Governance Models for Global Stablecoins & Digital Currency
Global stablecoins such as Centre Consortium’s USDC and Libra Associations new family of stablecoins are on the rise, giving way to coordinated regulatory responses for these innovative new forms of digital currency and payment systems. At the same time, governments and large financial industry actors are examining what digital currencies backed by central bank money might bring in terms of new opportunities and risks.
All of this is increasing the attention on governance models. How should global stablecoins be governed? How can standards be established that work across leading stablecoin arrangements, but also contemplate and support government-sponsored and led digital currency projects? What’s the role of the public sector vs. the private sector?
And, how can we learn from the lessons of the past thirty years in the development of other internet standards, open source software and decentralized internet infrastructure? As the internet collides with money and the financial system, governance models are starting to take centre stage.
Listen to this Money Movement episode to learn more about governance models for global stablecoins and digital currency.
Jeremy Allaire: Hello, and welcome to The Money Movement, a show where we explore the issues and ideas driving this brave new world of digital currency and blockchains. Global stablecoins such as center consortiums, US Dollar coin, Libra Association's new family of stablecoins are on the rise, giving way to coordinated regulatory responses for these innovative new forms of digital money and payment systems. At the same time, governments and large financial industry actors are examining what digital currencies backed by central bank money might bring in terms of new opportunities and risks.
All of this is increasing the attention on governance models. How should global stablecoins be governed? How can standards be established that work across these leading stablecoin arrangements but also contemplate and support government-sponsored and led digital currency projects? What's the role of the public sector versus the private sector? All of these are questions that we're thinking about in this realm of governance.
In particular, how can we learn from the lessons of the past 30 years in the development of internet standards, open-source software, decentralized internet infrastructure, all building blocks that digital currency is taking advantage of and that these new kinds of systems and schemes are building on as well? As the internet collides with money and the financial system, governance models are really starting to take center stage. To discuss all of these issues and more, I'm really thrilled to welcome our guests this week.
First, Sheila Warren, who's head of blockchain and data policy and a member of the executive committee for the World Economic Forum where she has spearheaded the formation of a global consortium for digital currency governance, and Dante Disparte, the vice chairman and head of policy and communications for Libra Association and emerging global stablecoin arrangement with broad industry backing where I'm also here as circle CEO. I'm also here as Co-Founder and Director of Center Consortium, which is an emerging governance framework for global stablecoins, including the USDC standard. We are welcoming Sheila and Dante to join us right now. Hey, Dante.
Dante Disparte: Hey, Jeremy. Good to see you.
Jeremy: Good to see you as well. Hello, Sheila.
Sheila Warren: Hi, there.
Jeremy: Excellent. Awesome to have you guys on today.
Sheila: Thanks for having us.
Jeremy: Why don't we start with something really basic, for each of you. Sheila, maybe you could start. What is this new global consortium for the governance of digital currency that you have helped to spearhead at the World Economic Forum? Maybe just talk a little bit about that agenda and what you're trying to accomplish?
Sheila: Sure, my pleasure. As many know, we issued a CBDC Policy-Makers Toolkit at Davos this past January. That reflected 18 months of community building in the CBDC space with Central Bank technologists and was the response to a demand signal from them that we create a toolkit for policymakers to understand the trade-offs and considerations in the issue of the CBDC. The digital currency governance consortium is the next phase of that work if you will. Our idea was always to start with CBDCs. They were more palatable, shall we say, to the Davos Crude, our community. We thought there was so much innovation happening there already, and there was need of a more objective guide to that particular kind of offering.
It deals with the DCGC, as we call it, Digital Currency Governance Consortium. It's aiming to do the same thing with stablecoin. Key things to note, there will be no coin issuance. This is not a consortium in the way that we think about it like Libra Association or center or others that exist in the space. We are simply here to look at policy aspects to specifically and governance aspects around the issuance of digital currency, stablecoin. What we're trying to do is identify where are their themes, where are their gaps, and where are their trade-offs that we can help elucidate using the forum's history of objectivity neutrality that articulate what those distinctions might look like.
Jeremy: It's an extremely important project obviously, and thank you for that introduction. Dante, maybe similarly, in a nutshell, what is the Libra Association? What role does it play in governance around Libra? Just a quick description there for folks.
Dante: Libra Association is now a year-old effort that is also a consortium driven effort today comprised of 27 member organizations that are building a blockchain-based payment system, and the supporting stablecoin infrastructure to be able to create the infrastructure necessary for digital money to exist but also to facilitate lower-cost payments at global scale.
Jeremy: That's awesome. I'll just briefly also share. I'm also Director of Center Consortium. Center Consortium has been around, for now, a couple of years. Circle and Coinbase both were members of that, and it governs the US Dollar Coin Standard. There's an ecosystem at now a few hundred companies that are involved in supporting and implementing that in different ways.
We're also thinking about, "Okay, now as this moves into the realm of government oversight," as this moves into the realm of major existing financial industry stakeholders, figuring out what's their role in this. This isn't just crypto startups anymore, this is moving into a very different tear. All of us are collectively thinking about, what are those global governance models, and how are those going to scale to support this opportunity?
Governance as a concept means a lot of different things to a lot of different people. Sometimes people think that literally means government, like what's the government going to do? Obviously, there's this long history of governance and technology, on the internet, governance of standards, governance of financial networks. With this global digital currency, what is governance? What does good governance mean? What does that going to look like?
Sheila: I'm happy to take a stab at that. Dante and I have a pact to not talk over each other, but it does [unintelligible 00:07:04].
Dante: I promise I'll keep it up.
Sheila: I'm going to try. For us, at the forum, rather I should say, governance is a couple of different things. One, it's the enabling infrastructure that surrounds any particular issue. It is the regulatory framework. It is, to some extent, government policies. It is almost a cultural, understanding the money, what money is. All those kinds of things we think make up the broader governance enabling environment.
It's also the rules of a specific game. Any particular issuance is going to have [unintelligible 00:07:38] consortium or whatever it might be, is going to have its own rules, its own operating model. All of that makes up the governance as well. We think about it as almost internal governance and external governance. Both of those things need to operate in continents.
Part of what's really interesting is, I think, in the early, early days like the Bitcoin-only days. There was this reaction to the external governance if you will. It was very, very reactive. The internal governance was a key area of focus, but that interaction between these two different layers wasn't something that was given a tremendous amount of attention, even though it was obviously thought about. What we're trying to do is draw those connections with the work that we're doing, but all of these things are really important.
Dante: If I could just build on that. All too often, big technology efforts, including the early, early movements in digital currency tended to be projects that would ask for forgiveness rather than permission. Then we've learned the hard way over the last 11 years that this's a very, very complicated model, and it often then means that these innovations are framed in opposition to existing systems, especially when you're talking about money and finance being in opposition to a regulatory regime or compliance team is one not great for longevity, and two, it's not really great in the public interest.
We have to remember that a lot of these external factors that much of the early wave of the digital currency movement was railing against or candidly might have been even designed to avoid altogether. A lot of those regimes around the world are established in response to whether it's market failures and crashes and the rest as a response and a reflection of public interest.
I do think it's vitally important that the governance movement today. I'm encouraged by the work that Sheila is leading at the WEF to help try to build a consortium here is that the more we can harmonize these interests, the more we will learn that there's actually not a ton of conflict between a stablecoin project that is trying to get regulated, and what is ultimately the type of public interest that we now see.
In this type of crisis, you could see exact very big bright spot areas where those interests are now starting to converge, whether it's a government-backed digital currency, or private sector initiatives. You're starting to see a lot of alignment here.
Jeremy: When I think about this a little bit and some of what you shared, Sheila, also made me think of these as these layers of governance. You've got the Internet Engineering Task Force governs TCPIP. Who's that? It's international organization. It's a bunch of IP, a bunch of academics, it's out there. Then you have these other things like a blockchain. It's like an operating system and it's an open-source project and-- "Well, how's that governed?" "Well, it's informally." There's a community of people, and people get power to approve poll requests. Then there's the governance of who validates transactions. Then there's a governance of protocol on top of it, and then there's a governance of what laws apply to the use of that protocol.
It's just layers and layers of governance. A lot of times, when people think about digital currency or global digital currency, they want to think of it as just this one vertically integrated stack that you can govern, but what we're doing is we're building on all of these very diverse systems of governance that we can compound value from. Now the work that the WEF is doing and consortium and others are doing is really trying to bring that all the way up to the world leader stage and bring that all the way up to like, "How do we as a planet organize ourselves around this particular technical breakthrough?" It's interesting.
Maybe given the focus on global stablecoins or the stablecoins that have really broad reach, there's obviously the-- This is principally a private sector phenomenon today. Sheila, when you think about that interplay between public policy, the financial market infrastructure/financial industry, and then these new arrangements that are out there. What would you hope to see out of the governance work that you're doing to address the rise of stablecoins?
Sheila: We have the luxury of not being weded to any particular modality or any particular offering or any particular issuance. What we're hoping to surface are the tensions and trade-offs, which we think are inevitable. There is room for different kinds of CBDC issuances. Different kinds of stablecoin issuances with different basket behind them and crypto for the matter. Pure crypto as well, and there is a role for all of these.
there is this sixth grade social studies notion, that we start with CBDC. Then we become more enlightened and we graduate to the stablecoin and then we graduate to crypto. I just want to blow that out of the water. It doesn't make any sense. Those things are different offerings for different purposes, and so to Dante's point, we are seeing some convergence in-- I would almost say the forced ranking of priorities, but the reactions to those are different.
Certainly, if you are [unintelligible 00:13:24] or I just call them out, whatever. There's a lot of other bodies as well, the SEC. If you're a regulator of certain kind, you have a very particular point of view, obviously. If you are a Bitcoin maximalist, which again, not to pose those as opposites, but to some extent, they are. [chuckles] Maybe we can just own that here. You have a very different point of view, but that's in part because you're focusing on a very different problem, and you're focusing on your perceptions of that problem.
Part of what I'm heartened to see is academics turning to articulation of the problem space. In addition to the design questions that come up, and we're hoping that as we see more and more of that, we're going to be able to really ground in a common understanding of what the different problems are and what types of offerings are of most value and where that value can differ. Financial inclusion is a great example. Remittance is a great example. [unintelligible 00:14:18] settlements is a great example. They have different requirement.
You can think of them as different use cases, which they, to a large extent, are and how do we articulate the nuance there in a way that can translate into governance and into an underlying governance framework. That is the real challenge and where we feel we can play a really strong role because again, we don't have any of those particular use cases as at paramount importance, and we're not trying to in any way assert that one of them is the priority over another.
Dante: If I can add to that as well, Jeremy. To me, this entire asset class is not as much a breakthrough in technology but a breakthrough in organizing principles and therefore governance. Not since the earliest, earliest days of the internet and the era of tech titans have we seen a space so desperately in need of regulatory clarity and alignment with all of these external interests for it to continue to blossom and thrive.
Oftentimes people dismiss blockchain efforts and crypto efforts as a race to the bottom and that a lot of these projects are looking for regulatory havens in different locations. This is not about arbitrage. If we get it right, it's about empowerment. Sheila hit on a very important point about-- In the regulatory domain, they talk about same risk, same rules, or technology neutrality. It tends to be difficult to put into practice. From a practical point of view, when you describe them the tokenized asset or the digital currency, I also think it's important to add another layer to that same risk, same rules model, which is regulate the economic behavior of the digital asset.
Don't create a catch-all model where all crypto is bad. Not all stablecoins are created equal, not all CBDCs are created equal. Hank Paulson wrote a great piece recently that said, "A digital version of a currency is nothing less than the sum of all the parts. If all the parts are also bad, a digital twin will also be bad." The governance breakthrough here will do more for the mainstreaming and the mass adoption and all the good that come of this space than the technological breakthroughs.
Jeremy: I see that. This is like the, "What is standing in the--" There are technical things that need to happen. There's usability things that need to happen, scalability things that need to happen, those various things that are moving along. As a technologist, those are solvable problems, and I can see that right on the horizon. It's these governance issues that are going to allow a person, a business, a government to say, "Yes, this is the future of the international monetary system and financial system and to have the rules in the road and know how risks are managed and so on.
Sheila: That's exactly right. It's a tremendous opportunity, and rather than just digitizing our existing system with all of its flaws, [unintelligible 00:17:09] flaws that currently exist, with all of the dynamics of power, and the balance that exists there or doesn't. The imbalance I should say more accurately and the exclusion that is inherent to our current system, we have a chance to rethink some of that. We can rethink that using governance, and then we can apply whatever technological layers going to be of most benefit to that.
I should note also just because I didn't that we're technically agnostic. Our CBDC policymakers toolkit does contain discussions of where a blockchain is of value and where it might be of less value. We certainly think that there are and will be explorations of CBDC that have nothing to do with a blockchain that really just leverage more ordinary, let's say, technologies, and the same thing may wind up being true for certain stablecoin issuances as well. We need to be examining very thoughtfully and holistically where a technical solution is actually adding value, and that value is coming from a new governance model.
Dante: If I can add again another general philosophical point here. In my mind, if we accept the narrative that finance has reached a point of diminishing returns, i.e., a world with 1.7 billion people unbanked, 1.3 billion underbanked, the inability for you and I to send value to each other instantaneously as easily as we would send a message or a video or make a phone call, that perhaps if that is in fact the case, that we can no longer extend the perimeter of the formal economy short of big scale innovation.
Then these types of innovations aren't necessarily competing with the existing financial system but perhaps completing it as one thesis. We do want to encourage a lot of innovation, a lot of vigorous competition around all of the edges of these ideas. The other piece of the puzzle is the external environment is the rulemaking environment, and so the more bodies like the World Economic Forum, The Financial Stability Board, and a number of other groups that are starting to coalesce. On top of which, you then have something like 70% of the World Central Banks thinking about CBDC or experimenting with it, to me, that's a very encouraging environment. We need to move.
This is not something that is going to get better with time. The condition of being excluded from the financial system, and it's a source of an enormous amount of risk in the planet. The pandemic has only just revealed that its fortres nations, just as much as developing and emerging countries, are being plagued by very deep sources of financial exclusion, and unless people come up with better fixes faster, these issues aren't going away.
Jeremy: Now I see that. It's perfect timing on a lot of fronts from that. I wonder, there's these lessons that we draw from other phases of innovation in the internet. That's a common theme. There's obviously lessons we can draw from. Electronic money itself like the birth of messaging standards like Swift, the birth of card associations. What we think of as electronic money today, whether it's fractional reserve commercial bank money or Central Bank money, all of these ended up happening at scale when broad stakeholders got together to agree upon standards, to make sure that those standards and how they operate work within the law, and the governments be comfortable with them.
As you said, Dante, this is the next logical stage of the international financial system. It has the potential to do a lot more and be more inclusive and more efficient and open up programmability and all this super exciting stuff. Fundamentally, the thing that gets these things to have scale is layering and governance. I wonder what other lessons we can learn from the growth of the internet itself and internet standards. I remember well the early stages of commercialization of the internet, and you had regulators in every country in the world. Some of whom controlled national monopolies that control, say, the communication system of a given country, some of which had actual monopolies.
Fundamentally, there was a set of governance that emerged around technical standards that was mostly driven by computer scientists, academics, innovators, and then industries said, "This stuff is pretty good, it's good enough, we're going to start connecting to it." Then the technology raced way ahead of what the regulatory regimes ever had. It used to be if you wanted to broadcast a radio show in Italy, you needed permission from a regulator to do that, but I can do that. I can do that right this minute. I can broadcast a radio show in Italy uncensored.
I wonder what lessons there are to learn. Is there a disconnect between what I'll just call the community-led, open-source, grassroots movement of the internet, which has built all this stuff, and the expectation that governments have about, "No, this stuff is stuff that we control." How do we reconcile that? It seems like it worked in the world of information, knowledge, communications, content to be a little bit more open. I wonder if it would work in the financial system as well, or if the instincts of governors to want to control this are too much at odds with that.
Sheila: Part of the challenge, in this space is that you had the app and the technology happen at the same time, but at the same time, we are moving to a place where you can divorce those two things, but a lot of people don't really understand that yet, still don't really get that-- I remember when I started the forum in 2018 Davos, my entire soundbite was like, "Bitcoin and blockchain, not the same thing. Bitcoin and blockchain, not the same thing." Over and over and over-parenting it because people didn't understand that. We've moved past that, but there's still a general lack of understanding of the distinction between the technical element and the financial systems element.
This is recreating something that has a tremendous amount of power and inertia behind it. You're going all the way back to Bretton Woods, and you think about creating a new financial order or a new financial system. There's a lot in there to unpack, but the thing that's not talked about a lot is how we thought about systemic risk. One thing it's really interesting, this is Dante's earlier point, is that we've defined in the financial system systemic risk. We just carved out a whole group of people, and said, "Well, yes, they're very vulnerable," but they're just outside of our system.
Therefore, our system is really not all that riskier. We can allocate the risk in a way that neutralize a lot of it. Then this whole thing over here we're going to ignore. Part of what I think the pandemic at least I hope it has really highlighted is that no system-- There is no outsider to the system. You have to look at the entirety of the system, and you have to accommodate and count for that risk that is coming from outside of what you think of as your closed system.
Actually, the internet early days did a very good job without necessarily making this a highlight but thinking about that and being very open to a model that would accommodate more holistic notions of systemic risk. That's something I don't think we talk about enough in our sector. We all think about it without maybe implicitly or otherwise. We don't really talk about it as much. I started doing a lot more thinking about the early days of the internet and how risk was accommodated and how we could think about that in the new financial system that we're all interested in seeing the bills, or in your cases, actually literally building. [chuckles]
Dante: The key is optionality. As it happens, risk is my cup of tea. I serve on famous National Advisory Council, lose sleep over risk every day all the time. When you think about it, the one area of-- Literally, the entire global economy that performed well in the middle of a pandemic, the pandemic that sent the entire world on a work from home excursion, those so fortunate to have the ability to work from home, and it withstood the load. It withstood the load of entire economies being permanently working from home. That bandwidth capability and that inherent resilience in the design, our financial systems don't enjoy that.
When the federal government had to respond to this crisis within all about $5.5 trillion of intervention to save the economy, effectively an example of privatizing gain and socializing losses, the very type of pattern we saw in 2008, it then begs very, very deep questions about whether or not things like financial inclusion are basic human rights. Simply put whether or not ubiquitous near-universal access to the internet should be simply a part of the digital commons that we all enjoy.
If we're all going to depend on it in the middle of a fire drill, which is the COVID-19 event, then we should also ensure that on those rails could ride the transfer of value, the transfer of information, the transfer of assets, the transfer of title, identity, assurance, authentication, you name it. Today, none of those things are possible at scale, and it's an indictment of us as a planet and as a modern economy, I'm speaking now of the United States, that in order to exercise your civic duty and go vote, you have to go violate the social distancing requirements and waiting the physical line to exercise your civic duty.
That should be something that motivates all of us, whether it's blockchain or some other standard to make sure that the very core principles of functioning in a modern system and in a modern economy can leverage technology as a difference-maker and for all the areas that broke very rapidly with the onset of the pandemic, value, identity, voting, these types of basic civic engagements could use a little bit of digitization.
Jeremy: I love your thinking there, Dante. Right on. What's interesting is there's this top-down view like should the national government have-- In China, blockchain is a major national initiative. It's got sponsorship every up and down the chain, no pun intended. It's a big thing. There's nothing like that going on in most Western countries, certainly in the United States, which it's unfortunate, but there is a lot of bottom-up innovation happening.
There are so many interesting engineers, startups, projects, some sponsored by big tech companies like Facebook, but lots of them that are open source, that are building the plumbing for a public infrastructure where you can do secure identity, and that nation-states could even depend on for voting. There is so much that is there. I feel like the collective commons of intellectual property creation that the internet has is working, and it may not work on the speed that we want. What we're seeing out of China a little bit is leveraging that IP Commons and all the energy around it with a big boost of industrial policy as well. That could be part of the answer.
Dante: I'm sure all of us are-- Sorry, Sheila.
Sheila: Go for it.
Dante: That's the only time, and I won't do it again. I promise.
I'm sure for [crosstalk]. We're all tracking with great interest. The way Christian Carlo likens this as a digital space race an equivalent. I'm not in the vein of a zero-sum person. I don't think we have to wait at anybody's expense, and any one of these projects would benefit enormously from a very vibrant and innovative thriving private sector. What you see here, and this is why, again, back to the great work that the Digital Currency Governance Consortium is trying to do, and the WEF is such a uniquely placed entity to build those bridges is that you do want-- and all of us would want to have the public sector have oversight over monetary policy and the creation of money.
If imitation is the sincerest form of flattery, then a good US Dollar back stablecoin is trying to mirror the underlying economic soundness and preconditions of the US dollar, but the creation of the dollar and the management of public policy and monetary sovereignty is a public sector activity. The rails on how that type of value are delivered should and ought to include anything from a Swift transfer to an ACH, to an EFT, to an option based on blockchain and stablecoins. It's a better more resilient system than one that is only writing on one or two cylinders from an economic value point of view, so it's not zero-sum. I want you to succeed, and I want everybody else in the sector to have a chance at success.
Right now, that success is being hindered by a lot of red tape, a lot of fear, and a lot of apprehension in the public sector that these types of risks or projects become systemic, or they destabilize the system. A lot of that early branding problem the space had is lingering with all of us, but there's a new era here where we can get it right, and also get to innovate at scale.
Jeremy: Let's get to the public-private dimension here, Sheila. I know that [crosstalk] fundamental to the platform, yet maybe you can talk a little bit about it.
Sheila: Absolutely. Everything we do is multi-stakeholder in its conception, so it's about bringing together public and private sector actors and the third sector as well to really think about civil society actors, academics, and others who are really focused possibly more narrowly but experts in particular needs articulated by certain communities.
Another thing we try to do is think very hard about geographic diversity. A lot of the conversation needs to and I know that both of you are good about this but many are not. Think about where the innovation is really happening, and that's in a part where the innovation is able to happen. There's less incentive in really established economies, there's more fear. There's more incumbent power.
A lot of the innovation is happening in frontier economies or smaller economies, and we're learning a lot from what's happening there. When I first started at the forum, it was really-- I had to really make the case that we should be focusing, not just on the typical halls of power but looking at a lot of the island nations [unintelligible 00:32:18]. Looking at what Cambodia was doing, looking at some of the work that's happening in Africa, all over the continent, by the way, not just in Kenya and not just in what they were doing and coming down in a [unintelligible 00:32:29] Ghana, Nigeria, but really looking across some of these economies to see what are the opportunities that we may be in the western mindset blinds to and bringing those things together.
Our CBDC project actually started off with a goal. The only goal was community building. It was to say, "We know which fans are talking to each other and which aren't." It's a huge miss, and we have the convening power and ability to say, "You need to listen to these guys over here or these people over here." Do some education about what is actually possible with this technology. In that case, it was really starting off with a focus on blockchain but then moving into an examination more of CBDC offerings.
Now, to the point about the one ring to rule them all, we are fervently opposed to that view. I don't think it makes any sense. It doesn't make any sense strictly from a standpoint if you even thought about it, if there was one CBDC, one stablecoin, and one crypto. There'll still be three. They have very different needs but it just doesn't make any sense because as you know, Dante, depending on what you choose to put in your basket or what you choose to back by, you're basically adopting, to some extent, a certain set of values, and we have to be very mindful of what those values are, not just from a literal economic power, really from a signaling perspective as well. That's also really important.
While I agree with you that it's really important to think about civility particularly in the environment that we're in now more than maybe ever as we're getting economic fissures and challenges that we haven't really seen before at least in our lifetime. It's really important to think about that as well. One thing we're interested in doing is thinking about almost ethnographic type studies of money and how the cultural values around money translate into policy and how making that more visible can enable us to almost cherry-pick some of those values and norms and put them into other issuances without having to adopt an unstable currency. Those things like this are really going to be quite fruitful and interesting to explore.
Jeremy: Very much. It makes me think about and I know this is a key consideration with Libra as well, which is it's very easy to get caught up in what is the G7 think and what's the Fed or the ECB or whatever. Then it's big deal, the FSB and the G20 and they're going to have global stablecoin, regulatory frameworks. That's all very positive. We're all involved in contributing, and that sets a standard.
The G20 is not the world. The G20 is the G20 and when you think about the benefits of this technology, they go way outside the G20. What are we really accomplishing? Are we building a new international-- an internet of money that is truly global, that the benefits and the frameworks can be taken advantage of by everyone everywhere, or are we trying to stovepipe and recreate the ruleset that runs the current monetary system that's largely dominated by the biggest economies? What is the balance there? How do we ensure that, in particular, innovations like global stablecoins where they have the reach of the internet, and people can participate in different ways? How do we ensure that that happens that we don't just make this a club of the G20?
Dante: Jeremy, you hit the nail on the head that if-- To me, candidly, a lot of these innovations won't be as meaningful as they could be if all we do is replicate the existing system. Candidly, the existing system has more to do with the zip code or the country you were born in than anything else, and even domestically, a payment across to banking platforms that are not conversant introduces death by 1,000 cut fees, and were laboring under slow analog painful examples. Ask the millions of Americans who were waiting for an analog check to arrive, who were already living check to check. 40% of the country can survive a $400 or $500 setback.
We would fail in the effort if the effort didn't absolutely extend, or at least from a technological point of view, remove the cost and the barriers of extending the perimeter of the formal economy to the billions were on the margin of it. Otherwise, it's not real long-term value-added. We have to figure out how to lay down infrastructure, not unlike the internet that pre-internet, it would have been very hard to provide for connectivity that was decoupled from fixed-line infrastructure or from physical infrastructure all back to the country of birth in the zip code.
Here, the same challenges hold true for financial exclusion. If we want to functionally extend the perimeter, we have to make a mobile device that's internet-ready, a regulated payment endpoint. I'm absolutely like Sheila and others completely technology agnostic as to how this is done, but what I'm uncompromising about is that it is done because the stakes are far too high.
There are far too many people on the margins for no good reason other than the thought of one Brown person or person in Sub-Saharan Africa makes one errant payment the entire continent must pay. We could do better than that as a planet, and I agree with you. We simply can't lobby across the Atlantic to get it right at one level. We have to figure out how to anchor this in a multi-stakeholder environment.
Jeremy: It's getting policymakers to think bigger, think bigger about what this new-- like a global digital economy, really think bigger about what that can be, which I know both of you are doing, which is awesome. Maybe we can try and end on a-- I hope optimistic note, which is there is this moment in time, there is this focus on global governance, there is technological innovation, there's all this stuff. What do you think? What does this look like in two or three years? What does this look like in five years? I'd love to hear both of you share your thoughts on that, Sheila?
Sheila: It's quite different two to three versus five. In two to three, everyone is still reacting to China. Just putting it really bluntly, that's going to really occupy the next 18 months or so because we're-- It is human being nature to just react, and if what we expect to see coming out of China is what we actually do ultimately see, there's going to be a lot of needed, to some extent, but also perhaps overblown response to that.
However, that will dissipate. Relatively, quickly, people will accommodate whatever they see and figure out exactly how they respond to it or carve out a new space or whatever it might look like. Then we'll shift into something that I really hope is truly more global and inquisitive in nature. The five-year mark focus more there. We are going to see a lot more access by people who are not currently included in the formal economy into the formal economy with on-ramps and off-ramps to more traditional systems. I don't think those are going to go away, I think to Dante's earlier point.
I do think we're going to see more entry and exit in and out of those systems where it is productive to be in those systems versus being adjacent to those systems in a way that is complementary to those systems and accommodates the rally of those systems. Do I see a massive fight club type, burn it all down, Mr. Revolution in money? I don't see that, certainly not in five years, and I don't even know that that is necessarily necessary.
However, I do hope that certain of our current system that really don't serve anyone well. They serve very, very narrow set of players extremely well, and they really don't serve anybody else particularly well. I hope that we will be able to loosen the stranglehold that certain actors have on our economic monetary and financial systems and more equitably allocate the risk and reward, as opposed to just reserving all the reward for a handful and blowing the risk down to places where we like to pretend that we can treat it as outside of our system or invisible to us. That's my hope, and I feel very optimistic about that in a five-year timeframe.
Dante: Awesome. Look for my part for all the doom and gloom and the talk of risk and resilience, I'm actually an eternal optimist. Between zero and three years from today, one will have made it clear that the stablecoin and the digital currency movement had less to do with reinventing money and more to do with reinventing how people interact with the exchange of value. Number one.
You'll start to see real big movement. For example, across key remittance corridors around the world that are stranded at the 7% global average if not higher, you'll start to see very vigorous competition at the edge of trying to enable faster cross-border peer-to-peer payments and to the extent that can happen in a three to five-year run. It's a very, very meaningful contribution.
Then in the three to five and then five onwards, I do think you'll start to see a lot of ubiquity of this. There is a movement of foot that one, it's a generation different than our own, I presume. Born with an instant gratification, born with trust in technology that is going to be much more willing to accept that value can also exist in a nonphysical form and transferred in a nonphysical form for everything as simple as paying a micropayment for liking a medium article or as complex as making a commercial transaction. The movement of money and the movement of value is what is being reinvented around these concepts that we've discussed today and much less of the reinvention of money itself. I'm very optimistic that a lot of good will come in the future.
Jeremy: The money movement has legs.
Sheila: Yes, exactly.
Jeremy: This has been awesome, you guys. I've really enjoy enjoyed the conversation. A lot of just far-reaching stuff and obviously looking forward to continuing to work with you guys, and see a lot of this stuff through over the next couple of years.
Dante: Same here.
Dante: Thank you, Jeremy. Thank you, Sheila.
Jeremy: Thanks for joining today.
Jeremy: Final reflections. I would say, it's just amazing that we've come this far. We're really seeing the birth of a fundamental new infrastructure for the global economy. Really believe strongly that these multi-stakeholder outcomes where governance that involves the technology community, the government community, intellectual leaders, financial industry stakeholders. That's what it's going to take to bring this to scale and to the mainstream. As you may have heard today, we are on our way there.
That leads us a little bit into next week's episode Digital Dollars and Global Stablecoins. Crypto and blockchain, in general, are really coming into focus more and more with policymakers globally. It's a much more intense focus at the supernational level and at the national level. As we talked about in China, blockchain is a national strategic priority. In DC, policymakers are starting to engage.
We're going to be exploring Digital Currency in DC next week, and we'll have several, I think, excellent guests who are playing key roles in interfacing with the policymaking community and the regulatory community in DC and hear from them, from the front lines of Digital Currency Policy in DC. Looking forward to that episode next week. Until next time, stay well, stay safe, and stay informed. Thank you.
[00:45:29] [END OF AUDIO]