Pierpaolo Barbieri: belief

Transcript context

…Given the failures of Chinese soft power, and that China more and more seems to have global preferences over what happens, why would other countries trust the Chinese digital architecture more than, say, SWIFT? Aren’t they just trading in one master for another, and ultimately they prefer the devil they know, which is the United States? I think for a lot of countries, that will be true. But you have to consider the weight of Chinese trade for certain countries, and how Chinese trade for certain countries in Southeast Asia and also in Latin America is so important to at least certain countries driven by ideology, or just the need to diversify their future options, would choose to at least leave the option open of doing some transactions in this new currency, and not entirely depend on the US dollar. I’m not saying you fully replace one master with another, but you hedge masters in a way that somebody would have done in 1910 when you were thinking about the British-sponsored international system or the American system. You’re an emerging market. You might want to hedge your bets and see what happens. We all have to recognize — and this is something we spent a lot of time thinking about — SWIFT is old, and it’s inefficient, and it’s extremely expensive. The real opportunity of digital currencies lies not in necessarily the novelty, but rather the possibility of supplanting a system that has been very cumbersome and extremely expensive for a long time. It doesn’t start by replacing the system, but it’s just inserting competition into the system. If you are going to have a transaction on SWIFT that costs you $200, and it takes days to clear, that won’t change in years if you have to think about decades. People may want to start transacting in that mode in a way that lowers the transaction costs and makes international transfers easier. Both from a firm perspective and from a government perspective, it may allow you to hedge bets in a way that you wouldn’t otherwise have been able to 10 to 20 years ago, where SWIFT was, and still is, the only real system that you have. I very often send remittances to Mexico as a form of charity, and I pay fairly high implicit fees on that transfer. Under this new payments architecture, how exactly does that transfer become cheaper in a relevant ground-to-ground sense? Where is the cost removed?…

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