an important part. The second part of this is that as we think again about the tokenized world, there'll be different products. There'll be fixed income, there'll be securities, there'll be FX, there'll be funds, and so on. Now, again, as we race to build each of these networks, Each network builder may have its own definitions and formats. Again, it's important that one token means something to the whole set of people, rather than different things to different people. And so, again, standardization is an important part of this. And so, you know, collaborative initiatives through a coalition of public-private sector, again, is being done. We call this the Guardian Project. and they go through asset class by asset class to see what are the areas of standardization that might be needed, have these published. So these are global public goods so that there is portability and there's the possibility of these being transacted across different networks and different chains. So that's important. A quick word about singleness of money. I think it's a hugely important issue. There's probably an optimal number of stable coins between one and infinity is probably an optimal number. The fundamental challenge is value stability. It's still early days, and it's not completely proven. It's not empirical yet. It has to be proven. The history of unregulated stable coins has been patchy, and there have been periods of time when unregulated stable coins, the traded value has deviated from par. We hope for a better record with regulated stablecoins. But regulations are only now being introduced, and we still have to see the fine print on many of these frameworks. And the quality of the supervision could vary. The quality of the regulation could also vary. So it's early days yet to see how that plays out. But it's, I think, critically important to the stable development of the space that good, reliable stablecoins, good, reliable settlement assets are available. There is the option of stablecoins. There's also the option of tokenized bank liabilities. There's also the option of CBDCs. And so I agree the views that, you know, different networks may try different combinations of these. The stablecoin aspect will have to be particularly important to build because with tokenized bank liabilities, there is singleness of money because it just tokenizes an arrangement that is already there, convertibility of commercial bank money with central bank money, which underpins singleness of money. Stablecoins have yet to have that arrangement, and so it's important that through regulation, they're able to achieve solid value stability. So I just can't emphasize that enough. Now, over time, regulations could develop, as stablecoin circulation increase, some may achieve systemic importance or cross-border importance. Then it becomes, I think, important for central banks to consider whether they should have access to central bank reserves. They should have lender of last resort availability and so on. Again, to bring them into the space of money and to consolidate the singleness of money. But we're probably not in that space yet. And it's probably still seen as, letting the primary regulation of stable coins settle and consolidate before we consider if systemic coins need to achieve the same status as commercial bank money. So that's another step forward.

So risk to central banks, but what about to traditional banks and whether it's a risk to deposits in the model?

So again, the way we look at it, we don't feel this is a gigantic risk as such. I think, again, it's a coexistence model. So, for instance, you know, maybe to address also a couple of points, for our large clients, they don't want to fragment liquidity. And what that means is they don't even want to bank with, like, five big banks across the world. So, some of our largest clients will have, you know, deposits all over the world. Let's say they are rich in Singapore dollars. They want to draw down in London. We will let them draw down in London because they have money in Singapore with us. So there is a tremendous amount of value that comes from a large corporate having money all across the world and they can deploy the money from anywhere to anywhere instantly. So that becomes a bit harder when you go into a multi-instrument model where you have deposits, you have stable coins, et cetera. Again, I'm not saying that can't happen, but that's probably a longer cycle to get there because our view has been ultimately, again, learning from the circles of the world and frankly, from the crypto community in general because whenever you have a very large open source community trying to innovate, you better look at them because they will come up with cool ideas. You can then take those ideas and deploy them in different ways. So our clients, for instance, they can be in our framework and do real-time effect because we have tokenized versions of euros and we have tokenized versions of dollars. They can do programmable FX transactions like we do with clients like BMW that we announced. so they can set conditions and automatically execute FX transactions. They can then, if they want to leave our quote-unquote wall garden and connexus, now we have a JPMorgan deposit token on a public blockchain. They can go from there to a public blockchain. Then let's say they want to go buy USDC. They can actually use that JPMD and go to Coinbase and buy a bunch of USDC. So ultimately, you are then part of the ecosystem front to back. And so I think from our point of view, if you don't innovate, you do run a risk of becoming less relevant. If you do innovate, not only do you learn and make things better, but you, frankly, are much more relevant in the long term. And then maybe a couple of the points on the cross-border piece. The one thing, again, in a very similar vein, if various regulatory bodies and infrastructure operators were to look at what the future looks like, they would do certain things. So, for instance, you can do instant payments, as I said, in India. You can do instant payments in Singapore. It is actually quite difficult to put those two instant networks together. Now, Singapore has done it, actually. MAS did that with RBI, I believe. In reality, these various islands have to figure out how to talk to each other, whether they use, at the back end, just regular rails, whether they use stablecoin, blockchain, doesn't really matter. But money should be movable at low cost across borders in any amount of, in any denomination. So I think that's something you can learn from stable coins. And then I think on the risk side, I feel there's going to be disasters by definition. I mean, look at how long banks have been regulated. We've been regulated for hundreds of years. But around every 10 years or so, some group of banks tries to blow everything up. And, you know, for, you know, whether they're doing or not they're doing. So things go wrong, and it usually comes from building leverage in the system, which is not monitored. People don't control it. That's why regulation is so important. So stuff is going to go wrong in this space. It's going to go wrong in the non-backed space. It is going to go wrong in the backed space. The question is going to be what's the regulatory framework, and can we recover, learn, and be better on the other side?

Go ahead.

I just wanted to answer your question about monetary policy very quickly. So I would say two quick points about that. I think the first point is that achieving monetary sovereignty in an emerging market context has always been an important issue. And the key to that is probably technology neutral, the key to that. And the key to that is sound policy, as Kristalina has said. And from my region, we've gone through that journey. From the Asian financial crisis of 1998 down to through the COVID period of time, I think we've seen our region gain substantial monetary sovereignty and control over monetary policy. And that has been the result of putting in place much sounder policy frameworks, macro frameworks, so that fiscal deficits can contain, current account balances are also managed, FX imbalances of the corporate sector and the banking sector are closely monitored, and so on. So, it's a result of sound policies that you achieve more credibility for your currency, and therefore there is less to be concerned about in terms of a dollar risk. Now, the second quick thing I'll say about this is also that I think for stablecoin development, it's important, again, that we do this on regulated rails, within regulated perimeters, so that compliance with domestic regulations in each cross-border jurisdiction is built in, automated, respected by that token and on that chain. So it's very important to have compliance by design within that network and that chain. And you can program in compliance with AML-CFT rules and you can program in compliance with capital rules of each country that coin is circulating in. And that should address the different measures that countries may have in place for this. So I think those would be my two quick answers to that point.

Ajay, everybody here wants to see more regulation, it sounds like, to build the trust and to build the infrastructure and the framework. What do you think would be a single good idea or example of regulation that we need to see, either country by country or broader?

In the case of the emerging markets, we can help them with modernizing their payment systems. We can help them get their KYC AML capabilities in a better shape. But on regulation for a minute, the tokenized, I just heard the word tokenized being used many times. Tokenization is a very big word. Because I'll give you an example of tokenization, which has nothing to do directly with this panel, but it's a very interesting example. If you took real estate, 30 Rock in New York, And today it's just a lump of real estate with a bunch of tenants and some owners. Imagine if you took all those leases and all the costs of maintaining it and you computed all that together and you took that and converted that whole thing into a set of tokens and you began to trade those tokens. You would create a secondary market for retail investors in a big lump called 30 Rock. that's a different kind of regulation from the regulation of how to use tokenization for currency. I think we've got to be very careful when we do regulation to ensure that we don't kill innovation in the process of doing regulation and we end up regulating the wrong idea. So the point that we were hearing about, you know, when open source is going on, there's a lot of smart guys doing stuff. This is the kind of stuff they're thinking about. Some of this could actually be relatively unregulated. and allowed to prosper and grow, and others need to be controlled and managed. And that's kind of where I think we've got to be careful when we advise our emerging markets clients to be able to understand this. This is a relatively sophisticated discussion when things are relatively unknown in the space, when you come to the kind of countries we're dealing with. So I'm kind of conscious of doing this carefully. Don't throw the baby out to the bathwater. Regulate correctly, but don't overregulate the system. I think that's how Singapore has also, over the years, managed to draw a very good thread through the needle.

Right. Jeremy, is the Genius Act an example of good regulation? And what else has to be done here?

Yeah, I wanted to actually say something that ladders off of Ajay's comments, which is both were very early. I think there's a temptation when we're talking about some of these topics, take stablecoins specifically, there's a temptation to try and look at history and look at the past and try and superimpose that on the future oh we have faster payment systems here this is a new faster payment system there oh we have uh you know we we have these you know wholesale models and these retail models and it's really looking backwards to try and look forwards especially when you're dealing with exponential technology is very challenging, which underscores why we need light touch regulation, because the technological progress is happening so rapidly. And my own view, for example, is that in, you know, five years' time, like, the concept of a cross-border payment is going to sound like a cross-border email. Like, when is the last time you sent a cross-border email? It doesn't even make sense. When all of these people had their SMS charges on their mobile phones in emerging markets, and then they all had WhatsApp and had free communications globally, they weren't asking anymore about data charges and their cell phone SMS. They didn't care what SMS was. It was gone. And billions of people were communicating directly, freely. We're going through an an exponential curve. And, and I think that the, the innovations are, are things that we haven't contemplated. And that's a good thing. That's actually a really good thing. I use the metaphor of, of mobile. We all remember for like 15 years, like there was a, everyone was trying to build the best mobile platform and there was the Symbian phones and there was the Palm pilot and there was the blackberry and there was the you know windows phone and they were all terrible and and like a hundred thousand people a year would get together in barcelona and go to mobile world congress and say you know we're inventing the future this that mobile and none of it worked and there were billions and billions and billions of dollars from major communications companies major device companies and it all was terrible and then you got a platform paradigm shift You had a good operating system, iOS. You had good user experience modalities. And developers were given the freedom to innovate. They were given an open surface area where they could create things. And anyone could build an application. And if you remember the iPhone, the very first ad campaign was there's an app for that. And it was this recognition that invention is happening. And industries were revolutionized by that device and by that convergence of compounding technologies. The compounding technology of blockchain operating systems, of stablecoin money, of AI, agentic infrastructure, it's on a curve that is, I think, going to lead to a world that looks radically different. Monetary sovereignty will be challenged. I think we just have to face that fact. There will be fewer currencies. I think we have to face that fact. and we're going to have intermediation and integration economically with velocity that we've never seen before. And these are wonderful problems to have. And it also suggests that a look-back approach to superimpose past regulatory models on the future is very challenging. So agility in regulatory responses becomes critical, as we're seeing in AI. Like, No one's racing to over-regulate AI right now. There's agility. There's close supervision. There's looking at trying to deal with the negative externalities. And we've never had that in the financial system, but I think we're now entering that era.

Just the one thing I'd add, if I could for a minute. I think it's useful to distinguish between platforms, applications, and services. And the thickest layer of regulation needs to be on the platform because that is the core of what everything else is built upon. then you get lower levels of regulation as you go up that chain. Think of it that way. And I think that fits perfectly with what he's talking about. And that's the way to think about regulation in this space in the coming years.

Kristalina, President Trump has said that he wants to see the U.S. be the crypto capital of the world. Will it be?

I'm sorry, which one? The United States.

United States, uh-huh.

Crypto capital of the world. Well, I mean, at this point of time, most of the innovation is here. But as we heard, the future can dramatically change. And I would say this. There are three things that will not change, I dare say. One, the importance of trust. Ajay talked about it. We see today what is trusted and attracting people's money and attention. Gold. So how can, and that takes me to my second point. There has to be agility but at the same time there has to be a sense that you can anchor your economic behavior into some predictability and this is where some common standards and compatible policy action of governments have to be in place. And my third point is kind of obvious. We need to talk with each other. We need to work together. We need to cooperate. And boy, I want to start where you let me. I would, as a head of an organization of 191 members, I want all my countries to be proud of what they do. And, you know, frankly, capital, he doesn't care as long as everything flows well. Can I ask the audience a question?

Yes, in the final minute.

We are running with three seconds. Okay, audience, are you more comfortable now with the world of tomorrow after this panel?

Okay, can I ask a question that's related? Are you or not?

Are you more comfortable or are you more scared? They're more scared. Okay. So we have done our job. You know, you got everybody to be deeply thinking of what the future would be.

Show of hands, including the panel and the audience. How many people own a stable coin, a Bitcoin, an Ethereum, some sort of crypto or digital currency? MD, are you raising your hand? how can I talk about something if I don't touch it so yes what price did you buy bitcoin just kidding everybody thank you very much for joining us thank you especially to our steam panel I think we learned a lot