Good morning to all of you, I am Pandur Kerr and the oldest faculty member of the department I am 29 years here, well before we start let me tell you this course, analog is a course which will actually never leave you in your whole career in case you remain a engineer irrespective what engineering branch you take. So please pay attention to analog because as the word suggests it is continuous in time and anything which is continuous in time must be important otherwise you know world will collapse, therefore anything which is continuous is analog and therefore it is very important. Before we start there are few things you should know, my name as I said already in Sandhur Kerr fixed credit course, what is this trying to do something that will try to see some of the analog circuits being implemented on bipolar as well as CMOS, it is very interesting to say that analog design appears to be much less systematic, yeah it is much less systematic whether some of those basic which make it unsympathetic are clear to you, some of the books which I will follow the first one you can see my name sitting there now, third author, I am not the author for this book so it is so happened that Cedrus asked me to revise Asia and other countries other than US it seems, so I added 150 pages to their earlier one with 1000 pages and that is why I am the third author in that book, so since I am now part of the game I will use as the textbook, however if you have a book of Milman and Gravel old book by the way this Milman person does not exist, this is like in my time I think your father or their father may be knowing the name called Thareja, you know it is your electrical engineering by Thareja, anything related to electrical electronics may be civil also he will write a book DL Thareja, you are wondering how one person can have such a width, so it apparently found that Thareja's book became popular, so every other book from the same publishing house was written in the name of Thareja, so there it tells, most well known analog circuit person in the world, he is dean of university and of course his book is unsystematic to learn but very interesting those who are really looking for very very strong physics circuits, I think Grace book is the best and the fourth book which I like normally which is written by Neiman, you may have read his other book on devices, the same author has written another book on electronic circuits and design, okay this is the syllabus which our site also gives, I do not have to talk too much about this, something they are talking about operational amplifiers, frequency response of amplifiers, this word which is border plot, border is a very famous feedback control system person and in 1948 he wrote the first book on feedback control and he actually described frequency responses and for good reason whenever I taught analog circuit, I also like the frequency response part little more than others because connected to stability of the system and therefore of course you do not say but 90s I was called Mr. Boudi really because of my fancy for this Boudi's plots, we will look into some applications of fans like comparatives, clippers and we will also see some oscillators, real operation amplifier, problems in amplifiers, normally the old books have only bipolar transistors as their basic elements but since world has changed to MOS, we will switch more on the MOS maybe 30 to 40% bipolar 60% plus MOS so that you know what is going on in the world now, so probably we will though it is not specifically written here but I may actually switch more on MOS transistors and I am told you are already been taught that officially at least, okay, whether you understood, you liked it, you do not know that is yours but I am told you know it, okay and then in the end we will see some more applications like A to D converters, D to A converters, sample holds and multiplexers time per meter. Okay, so this is something about the course, today what I am going to show you some slides which is just to tell you what is going on in the world, okay, so something I will talk today about why analog, what are the analog issues, why CMOS, we will just compare analog design with bipolar CMOS and some systems, please do not feel that is this is irrelevant or something, whatever I teach in the class throughout my semester everything can be asked in the examinations including today's talk, so I will just give you some what is VLSI, what are the technologies, what are the market needs, why analog designs are very important and what are the challenges, what VLSI has come from very large scale integrated circuits, since 16 when the semiconductor chips have started coming in the market particularly from Bell Labs and then from Texas Instruments, we started counting number of transistor per chip, so we say okay 100, small scale, 1000, maybe medium scale, 10,000 and above, large scale and maybe millions, very large scale, so that is the number we are talking, this has happened because the dimensions of the transistor started shrinking from 100 micron down to nowadays 28 nanometers, so obviously if your dimension reduces the number of transistor in the same area will increase, it is not so, the chip size itself has increased, initially I had a chip which I made in 70s was one and half mm by one and half mm, today one can have one and half centimeter to two centimeters SI, so huge chips for example Intel, recent De Leon has around 940 million transistor, it has four processor, quad processor on chip and it has a memory of 16k SRAM which is called cache and just outside another chip they are kept in the same package which is 4 GBB man, you can imagine what kind of densities we are talking, but good thing about all this, this is only for digital, analog people still talk about 1000 transistor, oh big circuit, so huge circuit, normally I prefer to have 10 transistor to 20 transistor, 50 transistor, huge analog block, the problem came because we have a technology earlier was bipolar transistors and it is very ideal for analog performance, in fact if you really want analog chip to work better, you actually go for bipolar, two reasons we did not do that or some company still market, for example some of the nationals OPAN 741 is still on bipolar, not all of them but some of them, the reason why bipolar loss because of its density limitations, that because the size could not be reduced too much and used to consume huge power, because of that slowly bipolar gave way to MOS technology and present day 99% or 98% chips are on MOS, however there is no system as far as nature is concerned which will not require analog, so a new concept appeared which is called mixed signal, analog plus digital, analog maybe 10%, 15% or even 5%, the rest will be digital, now the issue came that if you have a digital technology then I will prefer smaller diameters because then it will be faster I know, so I will go for 22 nanometers maybe 16 nanometer process, but analog says if it is a 1 micron I am very happy, larger it better for me, now that means you are trying to put analog design on a digital technology which is worse for it and now you expect that it should behave far superior, it is something asking too much, it is a paradox there, analog designers left to themselves they say okay put 1 micron length, channel length it is great, whereas digital will say put 10 nanometers if it can, 11 nanometers if it can, so there is a problem and therefore the design and integrate circuit for analog plus digital has become very, very crucial because of bad technology, circuit tricks so that it actually does lot of good things even with the digital around and that is where the challenge is there, therefore there was issues whether we should work on bipolar or CMOS and then in between someone said why not work together by CMOS, yeah there are many good things about bipolar CMOS process, one of the thing it takes some advantage of bipolar and some of MOS, but when I say some there must be lot many disadvantages both also must be coming, so you have to weigh whether this is important or that is important and then go for biasing, only 6 companies the world have biasing or technology no one else, so what is the market is asking, most of the market is saying wireless, almost every one of you I do not know if one of you do not have a mobile you should raise his hand I do not think anyone will say I do not have a mobile because that is the only past and you are constantly putting here, so wireless systems have become very important this is the market need, so whole challenge nowadays is to work for wireless system, major money is coming from wireless market, then there is another system which is coming called optical system particularly fiber communication passing a good data from say 100,000 of miles wireless does not work as good, so you want a cable where fiber was invented many years ago and now we are looking for optical systems, analog part came like this, if you have an optical system obviously you are converting some data into a photo diode into optics, you have LED and photo diodes, so you will convert one to the other from optical light to the electrical and electrical to the light and now these conversions have more problems, though the fiber will do faithful transmission, but what about the ends, so the major research right now which has much of analog components here rather optical analog components, Reynolds laws for example are re-looked into now, the other area where analog circuits are very strong are sensors, you cannot survive without sensors and will show some of them, for the digital side you are looking for a microprocessors which is around here your desktop if it runs around 1 gigahertz and a DRAM of 256 MB and you are playing a video game, oh you have to wait, now what is happening because neither there is enough memory nor there is a speed of the processor, so for this particularly game market all over the world including Sony PlayStation or Microsoft, whatever it is, there is a huge research in microsystem speeds, so you can see bad things also need something good and that is how we are looking for now around 6 gigahertz kind of processors, normal Pentium 5, Pentium which you use at least IIT has 2.1 to 3.2 gigahertz and now we are looking for 6 gigahertz, someday maybe ultimate aim is what we call as KU band 16 gigahertz, but we do not know where we will get there, I should not say we, I do not know because I may not survive the another area of interest in market right now is memories, just now I said you want memories 4 GB they are, so there is no end in requirement of memories and they will want very fast access, so there are lot of research going on in the area of memories and the most important area particularly IO input output blocks which should be of low noise, low power and very sensitive and these are the active areas of research. The word custom means in VLSI there are 2 kinds of designs we do, one is called semi-custom the other is called custom, custom essentially relate to customer, so customer says I want the specs and you meet them, so obviously you have satisfied a customer he is paying for it now, good money, but that means every spec he says you have to meet, this is very difficult because there is always what we call trade-offs, if you do this something else will be lost and to avoid that we are trying to get the best out of it, so it takes huge effort, huge amount of design time, hundreds of man years to design a good custom chip, so what we do okay, we pre-design some blocks and reuse it again, again it is called semi-custom, so essentially NL of designs individual design has to be designed every time and therefore it is called custom and as I said custom designs are costly, so it takes all hell of effort, is that clear, the major challenge in either digital analog is power and speed speed in our case of analog we call bandwidth, larger data can flow on the same line, larger bandwidth, so these are the challenges, now question arises why analog, some digital system design, by the way I have no fancy for digital or analog, I teach all sorts of courses in last 29 years I thought, last semester I was teaching a BLSR design course to post graduate students, before that I was teaching technology to post graduate, before that I was teaching digital system to second years, so I have no fancy for digital, but when I sit on this side I always abuse the other ones as if, oh I am now this side, so this so called digital designer suddenly said, oh dead, 1980 is it dead, last 10 years I find most of the research and most of the money has been now dedicated to NL, partly because of the wireless, partly because of the sensors, some answer is very simple, nature does not like digital, we are not suddenly see yesterday was no tree today some full grown tree, it takes years, ages before tree grows, nothing happens in nature which is instant, that is why when I of course I worked in data institute earlier, so I used to say Jayan Nararikar must be right, because he is suggesting steady state revolutions, because nature is normally prefers to go steady state, but the big bosses are always in big bang like a digit, one or zero, what knows, so what is important is nature being NL or even if you want to take that signal from nature which is NL or and you want to process faster, better whatever you call digital people say, I need initial input outputs as NL, so I cannot avoid NL because nature is NL, okay, what I will do, okay I will take that NL signal convert it into digital and maybe do all digital processing and then I want to display something, I will convert from digital to NL and replace it back in, but I will still require A to D and D to A converts, most of the DA speeds digital signal processors do this, here is a problem, if I have an ADC as I have a NL of signal word, NL of essentially is time varying, constantly time varying signals are called NL of, so this is NL of signal, I will convert it to digital table just to show you digital data and then I will do digital processing, the problem with this though it is shown as the same magnitudes, in real life the NL of signal from sensor from picture is extremely important, first amplify, okay, first amplify then as soon as I amplify it will get some other frequency company, so I will have to remove all those other than the signal I want, so I may need a filter and then maybe I will further go to ADC and process digitally and at the end if I want output NL of I will convert from DSP to DT, so you can see that these two parts even in otherwise digital system will be required because otherwise I cannot process it, there is a lossy cable like a copper cable or any other cable, you said an input data and this is the data you are actually sending because it is not a lossless line, actual data which is being sent is this, you can see it has a time period may be similar but its shape is how does it look like NL of, it does look like a NL of signal, so you sent a digital data but data received in the output was more like an NL of, particularly this will be dominant if the frequency builds high, okay, if you are looking at four regards above or one regard above, it is more likely that the digital data will be smeared to become NL of, so even if I am fully digital person now I will have to worry about that the data which I am seeing being NL of how do I process it so that it I still remain in digital domain, that is another problem which NL of people are now coming to the help of digital, the way we do it, we convert it by some reason four levels of digital data, so a new technique so far in digital how many levels we are looking last semester or 2, 1, 0, upper level lower level, now there is a trend going on in a very high potential domain to look for four level data and if so you will require four kinds of senses now because it should detect four levels, not that it has appeared in the market something, this is what I say going to happen now that people may look for multi-level digital data because that NL of part then can be broken into more levels instead of two only okay, so the newer research is now converting this so-called NL of looking signal into four level or even multi-level digital data, right now four is what is the method, why NL of probably I am trying to answer why NL of, most of the disk which you use hard disk, without hard disk you cannot survive 4GB, 8GB, 160GB, 320GB, it may be though come, this is your data you are storing on the disk and what you really take it out is this with the GB speeds are higher these days because you are making very high speed hard disk now and data acquisition actually smooths it and the variation can be as high as 2 millivolts to some levels, now again you will have to retrieve digital data out of this, this is called recovery, so another NL of circuit will be required to recover from this digital data, again there will be analog components, in wireless you send the data at a particular frequency for example GSM sends a data at 890 Mhz, this is your mobile communication signal, however whenever you see something like passing a signal there are two close by components which are called interferers, now they are very close to the original frequency and at times their amplitude may be larger because of the nonlinearity in the system you may get additional components which we will call later some way harmony but these are not actual harmony, noise you may see and they may have larger, so one of the major worry right now either you boost this enough so that the interfere signal is much smaller than the signal itself or shift this far away, both techniques have been tried in the wireless communication and both require a lot of NL of the system, just now I said optical this is what optical receivers are, you have a transmitter, you have a laser to convert digital data or analog data into light, you pass the fiber, you have a photo diode which receives optical light, converts into electrical, much of the processing here will be analog in the case, another area of interest as I say sensors as I said you want to measure temperature, you want to measure humidity, you want to measure all kinds of nature parameters, I will show you some other kinds of them soon, the best sensors these days available are made out of another silicon technology which is called MEMS, micro electromechanical systems, MEMS and the most sensors which are now made available which are very small, I do not know whether these days in my time you know we have a mechanical courses compulsory whether you do electronics or you do anything, so we have a applied mechanics course, we have a workshop, we have many other things also, even the surveying which I do not see anyone of, even civil people do this, I am not showing anyone theodolite and chain and everything, maybe it is there, I have not seen, so in the one of the famous gauge which mechanical people is called strain gauge and that is a huge bulky dynamometer they call, of course they measure lot of great large values of force as well as accelerations but they are very bulky, nowadays sensors have very gyroscope for example another big sensors, vibration speeds, so now we are looking for silicon sensors and one of this method is to use capacitances as their measurements because in the silicon I can make a cantilever which can under stress by acceleration or by force will vibrate or move down, the variation in this is proportional to the bending moment it has got which is proportional to the sense which it was doing and the change here can be monitored as a capacitor, if I have two plates here if it comes closer, the capacitor is larger if it goes away, the change in capacitance is the measure of the force of the, this is one more area which require lot of analog digital processing which is immense, another applications which are very, very important as I see is biomedical, I will not do all of them but just to read for you, there is a many surgical operations, there is an issue because you have, you will give an incision and lot of blood will ooze and if blood is lost too much, patient will die because of loss of blood though they keep feeding blood, so there is some medicines they give hyprion as they call and it clots, clots it but if it gives too much then they give clots in the bends itself, so blood flow will, so patient should not die is our major bacteria, so we must keep monitoring the clotting level going on, so this is essentially blood clot control which in most of the heart surgery is very important because patient may die before you think, therefore in such application I show you, analog processing is very important, so this is called in the first phase, you can put right now even there is a search going on for pancreas infections, core heart patients, everything is right now is replaceable all kinds are put here, tantalum sheets are put here, so during this implant surgery lot much of control is required which is continuous control and you need lot of analog processing, all your ECG, ZE, ZE, ZMG, ZRVs, brain any kinds of this body mapping all requires analog processors and there is a biochemical spectrograms, it takes place it does not suddenly happen, it keeps changing its pH values, so you want to know you want to see what is changing, so a spectrogram is seen, the patient is monitored when the drug is actually injected, it is such and this process is very slow, so you need a small signal which is appearing in the electrical has to be amplified noiseless because otherwise if there is a noise in that you will get something wrong, you say pH is 7.5 and it may be 2 only, so there is an issue there how to make a correct measurement of pH, another circuit which I had to Bombay has made or other product we made, I am not part of that, so it is a Sharma and my earlier Kadi Prasila Keshlal and even the madam should I am told, these days there is a worry even of course I hope you are too young and I only pray touch wood none of you will get your heart problems in your whole life, it has been now found because of so called money making business of young managers, they actually are getting heart problems at lower age than 40 which is unfortunate, now how do we know that the patient is actually having some problems, so we created a small kind of 2 probes, which is small locket which is put in gore like, then it monitors from the last ECS, if it is different than certain numbers it is actually the RF transmitted ECS circuit, the patient is running on the track in the morning jogging and he is feeling problem now, hence that it is happening to younger kids now, another problem which analog people are buying is neurons, your brain essentially works on the basis of neuron signals and as I again said all neuron processing is essentially like analog, I will show you some of time, a neural network which actually replicates a neuron behavior is like a opamp character, so you can actually think that a opamp can replace your is equivalent say model, that is why it is important that neuron theory that stood on the hard board using opamp, another area I just told you know anything you monitor inside the body is called lab inside your body, lab chip as they call, it will keep monitoring everything for you, in that the weak you have to block and sense, you need a good answer to that, at the end of the day whatever signal I get, I must reduce it is a very small signal, I must amplify it, I must filter it, I will see to it the, it is a flick of the original signal as good as possible, that is called signal condition. So these are the blocks, these are the areas where analog is used, yes I will read quickly, okay I already said the person who does this machine is called perfusionist whose role include monitoring appropriate parameters to ensure that the patient is effectively treated with anti-cogulant to avoid blood clots, okay and for at least 60 minutes this is being monitored, so okay this is more to tell you what kind of thing happen, there is a thumb brain and fibrogenic tool such parameters you keep monitoring, see what is the, but basically what elliptical people monitor, it actually changes the impedance when it changes this, so all that we do is to monitor the blood impedance and that monitoring will know whether what is the cutting level is not same, okay and then we can control it that hyperon how much we get turned not in this feedback system, okay so here is an impedance measurement system which is based on another device chip called pi 933, you can see from here there are certain digital part, there are certain analog part, this is your oscillator then there is of course multiplexer, then there is an interface, then there are digital block like registers, DFTs, but they can see there is a ADC, there is a filter, there is a gain amplifier, okay, you can see signals are analog and you are monitoring the impedance the blood clots, how it is done is this is how it is done, your blood clots are kept here, then it reacts and then it is finding the impedance and then this is done in MEMS now, the chip is outside, this is the main structure, okay and the whole processing is analog plus digital because something you have to control by this state, okay, so you can see that only giving you one example why analog cannot be ruled out, that oh everything is digital why analog, there is a requirement where analog cannot be removed, okay I just said all that, okay another thing which people say digital data transmission on a long distance needs to distraction that is noise continuous and analog kind of transceivers will be needed. Now question arises why we are not doing analog transceivers, this was known to us many years ago 60s we knew analog better than digital, so why we are not continued with analog, why we major worry came that analog signal actually died down as they move to on the line because of loss it has, so you need a repeater, if you see optical fiber every mile there is a repeater, so if you do same thing with analog yeah it can be done but then again you will have to improve it by its low noise performance filter it out, so cost involved, it is not that it cannot be done, it is just the cost involved and the power supply would have to where you have to come. So because of the cost involved in this analog receivers have lost transceivers lost to digital because digital signal can go far distance compared to analog and will require a repeater after may be 20 miles or 50 miles or 100 miles that is where our distance why are we, we have a cable why not use transceiver which are far superior in performance, so at least locally we may come back now for its own fidelity of best performance sensitivity, you may come back to analog transceiver system. For example a normal hard disk, the very little, it is the very high speeds disk have come, so you need now something to amplify that, similarly for wireless, the antenna even for not digital data, the antenna signal which you receive will depend on from how far you are away from the tower, of course towers are not good for your health that is what everyone is now saying, but I always say body is immune to everything after sometime, so probably this so called our radiation will finally become immune to that, hopefully so, maybe one angel, people ask me other day that you stay in Bombay, so much radiation from the DRC and TARAPO in it, I say our health is better now because of radiation during something, hopefully that is the way we should look, okay, I already said microcessor memory with ultra-high two clock signals across the major worry HEP is 2 centimeter, I just said now, what is the length of interconnect on Intel chip, anyone guess, what is the length of interconnect with a line taking signal from one point to the other, what is the length, it actually transfers through on a chip, typically maximum links available on chip, how much, anyone of you guess nanometers, typically Intel processor has 1 kilometer length of interconnect on chip, okay, and that is something you must understand that we always think wire or blibla, but here on a chip itself I have 1 kilometer, now if that is so, the signal will not have integrity going from one point to the other, that is our measure, it is a loss, so the clock which is running from one end to the other actually drifts away, okay, so let us say what is drift away means, at t is equal to 0, let us say 1 has to come, at some point to the t 1 0 plus point something it will come, because get delayed by them, this is called jitter, jitter is the major worry for digital data processing forget about, then the recovery of this can be done through what is called as phase lock loops which is analog lock, okay, that is why for clock recovery we will require an analog circuit, because you are running a very high speed signals on a large length of internet, this is like a transmission line, so all this memories have something what we call sense amplifier, what is sense amplifier can be, let us say memory you have read, let us say you are storing 1 as 1 volt, if the line which is coming out where you call sense, I know the cell has 1, it takes long time, because this wire is long enough, so it has a large capacitance, it takes enough time before 1 volt it reaches, I do not want to know whether it is fully 1 or not, I have already pre-charged this line will say 0.8 or 0.6, as soon as this process this charging process crosses 0.6 I will compare, if it is larger than 0.6 I say 1, I will not wait for it to go for 1, this is called sense amplifier, sense amplifier is a comparator which is an analog block, so even in the so-called hard memories the major research, excess time research is only on analog component and not so much on the cell, is that clear to you, why analog? In the case of digital, the circuit deal primarily with speed and power, I want a 4 GHz, 5 GHz data flow and I want preferably 0 watt power consumption, I mean I want 0 watt, of course I know power cannot be 0, so as low as possible, microwatts, milliwats but certainly not watts, typical chip consumes 40 to 100 watts of power, okay, micro buses of chip consumes around 40 to 100 watts of power, I want to reduce this, so the whole research right now we are looking is how to reduce the power, but there is a trade-off, as soon as I reduce the power what do I reduce essentially the current, if I reduce the current, power will go down B into I, okay, but if I reduce the current that time taken for the capacitor to charge with the lower current will be larger, Tdv by dt is smaller, so T takes longer, okay, speed there, so there is a trade-off, so now game is I want high speed but I do not want to give you power, that is the reason, thermodynamically it should not be possible, if you do not give me this I will not give the other, so how to fool thermodynamics is all over tricks, okay, if you learn my digital course some day I will tell you how I am fooling circuits and fooling others, beating as if thermodynamics is avoided, no it cannot be, somewhere else I am doing something tricks as far as you are concerned I have done I improved the speed I reduced the power, where did I spend I am not telling, okay, where I must have done, some tricks I must have done, but as far as you have come, only high speed low power, that is where the research is, in analog these are not the two parameters we are worried, this is unfortunate, we worry about speed, power, gain, precision, power supply, variation in that and many others but at least 5, 6 of them, you need large bandwidth which is called speed, you need very precise because why precise, because analog is time varying signal, any change there will be seen at the output, okay, so precision means 1.6 milliwatt means 1.6 milliwatt, 1.7 piato there will be 10 times 12 other, so I am worried that what I say I must get that, so precision is very important in analog, not so much in digital why I say so, because there is a noise margin, 1 can be recognized from VDD by 2 to VDD and 0 can be recognized from 0 to VDD by 2, anywhere is fine, here anywhere means nowhere and that is why analog means extreme precision, okay, of course there also will beat the system, do not worry everywhere like all IITNs brightest among them they feel so I do not know whether they are, hopefully they are, you beat the IIT system, not that you do good or bad, you see to it that whatever we come out with how to beat it, okay, 29 years my experience and we have lost, so I have full faith in you as well, whatever way I will try to see you should not do it, you will do it some way or the other, okay, that is the IITN, so okay, worry as I say they are very sensitive to noise, what is crosstalk, today unfortunately for me there is no crosstalk, maybe this is your first lecture you are worried about, good, keep worrying, anything you talk there if it interferes on me or my talk and it is called crosstalk, so two lines are going one data on this, one data this may interfere the next line close by because of coupling will do mutual coupling particularly inductance, mutual inductance, this is called crosstalk, particularly worst if one data is going in this direction the other is coming in this direction the crosstalk is highest both amplitude opposite, so maximum separation, so that is major worry in this interferers, crosstalks, sensitivity to noise all these worries have to be satisfied when you design analog that is why analog designs per se people they are difficult, other worry of analog is even worse, many times analog circuit books are called linear circuits, what do you understand by word linear, why they were called linear circuits, guess linear okay, word in match is y is equal to mx is a linear system, if I change x to 2x y will also get doubled if m remaining constant okay, linear system is that clear, why therefore similarly analog circuits were earlier called linear circuits because output voltage was proportional to input voltage in the meaning constant v0 by v in its constant, straight line it is called linear system, but our assumption is that the device property is always like this that is why translate input to output proportionality, but in real life you have learned bipolar devices, you have learned MOS transistors, there will be iso, so there is no real linearity in the MOS or bipolar characteristics, so there are regions where output current and input voltages are not linear or input current to input output current to input are not linearly connected, if they are not linearly related then there is a second order nonlinearity is appeared, so to say y is equal to a0x plus a1 x square no linearity, now this x square term will create let us say sin omega t was the signal, x square will create what terms sin square omega t which in terms of 1-2 sin square omega t is sin 2 omega t, that means you are now you have omega t terms and 2 omega terms also appearing is that harmonic has appeared, so part of the power has lost to second harmony, is that clear, so in the case of analog you have a very small range which is linear, as soon as you increase the amplitude even a little more you are in a nonlinear range and part of the power is anyway lost to the second or third or higher harmonics, so you have to be always worried you should remain within so called that linear range, otherwise you will immediately get into second order device problems, these are very important effects, we will see how to minimize them but not every time you can reduce to a 0 level, because of this so called smaller range so many effects it wants to do, it is very difficult for do automation like digital, in digital there are all kinds of software available, so much so nowadays there is something called silicon compilers, I give a statement I want to do this under this condition it should show me this and a chip can be designed without pure intervention, all simulators can be that, it will actually find out what you want and it will finally give a design for the automation, this is full automation, of course not the ideal we still interfere everywhere so that we remain in charge, if everything is done by computer what will be, so we keep saying no human intervention is essential, otherwise there is a possibility that automation is great in digital hardware or digital simulation, there is nothing so called fully automated analog designs or analog systems, you have to design every time because it is very problem is taken, every small problem has to individually handled and fixed, that is why analog is interesting may be difficult and much of this what is the way people do it, not essentially always by reasoning, mostly by intuition and experience, last time I saw who is Barwikar that is what I said and that is creating major problem because technology of digital particularly at 45 nanometer down is worse for analog design but we have to work with them so we have to integrate analog digital on a digital process rather than analog which would have been ideal because if I want opium only why should I put everything else, I want only this I will give very good to you but I cannot because they will say no this has to sit with microprocessor, this has something else put your block here, there is issue. So there is a difficulties in analog design therefore it is the challenge, so what is my answer to you, is analog design therefore more difficult than digital design, my experience of 29 years says yes because digital design has a large noise margin, you can have three way trade-offs only power speed and may be area whereas analog needs multi-dimensional redox, power, frequency, gain, precision, power supply and many more, okay, we are already done, sorry. There are two possible technologies which analog circuits can be implemented using bipolar current transport, they are bipolar transistors or field-based current transport which is MOS transistors, bipolar circuits have age over MOS circuits as far as performance is concerned or gain is concerned but has a drawback of large power dissipations whereas MOS technology for analog though not the best possible compared to bipolar but much more suitable for digital applications. CMOS is the best bait for digital and hence analog 2 should get implemented on CMOS not that it is better but that is just now said mostly the chips will be mixed signal both analog and digital together like a neural say and I will show you some figures, okay. This is a mixed signal neural processor, okay, this is your digital signal, neural digital signal processing, this is D28 inverter, this is analog neural network processing or neural processing, this is A2D converter and this is a processor was designed way back in 1964 or something which still works, okay. We are trying to replicate brain functions now, we are trying to see how brain works but tomorrow if you have an accident for some reasons you have a damage to your brain, can I put a chip supplement that part, this is what we are looking for, is that clear to you why this is that because there is a worry, there is a too much traumatic situation these days because the cars are too many, streets are too many, two wheelers if you are driving please take care of old person like me crossing a road at the main gate I always pray God every second because I do not know whether I will cross finally then this motorbike person will not throw me, he does not see signal, he does not see people I do not know he only sees speed, okay. So I hope some of you who have bikes we have banned and told but still the hundreds of them in case you are driving please take care of old people like us who still may want to throw at least two more years. So this is something what we are right now looking for, okay this is done quickly I show you introduction to analog circuit, you can see here this is a nonlinear system and this is a linear system, can you tell me why Vn is ground or Vdd is 1, Vout is either 1 or 0, the reason is since both are transistors and both are nonlinear components, so V0, Vn when you go for Vn from 0 to 1 both transistor will not remain in the same operating mode that means one may be in linear other may be in saturation, other may be linear, both may be saturation both may be linear. Since the characteristics in all three two zones are different there will be lot of nonlinearity in V0, Vn characters called the transfer, you have already done transfer characteristics, so that is a nonlinear device but in the case of analog circuit we only operate this is the transfer characteristics of an inverter which you just now see CMOS inverter you can see from here to here V0, Vn is nonlinear because here one is in P is in non saturation other is in saturation both saturation other opposite happens here. In the case of digital signal goes from 0 to say Vdd input goes from 0 to Vdd, analog actually works only in this zone where relatively V0, Vn is linear you can see the available input range to meet how much few millivolts you get the point because during this few millivolts only V0, Vn has relatively linearity nowhere else okay, so what does that mean the input signal in analog has to be small signal otherwise it will not remain in linear zones okay and that is why if you operate your in bias your circuit only in this range let us say this is my biasing voltage then I can apply an input signal rate which still keeps output such that V0, Vn is in linear mode okay that is where the analog differs from digital, digital I go from here to here analog I remain only here okay and therefore you can see linear circuit will always limitation of small signals it cannot have because you can see if I have this large signals which you are in non-linear areas is that clear to you therefore analog circuits normally will have very small signals limitations because of course you can go out then what will happen the power will go into other harmonics more than may be fundamental with the frequency you are 2 omega t, 3 omega t, 4 omega 5 more than non-linearity x square x cube x4 more third, fourth, fifth harmonics will start appearing plus another may appear omega 1 minus omega 2, omega 1 plus omega 2 will also start appearing which may be worse interferes and therefore analog people should normally try to operate themselves in the linear mode and therefore signals are always limited is that point clear to you that is why I say this is so you can see if you operate in this then you can remain as an amplifier and then you can see you are in linear circuits just to compare again digital so highly non-linear but very high noise immunity I just said VDD by 2 VDD 1 0 to VDD by 2 is 0 huge noise even to power supply variation if 5 if 1 word supply become 800mV or 950mV who cares that within noise margin whatever happens let it happen okay I damn clear and it only carries at a time only 1 bit of information 1 or 0 compared with linear analog circuits highly linear extremely sensitive to noise you can just see if that signal has some more noise it will transform immediate get the output any variation in power supply means bias point will very means one side may become non-linear one side may become very sensitive to power supply value and carries and bits of information in the sense the analog so it is an N bits of information is going in one go that is why it is very good essentially one more figure will come here is the advantage of digital you can see it is not very clearly visible but maybe I will read from here this is an input I have put and this center line is threshold so anything above is one anything below you can see there is a small variation is occurring below okay but it is less than we threshold now still recognize the zero but if that happens in this now you can see from here this will be visible to you as soon as it goes it also jumps so anything in digital is acceptable whereas in analog it is not acceptable okay so this is your VDD variation so you can see VDD variation will also appear at the signal outputs you can see this is my VDD variation this is over reading because that will change the bias point that will also show you the different games different outputs so very in analog is so called noise over reading every time if you do not take enough care in digital at damn okay irradiation some other day I don't know it is visible to you okay maybe just tell you there are three ways amplifier genetic will show you this later three possible way of mass realization of amplifiers okay so what we have to consider in analog is handling a positive and negative signals in digital we are only 0 to 1 is that correct 0 volt to 1 volt 2 volt 5 volt whatever supply in analog minus be hair plus be hair so dual rail hair minus VDD plus V so though power supplies are signal minus may be at a plus sign sinusoid a square hair so you need dual rail this I just now told you in the figure where do I buy us is very important because that will decide my noise I mean on linearity Khan so I must bias it correctly so biasing is most important aspect in NL of design because that may decide my all of the power delivered to the output linearity is essential because otherwise I am what is I was avoiding I immediately get you I lose power in harmonics I am I need linearity I want noise taller sorry the word is slightly made mistake I want lower noise not tolerance is essentially means it can tolerate larger noise I mean I it should not it should tolerate larger noise but doesn't happen so you must it will have a very low noise tolerance in normal system therefore you must design for it that it at least tolerate this much noise nothing should drift too much power supply should not be 1 volt and certainly pointed everything will have a score drifts the problem with design is in case of digital as I said we can have pre-designed pre-tested blocks I have a multiplier I have a multiplexer I have an adder I can once design for a given technology store it and whenever in a larger circuit I just duplicate that nothing happens in NL of that there is no standard says every block you design every time okay and difficulty in designing low voltage low power because larger the currents larger is the charging of capacitors as a faster bandwidth to make it look for four important parameters we have been looked into designs one is called transconductance what is transconductance by definition transconductance GM output current divided by inputs voltage or change in output current to the change in input voltage delta I by delta V is GM so one of the major parameter of design of NL of circuit is the GM Kipna GM and you will see later GM is proportional to I root I or some I current so if you want to gain which is GM into R you need larger GM so what does that mean larger GM will come from where larger currents larger power so gain at the cost of power no other we will see your alternate we also want to control output resistance some systems need very low output some systems connection needs very large output can be very output resistance of a system the third parameter of interest to me is called noise which is called input referred noise now this is very interesting word why it is not called output referred noise so must be something in it so we will worry about input referred noise okay and for but the north is the most important part other than the gain is the bandwidth larger the bandwidth higher frequency performance is greater or better and therefore larger bandwidths are we will see a very interesting thing will happen gain into bandwidth normally is constant what do I say gain into bandwidth is normally quotes is constant that I will see that can we beat this word normal otherwise what will happen I increase the bandwidth I lose the gain I increase the gain I lose the bandwidth okay so can I beat this system I will say I am not lost the bandwidth but I have to state gain if I had done that I have beat this so called technological constraint every technology say this is the maximum gain bandwidth possible but we will say a technology to technology on circuit do better show you how do I do it at cost we will see we stop with the night but I gain something but I will see that this so called constraint will beat what is the constraint we said in into bandwidth is constant but we will see to it can we take opposite is not possible again I repeat bandwidth increasing and gain constant is not very easy but gain increasing without losing bandwidth is possible because bandwidth is related to capacitance of the transistor that I cannot touch okay so I will say okay bandwidth do which have a head gain to my body you have which game okay okay maybe there was enough we talk today we will have some flight ladder another half an hour lecture will continue on this and will show you that little more design what is happening here than have a nice day take care


Thank you to Timothy Massive for those remarks to kick us off today. Next up is the panel Traditional and Evolving Functions of the Financial System, Payments as a Utility, moderated by our own Michael Barr. Live Q&A is available for this session, so please submit any questions to the Engagement Hub for registered attendees under the Day 2 livestream. Hello, everyone. Welcome to our next panel on Payment Systems as a Utility. It's my great honor to be able to lead this discussion, moderate this discussion with distinguished guests. Again, I'm Michael Barr, the Dean of the Gerald R. Ford School of Public Policy at the University of Michigan. My panelists today include Andrea Dunlop, who's the Managing Director of Payments for the Access Group, Chair of the Emergent Payments Association Advisory Board, and a member of the European Women and Payments Network. We have Tillman Urback, Managing Partner for Flourished Ventures, a formerly partner at Omidyar Network, where he built the Global Financial Inclusion Team, and the former CEO of Seagap, the consultative group to assist the poor. And we have Musa Etopa-Jimmo, Director of the Payment Systems Management Department for the Central Bank of Nigeria, an experienced leader in public and private sector issues in banking, in engineering, and in software. I'm really delighted to have all three of you today for this discussion on payment systems. For some people, payment systems may seem like a dry issue, but I think it's really actually not. It's one of the most exciting issues, I think, in finance today. And more importantly, it's a key to consumer autonomy, to access to the financial system. It's really the backbone of the system. And in many ways, it is helping us to find, in each society, who's in the system and who's not in the system, who is part of the financial system and who has denied access. It's really, really quite critical. And I'm thrilled that we have Andrea Tillman and Musa here to help us work through these issues. I might start with just a question for each of you. We're in the middle of a global pandemic. Many countries around the world use the payment system in their own countries to try and get government benefit payments to individuals affected by the pandemic. And I'm wondering what you've seen that has worked and what has not worked, and what does that tell us about the state of the payment systems in those countries that you want to talk about? And we don't have to be comprehensive, but just to get a look. And maybe I'll start Tillman with you, and then I'll ask Musa to answer and finally Andrea. Yeah, thank you, Michael and colleagues for having me today, great, great pleasure. Absolutely right. So a large number of governments around the world initiated relief programs, be it for families or for small businesses. The World Bank is putting together a paper I just saw. They mentioned some 80 efforts, distinct efforts, large scale efforts around the world. And I think it's fair to say that in those places where there was a modern public digital infrastructure and that includes payments, but it goes beyond payments to include identity, data availability, etc. It's fair to say that those countries who had that type of infrastructure could do a better job. So INIA, for example, in April in a time span of some 10 days, reached more than 100 million people at the margin of society in the informal economy. And they reached them with relief payments with a click of a button because INIA has the famous INIA stack public digital infrastructure, identity, payment switch, etc., we can talk more about that. Other places were not so lucky and the U.S. where I am right now and where I live, and I think the previous speaker in the conference actually alluded to that as well. I caught the tail end. In the U.S., it took three to three months for individual checks to go out. And some people are still waiting and we send checks to folks who had deceased and others that were not eligible. So yes, the infrastructure there was in place at the time has made a big difference in government ability to respond appropriately to the crisis. Thank you, Tillman. Moosa, you need to unmute. Can you hear me? Yes. Thank you very much for the question. For us in INIA, the government had actually embarked on several initiatives that leveraged this on the payment system. Before this time, before the COVID, there was this program that the government runs called the conditional cash transfer, where they pay monthly allowances to the poor. And what they basically leverage on is to use the mobile money to deliver those financial services. When the pandemic came, it was very obvious that the only means by which payment can actually be delivered to people was to use electronic means of payment, cash, nobody wanted to touch cash. As a matter of fact, nobody actually wanted to touch even physical payment devices. So everybody was doing transfer. And so one of the requirements that we needed to have for those in the rural communities or those that were badly affected was for them to have bank accounts. Unfortunately, the infrastructure for enrolling and getting everyone into the financial services is in that ability, which is why as a country, we embark on a financial inclusion strategy. We've been on this strategy for a long time, trying to see how we can get more than 80% of Nigerians into the banking sector. So the payment system basically provide the underlying framework through which economic agents can actually transact in Nigeria. Major use case during COVID was this palliative and the relief fund that was to be distributed to those that qualify to have that. Now, one of the major challenges that we face within the payment system in getting this thing sorted out was the issue of telecommunication infrastructure. People in rural communities do not have access, the kind of digital access we have within the cities. And so having a vast network of agent outlets and making sure that our payments and communication infrastructure is very cohesive and resilient is one of the major deterrent payment systems here. The other one is identity problem. Everyone in Nigeria needs to be uniquely identified so that we can actually be sure that when payments are being made, it is being sent to the right recipient. And so we embark on a national program of registering all Nigerians and issuing the national identity number. That is also one of the projects that we have also embarked on. By the time we resolve the issue of identity and solve some of the common infrastructure problem, I think Nigeria would be very strong in terms of making payment systems the underlying infrastructure for delivering financial services in Nigeria. Thank you, Musa. Andrea? Yeah, actually, I just wanted to touch on something Musa said because I whole heartedly agree with him, digital ID is absolutely key for inclusion. And actually, and not also the perception of this in emerging markets, actually, quite frankly, Michael, in our own markets in the US and UK, which we're considered very mature markets, it would help our markets significantly if digital ID was in place. But to go back to your question because I'm diverting and I don't want to waylay this whole conference, but we have quite a mature payments infrastructure in the UK. I think it's fair to say that there were a couple of issues that I think really come to mind that has occurred and still ongoing now during COVID. One was the ability for the businesses, particularly for businesses to gain access to the government loans, and I'm guessing it's no different probably in the US. That has been a challenging process for many businesses struggling to get access to the money. I think on the consumer side, I think that's been less of a case, but I think what COVID has highlighted to myself and many people in the payments industry is probably how many more vulnerable people that we had in the UK that we didn't fully appreciate. There's been a massive drive in many markets to a cashless society. When COVID hit, we have a significant amount of people that may have bank accounts, but withdraw cash and like to spend in cash for a number of reasons. We have a lot of vulnerable elderly people that were segregating and isolating at home.  There were some interesting innovations that came off that. There were companion cards created by Starling Bank to give to other people that you could load funds on to, that those more vulnerable people could still enable other people to go and buy goods for. One of the aspects that's really challenging around all of this is it still comes back to people being literate around IT technology, understanding how to load these cards, how to manage these products online, and believe it or not, we still have a massive gap in the UK around this. We also have a digital gap and no dissimilar to Nigeria, I think we still have about 25, 23% something like that that struggled to get access to broadband here in the UK, which when you're in lockdown kind of compounds some of these challenges that we saw and made people that were already vulnerable, probably even more vulnerable through this process. I think there's a lot of lessons learned for us in the UK is how do we go forward with our payments infrastructure and our systems in the future and start to take into account all of society, not just a certain percentage of society, which I think is what's happened here in the UK unfortunately. Thanks Andrea, that's really helpful. We're going to dig a little deeper into the question of who ought to run the payment system, whether that's the private sector, the public sector, multiple private sector entities and the like. Maybe Musa, you could start us out. How does the central bank of Nigeria think about the question? What kinds of aspects of the payment system should be run by the central bank itself? What should be regulated by the central bank? How do you think about these questions? Well, for me, I think running the payment infrastructure should actually be private driven. It shouldn't be run by the central bank. It shouldn't be run by any regulatory authority. As a regulator, we're supposed to provide the guidelines, the directives, the environment that makes all the participants to try very well to work simultaneously. And so to be an arbiter, you then need to take your hand off running any specific payment infrastructure. And that's basically the kind of configuration we have in Nigeria. The central bank doesn't run any payment infrastructure aside the ROTGS, the real time gross settlement system. Apart from that, every other payment infrastructure is being run by banks and by private entities and fintechs. Central bank doesn't run, it's not an operator, it's a regulator. And that's the kind of configuration we have in Nigeria that makes competition very smooth and symbiotic. So Musa, Nigeria, the bank-to-bank network for real time settlement is run by the central bank of Nigeria, but all the other payments infrastructure is run by the private sector. Yes, the ROTGS is being run by central bank because that's where the net settlement ends up. The banks all connect to central bank to settle the obligations after transactions have been pledged. And so we maintain the ROTGS. Every other payment infrastructure is being operated by the operators, the banks, the payment service providers and the fintechs. And Musa, what's the competitive landscape for the private sector? Is there real competition for payment services or the different providers operating in different sectors of the payment system? Well, basically what we have done is to segment our payment system into different compartments. And so what we did is to, you know, get them different kinds of authorization. So for example, switching. Switching is very, very important because it connects all the banks together and all the other payments. We have specific license for entities who can switch and we give the guidelines of what those switching services can be provided. And so we also have some agent banking, you know, activities that are regulated. We also have card issuance and apparements that are written. So they're also segmented into different authorization categories. What the central bank basically does is to provide the framework in the framework that makes all this entity to connect and interoperate. And so I would say, lightly, it is private sector driven with the regulator on the mediating to make sure that there is proper conduct within the ecosystem. Thanks. Tillman, how do you think about these questions? I would probably take two lenses. And the first one is a bit first principles, if you will. I think you would want to think through a financial system and say what is underlying, what is public good in nature and probably should be government provided. And both Moussa and Andrea mentioned identity as a key element. And I would think in many countries that should be a public good. It is related to the civil registry, etc. Then comes the question of what is a utility in nature. I probably would argue that payments, in particular retail payments, have a utility characteristic. They have network externalities. So frankly, they might be natural monopolies. And then you can think about where should we have public sector, public good utility type characteristics and where do we want the private sector to compete. And I think an ideal system would be one where there is the lowest possible systems cost, no duplication, and where the private sector competes at the application layer. So that's my first lens, sort of a principle lens. And I'm an economist by training as you probably can hear from that answer. I would then pragmatically use a second lens, which is to say, what is there in the country already, what to build or nobody starts home scratch when it comes to these type of things. And when it comes to specifically retail payments or the payment utility, it could be run by a consortium, a nonprofit consortium of private sector players. It could be run by a public player. If it is run by the private sector, it should be probably regulated as a utility. Interoperability should be mandated, the type of things that Moussa already alluded to. And I suspect that the majority of countries actually have some such approach. And certainly the higher performing ones from a cost and real time settlement perspective. So when I looked at these things, the Netherlands, Canada in the highly advanced economies were all one as sort of consortium of private sector players under public regulation in emerging markets as conceivably a bigger role for government or even the central bank to run more of the operations because they have the capacity to do so. But the answer really depends on the country and its starting point. Thanks, Tillman. Andrea, how do you think about this question? Yes, I mean, you know, in UK and Europe, you know, I think we've been really fortunate with some of the regulation that's opened up the market and the aim of that regulation was to enable more efficient into the market. Because I guess, you know, to Tillman's point, there could be a monopoly aspect around how the market has operated previously. I think now with open banking and the rise of open banking, I really see some, you know, really exciting times ahead. And I think the benefit of this off the back of this is ultimately going to be for the consumer. So I think, you know, with the new technology that's come in with a lot of the fintechs, and also actually many of the banks as well, a lot of the banks have up their game with all the new regulation that's come in, that there's much consumer lens on payments products. So the whole experience that consumers have, you know, can be you know, much more customized than I think how we were operating previously in more of a card payment world. I think open banking opens up so much more possibilities. And I think this is really exciting for UK, Europe, Australia now, I think they went in January. You're seeing other markets embark on the same journey that we've all been on. So yeah, I think there are exciting times ahead in this space, but there's no lack of competition. You know, I think in the UK market or the European market, they're pretty thriving over here in this space. Andrea, for our listeners who don't know about the UK's open banking initiative, do you mind just describing the basic structure? It's different from what we have in the United States and in many other countries. Yeah, so basically, when you look at the original N2M model of card payments, you'd have the consumer, the issuer, the card schemes, the merchant acquirer, a gateway before you get to the end bank account. And the advantage of open banking is it rides on in the US ACA trails. You know, we would call it faster payments over here. And it really enables payment companies, payment initiation companies to initiate payments straight out of a consumer's bank account to pay the pay, the payee. It's a very simple process without all the layers in between. It removes a lot of the friction. So if you have a good example, be like an invoicing model, the payments can be embedded into the invoice, pull straight directly from your bank account, straight to the person you're trying to pay in. And it does it all in real time. The advantage for businesses that makes this really, really attractive is it can be instant liquidity to them. So they're getting paid quickly. And as we all know, many companies are really struggling on getting bills paid in a timely manner. That's a massive issue and has been for a long time. The instant payment. And then on top of that, actually, there isn't a lot of the level of charge back and fraud aspects that we see traditionally in card payments. So there's a lot of benefits to that from using these rails. And then the biggest benefit of all to businesses to merchants is really the cost. The cost is significantly lower for utilizing these rails, you know, are more, you know, mid to high value payments for lower payments, you can still say a card makes sense. But as the values start rising, open banking just makes much more sense for some of these. So I think we see a lot of disintermediation will come in the future around these rails, you know, definitely. Thanks, Andrea. Tillman, I know you've done a lot of thinking about the evolution of the payment system around the world over time. I'm wondering if you could help our audience understand or give a perspective on that evolution. Where have we been and where do you think we're going in payment systems? Yeah, you know, I think one observation that might resonate with all of you is the following. At some level, technology, new technologies, when they arrive, they hit a system in a market structure, an industry structure in its current form. And we have seen massive explosion of innovation. And it really, from maybe relevant for today's discussion on the payment, retail payment side, started with a 2G feature phone. And PESA famously in East Africa, because the 2G feature phone had this unutilized channel for unstructured data, the USSD channel, and folks realized, well, we can transfer value over that. And that took off because there was relative white spray, white space and the regulator in Kenya was willing to let that experimentation happen. Now, that was held by the fact that Safari.com as the telco operator had a dominant market share. So there was no interoperability issue. It kept prices higher. In neighboring Tanzania, there are four operators. And when interoperability kicked in, right, fees for consumers or for senders and receivers became much lower. Then came the 3G and smartphone revolution, if you will. And it was really picked up in particular by the Chinese ecosystems. They used the new technology, but they still built a walled garden on financial Alipay on one side with a billion users by now, WeChat on the other side. It's a duopoly, if you will. And there's a real opportunity now to leapfrog all of that and put these principles in place that we discussed earlier. If there is an interoperable architecture from a payment system perspective, and if there is open data from an access to data perspective that I mentioned that Andrea covered, a modern payment in modern system can be faster, cheaper, less risky for everybody. And emerging markets have a real chance to leapfrog into that. In the U.S., we are stuck for much of our day-to-day payments with the old card networks and card-based news. And that cost for the credit card still 2.2% or some such thing on average, and for the debit card 1.2% on average of transaction. The cost could be much, much, much lower than that. And India and others are proving that where the cost for transaction is cents on the $1,000 as opposed to percents, as we observe it still in many other places. Excellent point, Tillman. Moose, as you see this competitive landscape in Nigeria develop, how did the central bank go about thinking about whether to regulate non-banks and how to regulate non-banks in that space? Yeah, I think regulating entities within the payment system have always been a major concern for all regulators. And in our own case, the inclusion of the faintings into the payment space actually pulls the great challenge for central bank. We're trying to balance allowing innovation to thrive and managing the risk that these innovators bring to bear. And so the approach that we have taken is to allow innovation to come out first, and then we try to put the brakes in between by putting regulations guidelines on what to do. And so some of the actions that we have taken recently, basically to promote fainting, was to launch the regulatory sandbox, in which case we allow the faintings to come and play around with the ideas and see whether they work in order to drive the financial inclusion in the country and not to facilitate payment services. So that is one of the actions that we have taken. Just like Andrea said, in Nigeria, we are also pursuing the concept of open banking, where in our own case, we've actually ramped up on instant payment. Instant payment is not something new in Nigeria. It actually happens instantly. Now what we're trying to do now is to allow the new entities, the small companies, the financial technology companies that are coming up, to also now participate by playing the middleman role. And so that's why we are also trying to drive open banking concepts and all that. But beyond that, we have a regime in Nigeria where our payment system directives and guidelines usually don't just have one within the central banks. What we do is to have an ecosystem, a reinforcement ecosystem discussion, and find out what exactly works for Nigeria. Payment system is very passive, is worldwide. But what we try to do is to dominate and find out what happens and what works for Nigeria. And that's why in coming out with our regulations, we always invite and involve all the major stakeholders, including other regulatory agencies. For example, agencies that regulate the telecommunication industry, agencies that ensure the depositors fund in the bank, they are all brought together for us to reason and find out the balances between all these regulatory agencies and come up with a policy that makes the financial system, you know, works. So for us, we allow innovation to come up, and then we follow it up with regulation that makes market conduct very good. Thanks, Moussa. That's really helpful. Andrea, how are the Europeans thinking about this question of the regulatory perimeter for payments? What's covered by the regulatory infrastructure? What's left out? Have people tried sandbox approaches like the one that Moussa is describing in Nigeria? What do you think has been successful and not successful in that space in Europe? Yes. I mean, we also have a sandbox, and I think it's been very successful. I think we're really fortunate in our market that we've got quite a progressive regulator. That's really helped the non-bank market really develop really well. I'm not saying we're not without our challenges, but what I do think has happened probably in the last five years is the regulatory approach has really changed. So it's not just the supervisory style, it's a much more open and engaged regulator that works with companies around supervision and has a very much more of a consultive approach to the non-bank sector. So, I mean, there'll always be issues because inherently you can't open up the sector and there won't be unintended consequences. Of course, there are. But I think what's great is that our regulator actually does work with us. And I think that's the case pretty much across most of the countries in Europe, which is why I think it's been pretty much thriving across Europe in this state, the non-banks. But what I would say as well though is that I think the non-banks that have come in and added particular specialism and very niche products within financial services, I do think that has upped the game for the banks. And I personally feel in the probably last 18 months, I think the banks have moved much strongly more forward with much more of a consumer-led approach, which I think historically have been lacking. So I think there's been a benefit on both sides. We all partner with the banks and I run a regulated entity myself. You partner with the banks and you collaborate with them. But equally, I think there's benefits on both sides as to the different types of services that we bring. It's much more complementary. There may be people think. Thanks, Andrea. Tillman, I wanted to return to one of the issues you posed about competition. If we have network externalities and payment systems and they tend towards a natural monopoly, what are the kind of minimum requirements necessary to have a functioning payment system with real meaningful competition for providing payment services? Yeah. I mean, the starting point is the one that you are describing, which is there are network externalities. If I can easily pay somebody else and there are more folks out there, there's a utility coming to that. And frankly, that phenomenon is accelerated now with the situation that we are living in. COVID and economic lockdown is changing the ways we try to make a living, the way we shop, the way we socialize, we do conferences like this online. And so new platforms that are important in our lives are gaining relevance. And that's why regulators are struggling with this notion of how to deal with these new platforms, for example. And by the way, I have a great sympathy for regulators. Regulators are concerned about the stability of the system, the integrity of the system. They want to protect consumers and they want an inclusive system and they have to balance all these type of things. And when it comes to payment systems, I would go back to the first principle of saying they ought to be interoperable. They ought to be real time. It should be push any account to any account. So you should probably regulate by, well, designed by these principles and then regulate activities, like to like activities as opposed to different institutions being regulated differently because of the legal status. I realize I remain a bit at the sort of abstract level, but I do think that's your starting point. And then each country and each regulator has to think through what does that mean for our context. And then the private sector can build on that. Once there is certainty around these things, the private sector will come in and will figure out better solutions that ultimately benefit all people. Our regulatory setup, though, does need a refresh, right? A lot of these things in mature countries like the US were written in the 90s, often in reaction to crises before the iPhone was invented. And so they just don't take into account these new opportunities and possibilities that we have and the new risks that also have a reason. So we do need a refresh there. Thanks, Tillman. I have one or two additional questions for the panel. And then in a moment, I'm going to turn to the audience questions. Musa, you touched on this very briefly in your opening remark, but I wonder if you could say a little bit more about how you think about the last mile problem, that last moment between the payment system and a merchant or between peers and peers. Is there a merchant access problem that you have found or have you figured out how to solve? Are there last mile issues that you've had to overcome in Nigeria that would be helpful for others to hear about? Yeah. It's something that is still ongoing, quite ongoing. There are several approaches to it, from regulator and then from the operator, including even the government support to resolving those last mile problems. Now, one of the ways by which we are approaching this is to deploy massive agent outlets to make sure that we keep the financial watchpoints closer to the underbank and then on the south and all that. Now, how do we get this done? We can't run a payment system without very efficient telecommunication infrastructure. That is very important. That's the way we get connected to the internet or at least connected onto the network. So what we've done as a regulator was to come up with a licensed regime that allows telecommunication companies in Nigeria to take a kind of authorization calls to our agent where they can actually deploy and leverage on the existing footprint that they have in rural communities to provide financial watchpoints. So they could actually turn their customer outlets wherever they already have signals, masks and all that. They could actually convert them to financial watchpoints. And so we are approaching it to make sure that we have provided access to the new Sanctanese of Nigeria. On the other hand, building agent outlets is also very expensive, especially when you move towards rural communities because you need to solve the problem of power. You need to solve the problem of security and all of that. And so it becomes very expensive to actually deploy agent outlets in those new Sanctanese. And so what with the central bank and the committee of banks called the Bankers Committee have done was to provide a pool of funds that these agents and super agents can actually use to build these agent outlets at a very cheap cost. So we also support the super agents with financial support so that they can go into the hinterland and build the agent outlets. So why the telecommunication companies are building networks, lean fibres and providing access across the country? The central bank and the bankers committees are providing funds that they needed to build these merchant outlets, cash in cash out outlets in the rural communities. That's basically what we're trying to do. I'm hoping that by the end of this year we are targeting to have a well over half a million agent outlets in Nigeria that will enable the underband to have financial support. And Musa, are you providing direct cash liquidity to the super agents or is that through the banks? No, through the banks. Each super agent will apply through its banks to access that fund. Great. Let me turn to some audience questions and then I'll have a few final questions at the end. Andrea, let me ask you, there's a question from the audience. The progress of fintech companies is often constrained by their need to partner with a bank that has access to central bank payment systems. Should central banks expand payment access to fintech companies? So it is true. Many fintechs are constrained by this and do need to use banking partners, but a couple of years ago in the UK between the regulator and the Bank of England, we did actually open up access to central banks. So we have a number of fintechs now that are connected into the Bank of England and carry out direct clearing. And I think that has started to have a really good impact in the UK on the services that can be offered outside of the core main banks. What I would say is that I think that this isn't necessarily an easy step for a central bank to take. I think that for central banks to start to open up to fintechs, to a wider system, could open up some additional risks that maybe weren't considered in the beginning. So I think this is a challenge for central banks and the future for them is just looking at how do they move forward? How do they move with the expectations of the market? How do they keep pace with technology when they're trying to maintain a very stable system supporting our core infrastructure? So I think this is a really tough one for them. And in the UK, you're probably aware of this anyway, we are going through a programme of work to upgrade our real-time system so that actually it's fit for tomorrow. But this isn't something that can be done overnight. And I think this is the challenges that fintechs expect everything to happen tomorrow and are terribly impatient. And when you embark on a programme with someone like the Bank of England to be on boarded into the central bank, this isn't a two-week project, it's not a couple of agile sprints and you're in, there's a lengthy process. So you're probably looking at probably a 12-month process, it could even be more, but with the bank on the verge of this massive technology uplift to provide services for the future, I do think there'll probably be a knock on impact to fintechs in the UK while we go through this transition. So we've got the first few in, which is great and we can see what the future can start to look like, but we've still got a way to go to get our national infrastructure where we need it to, to really adapt to the future. And I guess that's the challenge for central banks all around the world right now is how do they open up, how do they develop their tech and future proof it for the future, and then how do they manage the additional risks of bringing these players in through the central infrastructure? Thanks Andrea. Tillman, maybe you could take this one, there's a question from the audience, why is improving cross-border payments such a difficult problem? Are the challenges primarily technical, legal, or financial? If you look at different corridors, remittances corridors, cross-border, again I'm on the retail side of things, things have changed quite dramatically, right? So if you have environments where in both country A and country B there's clarity around, you know, your customer requirements, if everybody has essentially a digital access, either via account or wallet, etc, then cross-border transfers can be very easy, relatively cheap, and fast, and this is happening, and you don't need blockchain and bitcoin or any some such thing for that, right? You just need to modernize the age-old system that is in place, and for busy corridors that has happened. My sense is this will accelerate quite rapidly. The big cost in domestic, international remittances is still cash in, cash out, right? You need somebody to take the money in, and then the last mile, somebody needs to be able to take it out, Musa spoke about that. As countries on both sides do away with that need, because the entire retail payment system digitizes, there could also be an easy way to connect, as long as there's reciprocity in regulation and approaches. This is happening, and will happen, and will accelerate. Tilman, do you think that the evolution of that system will disintermediate the correspondent banking system, or use that system? It will, it's a bit speculative, obviously. It will certainly take out a couple of layers, I mean, if you go all the way back, how did this start? It started hundreds of years ago when you needed trusted intermediate banks, and you were merchant in Italy, and you had your merchant banker who connected you, and who had some connections to New York, and that banker in New York had some connections to pick your place. There was this layer of correspondent banks, because they needed to create the trust that trade could happen, what have you, right? It was a trust-based system that required this type of correspondent banking layers. You can take out a lot of that when things are real-time, digital, and settlement is happening pretty much instantaneously, right? There's less trust needed, if you will, there's no settlement risk. It will become cheaper for everybody, and yes, we can take out intermediate layers. Moosa, this question might be to you. How should central bankers think about the scope of a regulatory sandbox? Are all financial activities appropriate for a sandbox? If they're limited enough, and the number of people that they reach? That's the audience question. Well, this is a very tricky one. I think we can have one answer to all the various implementations by the various central banks. The objective of the regulatory sandbox physically is to encourage innovation, and those innovations should meet economic needs and all that. So I think the limits to what can be played out within the regulatory sandbox depends on the economic objective that the central bank or the government is trying to solve, or the kind of innovation that they are looking for. In our own case, for example, financial inclusion is very dear to our hearts. We'll see how we can lower the industry cost to start. So we're looking at creative solutions that can actually lower housing of savings. We're looking at creative solutions that can be used to provide services to areas where you don't have strong connectivity. So offline payment, for example, is something that we welcome as an innovation to be played within regulatory sandbox. So as a central bank, what we've done is to limit the qualification criteria to objective that actually meets the economic need of Nigeria, the one that promotes innovation, areas that have not been touched. Those are the kind of things and boundaries that are set, including the fact that since we're going to run this in cohort, we can only take as much as our capacity can take. So we can basically take on everyone that applies anytime we open a cohort. But basically, I think the limiting factor should be the underlying objective of it is starting the economic need or solving any particular problem that the country is faced with. Thanks, Musa. That's really helpful. And I do think that there's so much nuance that's needed depending on the particular government structure and private sector structure in each country that's absolutely critical to sorting through what makes sense in that context. The next question from the audience is, what role should central banks play in promoting the advancement of open banking? And maybe I'll ask Tillman and Andrea, maybe Tillman, if you could talk a little bit about the India stack experience. And Andrea, you could talk a little bit about the UK experience. That'll give the audience a flavor for different approaches to this problem. So the India stack and the language comes from the technology world. The India stack really, at its basis, has the unique identity, biometric, unique identity, 10-finger prints, two iris scans. And that, as we discussed earlier, is a public good the government provided it. Then very importantly, financial regulators obviously had to make sure that the use of this identity, it's called ARDA, that that actually is permissible or is good enough, if you will, for KYC and other purposes. If the financial regulators didn't recognize ARDA as sufficient, then it would not work. So that's the second element of the stack, if you will, is an entire notion of regulations around the use of the identity, including for consent and doing away with a requirement for wet signatures, these type of things. These are all the little things that can take inefficiencies out of the system. And then on top of that, there is the payment layer. And we talked about that a bit. It's the National Payment Corporation of India, which is jointly owned by a dozen plus banks in the country. And the central bank is the Reserve Bank of India is very much part of these deliberations. And it essentially nudged the system towards adopting an open architecture type approach to payments. And that led to this ability of any account to any account. There was an insistence that at the beginning of a transaction and at the receiving end ought to be a regulated account that is properly KYC, etc. But all sorts of efforts were made to make that easier. And the notion of then the data layer, who owns what data is a consumer or is a small business, to whom can you provide access as far as your data is concerned, that's a next important element. I think the data layer is actually something that we often forget, in particular in the emerging market context. There's at least a billion consumers who don't have a FICO score or any such equivalent. The vast majority of small businesses operate in emerging markets, operate under some notion or to some degree of informality. But the underlying lies are digitizing either in the supply chain or in the distribution chain. So there's more and more data available that allows, for example, for credit underwriting that banks traditionally could not have done. So the data layer and driving accessibility and giving users control over their data, that's a very, very important piece to unlock the economic upside. And that can be done by the regulator, but it can also done by private sector initiatives around API infrastructures and the voluntary, if you will, cooperation. If everybody realizes, wow, the pie could become bigger if we all open up, then there is a win-win situation conceivably. Tillman, that's right. I wonder whether, I haven't looked at the economics of this, but whether the, if you really do an open API, is the pie, the pie is bigger for society, but is it bigger for the incumbents is a different question. That is true. Somebody's efficiency gain is somebody else's revenue loss. And that's why we need the nudge. And as society and as regulators, I see Musa smiling, we should absolutely give that nudge. I mean, I had one piece in for the US, Michael, that people might not know. So I mentioned earlier that the average credit card transaction costs 2.2%. Relatively little goes to the networks. Most goes to the issuing banks 2%. And then the issuing bank credit card gives half of us, half of that 2% back to all of us in forms of cash back or it used to be my as we remember those days. Debit card or transaction cost 1.2%, cash obviously has no cost for the merchant or less cost for the merchant. Merchants don't discriminate anymore. They used to, right? You used to go to a gas station and get a better price if you use cash, that's gone. Everybody pays the same price, which de facto means that relatively lower income households, because they disproportionately use cash or debit card actually subsidize my credit card rewards. That's just not okay. The Federal Reserve Bank in Boston has estimated the value of that annual subsidy, if you will. It runs in the thousands of dollars per family in the US. Excellent point, Tillman. We're getting close to the hour. Let me let Andrea, if you want to say more about, you talked a little bit about UK Open Banking before. Are there other aspects that you want to highlight in terms of the central bank's role in pushing that? The only thing I would add to that is that actually we, ours was a little bit more government led, so I think to Tillman's point, there needs to be I think a mandate from the top to really open this up amongst the big banks. Interestingly, we created a separate entity which is called the OBIE, which has really led Open Banking for the last few years, and they're actually overseen by the competition's market authority. I don't know if that structure is occurring anywhere else in the world, but I find that quite an interesting structure that we chose to go down that path rather than putting it directly under a regulator. Everyone is very engaged. The regulators are obviously part of the discussion and everything else, but it is interesting that it is the CMA that really oversees this. I think that's about ensuring that we're driving that competition in the market and ensuring that actually Open Banking actually stands a chance of being a success here in the UK. Musa, you were, as Tillman said, smiling before about the nudge. How much of a nudge did you need to give to the Nigerian private sector to move forward on issues like interoperability and Open Banking? Well, I think for us, just like I said, the payment system here is driven by the private sector. What we're trying to do is to create an environment where it is a win-win, and so we are working towards establishing, as we speak, we basically, to some degree, regulate or put a cap on pricing simply because we have a financial inclusion agenda. So we try to put a sale on how much you can charge the consumers, because truly we are promoting financial inclusion of which one of the major deterrents is high cost of financial services. Then we need to put a sale on that. But we're trying to promote interchange. And with interchange, it means if we just basically, the acquire and issuers trying to promote efficiency in the payment system. And so what the merchant actually charges the customer, or sorry, what the merchant charges the customer or what the acquire charges the merchant has nothing to do with regulation. It is not priced, it is not fixed. It is basically through the bargaining power. And by that, I think investors will actually see the opportunity to get a very high return on their investment. Because competition will basically drive price down. And with improved services, you get more numbers into the system. So for us, it's going to be an open market where we allow the private sector institutions to basically determine what price is good for their system and to also drive for the services that they provide. Thank you. I might ask each of you to say if you had to pick one game changer, a technological development or a policy framework that's a real game changer in terms of advancing financial inclusion through the payment system, what would it be? And maybe I'll start with Andrea and then Musa and Tillman. Oh, do you mean a current one or a future one? Either way, something that you think is right on the cusp of making a big difference or one that you anticipate in the future would be a game changer. Yeah, I mean, the game changer for me is digital ID, 100%. That's the game changer for financial inclusion. I'm afraid for all of our countries. Thanks, Andrea. Musa? I think it goes for everyone. Feminine digital identity is very key. Trying to know every single individual and using that as an authorization is very key. And that's the major challenge that we face now. So a major policy directive focuses on digital identification in Nigeria. That's great. Tillman? It probably depends very much on the country. In the US right now, I think we could make a big difference on the retail payment side. If we just made sure the underlying infrastructure was open 24, 7, 365, which is not the case for the Fedwire. We could also mandate immediate funds availability so people don't have to wait. So there's statutory authority in the US to make a real difference. Very pragmatic, immediately doable. If you step back at the systemic level, I very much sympathize with Andrea's point around digital identity as a foundational element. And I think the one thing that we do have to all wrestle with is this phenomenon of finance starting with payments, but quickly going to the other dimensions of finance on the retail side, being embedded in the big tech platforms. They have the customers. They have the data. They have the brand. They have the connectivity by definition. India just allowed WhatsApp to start embed payments into the app. 400 million Indians use it on a daily basis. That could take off very, very quickly. And it raises all sorts of promises on the inclusion side and it raises all sorts of new issues on the competition new risk side. And so we have to wrestle with them. Thanks, Tillman. We are going to have a discussion later today and tomorrow around the role of Facebook and Libra and the big tech platforms. As part of our conversations, I think it raises critically interesting questions. We are basically at the hour. Let me just thank each of you for your insightful contributions to our discussion and really learned a lot from our conversation. I know our audience did as well. Our audience, thank you for joining us. If we didn't get to your particular question today, hopefully you'll hear more about it throughout the course of the conference. So those of you who are watching, please join me in thanking my wonderful panel. Thank you. Take care, everybody.