Panel On Stablecoins

Speaker 1:
I want to welcome everybody to the Economic Policy Working Group. We have an exciting panel today on stable coins. I want to give a hat tip to Mike Boskin who suggested to John and me that this would be a good idea and you think it's a great idea.
Our four panelists, in order of how they'll be speaking is; Michael Bordo, Darrell Duffie, Amit Seru, and Andy Hall. I just wanted to tell you the ground rules. Each one will start with a 10-minute presentation. After that, we'll have a discussion within the panel and then we'll open it up for general questions. It would be particularly good if there weren't any questions during that first 40 minutes, a little bit less so on the more open discussion, and then we'll have the general discussion. All right.
Our lead off hitter is Michael Bordo.

Michael Bordo:
Okay. Well, it is great to be back here on this panel. About six or seven years ago, I gave a paper here with Andy Levin on the case for Central Bank Digital Currency. I remember I got a lot of flak from a lot of people, some are still here. Now we're onto stable coins. I still like CBDC, and I'll tell you why.
So the GENIUS Act of July 2025 sets out a framework. A US Congress Act sets out a framework to regulate and promote stable coins as a digital money that incorporates the advantages of new digital technologies, such as the blockchain. The GENIUS Act, opens a number of issues on the implementation of a safe, private currency. Issues that were talked about, dealt with, over a hundred years ago. The act ignores some potential flaws that should be revisited before it leads to a satisfactory outcome.
What I'm going to do is discuss how successful, private currency was implemented in the US and Canada long before the establishment of central banks. My focus here is primarily on stable coins as a possible form of domestic retail currency, and less on the wholesale side, and less on the international possibilities, which I think actually are very promising.
Digital currency must satisfy the basic functions of money as the unit of account, medium of exchange and a store of value. They're a financial innovation. 250 years ago, Adam Smith wrote about this, his famous quote here, where he compares the innovation of banknotes over what was being used then, which was specie coin. Basically the analogy you made was that using banknotes in banking would be putting a highway in the sky and it would lead to this incredible social savings. This is a very old story about financial innovation.
Let me just tell you a little bit about the GENIUS Act. I probably am going to leave a lot out. The key feature of it is that it allows banks, like JP Morgan, qualifying state chartered entities, non-bank financial institutions, crypto companies like Tether and Circle, US branches of foreign banks to issue digital stablecoins defined as currencies backed a hundred percent by short-term treasury securities, cash, uninsured bank deposit reserves at the Federal Reserve, and money market funds and repos based on government securities. There might be more to it. Okay?
The act distinguishes between two types of issuers, large issuers with more than 10 billion in notes, and small issuers with less than 10 billion. The large issuers would be regulated by the office of the controller of the currency, the Federal Reserve, the FDIC. The smaller ones by state authorities. Key features of the act are stablecoins would be fully redeemable on demand into regular cash money. They wouldn't be legal tender. That term isn't used in there, but that's how I interpret it. They would not bear interest, and this is a big issue. The issuers would not be bailed out by US monetary authorities should they be become [inaudible 00:04:50].
Okay. The introduction of stablecoins today has a lot of resonance to some early stories about the introduction of private currency. The problem back in the 19th century was with free banking, national banking, and I'll, if I have time, talk about Canada, was to create a no-questions-asked currency. Gordon and Zhang in this paper explains this clearly.
The question is, when you have a note, it's supposed to be a $10 stablecoin, will it actually ... When you spend it, will it be worth what it says? This was not the case in the free banking period in the US, in the national banking period, they figured out how to do it, but it took some work. In Canada, same story. In a sense, I see the GENIUS Act as having elements of all of these three historical regimes. I know if you looked at other countries, I mean I know Sweden, Switzerland, a whole lot of countries, the same story is going to hold up if you look at monetary history. Okay?
What I'm going to do is I'm just going to go through these history stories, which some of you have heard before. I mean, this is the stuff I used to do for a living when I taught, the courses I've taught in my life.
Free banking. So if you know US history, you know that after the US became a country, under Alexander Hamilton, they set up a central bank called the First Bank of the United States. It was shot down after 20 years by populist pressure. Okay. Then they had another central bank called the Second Bank of the United States, and it was shot down too. Both of them were set up to create a uniform national currency. That was followed then by a period of free banking. That is a period when the states regulated banks and the federal government was not in the game. The key point is that free banking did not satisfy NQA.
The regulations under free banking was, it was not free, but it was very easy to set up a bank, very low capital. They issued banks bank notes. The bank notes were backed by the security of state bonds and there was an issue whether the bonds were at par or market value, they had to be redeemable on-demand, instantly, and they were regulated by state bank examiners. What happened with a lot of details I won't go into is that all these bank notes circulated. There were large numbers of them across the country. The US was a unit banking state, so every state had a large number of unit banks. They issued these notes, they circulated at different discounts reflecting the distance to get redemption, the quality of the backing, and they had something called a counterfeit detector, which was a magazine that a merchant would have, to be able to tell which notes what the discount was and which notes were counterfeit. They had ways of getting around the information problem, but despite that, it was very costly to make transactions. To summarize that episode, you had widespread counterfeiting, frequent bank failures, panicked financial instability.
Now there's a whole debate about this. One thing that matters, it depended on the regulations in the states. Some states did pretty well like Massachusetts, New York, but there were other states in the Midwest like Michigan, Minnesota where the discounts on these notes were over 50%. These were the states where you had Wildcat banking and fraud. Without going into any more details, the GENIUS Act, by allowing similar issues to be state-regulated, I think that opens up the same problems as under free banking.
Well, now we get to the national banking period. It was set up to remedy the failures of the free banking era and the national banks were chartered by the US government, they were unit banks, they could issue notes. These notes were more than a hundred percent backed by US treasury and bonds. They got around this problem of the backing. They were supposed to be redeemable on demand, involved with currency, they had double liability, and they were regulated by a new agency called the OCC, Office of the Control of the Currency of the Treasury. It still took 10 years to become NQA. Government intervention, that's the Treasury, had to basically get involved to overcome the problems.
Just to list what the problem, first, it was very hard to make these notes accepted everywhere at par. Okay? The problem was they weren't, at first. In New York City, they would be received, but if you had a note from another part of the country, there'd be a discount. What they did, they set up these redemption centers. The Treasury also insured National Bank notes against insolvency. It's set up a gross clearing mechanism. In a sense, it all worked very well.
The key lesson from that period is it took government establishment of enforceable rules to solve the problems of acceptance at par, rapid redeemability, insurance against default. The GENIUS Act does not detail how exactly these problems would be solved. It was solved by government intervention. What's going to happen when significant defaults occur because of similar issues?
I don't have much time, okay, I'm Canadian, so I'm throwing the Canadian story in. They had a private currency system, they had the charter banks, they had no central bank, they issued notes. They had backing very similar to what the national banking system is, and they evolved NQA, but, again, it took the government getting involved to come up and solve these problems, these problems of redeemability, et cetera. It took a while, but it did work.
Okay. What is the lessons that come from this? There are three policy lessons. Okay? A safe uniform currency is possible with enforceable rules for good behavior, but problems leading to systemic risks will inevitably require Federal Reserve, Treasury and other regulatory intervention. Shocks to the value of backing of stable coins coming from global factors, US policy mistakes, all of these things, which did happen in the past, that's going to affect these coins. In all three eras, banks failed because of fraud and malfeasance, as well as shocks to the real economy leading to contagion and panics.
Okay. The third lesson, and this is the end ...

Speaker 1:
Time is up.

Michael Bordo:
Okay. Third lesson, shocks coming from other parts of the global financial system could spill over into the stable coin space and vice versa. The GENIUS Act as it stands has no provision for dealing with them. A key lesson from the global history of private banking currency system is that at some point they failed to maintain the NQA principle and they even broke down in the face of systemic. This led to the creation of central bankers. The held right across the world. It would not surprise me that yet to be revealed flaws of the GENIUS Act, combined with totally unknown shocks, could lead to introduction of a central bank digital currency even in the US.

Speaker 1:
All right. Our next speaker is Darrell Duffie.

Darrell Duffie:
Thanks, Valerie. Thanks to you and John for setting this up.
Where Mike was drawing lessons from the past, I'm going to look to the future. Where will stable coins have a big impact? Is it really a big deal?
I'm going to start with a chart that I prepared with some data, that Citibank came out with last week, showing how part of these stable coins are used in practice up until today, and then their forecasts for five years from now. They have three different forecasts, as you can see, the A, B and C forecast.
The blue color at the bottom shows you that, by and large, stable coins are used today for cryptocurrency trading. If you want to speculate in cryptocurrencies or invest in them for some other reason, good luck, but the way you're going to do it is buy and sell using a cash medium, which is stable coins.
There are two dominant stable coins today, Tether and USDC. There's a smattering of others, they're all in the single digit billions, but Tether and USDC together are around 250 billion as you can see on this chart.
In the future, as you can see, Citi has pretty strong projections for growth in the cryptocurrency-based demand for stable coins. This is outstanding amounts of stable coins that are going to be used for crypto trading. I don't know what to make of those numbers because I don't actually know what to make of the numbers today. I don't know why people are trading cryptocurrencies. That's another conversation. They have an infinite price earnings ratio, they do have some fringe uses, so do tulips, but anyway.
Stable coins themselves are a different beast. They can be used to make payments. The other two colors, the red and the green are related to actual uses of stable coins for doing things that we like to do with money, in the "real economy". The red are the city numbers for where stable coins they project will be used as a substitute for US deposits. Now, it's not a zero-sum game, as some of the bank policy institute have suggested. It's not true that every dollar that's used to create a stable coin is a dollar less of bank deposits, but those are big numbers in red.
In a moment, I want to dive into how to break down those numbers and are they realistic? I mean they're huge. I mean going from nothing to potentially a trillion or more dollars, that's a lot of growth in five years. Is that actually feasible? Then I'm going to do the same thing with the green.
So starting with the red, I'd like to break it into two buckets. This is US, now, domestic uses of stable coins. One is the one that you've probably all been reading about, which is we're all going to someday have an opportunity to use stable coins to make our mortgage payments, buy coffee, buy a ticket to a baseball game, go to the grocery store, order from Amazon and all of that. I actually doubt it. I don't think retail uses of stable coins are likely to be a big deal because the network effects of established payment means in the domestic retail US economy are going to be very entrenched, they're going to be very difficult to dislodge. The more that stable coins improve on the payment experience, the more that banks are going to improve on their payment experience. It is hard to get interest on a stable coin. You don't get United Airlines miles on your stable coins. People when they hit one app or the other, they're probably going to hit the app that says, "Pay with my Visa card."
The other main part of the red block, however, is I think potentially very important and that's the use of stable coins for conducting settlement of financial transactions in the backend, the core financial markets for foreign exchange, treasury securities, repo and the like.
I'm going to come to that in a minute, just a bit on the green. International, it's now official US federal policy that stable coins will be used as a vehicle for dollar dominance and that is a realistic impact on foreign countries. Those with weaker banking systems or very volatile inflation, you should not be surprised to see stable coins being used. I've had anecdotal information from places like Somalia, Nigeria, Argentina, and there's also some IMF work that shows that people are actually picking up on this. JP Morgan's estimated use of that today is around $10 billion. They're also used in the international context for payments, to and from, emerging market economies because correspondent banking is slow and expensive. I'm not going to talk about that further because we don't have enough time, but I think that those numbers are potentially realistic, those green numbers, but they go from very small to very big. I think somewhere in that range is not ridiculous.
I want to talk more about this wholesale finance application, because this is the one where I actually think this is a better technology, it's a killer app for doing financial settlement and eventually the better technology is going to win or, at least, take a large part of the current share of trading, which is in the trillions of dollars a day. The fact that there might be multiple trillions of dollars of stable coins for doing back-end financial settlement is not a silly idea.
Here's the idea; a US bank wants to buy euros from a European bank. The US bank needs to pay $500 million to get 400 million euros, if the US bank sends its money over and the EU bank doesn't send the euros back, the US bank lost a lot of money. I discussed this at Hoover in the context of the Herstatt events of the 1970s. That problem of settlement risk was addressed with a very expensive, cumbersome intermediary, trusted third party in the middle. It could be done very simply by a cryptographic scheme, called a smart contract, in combination with the use of currency stored on a blockchain, by which we mean stable coins.
Here's roughly how it works. The blockchain or other ledger keeps track of the state of everything, call that state XT. The US bank signs cryptographically an irrevocable message saying, "I will send 500 million if the EU bank similarly, cryptographically, signs a message saying, I will send €400 million." Once the blockchain or ledger has both of those messages in hand it enacts the swap. Bingo, no settlement risk, programmable, extremely convenient, fast, simple, cheap, good idea.
Last slide. The US treasury market has already executed on Canton, a stablecoin based settlement of a Treasury repo trade. In fact, Don Wilson, he's sitting over here, established the company that established Canton, which is the ledger on which this transaction occurred in August. The idea of this is that the seller on the repo, or you can think of it as a treasury securities sale, sends a message to the Depository Trust Corporation saying, "Those tokenized treasuries that you have in my account, on your ledger, put those in the name of the investor buyer," provided the investor buyer similarly sends a message to the Canton Network saying, "Those USDC stable coins that you have in my account on your ledger, on Canton, please put those in the account of the seller." Once both of those messages are registered on Canton, bingo, you've got what's called atomic settlement.
These two types of applications are two examples of how the whole backend of the financial system can run much more efficiently, in principle, on stable coin cash with smart settlement. What are the caveats? Number one, well, there's a lot of plumbing out there and unplugging it and replugging it in is going to take a long time. This is a maybe five to 10 year thing. It's not necessarily going to work, maybe something even better will come along, but it seems like the better technology, so it has a very good chance of being a multi-trillion dollar a day use of stable coins.
The other caveat is I wouldn't do it with USDC passed a few hundred billion dollars because, as Mike said, the GENIUS Act only requires to be backed by things that include uninsured commercial bank deposits. This is totally contrary to international principles, called IASCO principles, our major infrastructure for settlement of things like treasury repos. It should be backed by a hundred percent government, let's call it, reserves or it should be reserves. There's no reason that the central bank couldn't issue reserves in a tokenized form that could be used for this purpose. I think, from a policy perspective, that would be a better choice.
That next best choice would be in a more resilient form of stable coin. It could be on a tougher ledger. Right now, USDC is on an Ethereum ledger, which is, I would call it, solid, but I wouldn't call it as resilient as you would want for a trillion dollar a day market. You have this issue that although they mostly have treasury bills, it's not all treasury bills. Why would you take that risk with a market like this?
Finishing these, I think there is a realistic future in which stable coins become a major part of our financial system, not domestically, but in the financial markets and also is a vehicle for dollar dominance, so beware if you are running a foreign monetary system.

Speaker 1:
All right. Thank you very much, Darrell. Our next speaker is Amit Seru.

Amit Seru:
Thank you, Valerie. Thank you, John and thank you, Michael, for suggesting that this panel will be a great one, your rational expectations.
All right. I want to say a few things which we didn't coordinate, but somehow we've ended up with kind of agreement on a few things, but coming from very different perspectives.
Just so you all understand, we are trying to modernize payments here, we are trying to make dollars more available outside, maybe potentially through the GENIUS and Clarity Act, that perfect stablecoins that we are discussing.
What I'm going to argue here is that just because we use a lot of buzzwords and tech doesn't make the risks disappear. If you really want to understand these things, you have to get into plumbing, you have to understand how do you build trust and how do you maintain trust? One of the things that's going to be important, like Michael said, is singleness of currency. That's something that we've got to understand a little bit, unfortunately. No one likes plumbing, neither do I, but you've got to understand this because that feeds into design and economics, which all of us like to talk about.
What I will do is I will give you the pro case for why we are so euphoric and enthusiastic about it. I'll talk about what makes it hard and then I'll tell you why GENIUS plus Clarity doesn't give us safety like they're supposed to. Perhaps they will with a few additional changes, but maybe CBDC is more efficient, if that's what we want to only do. Okay? That's the order of the talk.
The pro case, we've talked about it 24/7, faster, cheaper, safer store versus local, especially in emerging market context. One thing which has not been mentioned is if we believe on the crypto on chain, lots of transactions are going to happen in the future, this could be a settlement asset. That's all been discussed and a bunch of things that have been put in these acts, of course, as we know with all the rules, come from lobbies. Bank lobbies have shaped a lot of financial regulation in the past. Now there is crypto lobby as well. When there are gaps in this, it's not because people aren't smart, it's because lobbies are acting so something that we should keep at the back of our mind when I talk about a bunch of stuff.
So forward-looking, why do we want to do this? Well, we want to stay ahead and think about smart contracts so that we can have programmable commerce in the future. We want to get private competition going so that rates can be passed to the consumers without bank lobbies blocking it and so on, and we want to develop an innovation critical mass in the US. All of that sounds great.
Just so that you all know, like Darrell said, these things have been around, the stable coins, the Circle and the Tether thing. What's the size? 200 billionish, projected to be that. Why is it not bigger than that? Well, because there are problems. We'll talk about what those problems are.
Now, just to also give you some sense, there are three types of stable coins that people talk about. One is backed by safe assets, one is backed by crypto itself and one is backed by code, algorithmic stable coins. Well, you laugh, but these things are real. Okay. We'll talk a little bit about it.
Let's step back and try to link it a little bit to the economics that Michael talked about, and Darrell also a little bit. Essentially what we are doing here is creating a narrow bank. We are basically giving up on maturity transformation and we are going to create a narrow bank back in the day by thinking about also some kind of centralized supervision regulation because these things, for them to function, require resolution, require audit liquidity. We'll see what I mean by that.
The historical debate always has been stability versus foregone bank credit creation. I know John Cochrane will have an issue with this, this is a particular type of bank credit creation which is about maturity transformation, but that's the debate. This is going to be a similar debate, but it's going to be because it's tech, it's on a code. So we will talk a little bit about that. There is a side discussion here about what happens if all of this becomes narrow and deposits, where do they go and so on, which kind of Michael alluded to, I'll come back to it later on why this is not such a big deal, but people talk about it because bank lobby sort of gets worked up about it.
Let me give you some terminology on plumbing and why doing this is hard and where that comes from. So this is the same picture. Someone comes in, puts in a US dollars, it goes to an issuer through the bank. So you need the banking system right now. That person then puts it in reserves, issues some coins or tokens on a wallet, and then you can use that on the block. Why am I sort of putting it here? Because the terminology is going to be important. This is on-chain, this is what's going to happen in the crypto world and this is all off-chain. Okay? Something to keep in mind. Both are important, so that's why I said I don't like plumbing, but it's important.
What must be true to maintain and think about stability, one, is you need to have these reserves, whatever they are, they're amazing reserves, T-bills, cash, whatever have you. You will need to have some audit off-chain, which is where the reserves are. You also need to think about on-chain. Why? Because you need to have coordination across different chains, different platforms and so on. There has to be things like if there is fraud and all kinds of weird stuff happening, someone has got to figure that out.
We also need to talk about anti-risk-taking supervision. I won't do that right now because Michael sort of talked a little bit about it, but just as a point to think about, when we talk about banks and hedge funds, we always talk about them doing risk-taking to reach for the yield. There is no reason why this is any different. There will be a reach for yield here as well. Who's going to look at that? That's supposedly state or federal regulators and that has its own political economy that we can talk about separately. I won't talk about it right now, but it is an issue.
If bad stuff happens, you need then some orderly resolution. The structure has to be bankruptcy remote, you need to have some redemption rules on T+0, T+1 and so on. There needs to be potentially a liquidity backstop in the middle. There needs to be interoperability across chains, across platforms, because they might be haircuts, the coins might not trade at the same price or how do you redeem all that?
What this is getting at, hopefully you all understand, is some kind of centralization if you really want to do all that, which, by the way, cuts across the whole notion that started all this, which is the whole notion was we are going to have a decentralized architecture which is going to generate trust, which is going to replace the centralized architecture. It's kind of a conundrum here.
Let's talk a little bit about how good are we on all of these things, just in the context of stable coins and GENIUS Act and Clarity Act. Here is what Circle stable coin holds. They hold treasuries, they have reverse repos and a bunch of other stuff which looks like is cash and so on. How do I know this well, because Circle said so. Chain only shows you tokens and a tester only sees reserves off-chain, okay? So that's important. If that's the case, you've got to rely on some accounting firms, on someone, some accounting rules. Attestation, first of all, it's not high frequency. Some is weekly, some is monthly, either is monthly. That's not the same as full audit. Developing trust on this, as you know, is hard and can evaporate very quickly.
Who monitors this? If we are going to rely on people, there are going to be problems, and we have seen this. Suddenly when reserves disappear or someone is going to be audited months away and so on, or the auditors are cheating, they're all the common problems, they're not gone in this world. We can talk about smart contracts and everything will magically work, but this problem has to be dealt with in some way, shape or form and maybe we will, but right now it's unclear how.
The other issue, this was off-chain, is on chain and that gets to the issue of there are bad actors, you've got to freeze them, you've got to do something. It's not free. When we talk about it's fast, efficient, these sound very buzz wordy and sound amazing, but blockchain is not free. To verify and validate you need some resources. It's called gas. When you will need to tease out these people, you need more and more gas. That gas is not free, it's got to be charged to someone. Where is that fee going to come from from? From somewhere. Where is that going to be coming and how is it going to happen? We don't know.
The other thing is that you have many chains, many platforms and if there's no uniformity of rules and policies, you can hop to other tokens all the time. Okay? That, again, is something that you've got to figure out if you're going to develop a trust framework which applies all over. Transparency doesn't self-enforce, you need eyes, rules and budget.
If you think this is just a figment of imagination, no, it happens all the time. There's a beautiful paper by John Griffin and his co-authors where they have done this tracking across chains and what they find is when you're kicked off of one chain, let's say the Circle, the dotted vertical line here is when you're kicked off of Circle's stable coin because you did some fraud, what do you do? You immediately hop onto another one, which is where you're going. This is called DAI by the way. DAI is exempt in genius, very conveniently, because you can just hop on there. Why is it exempt? Because it's not backed by reserves or dollars, it's backed by crypto, so it's off, you can do that and escape and live there.
Why are we talking about all of this? Because it's all about financial stability. Like Michael said, this is the old story. You have a shock, something happens to the coins, the tokens' value, it gets de-pegged, once it gets de-pegged everybody wants to sell. If everybody wants to sell, there is congestion in the network, that means the gas spikes. Once that happens, you have redemptions. Once you have redemptions, this same old story starts, you've got to sell reserves. If you've go to sell reserves, this is what people worry about, which Darrell was getting at, that the pipes need to be clean because they might be spillovers to the treasury rates themselves if this becomes very high scale. Is there anything different? Not really. It's just going to be faster with the code. Okay.
It's happened. Small perturbation in Silicon Bank, USDC sort of goes crazy. It calmed down but may not happen all the time. How do I know it? It didn't happen with Terra and Luna. In Terra and Luna, there was actually a run, it happened very fast. Now people have looked at some data on this. There is a paper by Antoinette Schoar and Igor Makarov where they look at what is happening. What's happening is because it's blockchain and everybody can see everybody you run faster, unlike when depositors needed to look at the lines and so on. There is a little bit of a difference here.
Backstop and rules are centralized by design, which kind of cuts a crease across this whole notion that safety is going to be decentralized. It's not that easy, okay? If you are going to make it stable coins and they're all going to be interoperable, it's not that trivial.
There is an issue about fragmentation and singleness, which Michael sort of got to, so I'm not going to talk too much about it. The basic idea is if you have a dollar, you have trust in dollar because you can take the dollar anywhere and it works. If now you have chains where dollar is trading at different prices, why? Because the gas and the redemptions are happening at different places. Are we happy with having dollar trade differently in different parts of the world because we like stable coins and technology? Maybe, maybe not. Okay.
To summarize this entire thing that I talked about tells you that maybe centralization is the order of the beast here. What does it replace? We can have a conversation about it. I'm just putting this just for your convenience to see that people talk about money market funds getting displaced, cash, cross border. The only thing I'll comment about is deposits. People talk about, "Hey deposits, once they go away, bank funding costs go up, lending is going to collapse." Well, it's not obvious, because banks will reprice, but the non-banks exist and the capital markets exist to do this so this is not an issue really.
We talked about GENIUS Act, but if you look at all the points that I talked about on-chain, off-chain runs and fragmentation, it leaves gaps everywhere. Like I said before, it could be because lobbyists are pushing us in that direction, but they are left. We don't have on-chain, off-chain fragmentation and run things, which I just told you, if you really wanted to address that. It, therefore, points to the direction of an efficient, public core-oriented system, which is what Michael was getting at, which is a CBDC, but the Clarity Act has banned CBDC.
They have banned us to even think about CBDC, or even to think about something like this in the future, for various reasons. Again, is it something that we should be banning or should we at least leave it on the table? One issue, is, well, we can't have the government oversight on all the privacy that we all love, but right now we are giving that same privacy and data to companies basically. Let's be clear that nothing is free here.
My thesis GENIUS plus Clarity Act right now with stable coins, does not imply safety. It could work, but there might not be the most efficient way if we fix all this. Maybe the answer is CBDC, if this is the only thing we wanted to do. Thank you.

Speaker 1:
All right, thank you very much Amit. All right, our final panelist is Andy Hall.

Andy Hall:
Great, thank you. Super excited to be here and perfect timing coming after Amit because I'm going to talk about some of the same things. Just for context, for people, I am faculty in the political economy group in the GSB, I'm not a finance expert by any means. What I work on is governance and, in particular, governance of the online world. So I'm going to be speaking from a slightly different perspective in that way. As part of that work, I'm an advisor at Meta and at a16z crypto, so you should be aware of those disclosures. Great.
I want to talk about the ideology, the origins of this whole thing, which is what Amit was getting at too. It's kind of puzzling to see where we've gotten from where we started. Crypto was originally motivated, as Amit said, by this idea of "decentralization". That word actually has many definitions, no one is clear on the definition, of course, but in the case of money, there was a pretty clear declaration of what it meant in the original Bitcoin white paper, which is fascinating to go back and reread now. Encourage you all to do it.
The very first paragraph of the Bitcoin white paper is all about how we really need a digital money that's irreversible, that you can make irreversible payments with, because reversibility is what leads to all these costs and the need for oversight and fraud. We need a digital version of cash. That then was picked up by other people and turned into this idea of, what they call in crypto, censorship resistance. This idea that you could have this digital cash you can pay people with and no one else can come in and mess with that transaction. You don't need any other authority, who you trust, to decide whether that payment is fair, or correct, or not. I'm going to come back to it at the end because I think that turns out to be a really important issue that goes way beyond payments in the online world.
I just want to flag, at the beginning, crypto, the technology of blockchain gets conflated with payments, but there is in fact an enormous amount of work. If you go talk to computer scientists who work on blockchain, much of the work is not actually about payments. The same idea of decentralization comes up for these other things because the idea is this is a way to do distributed computing, or to create networks in which there's no central authority. That could be really, really important in the online world.
There's a great quote that I always use from a computer scientist, Tim Roughgarden, "The idea of the blockchain beyond payments is a programmable computer that lives in the sky that is not owned by anyone, and that anyone can use." I want to come back to that at the end because as we head into this world of AI and agentic payments, which Darrell asked me to talk about, these questions are going to come back of what does it mean if everything we do online is mediated by a central platform? If we think about social media where I've done a lot of work, for example, that's obviously a concern to a lot of people.
This ideological origin of crypto, I think, is underappreciated today. It's odd where stable coins have gotten to, given this original ideology. Where did stable coins emerge? The idea was Bitcoin was going to be this censorship-free digital cash that no one could mess with. Whether that's true or not is somewhat debatable. There are actually ways you could take over the Bitcoin network if you really, really wanted to, but I think we could posit that that's basically true.
The problem, for everyday users, was that, of course, it's super, super volatile and so it's actually not very useful to pay people in it because its value is bouncing around so much. Early on, this idea of stable coins was very, very explicitly, "Let's take what makes Bitcoin great, to people who care a lot about decentralization, and let's add stability on top of it."
This picture here is a very famous crypto founder Rune who founded something called MakerDAO, which at one point had $40 billion under its control, less now. They created this thing called DAI that Amit talked about. In the DAI white paper it explicitly says, "The primary feature of a decentralized cryptocurrency is censorship resistance." The idea was here's a way to make payments over the internet where the other person can trust that you're getting what I say you're getting, and no one can come in and interfere with the transaction.
Since that time, that idea has become incredibly salient and important to people who care about crypto. This hasn't really come up in this panel yet, which again is sort of odd how we've gotten to where we are with stable coins. That idea is everything. People who care about this will point to a bunch of episodes in America, and elsewhere, where they feel like the government has done a terrible job of overseeing these things. You can pick your favorite example. There was Choke Point 1.0, Choke Point 2.0, the Canadian truckers. We have the Canadians on. They have a bunch of their favorite stories about this. That was the idea of DAI.
Now the problem with DAI, it turned out, and Amit was sort of alluding to this too, is it actually turns out it's super hard to make a decentralized stable coin, for at least two reasons. One, which is the focus more of my work, again, not so much about payments, but just generally about governing online platforms, is what does it mean to have a decentralized stable coin? Well, you're going to have to get a group of people together online where no one is in charge, no one has all the power, and have them make a bunch of decisions about how this coin works and write the code that underlies it, and so forth. MakerDAO, which produced DAI, constructed an unbelievably interesting governance structure that involves weekly votes and the votes are self-executing on the blockchain. They developed a system of representative democracy. It's quite professionalized. The delegates, these representatives are paid hundreds of thousands of dollars a year. It's fascinating, but it's also super difficult. There's all the standard agency problems we see in democratic systems playing out in this online platform that's trying to make decisions about how their stable coin operates.
More practically speaking, it's also really, really hard to keep the peg. This is a picture that kind of, it's a nice pair to Amit's. This is DAI's peg over time. It's a little hard to see the Y-axis there, but the two things I want to highlight, there's of course this very salient complete loss of the peg and that is the Silicon Valley Bank disaster. Even prior to that, even under normal operation, you see it wiggling around way more than someone would normally roll with. That's because of the extremely complicated mechanism DAI uses. DAI doesn't want to be backed by the kind of treasury efforts we were talking about before because their whole idea, again, is censorship resistance. If the idea is you're backed by this thing that the government can do step to you with, that's not what you want.
It turns out it was impossible to keep DAI stable without that and without getting too much into the weeds, maybe in the Q&A if people are interested in this, they ended up holding a ton of USDC in order to keep DAI stable. Then some of the people involved were very upset about that and that became a fascinating debate.
With that background on the history of stable coins, it's then very notable to see where we've ended up today. This is from the White House Explainer on the GENIUS Act. You can see that it's required, if you fall under the terms of the GENIUS Act, your stable coin issuers must possess the technical capability to seize, freeze or burn. Here, I'm showing you the actual smart contract coming from Tether. This is prior to GENIUS, this has nothing to do with GENIUS. This was already the case. Tether can come in and blacklist any address that they want. That's true of USDC, as well. It doesn't seem like stable coins, as designed here, are achieving the original ideological goals of stable coins.
Then that's a puzzle. It raises I think some profound questions about where we're heading and what the purpose is. We saw, I think, in Darrell's talk some very interesting projections of places where this could be useful. I think the key question for every element of where this could be useful is, is this a case where the decentralization of the stable coin is actually important or not? It might be in that smart contract case you gave, maybe there is no trusted third party, you're willing to oversee that swap and then you really do want Ethereum or something to be the provider. Maybe in lots of other cases a permissioned network would be okay.
That, I think, is the fork in the road where people haven't always been clear on where is blockchain uniquely valuable. Having the decentralization of Ethereum, or Bitcoin, or other blockchain comes with a lot of costs. It's very unwieldy to maintain the decentralized nature of the blockchain. For certain uses, it could be very, very valuable, but there may be lots of others where it's not.
I think when I look into the future, again from a governance perspective as a non-payments expert, you can see arguments both ways. I think the bare case for this idea is that you're going to end up with these super centralized, stable coins like we're seeing right now. They're going to end up looking just like the thing they were trying to avoid being, like a CBDC, or something like that. There might not be anything else about blockchain that's giving you value. So if it's just about programmability and things like that, you can get those without blockchain.
On the other hand, it might turn out that there still is value to this approach. It could be that there's something about having ... The fact that these stable coins are at arm's length from the government might provide some kind of meaningful insulation, that people who care about that censorship issue, might value.
This came up in Amit's talk a little bit, currently in the policy, there is still this path to decentralize stable coins who are actually not subject to the GENIUS Act. There's some question of will people actually end up wanting to use those instead? Again, we know there's a lot of practical issues with them.
I just want to step back. Again, where I come from is really much more about the power of online platforms, more generally, and payments are one interesting feature of that. What I have here is a screenshot of a truly great commercial. You all should check it out if you haven't seen it. This was a commercial that Epic Games, the maker of Fortnite, released when they sued Apple over the rules of how Apple oversees payments in the app store. Without getting too much in the weeds in my last 30 seconds, I do think this is really important for understanding the coming battle over agentic payments and AI agents.
The issue was Apple took the position ... you have all these kids playing Fortnite on their iPhones. The way Fortnite makes money is in-app purchases. Apple's position was you install that through our app store, we get 30% of every transaction your kid makes in Fortnite. Epic Games didn't like that. They said you should be able to go outside the app store, use Safari on your iPhone, to transact without that cost. Apple kicked them off the app store and that led to this huge litigation. Epic Games kind of won the litigation. As usual, the Supreme Court is super complicated, but we're going to see that battle come up again with agentic payments.
People are saying stable coins are going to be this key ... This didn't come up in any of the talks, but in tech people are saying stable coins and AI agents are a perfect pair. This will be this way that your autonomous agent can make payments on your behalf. I think, coming back to this governance question, it's all going to come down to who is going to sit on top of all of those transactions that the agents are making. Google released a proposal for a protocol. Ultimately, the question's going to be is OpenAI getting to mediate all of the transactions that these AI agents do? If so, they're going to be able to impose their own rules, just like Apple did in the app store. I don't see why stable coins, as they're built right now, are going to solve that problem. If you had a world of completely open AI agents and censorship resistant stable coins, then you could imagine a super weird world in which AI agents are freely transacting for good, and probably for ill as well.
I'll leave it there. Thank you.

Speaker 1:
All right. Thank you very much, Andy.
Okay. I want to initially just go to the panel, if you want to agree, disagree with what each other said for a little bit, and then we'll open up questions for the audience. I will let you do it. I mean, one thing that occurs to me is that that big computer in the sky just doesn't work as well for money as the invisible hand does for the exchange of goods and services.

Michael Bordo:
I just want to amplify some of the history stories that I told and try to relate it today. Darrell raised this, what are the incentives to become a stable coin issuer if it doesn't pay interest? With the National Banking system, the way it worked is you had these bonds, the value of the bonds was less than you could issue. I mean it was more than you can issue, but based on those bonds, you could then issue these notes and lend them. You get interest on the loan. Another way of looking at it is that the private sector shared in the senior age, that's the incentive.
Let's think about today, I have three examples; JP Morgan, Circle or one of these companies, and say the Trump family, something like that. JP Morgan, they actually could benefit. They set up a narrow bank, it's a hundred percent backed. It could be backed by cash, by reserves. Why are they going to do this? Well, because it's a tie-in sale. People know it's really going to be safe and they can offer all kinds of other services. I think JP Morgan stable coins could probably solve all these problems. The crypto companies, I'm not so sure. They don't have the history, they don't have the credibility. All these issues could come up.
Then the third one, so I made this distinction between large stable coins and small ones. Small ones are regulated by the states. Now it says on there that the states are going to be overseen by OCC and all that. My history tells me about the free banking era. Some states actually did a good job, some of the East coast states, the Midwest states did not. Also I could see a situation where you could have almost corruption going from the state-regulated stable coin issuer to the examiners. I mean, so that there really are some serious problems other than just the problems I've talked about. All this has to get worked out.
The second point I wanted to make is systemic risk. We've been talking, I see the systemic risk, and if I were a regulator and I've been talking to some friends in the Fed, so they worried about where are the bodies? Where is it going to hit us? Okay. Come in through the backing. Even if you have US treasuries, if something goes wrong, like now, okay, let's say there's a bad ending to what's going on at the Fed and there's a run on the dollar and there's a crash in US T-bill marker that affects the backing. Shocks of all kinds could affect the backing. Then you've got shocks coming from everywhere. There could be a feedback between the shocks to the stablecoin issuers, problems with stablecoins feeding into the rest of the economy. That's the nightmare scenario that people at the board are thinking about right now, and they need to be worked out.

Speaker 1:
I'm going to go first to Don Wilson, who's the founder of Canton.

Don Wilson:
Okay. Yeah. This was a great discussion. I really enjoyed it.
Just so everybody has a sense of who I am, I'm the founder and CEO of DRW which is a proprietary trading and markets innovation firm. We founded Cumberland in 2014, which is one of the largest cryptocurrency liquidity providers in the world. I'm pretty sure we have redeemed and minted more Tether than anybody else in the world.
When you show the disparities in DAI, we're very familiar with, although I would argue that those are ... It's far less than a credit card charges in fees. So pretty good.
One point I want to make is that this idea of censorship resistant money it's a great idea, but it's practically impossible as soon as you have something that is tied to the real world. The unfortunate acronym that the crypto community has adopted of RWAs, which I always knew as risk-weighted assets, but I guess now means real world assets. As soon as you talk about on-chain RWAs, they're not censorship resistant. It does not matter what you do, there has to be a trusted issuer in the chain. It's just a question of what the least bad solution is that enables us to benefit from the ability to all the things that blockchains provide, while mitigating the risks.
Of course, if you had a CDBC, that would be a much less risky form of digital money than a stablecoin, but there was strong backlash because of all the things that the government did to punish people who didn't spend money in the way that they wanted. I think that that's a legitimate concern. Creating this barrier where a private issuer is one step removed from the government. Of course, if the government gets a subpoena, they can go to Circle and ask them to shut down somebody's money, or give them the history of all the movements for some particular wallet. That does create a nice buffer that, I think, improves the things.
Now, I think that for wholesale payments, especially, for instance, repo settlements, this idea that we're going to accept this incremental risk in the system, may be untenable. So another solution that could solve both problems, it would be if the Treasury started issuing a new form of security that pays interest, maybe at below the target rates. This would be beneficial to the US taxpayer. Maybe it's 50 basis points below the risk-free rate. An entity like the DTCC could then tokenize those securities on a blockchain, similar to what DTCC did with treasuries in the example that Darrell showed on top of the Canton chain. Those securities would then be clearly one-to-one, at any point redeemable for dollars, and would even bear some interest, but would still be one step removed from the government's ability to constrain things. I think that something like that could be an interesting solution that gets us most of the way there are, that solves both of these problems.

Speaker 1:
Thank you very much. All right. Mike Boskin.

Michael Boskin:
Yeah. Thanks, everybody. Terrific. Exceeded my expectations, however rational they were. Three real quick comments and a question for all of the.
First is, Andy, if you think the governance problem's going to be solved by the owners. Looked at the history of the mutual form of organization, didn't work out very well. Credit unions haven't exactly replaced banks, mutual insurance companies, even with big taxes, and it just didn't replace stock insurance companies, etc. So just FYI. It may illuminate some problems. Okay.
The second point is that some of the rest of the world has started moving in various ways. You didn't talk much about that. At the risk of Darrell knowing a hundred times more than I do about [inaudible 01:01:31] too just FYI, the Chinese have the ECNY. They're very, very, maybe because of their system, they're wanting control, their power, etc. They're very much against decentralized stuff. They have a centralized system plus FinTech with ECNY, which, as I understand it, they're using in Belt Road and Silk Road payment systems and transactions. The UAE and Europe seems to be somewhat resistant and for know-your-customer and risk reasons and stuff like that. They're also desperately trying to get a euro digital currency.
The UAE has had an interesting evolution. Now they're tiny, but they seem to be moving towards something that seems to make more sense to me, which is sometimes it's called a pyramid of these things where you have a central bank digital currency that is the public safe asset in people's digital wallets, that it generates the foundation of trust. Then you have stable coins for peer-to-peer and international transactions. You have tokenized deposits for interbank transactions. Now, with the risk of that creating its own risk and opportunities for people to find flaws in it, and exploit it, et cetera. Where did each of you or any of you think about that as something that might work?

Darrell Duffie:
I'll take a quick shot at it. I mean, the idea that Central Bank money is the medium of exchange among banks is what we have today. We have a digital central bank currency, it's just not on a blockchain. Putting it also on a blockchain, in addition to the way that it's recorded today, would facilitate programmable payments and then people could build stable coins on that, backed by those or by the coins that Don just described, issued by the treasury. That would be fantastic. I think the system would run better. Now, it's a market decision. Once the government issues these things, whether they're going to adopt it or not, there's a lot of vested interests. So whether the market would go for that, remains to be seen. Having that utility underlying the banking system would be nice.

Amit Seru:
I think I completely agree. If you also look at the Brazilian and the Indian system where they have a public infrastructure, but there is a separation, like what you were saying, where private entities can then build and offer products. That seemed like a much better way of doing this, because essentially what we are arguing is that this whole trust technology, the most efficient way of providing it, we have a good sense, so we don't need to rediscover it and have competition where there's going to be no credibility building it. Once you have that, then you can do all the innovation and other things that we want in the system, which, for various reasons, we have not seen in the payment sector.

Michael Boskin:
I really appreciated your emphasis on safety having ... When I was in the government, I had to deal with, getting back to the plumbing analogy, with poor monitoring of the plumbing when we had to clean up the SNLs and third world out of the money center banks.

Amit Seru:
I didn't want to give more analogies, but yeah, I figured that everybody got what I was saying.

Michael Bordo:
I mean I always liked the public-private partnership approach that the Bank of England was pushing up, until recently. That was what Andy Levin and I were talking about five years ago. You've got CBDC at the bottom and then you have banks, their partnership and bank accounts that are a hundred percent backed by CBDC and they could pay the interest that's paid on reserves. I thought that would be a great way to go. But of course what happened was the banks immediately said, "Wait, we're going to get this [inaudible 01:05:21], we can't do this," and they shut it down. I'm still not clear that that would really have happened.

Speaker 1:
Okay. I have four names of people who want ... Or not names, but four people. I'll go to the two of you and then Jennifer Burns and then John Cochran. I apologize, I don't know your name, so if you could state it to start with.

Speaker 8:
My name's [inaudible 01:05:45]. I am involved in uphold and figure and issue tokenized real-world assets. Although, I'm a quant, so I agree with you, the original acronym was better. I thought I'd throw some critical facts into the debate here because some things have been said and some questions have been asked that indicate that there might be a few facts missing from the analysis here.
First of all, the relationship between the US government's balances of 35 trillion is to the amount of transaction activity that goes on with the US dollar is 100 to one, 3.5 quadrillion a year, versus 35 trillion. Interestingly enough, that is the same ratio that applies to stable coins. Stable coins, at the end of the year last year were 26 trillion versus 250 billion of balances. So this notion that transaction activity is irretrievably connected to backing is simply either fanciful, or not related to what's going on at the moment.
Second thing I would say is that right at the moment we have a lot of tokenized assets, we don't tend to call them that. Let's talk about ETFs, which being ancient, I was part of the development of. Today, mutual ETFs represent $25 trillion of America's $55 trillion of wealth. Of that $7.5 trillion is money funds backed by the very same assets we've been discussing. The revenue on those ETFs, those money funds, to the institutions that offer them, is approximately 10 to 15 basis points. The revenue from stable coins is the yield on those underlying assets. They'll just call it 550 basis points.
If you ask why does anyone boot up a stable coin, you just need to look at the revenues. Now I'm not making a case for Circle's arithmetic. There's a lot to know, which I suspect we know, about how Circle and Tether spend that money including by buying European soccer teams and turning around and paying other members of the community outrageous hostage money for the right to be part of the ecosystem. But just to do the math for you, the total revenues of that $250 billion of stable coins is equal to the total revenue of the $7.5 trillion of money funds in various forms.
Second thing I would say is, and then I want to ask a broad overall question, which will have no rational answer, but I'll throw it out there for the hell of it. The second thing I would point out is that we haven't given enough credit to the arbitrage function that exists within these redeemable instruments. At the end of the day, the price of dollar backed stable coins, backing stable coins and of real-world assets, arguably, lies in the interaction of the mint and burn structure, which periodically either continuously on-chain, in the case of a money fund or a stable coin, or periodically in the case of real world assets.
By the way, the linkage to the trap by world of real world assets is inextricable, so I agree with that observation too. Because of the ability to redeem at any time in the face value, the stabilization of the price of the currency takes place not in a committee room somewhere in the Fed, not in the underlying regulatory architecture which moves at the, well, let's just say not at the speed of light, it takes place in terms of real arbitrage, which is I think a stabilizing factor that is ... It's recognized by those of us in the industry, but I think it's under recognized by groups like this as an alternative to deliberative activities.
I guess my final question ties into that. You all seem to have a lot of confidence in a process which has failed us collectively since it was invented, called the committee, whether that committee has power or not.

Darrell Duffie:
You're speaking to faculty members who couldn't agree with you more.

Speaker 8:
I have little experience inside that process, but I've watched the bloodshed. Yet everything we talk about when we talk about government action, and I would argue even in governance, is committee based. We have this faith that whether it's regulating AI, or regulating the blockchain, or regulating human behavior, or regulating your pronouns, no matter what we talk about, we are always willing somehow to trust a committee rather than some sort of equilibrium-based system, because we all know the failures of an equilibrium based system so dramatic, but the failures of committees are endemic, persistent, and inescapable. How do you think about the faith you seem to have in some sort of committee?

Amit Seru:
I can answer that very quickly. I'm very religious.

Speaker 8:
We all are.

Speaker 1:
We only have a little bit of time, so I was going to get comments from the three last ones and then you guys can ... Go ahead and get ... I don't know your name, so please ...

Speaker 9:
I'm a Jarred. I'm a [inaudible 01:11:30] fellow at Hoover. I'm just going this very quick. My question has been asked sort of, what could the pros and cons inform America's adversaries or competitors in terms of the US dollar like China?

Speaker 1:
Jennifer.

Speaker 10:
I have a similar perhaps question. I'm curious just for the panel to kind of walk me through how you're thinking. I see the case for CBDC as you outlined it domestically because of the problems it would solve. To the extent that the US not going that route inhibits the broader system, other nations from not going that route, is that potentially a positive in terms of dollar dominance? I'm thinking of your chart, Darrell, and you show the stablecoin disintermediating and just allowing direct transfer. If we blow that up to the macro scale, doesn't that perhaps imply central bank to central bank, with no US dollar intermediation. Given the adversarial shifts in the world, isn't that something we should have our eye on or am I off base in thinking about that?

Speaker 11:
I have a short question for each of you. Andy, I'm amazed to learn that stablecoins government can push one button, and seize, and freeze you out like the no-fly list without a subpoena, without a judgment, without recourse or whatever. We have to balance somehow anonymity versus collecting taxes one of these days. I Don's structure, it's a private thing, you need a subpoena.
Amit, it seems to be the answers to all your worries are CBDC reserves or my favorite also ex-value floating rate, overnight treasury debt, backs, stablecoins, segregated accounts, money market funds that are allowed payment services, and we have reinvented the narrow bank, which is [inaudible 01:13:18]. Or you have risky assets plus an equity buffer and some regulation and we've tokenized the actual bank. That seems like the answer.
Darrell, the message I'm getting from you is that exchanges, margins, collateral, escrow, it's all out the window. We're going to tokenize this whole operation. I think we just get to cheer.
Last for Michael, the big difference 19th century and now we have instant communication. If I walk into a store, I know what the value of a Minnesota thing is. In fact, I could even know what the mark-to-market value of their assets are, which would seem to help a lot. Which raises the question; why do we need run-prone on-demand in order to have liquidity transactions for ... Bitcoin's a little bit too much. But if these were very clear assets, ETFs, trading in a small band that would seem, in today's technology, to provide all the liquidity you need without the run-prone nature and without the dangers that you had historically.

Amit Seru:
Can I go because I have a very short ... Yes to Jennifer, and yes to yours too. Now I cede the floor. The others can now ... I give you the time

Michael Bordo:
I agree with Jennifer. I think that's going to create a problem if the other countries all go CBDC and the US doesn't. That will be an issue in the future. John, yeah, I mean sure that was an information problem and this would get around the information problem, but there were still other problems too that this wouldn't get around. Okay. Yes, I agree.

Darrell Duffie:
I want to talk about this issue of dollar dominance that both [inaudible 01:15:07] and Jennifer asked about. I think it's a terrific question. There's a distinction in my answer between smaller countries that don't have really strong payment systems and banking systems, on the one hand, versus countries that are developed and probably not susceptible to this kind of dominance. Those smaller countries are in play right now. Yesterday, it was announced that China would give up $215 million of value on a loan to Kenya if they re-denominated it in Renminbi. They are trying to get more and more smaller countries that are kind of on the boundary between which geopolitical faction that they're in, to go to Renminbi, and now they're going to have a hard time. The dollar is just so hegemonic, globally. At the margin it's an enterprise for the Chinese government. The US government is kind of less organized and just saying, "We have dollar stable coins, we're not going to do a CBDC, which is harder to manage, but a free market, go ahead. Invade the world with dollar stable coins." That may be quite a successful strategy as well.

Speaker 11:
I just came back from Europe and I can report Europe is going to shoot themselves in a foot and make sure to regulate this thing out of existence before it started. Switzerland, where I also was, the last thing they want is the stable coin because then they would have to issue more Swiss francs to back the stable coin and they don't want to do that either. Our major competition is ...

Darrell Duffie:
I think you two raised both a fantastic question.

Andy Hall:
No. I questions to me raised this ... I think the censorship resistance thing is under rated, certainly from the politics of this. I can't imagine a CBDC in the US anytime soon.

Speaker 11:
Can I ask you just to clarify, so is it true in the current legislation that with no legal procedure, somebody in the White House can say, "Andy Hall, boom, it's all gone."

Andy Hall:
I don't think so. The last thing I want to do is ...

Amit Seru:
[inaudible 01:17:15].

Michael Bordo:
Absolutely not.

Speaker 8:
[inaudible 01:17:22] is not imposed within the network, it was imposed on the network because the original transfer activity was largely ...

Michael Bordo:
It looked like a hundred dollars bills.

Amit Seru:
A report has to be filed. There's a process. It's not that.

Speaker 11:
Thank you.

Amit Seru:
The issue is just you can hop around. That's a separate matter though.

Don Wilson:
I think the stablecoin issuers can freeze a wallet, and the government can, if they have a subpoena, go and ask them to do that. I mean, obviously just like some of the ...

Speaker 11:
Just like a bank account.

Don Wilson:
Yes, just like a bank account. Of course, a stablecoin issuer could behave like some of the social media companies did under previous administration [inaudible 01:18:04] that's a concern, but they don't have to.

Speaker 1:
Well, I want to thank the panel and all of the participants for fantastic ...