Last week in London, thought leaders convened to reflect on progress within the digital assets and money ecosystem. For our Chief Marketing Officer, Andrew Carrier, the five key takeaways were clear: the industry is now receptive, the UK maintains a regulatory advantage, public/private collaboration is key, customers should be protected from complexity, and – ultimately – it’s all about providing liquidity.
Quant is proud to be a member of UK Finance. As the collective voice of the banking and finance industry, the association shares our vision of a more competitive, more innovative UK financial system. It is also unrivalled in its ability to bring together the sector’s regulators, policy-makers and thought leaders – which is exactly what it did last week to reflect on the progress within the digital assets and money ecosystem and identify where there may still be gaps.
Speakers also considered the relationship with the wider economy, where the opportunities exist, what level of risk is desirable – and the potential consequences of not taking action.
I took five key messages away from the event.
How far we’ve come
It’s clear that, as an industry, we’ve moved fast and far. In just a few years, the landscape has transformed. We’ve come from facing a lot of healthy scepticism to being surrounded by a wealth of use cases, experiments, and a handful of profit-making new business lines already in production. The sense of receptiveness to digital money and assets is now widely evident.
The regulatory opportunity
Regulation primarily serves to protect consumers. And there’s a delicate balance to be struck between that goal and enabling innovation. The good news is that, in the UK, we have law-makers and regulators who are favourable and genuinely want to listen and engage with the industry.
There is a wider challenge though that’s concerned with achieving global regulatory cohesion. Fintech firms – and indeed established financial institutions – face a myriad of regulations in different jurisdictions. Harmonising those would go a long way to boosting innovation.
More, together
What experiments like Project Rosalind on the digital pound have demonstrated is the immense value in public and private sectors collaborating. By drawing on the best characteristics of each, as an industry, we’re able to deliver exponentially better solutions for consumers.
Digital money and sausages
They say laws are like sausages: it is best not to see them being made. This may well be true of digital money too. Customers simply don’t care to know the intricate details that distinguish the various types of digital money. They care about outcomes: instant, cheap and reliable. It’s all about convenience.
That’s a lesson for all of us working in digital money: we can lose sight of the outcomes by getting caught up with how clever the technology is. The consumer finds complexity unpalatable.
That said, it is critical that we are clear on what ‘money’ means. The best definition I heard at the event is that it’s backed by a promise from the state – either directly or indirectly. Crypto is certainly not money.
The bottom-line
Money ultimately exists to enable individuals and institutions to transact as seamlessly as possible. It was created to replace the bartering system and its obvious inefficiencies. With that in mind, it’s no surprise that what customers – consumers and companies – care most about today is liquidity. Transactions should be easy. That’s what drives growth. And in the context of liquidity and transactions, real-time settlement would be the ideal.
The providers who will thrive in the digital age will be those that can deliver liquidity simply and securely. “A payment is a payment is a payment”, the adage goes. Maybe not all payments are created equal after all.
How Quant can help
