[inaudible conversations] okay. Here we are. Thank you. Good morning, everyone. My loud enough . Good morning, everyone. It is such a pleasure as to welcome you all on behalf of the brookings institution, Cornell Law School and band of law school, erin, dan and i are truly thrilled, incredibly delighted and deeply honored that you join us today in person as well as online to talk about the u. S. Financial and Payment System. Given that it is a friday of a Holiday Weekend and you guys are here to talk about the Payment System on a dreary d. C. Day, i think its safe to assume that you are here for a completely unabashedly full on nerd experience for the day. And so that is exactly what were here to give you. Because the u. S. Payment system deeply, desperately needs it. It needs your ideas. It needs or technologies. It needs your policies. Needs your passion to get it ready and equipped for the digital century that we know is already here. We know i think in this room that the u. S. Payment system has undergone a structural transformation over the last three or four years concert in a sense of pandemic. And if we can do maybe a show of hands in the room, how many of you have been using cash may be in the last 24 hours to pay for anything . Anyone use cash . One, two, three, four. How many of you have forgot what cash even feels like in your wallet . Where did it go . As much a summary of us are moving toward the kind of cash was universe, especially after the big pandemic, the populations and communities across america, community of color, low income households, single parent households that have been left behind. A function of an banking and under making that is meant that the Payment System is not working as efficiently, as inclusively as fully and fairly as it needs to. Right . As much as were all looking forward and saying our money move, seemingly instantly, right . Money often takes several days to it our Bank Accounts and be ready for us to actually use. As much as the u. S. Is of course the uncontested, the uncontested issue were of the reserve currency globally, our international u. S. Dollars system remains as we all know incredibly unwieldy, slow, expensive, and globally becoming less and less competitive as we enter this new century. So this is becoming a situation which it is costing us a lot of money to move money. And things need to change. Take a as were entering this to technological era in a digital century two. So we have an incredible panel, incredible day for you, a full on nerd fest is nigh and with two diabetes panel. The first will be looking at the current Payment System followed by our later panel look at digital technology, stablecoins and cbc d. C. s of potential solutions to the problems were seeing with the upgrades we need for the u. S. Payment system. And in between whip thune remarkable keynotes from director chopra of the cfpb as well as governor waller of the fed, and most of all of course we want to hear from you. This is very much a conversation picked this is an issue uniquely and fabulously that affects each and every one of us. This is our experience. You have thoughts and opinions so please be part of the conversation. If youre joining us online you can email us with questions and comments at a fence brookings. Com if you want to send an email or on twitter if you want to use the hashtag, the handle at brookings econ hashtag future payments pick send us your questions submit your questions we really want to hear from you. All right. So with that im going to welcome and it is our fabulous wonderful first panel which will be led by victoria guida. You all know her. She is the brilliant reporter for politico who covers economics the really focuses her beat on the fed and the treasury market, and shes making and cuddly complex, opaque grey hard topics very intelligible and use for all of us to get. And hopefully she will do that with the first panel and the Payment System. So victoria and the first panel, if you like to join us on stage. [applause] thank you so much for the two kind introduction. As yesha was just saying weve seen a lot of ships in the Payment System just over the past few years so this event is very timely. Weve seen more nonbanks jump into spaces that are traditionally been filled by banks. We see more diverse institution tried to get access to the payment rails and weve also seen updates to the payment rails themselves. I have an excellent panel here with me today to talk about some of those things. So i have mark trotman, chief operating officer at china. Julie hill, vice dean at the university of Alabama School of law, and dan allred, a professor at cornell law. So lets jump right in. So dan, i would like to start with you. Youve written a bit about this sort of unbundling of payments and how we sang different sources have been traditionally formed by banks to have been perform at other institutions. So to what extent is the Current System working and to what extent our current policies holding us back . Thanks, victoria. I guess i would divide sort of the world into two segments here. One is, is it working functionally speaking . Are people getting paid and be able to make payments quickly, cheaply . And on the other side, is a working from a policy perspective . Are we making sure the system is governed in ways that enable us to advance social objectives . Like cheap fast and secure names but also in terms of things like competition and ongoing technological innovation over time period i think the answer is were not doing well on either count at this point, and with a look at that domestically so we can look at the cost of payments in the United States where for a very developed country with a worldclass Financial System we pay more for payments, especially poor people pay more for payments than they do in other countries. On the other side of the ledger we also have relative many of her peers and the g20 and the g8 and many emerging markets not really invested in the governess of payments. If you look to australia, if you look to brazil, singapore, china, the United Kingdom even the eu, that paragon of Good Governance when it comes to financial markets, they have invested more in building the infrastructure from a policy perspective to take advantage of all the technological change thats going on. So i would say were not doing great. The our roadmaps for doing better and i think what are the exciting things today is to have a discussion about which sort of lessons we can take from those roadmaps as we move forward. Mark, you had a very interesting perch where you at china. You have a Payment Service that you provide. Is a Payment System and a good place . How could it be better . Thanks, the tory. I think some come with look at the Payment System and our primary question is that is a working . Were consumeroriented company so me tag at that. I know nothing that businesstobusiness payments. We basically say is a american Payment System working well for consumers . And actually this is where you really do have a Digital Divide because if you look at middle to higher income members of the American Population are, you know i could be better. Still too expensive, too slow but actually its not working badly, here i think when you start look at people who live paycheck to paycheck, the american Payment System isnt working well for our consumers in any way. We still have 65 65 is 80 or population that is living paycheck to paycheck. By definition for us that an indication its not working. Just to give you an example of that, today would look at the Payment System very broadly and we include things like payroll. We have a lot of discussion from a policy perspective around how do we provide shortterm liquidity to underserved communities and what do we do with Overdraft Fees and payday loans and things . That actually takes two weeks for somebody to get their pay. American consumers are actually lending effectively lending money to their employers and then having to go and borrow it from banks and other financial institutions. At a high level i think my perspective on this would be its not working for our neediest consumers. And sort of on the back end, julie, you are a world expert in the Federal Reserve is master account system. We have gotten a lot more information about who actually has those accounts. What does that tell us about the current state of the Payment System . What have we learned from that . One thing we know is what the fed has said all along, that the bulk of the people using the fed payment rails are traditional banks, banks accept deposits and make loans. If you are making payments, chances are good that payment, even if you use a nonbank like venmo, is eventually get into a bank and is eventually getting to the feds payment rail. But the other thing that weve seen is that there are other businesses that want to make payments and i want to make them with a Business Model that isnt just accepting deposits in making loans. What weve not been very good about is inking about that space, about what pure Payments Companies might look like and whether they can safely use the feds rails. I think the Federal Reserve has so far been rather skeptical of that Business Model for some good reasons and for some bad reasons, but fundamentally as a matter of law im not sure that its the fed the decision to make. Congress is the one that creates the laws so men who gets access to fed accounts. So its a bigger question than just the question of what the fed has done. Yeah, so functional but not ideal sort it of seems to bee theme across all these answers. I did want to use your comments as a jumping off point about sort of Congress Role here and who is in charge. There was a lot of talk, as most of you all will know, about the office of the comptroller of the currency talked about potentially providing charters, limited charters to institutions that to provide for example, Payment Services. More recently theres been some talk, for example, from the Treasury Department about whether we should have a separate federal payments regulator. So julie, just taking with you, is there a way to make federal policy on payments a little bit more coherent on either of those fronts, or either of those a good idea . While i mean, i think that if you just asked an outside observer, the person who does, does nothing but a strap into the United States and said, Financial Regulation or is payments regulation done in a reasonable and efficient manner . They wouldnt say wow weve got all these regulators and thats just awesome, right . I used to way back in the day used to work in payments at a bank and my boss was fond of saying that if everybody is in charge, and nobody is in charge. Thats one of the things we kind of have going on here is that we have so many regulators that want to be, or feel like they need to be, in the conversation. Thats very hard to figure out who is actually in charge. And then i mean, i guess in d. C. It is probably sport, especially these days, Typical Congress and what they are doing or not doing. But really i think that the responsibility for the Regulatory Framework and the regulators falls on congress, and i guess you all are probably just as equipped as i am to make predictions about how likely it is that congress would be able to something more functional for us. But its a hard question and its a hard question for regulators to agree on because they all want a piece of it. Yeah. So from a private sector perspective what do you think would make the most sense . I think, well, first you think were proinnovation generally. I do think an example of this, we are a nonbank to your point, julie if you think about what sort of sponsor bank model has done for competition in America Financial Services its been amazing. Five years ago were talking about 30 plus billion dollars in Overdraft Fees. Thats more than half over the last five years. Large we believe because of the competition coming from syntax and nonbank participants. Our starting point is we as proinnovation and we think we should create opportunities for nonbanks to participate as fully as possible within the american Payment System because it will drive that competitiveness and drive down costs and improve members experiences. We are not wouldnt be using a federal payments charred ourselves just because thats not the Service SectorFinancial Services were in what we definitely proinclusion here. Yeah. They and come just to bring you in, i also dont want to forget that there is a whole mosaic of state regulations here, too, and dan i know that you look at this a bit. What do you think about making federal policy more coherent, and where are we at the state level with regulation of Money Service businesses and things like that . Mosaic is a good word, but mosaics can often be beautiful in their complexity, and to think its fair to say that there is nothing beautiful about having 49 different state regulators for payments. There are 27 federal countries on earth. 26 of them have federal regulation exclusively of payments, and then theres us. My work is done a lot i guess im shining light on exactly how different some of that regulation is at the state level, have at some of it is at the state level and a depute as a ticking time bomb that as nonbanks get bigger into payments as they start to amass more and more backing assets, that the inadequacy of these laws is going to cause a problem. It already has caused a problem. Anybody save Money Services business has been in his last 12 months. Thats ftx. Thats the same Regulatory Framework we used to regulate payment companies. Im a big fan of federal payment charter but it do think its own just the beginning of the more fundamental rethink. A charter is great but it doesnt do much for things like competition and innovation to be honest in and of itself. Its great for financial safety and soundness oversaw problems like the problems that julie is exposing her work about access to that system for nonbanks and around the governance of the networks themselves where, just to rip off the earlier part of your question, we dont need more regulators but gosh do we need more mandates. The occ, fdic, the fed are regular payment institutions for safety and soundness. None of the regulators had a responsibility for promoting technological innovation, competition or really consumer welfare let alone individual or personal privacy. And i would be loath to add number of regulars but theres a discussion to be had about adding to the list of things of regulars had to take account of. These other very important social policy issues. Yeah. So kind of drawing out a couple of strings from that. You mention ftx which is sort of a poster child for one of the issues and the Payment System which is whether the funds are there, right . When i think about institutions facilitating payments that are not thanks, i feel like it raises a lot of questions about how people can be sure that the money is actually going to be there and go through. Does there need to be who should look more into that . Will be any good place without . Dan, ill stick with you. Yeah, i think we should go with the crowd and make this a federal responsibility. I think existing, i think theres a lot to debate and one of the few things i dont have a passionate position on in payments is which federal regulator credential regulator should be responsible for this. All of them have their bright spots in dark corners. But i do think creating a single federal Regulatory Framework for this is great with a single regulator. Now from there i also think if you want to do banking, get a banking license, and the converse of the you want to do payments without banking i think what you should be able to do with customer money should be very limited. And we have structures that enable us to then put all of that money in one basket and watch it, to misquote mark twain. That is, we have thirdparty custodians. We have reserved accounts at central banks. We have master accounts where it becomes much easier to verify that your total stock of outstanding monetary liabilities and the total assets sitting in that the count are the same and that the backing that you have been is something that is relatively easy to monitor and verify over time. Julie and mark am also interested in your take. So i think i am less optimistic than the federal payments regulator leads us to the sort of innovation that we want in the payments space. And im much more i would say bullish on the possibility that states could do a good job of having a payments charter managing that payment charter. I think that if you look out at whats happened so far, i think that states have kind of been on the forefront of considering how a payments charter might work. Certainly weve seen litigation in that space over wyomings attempts to have a payment charter and connect it to master accounts, and now were seeing some other master account litigation. We have seen states can of taking the lead in adopting Blockchain Technology laws, and also as a historical matter, i think states have done a relatively good job and acting the uc see everybodys favorite outlaw, right, the uniform commercial code thats adopted as the law which largely governs questions like what happens when payments go wrong. I am not as enthusiastic about saying that we ought to just hope that the fed gets this right at the that spurs innovation but because a boy knows what the law is. Because im somewhat skeptical that the fed is equipped to be a leader on this or, i mean, beyond the fed, the occ. I guess im still hopeful there some space for states and state regulation in this debate. I think im probably a little more optimistic than julie, maybe misguidedly so. I think if the question goes to how do we make sure money is there, i think the fed is actually quite wellpositioned to ensure that. We operate under this model today. We have a sponsor banking mouse wheel two nationally chartered banks and our deposits all sit in one of those two and theyre all fdic insured. It gives our members compass that the most efficient system but it gives our members any think the broader Banking System comfort that the suns will be there when they need to be there. Yeah, and i kind of want to ask a broad question from your perspectives. When you think about the shortcomings of the Payment System to use it as more of a Technology Problem that needs to be sold with more innovation, or is it more of a policy problem . Which a seems to be were leaning more towards the latter in this conversation. I think the answer is both but i do think its actually more of a policy problem. The reality is we spent a lot of time talking about faster payments, like when you talk about innovation in the Payment System, first topic is faster payments. This is about eking out a few more hours a few more days for a few more seconds making sure you get that p2p payment from your friend like instantly. That is important. What are the reality of it is the lack of a federal instant Payment System whats happened is you had private enterprise actually step up and develop some of the systems. You have a number of solutions out there today. They are not as good as had we had 20 years ago and instant Payment System. I have been encouraged by the degree of progress on that. If you think about the last five years and plus in terms of same day ach and realtime payments and sad now. You need to be fintech geek to go to keep up with the innovation in terms of faster payments. I think thats been a real positive but i think from a policy perspective i think there is a long way to go still and there still a lot of on ramps onto these federal payments rails that are required. I still come back to this around the fact that we need in addition to technology, we need to be able to have open data and we need to start to drive innovation in some of the core inputs like payroll and summaries of the systems weve been talking about if we really want to drive effectiveness in the Payment System. I think a lot of that falls on policy. Maybe with her from director chopra on some of those data questions. Julie, i do want to ask you, marking a perfect segue here to talk about faster payments and we know we have fed now. We have the big bank infrastructure. How quickly do you think this will take to actually really be felt by consumers . When did we get faster payments and this is playing out what you sort of expected it so far . I think the jury is still out on that now. Ive been calling get fed in the future for so long, i feel nervous about calling it fed now. But i think that sort of illustrates the trouble with innovation coming from the government. Now, let me be clear that i totally understand why Community Banks wanted fed that now. I understand why if youre a Small Community bank it gives you heartburn to think that the fastest payment rails is a payment rail provided by the clearinghouse, which is a consortium of the largest banks, your largest competitors that would probably just assume you would not exist. Im not saying that the clearinghouse acted inappropriate but i certainly can understand why from a Community Banks perspective they would like the feds payment rails to be faster and more competitive. Now i think what we are still waiting to see is what exactly the Community Banks do now that said now is operational. Do we think that they will embrace it . Do we think that lots of the payments that have been traditionally processed on the slower rails will convert to fed now . So i think the jury is still a little bit out on whether this makes payments faster, whether it makes payments for consumers in particular faster, or whether thirdparty innovations like china or nonbanks chime drive faster payments for consumers. Yeah, then, what you think its going to take to get this infrastructure to work . And should we do what and client has written many times, require that the fed change its policy to the banks make Funds Available immediately . Yeah, there are many things a lot about erin and methinks we completely agree on. This is one of those things where i think im even more radical than aaron. I think that now is going to fail. If i try to imagine a system that was designed not to work, not from the technological perspective but from the governance perspective, we are pretty close to it. I have a system, that the largest banks are not going to use because they already built one, that has no competitive advantages over that system either in terms of the cost structure which is identical to rtp kind terms of this technology which is noninteroperable with rtp. And each is what it actually requires banks to do, it is a most optional payment cabinets and Technological Network ive ever come across. So i dont know if any of you have a bank that assigned up to the fed now network. Just kidding, you havent. Of the 50 something banks that have signed up, most of them aside up, actually not most of them of any of them have signed up some two to receive payments. We all like it to get faster payments, sure, and i would be great if customers got faster payments, as it is if everybody just sent up to receive faster payments and nobody signs up to send faster payments, nothing really happens. And for the Community Banks the would most benefit from this, this involves huge changes in the Technological Infrastructure necessary to do this. You have to build an api web enabled interface that can give your customers the option to say i want to send a faster payment. Thats superexpensive and we are not seeing a lot of uptick because of that. And lastly to go back to marx point from before. Really i dont expect a lot of the inherent benefits of having an api based Payment System really roll out until we move forward on open banking and open finance. Thats addicted to make it over this with wofford customers. At the moment doddfrank 1033 has its 13th anniversary has come and gone now and we are still all the fingers crossed for today waiting for some real leadership on that particular issue. So thats a long way of saying we are nowhere near where we should be on this. And where we need to be on this is understanding that having of the Federal Reserve responsible for safety and soundness makes tons of sense. But actually delivering on Technological Infrastructure and promoting consumer welfare and payments is going to take more people. Its going to take congress. If this wasnt caught if you close your eyes and these types of issues were not in finance and banking, the current ftc would be all over this, right . This is bacon, controlling access to a set of infrastructure that results in consumer welfare losses on a number of dimensions. It was anything other than finance, we would probably moved on this a long time ago. I dont think theres one single solution to think the first thing we did you like all good 12 Step Programs is admit that we have a problem. And then have honest discussions about moving forward. I think thats kind of what today is about. I didnt know i was going to be the glass is halffull kind of person. Yeah, we had a little switch dynamic there. Mark, from a private sector perspective, i mean you have partner banks. How are you thinking about realtime payments infrastructure . Are you wanting to use it . Where is chime situated with that now and rtp . I think we probably share dans wholesomeness. I think the thing about that now is, to dans point, anybody has no going to create a nonrepresentative onto this that only a technological one but a user excretes one, incorporate this into their apps. The challenge is most of us have already done that with leveraging other technologies. If you think about sort of person to person payments today, i mean the most prevalent is probably like that hes a direct system today which operates a lot of that infrastructure. You find a lot of private enterprises actually spent a lot of money integrating into these. I do think over time as this is a network problem, as more banks are able to opt in and develop the infrastructure thats required, i think youll find people adopting it. But its a bit of a chicken and the egg at a think there isnt a sort of forced function to initiate that system upfront. I dont think its that something will be leveraging in the shortterm just to give a direct answer. And again for us foster faster payment is important but actually we think because weser people who live paycheck to paycheck we should be talking a little more and maybe more about faster pace rather than just faster payments because we think thats a much bigger problem today in the american Financial Services. Yeah, so does that, when you think about earned wage access and things like that, is Something Like the payments rails facilitating faster payment, is that meaningful in terms of helping people who live paycheck to paycheck . It is. Its necessary but not sufficient. If you just think about the payroll system today, most companies are doing this every two weeks and theres a notification that comes by the fed, and even once certification is there still takes 2 days and on a holiday we can like that it could take three or four to get into someones account. Its ridiculous. Like, and iron is we sit or talk about seconds and minutes on faster payment actually we should upstream. Payroll is a largest source of input into consumer funds today. That system is entirely broken. Its antiquated. So yes, realtime payments would certainly help reduce that to date delay, and that is a necessary requirement but is not sufficient because two day delay we need more information on the payroll and realtime access to payroll and helping particularly the neediest americans access, the funds theyve they workt are now locked up inside that employers Bank Accounts. So i do want to pivot back to the fed accounts question because i i personally think s is very interesting. This has been a big policy debate as to who outside of the Banking System should be able to access to the feds payment rails directly here so julie, i guess i will post it to you. You were saying early you dont think the fed should be the one to decide this question, but how do we think about who should have access to the payment rails . Well, i think that congress has set who gets access to fed accounts, and they did it way back before any of us were thinking about the sorts of payments. I did it back when they created the Federal Reserve banks and said that the Federal Reserve banks could except deposits from originally it was just member banks in the United States, but then became broader to be all depository institutions and some trust companies, and still the united United States, and so for better or worse congress has a lot in the books that says that the fed is supposed to provide accounts to banks depository institution institutions, banks that accept deposits, institutions that except deposits. And so i think now how we ought to be thinking about it is we have a law on the books and the Federal Reserve to follow the law. Now, i mean i guess sometimes we are sort of understanding when and if it stretches its authority a little thin. I think where the financial might fashion massive financial crisis maybe the consoles save us, they bring below forgiven if they stretch the law but this isnt one of the circumstances. This is a circumstance where nobody is going Financial System isnt going to implode if the fed doesnt stretch its authority to keep people from having access to fed accounts. So in my mind if you want a different set of institutions to have access to fed accounts, i mean maybe this is understandable to all as yesha called it, the nerds in this room, but if you account what the soviets payments, you dont have an account and theres no real way to settle a payment. So if you can have access to a fed the cut you cannot access to the feds payment rails. But seems to me that we ought to first and foremost follow the law and if we want the law to change we ought to ask congress to change it. Do you think we should change the law . No, im fine with it the way it is. Dan, what about you . I dont think the law is fine the way it is. Some of you in the room have seen this but ive gone so far is drafting legislation that a think congress should consider in this regard to expand the universe of firms that have access to the settlement rails. We often talk about payment rails. We really should distinguish between clearing rails and settlement rails. Reserve master accounts julie is actually right. These are the settlement rails. You cant operationally send and receive money in u. S. Payment Networks Without it. But the fact we focus on settlement rails has really been a question going back to your question when it safety and soundness who do we trust with our best first and last form of money . And thats an institutional question about the types of firms would want to let in. Our traditional answer is banks and things that look a lot like banks. I think the policy question now is one of our the other types of firms that just dont present settlement risks where we could expand this . I do think the answer is yes. Some of the storms are in a legal fight right now in order to get access on existing terms top but i think the fact theyre having to fight the fed on this is one reason for congress to intervene. And the other types of firms would like access and a think should have access who are then not the type of firms we typically think of in the safety and soundness way. This is why i make the distinction between clearing and settlement rails, is that banks suck at technology. I know this. Ident technology for banks in my career. Its not that there are not great people but the challenges of Legacy Technology stacks huge often amalgamated businesses and the fact that theyre full of bankers and not Software Engineers means that when it comes to moving the clearing rails i had using new technology to do things that the next generation of indian consumers, thanks to upi, by getting your paycheck why to do the work are going to take for granted. Since we are not can happen in the United States as long as we continue with the peculiar decision to let banks be the things that are by the Clearing Technology and developed the Clean Technology for the Payment System. The record is spotty at best. You are more likely to be a french humorist than a a bankn it comes to developing transformative payment technologies, 120 basically. If youre wondering its of the emv chip technology. Its just that something that they do well. And the one of the races to bring them in on the settlement site is because we want all that technological innovation on the clearing side, on developing an ecosystem that enables us to do much cooler things, things that are more helpful for consumers than simply faster payments. So i guess just to clarify, im happy with more people getting access to the feds payment rails. I dont think that we need a change in the law for people who are currently litigating over it. I think the court should tell the fed they are wrong but i dont really have any problem with banks that or nonbanks, whatever we want to call these institutions i want access to the payment rails, the present little risk getting access. But it think sometimes the question is presented as she we take with access from people who seem to be included under the current law . And it sort of skeptical about. Right. Youre basically saying we dont necessarily need to expand it to be on depository institutions but for institutions that are given a state charter. Thats right. They should have access to okay. Even if there involved in crypto. Even if there involved in crypto which now dan is going to fight with but i dont think were fighting on this at all. We are obliquely referring to the custodian litigation, and i dont think i was a state charters. The wyoming spd eyes are the rules desha rollsroyce of safe state charters. In terms of the Business Model that they permit. It is basically a payment sector node within a network. Its all about technological connection, not financial intimidation. If you look at state money transmitter licenses, which lots of crypto firms have used, that are incredible sort of different branches they can invest in. Many confessed all crazy stuff and poorly many of them can complete us keep it as a former transactional lawyer you look at these things and you can like thats how you indicate that. The way you can do it in most states precipitous a lookup one of the things im allowed to invest in, and appreciate this out ftx to do, i can invest in quotation marks in the death of my affiliates, which is in the way of saying i can just load all the customer funds to my affiliate at the subject to states money transmission loss all of a sudden i am a regulated into shell that has an illiquid asset in the form of a loan that ive extended to my affiliate that can then because is not subject to any of these laws about and do other stuff. Its not subject to state money transmission was because its not responsible for sending and receiving payments. Thats the sort of thing, that tell you the variance. Wyoming spdis that money is locked in there, not going anywhere, the so financial intermediation. There are lots of states that pretty much enable you pretty much rule out the red carpet for you to be able to evade their own laws. So let me just say dan is right. I think the other litigation that you can kind of compare and contrast is currently the banko san juan international. Its a puerto rican offshore bank. So puerto ricos offshore Banking Sector provides loans, makes payments, engages in securities transactions, and they can do that as long as you dont do it for people in puerto rico. So they do have some risk in their Business Model already. There are what, more than a handful of these puerto rican ifts or igs that have access to the fed payment rails with any sort of deposit insurance or anything. To me those present a much bigger risk to the payment rails than wyoming specialpurpose depository institution charter. So maybe it does make some amount of sense to distinguish based on what state law or local law allows these institutions to do but it dont have much heartburn about trust companies that do payments. Mark, do you want want to bring in you. Who should have, who should be able to payment account . Do you really want me to get in the middle of this . I dont know. Do you want to get in the of this . I thought i was a fintech nerd but clearly out of my depth. Thats a compliment in case youre wondering. I think again i think our starting point here is proinnovation. Proinnovation. The reality is we do need to provide more access to payment rails. We are not best qualified to comment on specifically who. I do think there are a lot of institutions that dont pose a risk to the Payment System today that are excluded from that and you think finding ways to develop a better framework around who should have access we think is an important piece of innovation for the american Payment System. So soon i will turn to audience questions, so keep your questions in mind. But before we do that it would not be a fulsome payments discussion discussion without talking about interchange. So i wanted to ask about, you know, we have the durbin amendment that caps these on interchange for debit card transactions, and now theres legislation that wants to try and create more competition for visa and mastercard and credit card transactions. Dan, i will turn to you. How do you think that durbin has, has it helped the payments landscape, hurt the payments landscape . Where are we on that . Saving the tough questions for last i think. From the americans who dont get access its an awkward thing where we have to admit we have a different Payment System because of things like this and because the margin we dont care, another half of america half probably putting it to modestly to netiquette the. Nor to get the vintages that come with it and they still pay hyphae so its a mixed bag. A good news story what has been but overall bad news for you think especially as you mentioned earlier to merge move further and further from the cash based system, its usually important social infrastructure, i know it is a highlevel question and the platform economic between card providers and the system at a high level. You see it changing your customers, you serve a lot of these customers who dont have the card. I agree we come from the consumer perspective and is you look at the research and reducing interchange, theres lots of research out there where it is pastor, it wasnt good for consumers. Number two, it has facilitated access. The amendment is something that did enable to provide more access so i will comment on the act but we need to be careful thats why there are two different rewards for People Like Us and we need to be very careful, your producing interchange. Julie . Wouldnt it be great if it was for everyone . As it turns out somebody has to pay for them. Anytime you have a twoheaded market, people are making payments and people are receiving payments. It is abundantly clear we can agree on how it is divided up into more complex when people make and it is exactly the same when you think of the merchant receiving payment when you buy something that you think of the person receiving the person getting their paycheck. They are on both sides of the transaction and that is what makes the pricing so tough to crack. We really need everybody to use the payments to be useful for all of us so it is a question that there is no objectively clear answer and thats why you see debate over and over and over again regardless of what technology we are using but to the extent you can make payments faster and cheaper for everyone using them, everyone is better off. I do want to open up to questions we have any in the room. If you could stand up, identify yourself and questions rather than comments would be great. I am the ceo of the foundation, with respect to this, i think its a payments questions to matches in exchange, i should not have customer accounts. What is the framework in which we should talk about this, not forthcoming about his conversations. My question, assuming lighting regulation around transparency and collateral, would you advocate for this . These networks use and how we upgrade our secrecy act to accommodate them. Keep talking about foreign assets that are legitimate. I dont have any concern about that. I have a question about access, a dont accept cash. Then over the summer my Bank Debit Card and credit card were lost in time so about a week or two will get to experience what a good muslim good this usually. Is in kyiv i see you want to start with that . Sure. New line in a predicament. Your company must use this, i think i dont think the issue is that now, will find that situation. What you need is better controls and it does not happen. That is the reality of our system today. Im not sure that would help not situation. In this case is probably more a yc challenge today we dont think it is not a crime or we restrict access, 20 of the people, frankly a lot of the people walked out of the system, thinking back 20 years we came up with a free Checking Account 15 years ago. What it essentially did was subsidize checking for wealthier customers and the additional policies are a lot of everyday americans. We still have a situation where we come back and they are using flexible accounts so what we need to do is drive more general access and create these systems and allow them to continue to innovate and create better experiences and that will bring people back into the system. Did either of you want to chime in . The question is, why are they not been base . They do surveys every so often and of course they collect what people say and wonder whether you have the right population. One reason is they say its too costly or the cant afford it so you can make payment cost but another thing is currently dont trust thanks so then the question is, is there one thing things can do that are more trustworthy, just something other than a bank of they provide services as just another code for the jew move them to consumer accounts . Some are really busy as not understanding why the trust the government everybody has their own background on that. I think the population is careful why they are on bank before you fix the problem because making it cheaper doesnt solve the problem, so they really didnt want. Other questions . Correct me if i am wrong, im no expert but a lot of times they talk about interchange fees and credit card awards and a lot of times it comes up as for or low and middle income people, they lose but people who are gaining those with the best cards and high interchange fees different personal experience i feel it is more of Financial Literacy sometimes in terms of if you get a card, if not always based on credit score or anything you can help pay for Everyday Needs especially when the pandemic it, a big thing that helped out and everyday necessities using awards to subsidized. Obviously i am still paying it but i wonder results on, is it just helping the platinum awards or is it a different problem . To verify what i think the story is, credit card markets are side were you have the Critical Mass on one side of the providers to make a choice how you can is the them and typically one side of the market receives a subsidy and one side pays the price because they want the other side and credit cards historically can be earning high spending consumers who make it undesirable for merchants not to accept payments the Consumers Want to make. The added wrinkle in the credit card market is a small number of Big Companies negotiating but we have a tiered system of credit cardholders so when i get my reward miles are not going to be worth much soon, i am the type of customer they want although i am completely cheap but thats sides the point. Somebody who does not have points paying high fees are paying the same interchange but the part that makes for the subsidy we are talking about, they tried to attract the needs of the world and they are willing to pay side about these. Other consumers have credit cards or using mastercard on the points and from the outside, they are just there for the ride to the other side, they are paying the costs associated with not only the Technological Infrastructure but also the fact that somebody is paying those points and when you look at the system as a whole, the answer becomes pretty clear who is paying for that despite the fact in their individual perspective might feel it is very helpful, they are the ones paying the price in the room when you look at the system as a whole. I want to do a quick lightning round. If you could snap your finger right now, what would it be . About change one thing, i think would be every american on a trip to their choice of singapore, india, brazil or United Kingdom and make payments and realized how cheap it is to do what we are talking about today is not a futuristic scenario, is later but we are talking about failure to build and offer consumers things around the world. Rather than policy, i want to show everybody what we started. , the Federal Reserve to follow existing law. Its not too much to ask, its very reasonable. [laughter] i get holiday wages. Thats all the time we have, thank you for joining