So I have the pleasure to introduce the second keynote speaker of the conference, Jean-Charles Rocher. Jean-Charles is written from the metal contribution in banking and financial stability, but also in two-sided markets and digital payment. So we thought he would be the idea as speaker for a session that we share between the central banks conference initiative this morning, and the 15 initiative conference that we continue later in the afternoon. So Jean-Charles, thank you a lot for having accepted our invitation. The floor is yours. Thank you very much, Milo. Can you hear me well? We do hear you well. Fantastic. So good afternoon, everyone. It's a great honor and a great pleasure for me to participate in this conference. I have to apologize for presenting very preliminary work. Yesterday, Jean was apologizing because his paper was not fully finished. My paper is really, really preliminary. But on the other hand, I was eager to get your comments. So please don't hesitate to interrupt me at any time with questions or comments. They would be very welcome. So this is based on, and first of all, again, many thanks to the organizers, to Emma and Milo for inviting me. So this is based on ongoing research with John Frost and Yoon Sheehan from the BIS and Marianne Verdier from the University of Paris. And the motivation is really simple. It's really the observation that the traditional business model of banks is jeopardized by two things, FinTech innovation and big tech platforms. FinTech innovation allows to unbundle deposits and credit which we are traditionally put together by banks. And on the other hand, big tech platforms are rebundling financial services with their core services. And I will come back to that later. This is the idea of Bruno Meijer, James, and Landau. Moreover, as we saw yesterday in the mobile money session, in emerging countries, tail co-operators contribute to financial inclusion by offering payment services as well. So we like to reintroduce the fantastic title of the paper of Boyd and Gertler in 1994. That was, I quote, our bank's debt or other reports are greatly exaggerated. And I think at the time, it was the issue of disindication. And here it's another threat to the existence of banks. So the banks have succeeded to resist the first movements. And that was the essence of the paper of Boyd and Gertler, showing that in spite of competition by financial markets, banks were able to survive. And today, the question is open. And it's even more serious than that because the question may also apply to central banks in the sense that the cryptocurrencies threaten monetary sovereignty of countries. So it's the traditional model of banks and central banks that is jeopardized by these innovations. So the research question that we want to address in our paper is essentially what is the socially optimal industrial organization of the payment system in a digitalized economy? In a traditional economy, an economy of the past, we had a so-called two-tier structure between commercial banks and central banks where commercial banks manage the retail accounts of the final users and provide financial services to the public, while central bank only manages the reserve accounts of the banks. It's the banker of the bank. And the users, the final user, do not access this higher level circuit or payment system. So this is a traditional structure that has been in place for many centuries, actually, or at least two or three centuries. And the question is, is this system going to be preserved by digitalization? The second question related to that is whether an appropriate regulation of payment activities is sufficient to implement the social optimum? Or do we need more? Do we need public provision by the central bank in the sense of a central bank digital currency? So this is the core research question that I'm going to examine. And as I told you, unfortunately, I have more questions than answers. So this presentation will have two parts. First, I will briefly explain what we already have done in the paper. The model we have built and the preliminary conclusions. But a lot remains to be done. And I will essentially look at the five fundamental questions that condition not only the assumptions and the modeling strategy, but also the interpretation, the policy recommendation of our results. And these questions have been examined in the literature. So I will refer to be a survey of the literature, and I will give you my personal opinion on the way people have answered these questions. But I believe that we need to answer them before we can have a clear picture of the future of the payment system. So the first question is related to what I was saying. Are traditional banks going to survive in some way or another? I have always taught in my banking 101 courses that the role of the banks was to provide deposits and credit simultaneously. This is the classical transformation of maturities at a diamond and big big. And the reason was that this was good for the allocation of resources in the economy. The question is, are these old scope economies between deposits and credit still relevant in a digitalized world? Or is it going to disappear? That's question number one. Question number two is associated to the new scope economies between payments and platforms. Let's say we're talking of, come back to that, social networks like Facebook or e-commerce platform that Amazon or Alibaba. So these big techs, these internet giants are bundling payments among other things with their co-activities. Is it something that we, it's probably something we cannot avoid. It will be like that. Question is, how can the regulator or public authority take this into account in order to provide the best allocation of resources and the best service provision to the final users? Question number three is why and how should cryptocurrencies be regulated? It's what is interesting in the domain of banking economics is that you have the impression that it's always the same question that come back cyclically in a cyclical pattern. This question of should money be private or public? What is the fraction of the money that should be provided by private banks and what is the fraction that should be provided by the central bank or public authorities? And it goes back and forth and it says it's an old question being reexamined in the light of technological innovations. Another important aspect that they will briefly touch upon is the impact of payments on privacy and data markets. One crucial characteristic of physical cash is anonymity of transactions. And if we, if physical cash disappears and is replaced by digital currencies, is anonymity going to be preserved for the good or for bad? And what are the consequences on privacy and data markets? And finally, I will address this question of is it really a good idea to create a CBDC? And if it is the case, how to design it? Because there are many different possibilities for designing a CBDC. And so I insist again, feel free to ask questions and interrupt me if you want clarification for your comments. Okay, so if there are no questions at this stage, I will essentially explain to you what we do in the paper which is, as I told you, still very preliminary. Essentially, what we do is is dear to my heart because it's integrating two topics on which I've been working for many years. One is two-sided markets and the other is banking economics. Okay, so we have in the model, we have two sectors or two types of activities. One is online, for example, e-commerce, but it could be a social network. But let's focus on Amazon or Alibaba. It's e-commerce and the point of sale. So you have physical wake and water shops. And so you want to be able to, so some goods are bought online, some goods are bought physically. So in the current situations, we have basically three types of payment instruments. We have what I call bank transfers which could be, you know, card payments or mobile payments or checks or other things. But essentially the idea is that you're moving money from bank accounts to another. And you have the more or less developed stablecoin issued by the platform. And I will come back to what I mean by stablecoin, but it's the idea that the platform is creating or issuing its own currency to some extent. For the physical transactions, point of sale payments, then basically the trade-off is between bank transfers, card or mobile, and physical cash. Sorry, physical cash guarantees anonymity, but the bank services are bundled with credit. So the bank payment services are bundled with credit. So for example, if you use your bank account, you may benefit from the possibility of having a credit line or having overdraft or this kind of thing. On the other hand, the platforms, the platform, here there will be only one platform, does something different. It bundles payments with matching services. The idea that for example, a platform is going to find you the best product on the internet and it's going to use the data, the information collected on your behavior particularly your payments, in order to find for you the best product, you can think of. So this has a positive side, which is that it improves the allocation of resources, but presumably the platform is going to collect the majority of the surplus. So it's not necessarily good from a consumer welfare perspective. So in this model, we have three payments instruments that they call CB&S. We have central bank money, that will be initially physical cash. Then we will replace it by electronic cash or CB&S. You have the digital money issued by banks, which is essentially bank deposits, classical private money that we are used to. And we have the new thing, which is this stable coin issued by the platform, which could be as I said, e-commerce or social network, for simplicity, I will focus on the e-commerce. And so you have these two types of transactions. B&S compete for online activities because obviously you're going to use cash for online purchases. However, if the CBDC is created, then the central bank currency could potentially be used also for online transactions. And CNB, which is the central bank money or the cash if you like, and bank transfers compete for the point of sale transactions. So it's the physical activities. And also there is this possibility that the so-called the tipping or leveraging on this market power, since the platform is really big, it may convince consumers to use also their stable coins, their DM or their other cryptocurrencies or stable coins for purchasing also at the point of sale. And the shop, the merchants, may be forced to accept it if the market power of the platform is big enough. So it's basically an extension of my paper with Jean on the credit cards, essentially. It's really the same idea, except that you have, so yeah. Sorry, one clarifying question. So the platform in the model does not offer financial services. So here at this stage, the platform is only offering payment on top of it. But you're perfectly right. It's also interesting to see what happens when the platform also offers financial services. But for the moment, we don't deal with that. We assume that the superiority of the bank if you like is to be able to provide credit. And for the moment, we assume that the platform does not provide credit. Okay, is that clear? Yeah. One other question. Okay, so what we do is an extension of my paper with Jean. I think Seth has another question. True. So is the fact that the online platform can't accept cash important? Because I think in places like, for example, yesterday, Grab went public. Grab is a big e-commerce platform in Indonesia. And they have lots of outlets that actually will enable people to use cash because obviously not everybody has access to digital finance. No, no, you're absolutely right. I try to focus on the advanced economies, but you're right that in full generality, accepting physical cash could be also a possibility. But the point is that there will be transaction costs. That is probably the fees of the intermediaries. And it will not be the preferred technological solution. But I agree with you that this is conceivable. Okay, so what I was saying is that implicitly, behind all that, you have banks, you have the different business models for the way in which the payments are processed. You have, for example, the classical bank transfer model, where you have the bank of the merchant, the acquirer, and the bank of the consumer, the issuer that has their arrangements between themselves in particular, in terms of interchange fees, and this interchange fees could be regulated. And we also have the possibility for the platform to control everything. So in a sense, the platform is a bit similar to Amex, in a sense it's the three-party system rather than the four-party system. But I don't want to go into that. There are so many items I would have to deal with that I will not go into the detail of the model. So what we do is first we analyze a less-fair situation where there is no interventions by the government. First of all, the payment system is fragmented in the sense that the users need at least two accounts or two types of tokens. You have the physical cash, you have the bank deposits, and you have also the stablecoin. So the fragmentation may not be fully optimal from a social perspective. Another thing is that the platform may use its market power to oblige consumers and merchants to use stablecoins for online payments, but this could be rolled out by the regulators. So the question is, is it a good idea to roll it out? Similarly, the platform may leverage its market power for online activities to encourage the use of its stablecoin on the physical market. But again, this could be probability by regulation. And the interesting point from the technological and preferences point of view is that if stablecoin replaces cash for certain transactions, then there's presumably a loss of privacy. If the stablecoin replaces bank transfer, presumably there is a loss of the credit option, although as Milo pointed out, the platform could also provide credit services. And there is also the argument that we developed with Jean in another paper on the must-take card argument, namely that if the platform has a sufficient market power, it may oblige the merchants to accept the card, to accept the stablecoin, sorry, even if it's very expensive, if the merchants fees are high, excuse me. So in the second time, we look at what regulation alone can do. We don't allow for public provisions of services. We just look at the government as a regulator and not as an operator, if you like. Sorry, Jean-Char, can I ask a question? So in your setting, what would be the first best organization of the market? I mean, as I said, there are many assumptions that need to be clarified. And at this stage, what I have in mind is that the share of the transactions which will be processed by the different payment instruments depends on the characteristics of the transaction. A bit like in my model with Jean, the basically there is a convenience benefit for, in my model with Jean, there is a convenience benefit for the point of sale transactions where you have a benefit from using cash, sorry, a benefit from using the card or a cost from using cash. So depending on this realization, this random variable, you have a fraction of the transaction that are held with card and a fraction held paid by cash. And so the same is true here. That is for the, there would be a certain interior market sharing between stable coins and credit card or bank cards for the online transactions. Depending, for example, if you need credit on this transaction or if privacy is an issue or if different types of considerations. So it's the same idea that there is a first best that could be defined depending on the list of the parameters that I gave you. And of course the question is whether this optimal allocation can be implemented by regulation alone or do we need on top of that public provision? So let me move on because there are many things I would like to discuss. John, I just have one question. Yeah. So I'm just wondering when you talk about the loss of privacy in some situations that may be incremental like Amazon is able to figure out a lot about us without using Amazon coin. So I'm just wondering if you can think about a regulation of cryptocurrency separate from data privacy regulation. No, no, you're absolutely right. The platform already has some information of my preferences, for example, even if I pay with another instruments. So I will come back to that at the end, but you are very ahead of me. So I would like to really start by the basics. And then we would discuss this aspect but it's very good question. So the first thing we the regulators could do is look at the stability of the stable coin in the sense of potential regulation. And this is the spirit of the recent reports of the US president working group on stable coins. Really this idea that we have to be sure that the stable coins are stable, that there will be no run. And that's, so it's very much like a narrow bank you have to be or a money market fund. You have to be sure that the assets of the stable coin of the platform that issues a stable coin are really invested in goods that are in assets, financial assets that are not risky or that it's over collateralized. So you want to avoid the risk of rent. So this is in effect considering the platform as a bank or a narrow bank. Another important aspect of regulation is the to force interoperability between the stable coins and bank deposits, for example. As I said, in this model, we have a fragmentation of the payment system. You have different payment instruments. So I would not say that we have really different monies. I can discuss that later. Maybe it's the euro or the dollar everywhere, especially if the first point is in sure that there is a one-to-one conversion of the stable coin in euro or dollars. But you still have fragmentation. You still need to have several bank accounts, several types of tokens or accounts. And so you want to encourage, to minimize the transaction costs between transferring money from the different kinds and in particular requiring interoperability. There could be also issues related to what I was talking about, namely the use of interchange fees in order to pump up merchant fees to avoid this exploitation of the must take card argument. As I said, there is this question of potential regulation, which I already alluded to in the first point, where you want to essentially regulate payments of these providers, even if they are not known banks, if they don't have credit activities, you want to regulate them to avoid rents. Another aspect of regulation is, of course, antitrust, because of the market power of the platforms. But I mean, to some extent, the whole movements on open banking was initiated by the observation that there was not enough competition in the banking sector. So it's not only a competition between the online activities, but also for traditional banking activities. And finally, this question of a level playing field between banks and non-banks payment service providers. So let me move on, because I'm running out of time already. The third point that we examine in the paper is the impact of implementing a fast or instant payment system. Many countries have adopted this fast payment system, which is clearly an improvement. But different styles of instant payment system are possible. I listed here a few examples, more or less in our chronological order. In 2004, Mexico started this system, a SPI or CODI, which is operated and regulated by the central bank. So the central bank does everything. In the UK, it was different. The faster payment system is operated by private banks and it's only regulated by the Bank of England. In Sweden, it started slower because swish was only essentially a person-to-person payment system. But then it evolved to include a person to businesses. And it uses QR codes. That is, you don't need to have a bank account. You need to have some key or a bit like in India or in Brazil. In Brazil, you don't need a bank account. The PIC system in Brazil is also very efficient. And if you compare with swish, for example, it's universal in the sense that you have all kinds of payments. Person-to-person, person-to-businesses, business-to-businesses, person-to-government, business-to-government, etc. And you don't need a bank account. So, non-bank-sperm-on-service providers can allow you indirectly access to PICs. It works with a key, which could be your email address, your cell phone number or QR code. UPI in India is also similar, except that it's still, if I'm not mistaken, limited to bank accounts. But you have this mixed system where it's operated by an entity which is a private-public partnership and it's regulated by the central bank. And interestingly, although we have tips in the euro area, the FedNow project is still lagging behind. And it's very interesting to see that the emerging countries are much ahead of the US or even the euro area because they have, to some extent, leapfrogged to the new generation of payment systems. And the last thing we do in the paper is we look at the impact of the central bank digital currency. And the question we ask is, what is it that you can obtain with public provision that is the government himself providing a payment service, to some extent? What is it that you can do with public provision that you cannot do with regulation alone? And so you could think, well, maybe it's related to the imperfections of the regulatory system. And in fact, if you look at the experiments, different experiments of regulation of credit card into change fees in the world, and Jean and I worked a lot on these questions, they are not very successful. And interesting, I mean, there are several episodes. I mean, I don't want to go into detail, but the latest one, if I've made a mistake, is that Amazon has decided to reject the UK visa card since Brexit, simply because visa decided to increase massively the interchange fees before they could not, because there was this rule in the European, there was this capital interchange fees in the European Union. And since Britain has left, now visa has raised interchange fees. So it shows that the regulation of interchange fee doesn't work very well. So one idea is that the CVDC can do two things. First of all, stimulate competition for payments and also for credit, but also eliminates the risk of domination of a limited number of platforms, like we have seen in China. And I will come back to that in a moment. But the problem is one of the problems that I see with this public provision is that it's difficult to preserve competitive neutrality. If the central bank is both a supervisor and an operator. So we have to think of a regulatory structure that avoids this lack of competitive neutrality. And to some extent, this kind of mixed duopoly solution or mixed oligopoly solution exists already for a large value payment system, because in most developed countries, you have for interbank payments, for large value interbank payments, you have coexistence of a private system run by the banks themselves and a public system run by the central bank. And this issue of competitive neutrality is already there. And finally, I would like to insist on something which is a bit surprising in some way. Is that a priori you would like to minimize transaction costs, right? You would like to say I can transfer my different money from my different accounts or from one token to the other without transaction costs. Excuse me. But if you do that, you augment the risk of a digital run because if it's very easy for a user, for a consumer to transfer all his money from one account to the other, it's possible the high call for instability of the system. So now that I've told you exactly the type of approach that we have started to adopt, I would like to insist on five fundamental questions. As I said, they are relevant to the assumptions, to the modeling strategy, but also to the policy interpretation of our results. And I will start by this question of the economies of scope between deposits and credit. So are these economies of scope between deposits and credit still relevant? Though as I told you, this is what I teach in my 1911 course. And it's an old idea of Fisher Black in 1975. That is the traditional business model of banks is to manage deposits and credit. And there is an economy. There are economies of scope between the two because by managing deposits, bank learn something about the credit worthiness of customers. However, this business model can be disrupted by FinTech. And I believe that Uda is going to present this paper with Chris and Paolo and Zhu where they look at the competition between FinTech and traditional banks for payment services and entry of FinTech, stimulus competition from payment but may reduce bank lending because it makes the funding of the banks more costly. Of course, when you allow FinTech to sell payment data to the lenders, then the part of this effect disappears. But interestingly, the impact on consumer welfare is ambiguous. But I don't want to say too much because I think Uda would be in the best position to explain these results. Another thing which is important is that when you introduce the possibility of FinTech lending, then when borrow or share the data, which is the hope of the European Commission that PSD2 and the open banking, the idea that there is not enough competition for lending. And so if you open, if you allow consumers to give access to their data to third-party providers, then it would be wonderful because it would stimulate competition between them. Problem is that Hei, Wang and Zhu have shown that there may be unintended consequences of this phenomenon that, in fact, at the end of the day, consumer welfare may decrease after open banking is introduced. Another interesting paper that would be presented, I believe, after my talk, which is this paper by Gauchvali and Zhang, and I think it's the one presented. This is why his name appears in bold, which is this idea that the data on cashless payment to low FinTech lenders to evaluate creditworthiness of firms better than banks. And so I'm really looking forward to the presentation because I want to, there is something I don't fully understand. This is a citation from the abstract. And they say that the synergy between cashless payments and credit supports data sharing and open banking. And leads to, and I quote them, an alternative banking model without a balance sheet or traditional banking relationship. So the idea is basically that you're going to revolutionize banking by exploiting this synergy between payment data, cashless payment data and lending. But I slightly disagree with that and maybe that's a misunderstanding on my part because I believe that the synergy is really something that underlies the traditional business model of banks with going back to Fisher Black. And what Gauchvali and Zhang focus on is a different thing. Is the relationship banking, the idea that you need to have several periods of relationship so that the bank accumulates or produces soft information inside the bank. And this is opposed to the more modern type of artificial intelligence use of big data and payments, which is a hard information produced outside the bank. OK, so you have the, of course, the choice between the two techniques. But I believe that in the current state of the regulation, there is not enough. There is not really a level playing field between banks and non-banks in the sense that banks contribute to improving the system by producing this data or by giving the access to this data. But they cannot benefit from it. OK, so my question to Yao and his co-author is, what is traditional banks also use FinTech methods? And maybe after all, big tech platforms pose a more serious threat to traditional synergies and FinTech. And this is what I really think because banks could buy FinTech companies, could use FinTech artificial intelligence. But there is something more serious, which is related to the big tech platforms, not the FinTech, but the big tech. So there is this paper by Berg et al, which shows that digital footprints, in other words, what you do on the Internet, predict consumers' default better than traditional credit scores. And similarly, there is this paper of my two co-authors, John and Nune and others, on a big tech credit in Argentina, where they show that the small Argentine firms that use big tech credit perform better than their competitors. So is it after all the end of bank lending? So this is related to my question of survival of traditional banks. And finally, sorry, it's not finally, it's still two slides. I was talking of the two tier structure of the payment system. Remember, bank offerings, payments and credit services to financial users, the central bank, only managing the transfer or reserve in between banks. Is it something that we want to preserve? Is it something that is efficient in a digital economy? Because there is a simple alternative, which is essentially already in place in some countries, to some extent, in Switzerland or UK and Mexico, which is to offer a real-time payment system to everyone, including non-banks and large corporations. So this is related to the design of the CBBC. Who has access to bank reserves and who has access to central bank reserves and who has access to the fast payment system allowing to transfer them. And this is related to the title of this paper of Dirk Diepelt reserve for all with a question mark as opposed to something more interrogated where the CBBC would not disrupt the two tier structure of the payment system. Finally, I would like to say that the question is also related to what the Brenner Meyer et al. considered to be a fundamental change in the business model or in the structure of the payment industry before the banks were at the center of the model and they were mediating a relation between different types of consumers offering different types of services. And now it seems that the center is really not, it is not really the bank itself, but the platform that provides access to different kinds of services, but it's not the bank itself. The lending activities is outsourced somewhere, et cetera, et cetera. And I'll come back to that when I talk about China. So now, second point, the consequences of the new scope economies between payments and core platform activities. As we know, the big tech giants, and I will illustrate it by Ngroup and Facebook or Meta, it's called now, view themselves at quote unquote lifestyle platforms or Metaverse, which we use the term as we come back, where users can spend if they want the entire life. You don't have to be in the real world, you can be on the platform. You can chat with friends, watch videos, order meals, buy goods, books, etc. and pay your bills. So why would you need a bank account when your platform, for example, and financial can offer you all the financial services that you can dream of? The scope economies between e-commerce and payments started by a very simple escrow account that were used to build confidence between the buyer and the seller. You buy something on the internet, you don't know if it's exactly what you want. The seller don't know if you're going to pay. So the idea is that you put some money in deposits with the platform and then when you give the green light to the transactions, then the money goes to the seller. But I mean, immediately Alibaba realized that it was very easy to extend it to add many other financial services to the simple app. And this is what we have now. The end group is a fantastic conglomeration of different activities. So Alipay on online mobile payment, Jai Tiebay on small business lending, MyBanks, etc. etc. And so if you look at the chart on the right, you can see that the structure of the revenue of the end group, which was initially concentrated on payments in dark blue, is now much more diversified and includes credit in light blue, insurance and asset management. But of course there was a regulatory backlash. As we know, in November 2020, the Chinese authorities decided a rectification plan, restructuring of end group in a financial holding company submitted to financial regulation and supervision by the Bank of China. By the way, it's very similar to the conclusion of the U.S. president working group. A stripping of Alipay platform from financial products, consolidation of lending operation into a single entity, the Chongqing Ant Commercial Finance and the downsizing of your bow, which was this huge money market fund that grew of the simple escrow account used for customers of Alibaba. And so the official motivation, of course I write official because I know that there were also political issues, but the official motivation, which we have taken into account, were the protection of consumer rights and the privacy, the limitation of market power and also the notion of a level playing field between all kinds of competitors, financial intermediaries, the banks themselves, the FinTech PSP, the non-bank's payment service providers and maybe the other big tech because Alipay is not the only one, you have also paid the same. So let me now move on to the third question. And as I said, there are more question marks than answers. Why and how should cryptocurrencies be regulated? So of course there is this old debate about the denationalization of money. It comes back and forth regularly. So the idea that maybe it's more efficient to have competing monies and that the monopoly of the government is not a good idea. But if you look at the facts, competition between private monies doesn't work so well because of the complexity of exchange rate risk, you have to transform one into the other. You have a transaction cost, you have risk to run. And so if you look at a recent example, the free banking era in the US in the 19th century, more recently the Liberty dollar that lasted only 11 years in the US doesn't seem to be working very well. I will not touch upon the Bitcoin aspects or the cryptocurrencies in general. I will focus on stable coins. The reason being that first of all, there is already a large literature to which Catherine contributed eminently. But also it's more of a vehicle for speculation in my opinion rather than payment instruments. So I will not talk about that. I will concentrate on stable coins. Stable coins, which I believe are more promising instruments and the characteristic is that in principle their value is pegged to one official currency, the dollar or the euro. And to some extent, they are very similar to money market funds that provide the payment services. So even if you have the same currency everywhere, even if those stable coins you consider them as dollars or euros, the payment system is a fragmented. And even if you prohibit any fees for transferring one into the other, which is already a big assumption, even in this case, you still have a fragmentation because you have to manage several accounts and it's more complicated, less efficient than having a single payment. So I'm not sure. And this is something I would like to discuss with you. I'm not sure that in the long run, many cryptocurrencies can survive. So there is this issue of platforms and tokens. There is already a large literature on the incentives of platforms to issue their own tokens, if you like. And as you and Rogoff point out, this is not new. We used to have stamps. We used to have air miles, et cetera. So the idea that you want to encourage customer loyalty and to some extent it's also a way to exert market power because you want to lock in your consumers to some extent. But interestingly, you and Rogoff show that in their paper at least, the platforms make more profit if the tokens that they issue are non-tradable. That is, they have to be exclusively used for buying items on the platform. So the platforms do not want to issue money, general purpose money. Bernard Meyer and Pine in a paper that I've only seen slides but not the paper itself. I couldn't find it. But I discussed with Marcus a little bit. So they have a different view. They consider that in the digital era, you can do better. So it's not the old stamps things of the 1950s. It's something more, you can view digital tokens as what they call smart bills of exchange in the sense that you can do more things. You can use a, it's a programmable money. You can use smart contracts and stuff like that. And they compete with traditional currencies because they can be both a means of payment and store of value. But then if you want to have a store of value, you need to maintain a reputation. You need to avoid runs. And there is a trade-off because this is costly. There is a trade-off between senior-age revenue and cost of maintaining reputation. Michael and Wei have an interesting paper where they argue that tokenization might be a commitment device to prevent a platform from abusing its users. It's a more appealing funding scheme for platforms with a weak fundamentals, but probably not a means of payment. And now you have to draw the line between crypto assets and cryptocurrencies that are different things. What are the challenges created by stable current? Well, if I go to this report to the U.S. president of the working group on stable current, I quote Yellen's introduction. She says stable coins have the potential to support beneficial payment options, but there is a big but current oversight is inconsistent and fragmented. And the concern that there might be destabilizing runs, there might be fragmentation of the payment system. There can be excessive market powers of the issuers, especially when it becomes big. Of course, you could argue that this report has been written under the influence of the U.S. banking industry and also the regulators and the FDIC in particular, they have their own political interest in there, but basically the recommendations of this working group are interesting. And as I said, that basically requires stable coins issuers to be regulated financial institutions, like Max. They can impose maybe capital requirements, liquidity requirements, and the minimum is the guarantee that the assets are safe or overcollocated. Similarly, they want to require the other intermediaries which are the non-bank PSPs or the custodial wallet providers to be supervised. The question is how much? What kind of supervision? There is something I never understood in the U.S. regulatory literature which is this obsession for the separation of banking and commerce. I don't think in Europe we have the same obsession, but basically they want to separate stable coins issuers from commercial entities, and this is not entirely clear to me. And finally, again, this notion of interoperability between stable coins, which is also very easy to understand. Now, let me briefly discuss the impact of payment methods and privacy in data markets. As I said, and as you know, physical cash preserve privacy. That's essentially a big reason why it's still used a lot in some countries like Switzerland or the U.S. Sorry, can I ask a clarifying question? Sure. So can you explain what interoperability between stable coins means? Because I don't understand when people say that. Say it again? What is the question? When we say interoperability between stable coins, is that not just the currency exchange? How does that look different from currency exchange? No, but I guess it has not only to the fact that you can exchange one with the other as a feature, the one for one as a parity, if you like, at par. But also presumably regulation of the fees because if you have a par, but there is a big fee for the intermediary, effectively there is no interoperability. So I think it has to do with the regulation of interchange fees basically. Okay, thank you. Okay, so I was talking of physical cash and privacy. For digital monies, it depends a lot on the way they are designed. And in fact, you don't want to eliminate the use of data because I believe that data generates huge network effects. It's a so-called DNA loop, data network activities. If you get data on the payments, then you can offer better services. But the problem is that these network effects, you don't want to kill them, but they can be a mixed blessing for users. On the one hand, the DNA loop can create a virtuous circle driving greater financial inclusion. This is particularly the case in emerging countries. Better services and lower costs. On the other hand, it may impel the market for payments towards further concentration. And the look at the example of China, where Tencent and Alipay have like 85 or more percent of the market of payments. There is a literature on big tech and big data, but it's not specifically focused on payments. And so you have the paper of Kirpalani and Filippo, where platforms gather data that users and they sell it to merchants, et cetera. I will not go into that because I'm running out of time, essentially. And again, Michael, as an interesting paper with you and Amway Zhang, where the platform's extensive access to user data may allow them to take advantage of users' vulnerability to skip it because I'm running out of time. There is also this literature on privacy, the market for data, the notion that the data on previous purchases allow firms to price-exterminate users, in particular, the tailoring, calcutture, and paper. You also have the paper by Doshin and his co-authors on the fact that individuals do not fully internalize the cost of losing privacy when consumer tastes are correlated with observable characteristics. And finally, there are a couple of paper by Garrett and Coasper who rightly point out the fact that when payment data provides information about consumer taste, in the long run, the only stable outcomes of those models are data monopolies. That is, there is a tipping phenomenon. At the end, only one big platform survives. And they argue, I don't fully understand the argument, but they argue that electronic cash, a CBDC, maybe a way to monetize this privacy and avoid the use of the market power by the data monopoly. So let me finish by discussing why creating a CBDC and how to design it. First reason, of course. Just to tell you, I know this is the last question, but it's five minutes. Five minutes, okay. Perfect. So a first reason, which is perfectly reasonable and that is put forward by central banks, is that we do that because it responds to users' needs. And it's true that in many countries, the share of cash and data transactions is falling, especially in the European, in the Euro area, for example, or in the... But not so much in the US. And not so much in Switzerland. And so the argument goes, that is part of the central bank mandate to provide legal tender to all in the convenient form to central bank money. And so if people don't want cash anymore, you will give them digital cash. Another reason which I believe is really important in the back of the mind of the regulators is that they are fed up with merchant fees for credit cards and even debit cards. And that is this old debate on the huge costs of digital payments for merchants through the manipulation of interchange fees. So in many countries, even if digital payments are more efficient than cash, they are also very expensive. So the idea there is to stimulate competition. However, there is a large literature, a sub-sample of the papers, of the mostly macro-monetary papers, who argue that be careful with the CDBC because it may lead to a digital run. That is, if it's very efficient and simple and cost less for depositors to put their money in the central bank rather than at the commercial bank, you will do it. And so it will be more efficient, but it will also crowd out bank deposits. It will raise banks' funding costs and decrease investment. So some people like Dirk Nippel suggest that the central bank could recycle the fund but lend it to the banks. But this is not always a good idea because it may expose the central bank to counter-party risk and favoritism. So the role of the central bank to lend to the private sector. So the idea here that is defended by some, like our Burma, is that you want to have a CDBC, yes, but what they call a minimally invasive. You want to maintain the two-tier structure with commercial banks and central bank, but in a minimum way, in a way that does not perturb the two-tier payment system. And the idea is to have a limited financial system footprint in a way that CDBC could be designed to have a limited financial system footprint like cash today. And this chart shows you the volume of cash in circulation, cash in red as opposed to bank deposits in blue, as a percentage of GDP in several countries. And as you can see, cash, even if it's still used for retail production, in terms of volume in circulation is very, very small. And you want, maybe, to do the same for CDBC. You don't want CDBC to be huge in terms of volume. So, of course, you can think of different types of CDBC. As I said, the current system is the top system where the CDBC is only available to financial institutions. It's a two-tier system. And now you want to make it available to the general economy. And so you have different possibilities. And depending on the anonymity, absurdity that you want to preserve, you may have account-based or token-based. I don't have time to go into that. So let me finish by saying that there is one aspect in which I believe that CDBCs could be a big improvement to the quality of service for financial users, which is cross-border payments. Cross-border payments are extremely expensive. And the organization of the foreign exchange market is a mystery to me. I don't understand the way it is organized, the flows that are huge, the fees that are very high, especially for retail users. So I don't think this is an efficient system. So suppose that most countries agree to create CDBCs and connect these CDBCs through more efficient systems, then it could improve considerably the functioning of the foreign exchange market and it could improve the quality and minimize the cost of service to the financial users, which would be good for the economy. But of course, maybe some intermediaries would lose if this organization is above. So let me conclude by saying that as you all know, the payment system is a vital element of the economy. For centuries, at least two or three centuries, it has been organized as a public-private partnership between the central bank and the commercial banks. And the digitalization of the economy implies a need to redefine this partnership. So of course, there is a pressure by central banks and regulators to implement the CDBCs. It's not entirely clear to me whether a CDBC is necessary to organize a socially optimal organization of the payment system. So maybe a fast payment system or instant payment system with an appropriate set of regulation could suffice. And in any case, I believe that a one-size-fits-all solution is unlikely to be optimal. I believe that the pros and cons of CDBC depends on countries specific, like for example, the users' preference for physical cash and anonymity, the degree of financial inclusion, and finally, the intensity of bank competition and data governance arrangements. And I thank you very much. I'm sorry for being a bit too long. Thank you very much, Jean-Charles, for a very interesting talk and also for having raised our appetite for the next paper in the session. I propose that we take a few minutes from the break just to, if there are questions for Jean-Charles, you can just speak or raise your hand. So I just start with one. You mentioned a trade-off between value for privacy and the data production that might depend, for example, on the degree of financial inclusion. So you seem to suggest that, for example, in developing countries, the value of generating data and so being able to offer other financial services might outweigh the value of privacy. Is this correct? Yes, but again, as I was alluding to, there is something intrinsic and the user's preference is for anonymity. It's something, you know, in the DNA of the country, people are used to a certain degree of privacy. And if you look at the surveys that have been done by the BIS, if you compare the China situation and the Swiss situation, it's completely different, right? So there is one degree of idiosyncrasy in the preferences for anonymity. And then it depends a lot on what you can offer to the informal system in emerging economies. That is, of course, people are reluctant to enter the formal system because they essentially don't want, they want to avoid taxes. But in the end, it's the task of the government to convince them that they will benefit a lot from, you know, being part of the payment, the official payment system, in particular through the use of the government of, you know, poverty alleviation system or this kind of aid to the poor if they can be mediated through these mobile payments or this, you know, official payment system. I think that that's a way to convince them to participate. And then several empirical work, for example, from my colleague in Geneva on China, on the fact of the, you know, it's also this notion of the platform lending being extremely efficient, particularly Alipay and financial, extremely efficient in stimulating small businesses. So in a sense, maybe people will react with other people. But in a sense, I would say that microcredit in the end was not very successful. But maybe, you know, mobile payments or fast payment systems could be a way to really stimulate investment for small businesses. I see Matthew as a question. Hi, Jean-Charles. Yeah, I had a question about this level playing field you talked about. So the fact that, you know, and the PSD2, for instance, banks have to give access to information, but there is no reciprocity on the part of index. And so I was wondering if you, like, how, so this is actually calling for changing this regulation on, you know, the given access to data and how, what kind of regulation, how would the regulation, like better regulation or more fair regulation look like if we really want to have, let's say, a competition between big techs and banks? Well, it's a very good question. I believe it has to do with the better understanding of the production of new information. That is, there is some data which is available and there are several ways to use it, particular credit scoring methods or you have this big data methods, machine learning, et cetera. So the question is, what is the best way to use this information for the sake of, for the public at the end? And I must say that I don't have a clear answer to a clear view on that. So I think we have to dig a bit more into the production of information. What does it mean? What kind of information is useful and how can it be processed?


And we're live from the MIT Media Lab. And yet, not really at the Media Lab for purposes of how it is we're who we are for this meetup. We're really, today, all legal hackers. And this is a conversation about legal hacking among the Massachusetts legal hackers and the newly born, a newly minted, research tribal, park legal hackers and friend and colleague, Neenakal Bride, among the first of a new generation of legal engineers in her day job. And I'm Dazza Greenwood, the hopefully soon-to-be outgoing chair of Massachusetts legal hackers. I'm Chris Wanlein, the soon-to-be incumbent chair of Massachusetts legal hackers. Fantastic. And we just thought we'd have this conversation with Nina, who's fixing to do a hackathon on a really cool hack and kind of talk it through. And we're thinking, well, why not do it on a hangout so that perhaps others that were interested in the topics could listen to it later? Also, we have so many cool conversations that we can't ever find again. We thought, well, let's give this one a shot of being findable. So with that, you want to tell us what the idea is? And Chris and I can help talk it through with you. Sure. So I learned about blockchain as a tool for crowdfunding a while back. And I, as a practicing lawyer, had this drive that I really thought that it needed to be used at the community level for small business crowdfunding. Because in my practice as a lawyer, those tools just did not exist, in a way, for that really big segment of my client base, as it did for this other segment of my client base that could afford any tools that they wanted. So over the past couple of years, I've been working on developing smart contracts, helping harden the technology and my day job. But I've been watching the crowdfunding laws evolve in the United States, waiting for the regulatory time to be right. So I was lucky for my state to be the first one this year, North Carolina, to enact SEC Exemption 147A. Boom. Boom. That's what we've been waiting for. So that is the key to being able to use the internet freely to advertise, to raise money. Some of the earlier crowdfunding regulations and legislation didn't really recognize the fact that the internet didn't have straight state lines. And so we've updated the law, but it's got to be implemented in each state that offers crowdfunding. Anyway. Only application of some kind to, wait a minute, wait a minute. So I have been pushing this forward. It's sort of a matter of willpower as much of anything else, because part of the problem is in the way small business crowdfunding would be done, there is limited transferability of the shares. So right now, all of the excitement about blockchain is in capital markets. Well, if we're talking about doing crowdfunding for people who may not be producing the most liquid tradable shares, that doesn't really get people excited either, you know, just to write a check to do something like that. And that might not be the best way to achieve what we want it to anyway, because what we want is for anybody to be able to do it and people to do a better job than I'm doing, hacking it out on the side from my day job, right? So I went through a couple of mistakes trying to figure out how to get here. But I then decided what I needed to do was take advantage of the fact that I live in a town full of people who like to do civic hacking, are leaders in civic hacking, and I live in a state that's a leader in open legal data. So I decided that based on my experience kind of helping people put these blocks together to make applied blockchain solutions design, that what I would do is work on an open source GitHub repo that would give other people tools to execute interest rate crowdfunding. However, they sell fake, because they're going to want to do it some different way for me, I am sure. The other thing is preach, preach. That's the gospel right there, this volunteer motivated civic participatory building culture that we're part of. And it's just music to my ears to hear you say that Nina. Yeah, so yeah, the next person is going to want to do it differently from me is the first thing. And the second is there's going to be a lot of different kinds of evolution of this technology. We want the lawyers to be able to help the companies, not try it. I mean, so right now there's a real barrier to even aside from not only small business, which is going to be helped by this crowdfunding tool in the long run, there's a real barrier to businesses getting the legal advice they would need in order to take advantage of these crowdfunding tools. I've been parsing statutes for a very long time. It was really difficult and took me a whole lot of legwork and a whole lot of conversations to figure out how it is you could configure this thing to execute it. And so yeah, I want other people to be able to do it. And the result I want it to be is that it spurs an ecosystem where more and more people are just able to crowdfund a business in a way that is sustainable. And eventually, what I like about this to do it in blockchain is that gives it a way of not only taking advantage of all these legal tech operations that we're thinking about, but it articulates risk-compliant methods to bring some of that blockchain liquidity from capital markets all the way down to Main Street, which is because when I got it, so here's where I'm going to be a little bit silly in Southern, when I first heard about blockchain and crowdfunding. I'm like, if y'all bring the tools of capital markets down to me and my girlfriends and the fundraising capability that we have, the world is going to change. And so I'm just going to execute as much as I can to help other people do it. All right. Amen. That's so thrilling. So my. That's what that is. So I'm sorry, bring it home. So yeah, so I have a link I want to, I guess I want to share here to this repo. Does it relate to? It does relate to that. That's our party tomorrow. Research Triangle Park. That's us. Party, in this case, tomorrow, because it's party time and legal hackers to do a barn raising. And what do you use for a blockchain thing? A token party tokens in this case for the game arcade. It's so meta, Nina, so meta. The token buys you an experience. That's for sure. So well, OK, are you ready to screen share? Oh, I can screen share. I had actually shared the links here in the group. But you don't have to. Why don't you? Just so because, you know. Then I will, OK, screen share. I'll share. Yeah. And then we can see what we see. So there's two things on the screen sharing I wanted to say that I think I heard, which will maybe give access to unleash the apparently infinite energy of Chris's, you know, like hackability and hacky sensibility. OK, here we go. So first things first. Oh, hello. Gets up. NGK 207. And this is NC. How do you make that so it doesn't? Yep. Oh, there we go. NC Thunder hack. Beautiful. OK, so that's where people can find it. And NC Paces hacked as the statute. So, OK. Thank you. And one thing I want to mention is as a lawyer, this was so hard for me to put an imperfect work, incomplete work.  And we beat each other down from the day we passed the bar exam not to do that. You're an example for all of us. Incomplete work. Yep, you're an example for all of us. And I remember when you made a pilgrimage to MIT not long ago, a year and a half ago or something. And we sat and we hacked for like three days on promissory notes, I think, and blockchain digital signature hacks and dual integration kind of stuff. And our work was primarily imperfect, as I recall, because we were doing something out of nothing that no one ever thought of before half the time. And the courage of being able to come and do that in the fullness of time resulted in breakthroughs with no budget, whatsoever, almost no budget, with lots of people helping now. And it's the courage of the first draft and even more courageous to be able to share it in the open. That's part of the gestalt of this culture. So I applaud you for doing this. Thank you. Because some of this is ugly. Yep, it gets better, I think, is the mandatory line. Tell me if I got this right. The two things I heard you say is number one, that you want to create a mechanism that to some extent, to a meaningful extent, implements the correctly, like the requirements and the constraints of the North Carolina state-based crowdfunding. That's a legal hack. And that makes a lot of sense. And then number the second major thing you said that I hear in a special way about something's been said that is buildable, is basically that part of your motivation is your girlfriends and so many innovators in your community in the state can then have access to capital in a legit way, in a crowdfunding way, under the state law that they don't have right now. Lost to us are so many great projects, including the one you're doing, where you're gritting it out on this. But this could be the type of project that's fundraisable under your state law. And so I hear that second one as a good candidate for success metrics or some sort of measurable criteria to know we will know that we have succeeded if or when. And then something like this or that type of project is able to use these tools to achieve some outcome, such as to do the raises of that amount of money in that context, something like that. And then that squishy, it's not completely buildable, but I kind of picked those two things in particular up from what you said. And can you tell me, did I kind of get it right? Or could you add modified delete, whatever I just said is needed? Sure. Well, so one of the things about it is that what I wanted to shed a light on is some of the information from the diverse subject matter expertise that has to come into executing any of these more complex solutions. And so any of these legal tech solutions that we're talking about require us to bring together a bunch of different things in collateral from legal forms, legal scholarship, technology, and also the business information and policy information that makes all of it relevant. And so my desire was to get that gathered in a place that would make it easy for others to build blockchain-based solutions, because what I want to do is really make the whole process more seamless and accessible for everyone. So there's this idea of advanced process engineering that everybody needs 80% of the same thing for some of these masks. And so right now, what folks really need, at least from my perspective, is some way to collect all these ideas together so they can draw from it themselves. Because I don't really want to decide for you whether you want to use x-blockchain or y-blockchain or this kind of currency or that kind of currency. I'm really focused on making it easier to operate digital technology that serves community access to capital. OK, got it. So that is a question. I mean, it's sort of like. Look at your loss about making, enabling financial technology to address a certain population. I think sometimes people in the space, including myself, sometimes get a little overcome with the applications that you can have with blockchain. And there's a phrase that we like to use here now called blockchain because blockchain. Right. It's the overhype. Yeah, but I do think there are some particular use cases here where you're talking about distributing assets, voting rights, all kinds of things that do lend well to a distributed system that can capture who owns what essentially. And the number one thing is being that early in a project like this, you really want to just kind of focus on the team. And together you guys will hone the idea. And it seems as though we had a discussion about how you're involved with Code for America in your local community, which is phenomenal. And I think those guys, yeah, that's actually, I think, how we met originally. And so those guys are a wonderful resource from a just source-of-the-earth kind of thing, digital natives also, a lot of them, and the ones that sort of took it on are now pretty pro. They can help facilitate some of the more technical concerns. And actually, I would imagine, as long as I would advise you not to position it as a blockchain project. Instead, it is a project that involves blockchain because for some very good reasons. I think a lot of them will just kind of jump at the bit to kind of get involved and stick their teeth in into a solidity and a bunch of other sort of smart contract-based technologies. And really, it's in the combination of your expertise and your skillset that you guys will really find a really great solution. I think you really need to think about whether or not you want to, so essentially, you do, to an extent, want to replicate what's already out there. You just want to do it in a way that's distributed. If I'm not mistaken. So there are platforms already that kind of do some of the stuff that you're talking about. One major question is, is this for fundraising or is this for pre-sales? Is it more of a Kickstarter? Is it more of a GoFundMe kind of thing? And I think by sort of working through some of those things with your developers, which is part of the challenge in any team and executing a project that's pretty communication. So just figuring getting everyone on the same page is going to be huge for that. And so there's a bunch of exercises that we can talk about and talk through to sort of get everyone on the same page. But kicking off, personally, I love the stuff you've done with GitHub. And I really applaud you for stepping out of your comfort zone and starting to meddle with that a little bit. I think it's that's ultimately the medium through which a lot of devs love to communicate. So that's great. I would definitely also encourage you to design something, create a document more for your team that's going to sort of more of like a narrative like format. So I take a little bit of narratives from how Amazon and the visas team have constructed sort of like high overarching sort of one to three page documents that kind of summarize pretty much everything you need to know about this project. And so getting everyone on the same page, engaging with the right folks, and just starting to experiment and just being aware that most likely your first solution is not the correct one. That's pretty crucial. And just if you guys can work through the pitfalls as a team, I think this is a really phenomenal project for legal hackers in general. And using the technology to then spread these insights that you've gained is a wonderful way to apply some of these tools. So yeah, there's a lot of legs here. But obviously, your key thing here is just to state out your assumptions and share them with your team and talk through them as a team. And yeah, give me the other. Yeah, I think that's great. So listen to Chris. And also, that's your go-to for Massachusetts Legal Hackers. I guess there's something out today that specifically I was thinking the back of my head. I can think of any examples of times when this sort of thing has worked successfully. And one thing that I thought worked pretty well was a multi, I think it was going to be one night, and then it became three nights. I think it ended up being seven through the late spring and summer of a run of a series of Massachusetts Legal Hackers meetings to create the digital signature hack on a promissory note. Or no, I'm sorry, on a bill of sales for a car. So it was actually exactly the thing that we initially did a proof of concept up together a year and a half ago. And then it had real legs and we ended up having people that wanted to keep working on it. And so we kind of like actually reluctantly, in my part, but I said, we'll do it again and again because I don't like having ongoing meetings for no reason. It becomes a zombie. But this happened, you know, and people wanted to come together and had an end of, we had a goal to try to do a mock, a little bit of a mock trial. Like how would we know if we got, you know, a signature? Well, one way to test it would be, well, you could show it to a mock trial and try to see if it's admissible, I guess. And how would you know if you have a crowdfunding thing? Well, you could see some of your friends' businesses were things they saw. So it kind of had a kind of a goal of some type. And it had a pretty, it had a reasonable run and people that were doing it. The other aspect of it is actually we started, we kicked it off with Toronto Legal Hackers and Amy Tarahar up there. And some great people who talked us through like some software code that they had that was similar, like adjacent purpose and Ethereum, it was called on stone paper. And like, you know, we tried to work on that and exactly as Chris said, like the first thing did not pan out and none of us imagined it necessarily would. So we did a good spirit that was, like they were more mature devs than me there that were like, just remember it as probably won't pan out. So that was good and there's no one lost face and we ended up doing other stuff. But starting with other legal hackers and sharing ideas was invaluable that were well aligned. Tony Lye also in San Francisco Legal Hackers was very invaluable at certain points too. And we just got on Hangouts with them, put them on the big screen from time to time. And that was another thing you have community that's broader that may be good and certain aspects potentially. But then the other thing I'd say is something just that Chris said like earlier, but he didn't mention just now, it was implied in his comments about the team, but he said specifically like the most important things to kind of build community and to have a thing that has a pulse. And so like code for Boston is terrific. It's like, if it's Tuesday night, it's hack night with pizza at, you know, fourth floor game, which innovation center. And same thing I noticed with an NC code for NC or whatever the brigade, the code for America Brigade has a regular pulse. So the more you have like a pulse, maybe the better so you can build community in some sense of regularity for so long as it makes sense.  But I think that first thing you said made a lot of sense tactically. So that's all I've got on that, just had a super high level. And then I've got one or two tactical things after if the conversation goes that way, like little hacks that we did in the media lab and an earlier version of this, like there's one or two things maybe we could pull out that you might want to take going forward. But anyway, what are your impressions of like the things we just said and, you know, what do you reckon? I reckon all of those things, that's excellent advice. So I started mostly with a legal hacker team because I figured that as far as, I had a multidisciplinary problem on my hands that we just had, we had to knock out the stuff that was in the lawyer's primary wheelhouse to tee up some actionable things to do with the developers once we came, you know, we were ready to actually ask for their help instead of just, you know, kind of going down and learning and making friends and understanding how things are done. And so we've spent a lot of time, you know, there are a lot of really innovative lawyers around here. I'm really lucky to have gotten a team of people who has been willing to give their time to help me produce these things I've shared with you. But going forward, we need to be able to, you know, broaden our group of people collaborating and making this happen because there's only so much of willpower and get gridding it out, I can do because, you know, this is a network phenomenon we're trying to create. And just to double-check, like the, so the initial stuff was that in like the forms directory and like figuring out like what the forms for the different roles were or like, what was like the main contribution for the legal part that you feel like in the initial hacks you got together. So I'd say gathering up legal research. Let me share, I'm gonna share my screen with you again then. Okay, so here what we've got in, we started out with some crowdfunding forms and these are not ready, but the goal is to have these all be machine-readable or have a North Carolina SAFE and a North Carolina promissory note, machine-readable. That's getting real. Yeah, and ready to go. You know, by, you know, we started this project in mid-September, you know, we want to like say that we have gotten our first Lego kit together by, you know, Thanksgiving, right? So we should have the NC SAFE ready to go with NC promissory note in here. Also you see like some exemplars that the North Carolina Secretary of State and then other lawyers, this is a Cooley's staff. Like they've done an open source repo for a SAFE agreement for future tokens. But then some forms that the North Carolina Secretary of State recommended to me. And then for legal research resources, I've pulled together a whole lot of various things from different sort of either really academic, nerdy, legal tech stuff that once you combine them all together, you know, that's still gonna require a little bit of drawing out the legal rationale, but it's all there in those documents. You just gotta do, you know, just gotta make the narrative. So I included, Chris, you were talking about, I have, I should talk about what this is about. And so I wanted to make sure I did that and I did it in first person. And one of the things that I wanted to make sure I put on this page when I talked about what I'm doing from first person is that I'm not really talking about ICOs or token sales or any of the things that are really sexy and popular right now and people are worried about it being a bubble. I'm talking about automating operations in order to make these inclusive blockchain applications that we're talking about. So there's a little detail that I shout out to DASA for turning me on to the Code for America folks.  It's just terrible. But I had to like rip off the Band-Aid and put it out there because I think it will be important going forward if another lawyer wants to skill up to offer these services to their clients over in Greensboro, putting that kind of synthesis together for them is really gonna help small businesses get the lawyers they need. So I need some tech exemplars. I've written a couple, but I need to think about them a little bit more to see if they, I think they're the right kind of exemplars. Because I don't really need tokens, like really, I don't know. I'm just still thinking on that part. So a couple of like super simple tactical things in GitHub, which is, I wish Christian Smith was here, partly. He's the like maestro of open source community building in GitHub and how to really just finesse it perfectly. But one of the things it's worth looking at, maybe we could get good at this together actually, because he looks at my repos and just laughs. Basically, you know how it's set up because it's just like flailing around. But basically, there's like a kind of like a way to do the read me file and its purpose that it serves. And I think there's more than one opinion on it, but I like Christians a lot. And then there's a second thing that I noticed from doing standards, like legal standards and tech standards and just insisting that we move it to GitHub in many cases. And then as we're doing that, and then as we're looking at how to do issues and who's contributing, there's a big question with standards about, did they sign up the contribute contribution agreement? You don't wanna get patent or weird stuff in there for an open standard. And if it's in GitHub, it's convenient in a lot of ways, but who's doing what? And did that work its way in the standard? We felt like we had it locked down in one case with just who had rights to merge pull requests and so forth. But then there was issues, like we really wanted to keep issues open to let a broader community look at our stuff and propose things, but then if they propose things and they worked its way into the standard and they didn't sign a contributor agreement or there wasn't one of the normal processes of the standards organization, people worried. So as I was kind of running this down because I was the one advocating remaining in GitHub basically, I discovered that this is like so many of these things like a well-solved problem that coders have solved, but that we just, I guess that required some investigation to discover. And so basically what it is is there's a magic file that you call contributing.md, all caps. It's like license that shows up a certain way and read me search up a certain way. If you have read me in there, it will display at the bottom and everyone knows to look for the read me. License, you know, the look for license. There's a new one, it's contributing. And then there's a kind of format it follows, but in there, that's a place for number one, you would indicate like what the deal is, like if it's open source and then if people have given a sense, giving up rights by contributing, you make that known there. And then you can have it pop up automatically when someone does a, like makes an issue, even if they're not in your team, if there's a contributing file, I'll pull it up.  But the main thing is just like the real thing that if you click around and look at examples, that's where you, one of the best places to do what Chris said, which is, as for people kind of say, these are the assumptions of the project, here's how you contribute to the project. We have a weekly meeting. We kind of like, we do pull requests or we have a wiki for this or however the culture is as it evolves, that's, you write it and contributing. So, you know, who knew, but it turns out that that's what like the good projects do and people know to look for that and it works well. It kind of separates it from the... Okay, thank you. I mean, actually, I was probably gonna ask you that question sometime next week, right? So that's where we discovered and it seems good to me to do that. It seems really good actually. I'm gonna, and I'm guilty of not using it. I sometimes think I forget that that exists or I just cut the corner, but that's probably a good practice. You should maybe even have a canonical legal hackers like Project Fulver at some point where just like... Fabulous. This and get in the right track. That's a good idea. Yeah, I've been slowly trying to get my lawyer team, like just pushing them in to get up with me, but they're very, very slowly coming in.  Yeah, it is. And it's not, yeah. It is. It's not made for non-coders. For non-coders. And like, I actually learned how to do it at Code for America, finally. Like the thing that was breakthrough wasn't the documentation, let me tell you, in those days, but it was like some person that did Massachusetts general laws actually in a couch TV, just like on a lark. Like, so I was trying to figure out how to do this, but I couldn't do like some, like foundational thing. And it just kind of like just showed me. That's one of the beautiful things about getting together in a local community that it's why I think legal hackers work so well in Code for America. It's like, it's a meetup group. Like we may have lots of different ways to do legal hackers around the world, but one thing everyone knows and agrees on is you don't have a legal hacker, unless you have a meetup page. And then like James and her fellow or somebody kind of puts you on the list and that's fundamentally what we are. But there's a lot of wisdom there. It means that now people together, locally together, can get together in person. So much happens there at that time. How, you know, propagating knowledge of how to use get hubs and how you'll use it different from how others use it really happens. So. One thing I wanted to say that I think would be, I have found a useful way to onboard a couple of lawyers that I'm working with the GitHub. There, the little bit of the carrot is that if you begin to, you decide, okay, I want to make some machine readable legal documents. They're not ready to down. I want to make some machines readable legal documents. That sounds like a great idea. We all do. Yeah. Some people say that. Okay, just assume somebody says that. They'll say we know. Right. But so say you're going to be teaching yourself how to work and mark down. Cause you know, lawyers don't work and mark down, but that would be step one, right? Yes. Or at least learn that kind of thing. The great thing about the GitHub online interface is that you can teach yourself mark down just working in it. And so it is really an easy teaching tool. And so we've been kind of working on iterating the documents for organizations and things like that. And so we'll get those in the repo in the next few days. Yeah. Love it. While I love and share enthusiasm in GitHub, I also believe in lowering cognitive load as much as possible in all things, sometimes to extremes. Oh yeah, sometimes I go for the load. I love it. Well, it's good to start ambitious. But yeah, I think in terms of just the project and its success, which I absolutely want to see, I would just encourage you to. It sounds like you have a great group of folks with the Code for America people. It sounds like you have a great group of folks on the lawyer-slash-business side. I would highly recommend that you engage with an individual or group of designers who are not as much worried about how things look but how things work for humans, for people, as that is often an overlooked aspect of executing a project is getting them in really as early as possible to understand how you can make it usable for your target population. One thing that Chris is so good at, like when we're in these meetings and we're trying to figure out what to hack or how to do it, being able to draw and talk to people and create human narratives in a design-oriented approach is just invaluable. Our whole group got so much better when you started coming to it. Frankly, having that kind of talent really isn't valuable and convinced now. Dad's actually hit the nail around the head. It's really about building a narrative. You want to build a story of a user who's either trying to raise money or sell something and someone who has the assets that they are willing to invest in whenever the venture is and being able to tell the narrative, as though it's a story, as though it's a book of some sort. Hopefully it's a picture book that provides a book. Because then if you can break down your story that way or your stories of different user types, developers actually, in a lot of cases, prefer those kinds of things. Not only do they prefer those kinds of things, they require those kinds of things. I mean, good ones also are the front, right? I want you to articulate things for me and sufficiently nuanced words that I know how to apply the law to that. That is not how developers want me to produce my specifications for them. So yeah, learning flamethrower is an awesome skill. Yes, Swimlane especially. Someone might guess. And most of the, well, I feel like I don't know all of the visual methods you have, but a lot of what Chris does, it works well. Beyond the Swimlane kind of process-oriented role-based procedural diagramming, which is practically schematic, it's also very human stuff, like the persona and the point of view and these little clouds of conceptual things, like the goals and the objectives and the priorities. And it's not all linear and buildable. Like a lot of it's not that. And maybe it isn't logically point A to point B, but it's invaluable stuff to get people on the same page and in sync so we can all really contribute and work together. Yeah, I've got a pile of those. I need to load up in this recode in the next day or two about this process. And I've got one final little hack for you. I don't know if you saw it in the thing that we did before. And I'm not even sure. Like crowdfunding and just curious is not my gig. I've just tried to learn about it just literally to try to see if I can be constructive for what you're doing. But when I was looking at how to do this stuff, and in particular, and this is partly code for America thing, like how to work with regulators on a thing. But in a unique role, like as attorneys and as business people or relationship with the regulators is, I won't say adversarial, but it's all business. It's arms length and it's regulator regulated is like the fundamentally like the role. There's another role that you can use. It's rare. And it has to be treated with complete respect like a medically sealed from all other context of one's life. But it's the role of like the citizen's civic volunteer that's kind of coming by as part of like, I don't know, like, like someone that helps clean the streets or volunteers at the lemonade stand and that kind of stuff. And just so happens with your coders. That's the code for America stick and a few others as well. And so when they get together and talk to the regulators and they have all kinds of reach in different organizations and cities and states and federal agencies, it's a completely different role. And it's one where it's possible because of the lack of conflict of interest and the nature of it and the transparency of it and everything else to engage in it like more of like on a partner kind of level and then not to expect them to make unofficial ruling or anything like that, but more sort of like, I don't know, on a friendly basis trying to be constructive. So in that spirit, I was kind of think like what, how would one do that in like a state securities regulator kind of context? And I just poked around and poked around and poked around. What I finally came up with was, okay, well, one way to know that the regulators are alike and actually prefer to communicate whether like a technical implementation or a business method is appropriate under their particular statutes and laws and the current interpretations and policies and everything is sort of the no action letter that's like kind of SEC thing. And then I looked down further. So in theory, if you had a new company with a new technology, you could request a no action letter and they would review all the details. And if they felt it was compliant, they would give you this letter. You make no actual letter request and then if you're lucky, you get a response that says we will take no action like this, you know, I don't, I feel like I would stop short of saying this is in compliance, but they say we'll take no action like lawyers. And then I found out that like state regulators also do no action letters. I found a bunch of North Carolina ones and some like Colorado and Massachusetts ones. And then what I was thinking is what if at some point when you're getting ready for people to use this out in the field in some way, one of the things people hack is you got together including a bunch of lawyers that know that you've done this in your jurisdiction and did like draft model requests of your methods, your tools or with an actual issuer that might do it. And the thing was without practicing law somehow that you kind of reflect what would be a sufficient amount of the facts of how would you request a no action letter? And then, you know, people could do their draft no action letters and that could be in the repo with the rest of it. And that would just be, and then we got to learn from our no action letter requests and get better and better templates and the regulators could say that's okay, but you're missing facts. And then people could say thank you. We'd love to include more facts. We'll put in the template for everybody. Yeah. So the thing I love about like interacting with regulators is I've got a good one to regulate, to interact with, right? Do I not have like a good secretary state to end? So the thing about is, you know, I told you how when our crowdfunding regulation went into play, I was like, I do not know how to use this because it was very hard to understand in the intervening months, they have continually upgraded not only their open source advice about how to use the statute, but upgraded their technology. So now if you want to apply for approval of a funding portal or a crowdfunding raise, you can apply through the website online using a PDF application. So it is, you know, as fast as you and I can come up with ways to interact with the regulator, my regulator is moving so fast that by the time we've finished with our legal hat, they might have something, they might have a race car going, right? So. Better. That's good. So race the regulator. Yeah, you know when I was little, just fresh out of law school and I was trying to do like, like trying to like do electronic things in a state government. My lead, one of my key leaders was Elaine Marshall who was just like so so and so wise about how to do change management, how to get multiple states together, operating goodwill. And I seem to remember like the person I was working was a different party, but you know at a certain level, we want businesses to be licensed. Like we want economy to function. We want public administration that works effectively. And she was always a roll up your sleeves and sensible as a day is long, effective, and she was never afraid of technology. Not that she's the best technologist in the world, but she understood it was part of how you do your job way back then. And no wonder she's come up with that you're so great now. Like, gosh, I almost feel like we ought to just get in there and do it for a lane, you know? But I'm a big fan too. I'm glad you brought up that aspect.  And you know, they're really good. Can you hear all my dogs barking in the background? Well, aggressive. Well, I know, like that we need to do another one. We're like, it's mandatory having dogs and the cats on your lap.  Everybody just came home from baseball practice. Okay, so yeah, so I think we're moving along. We're gonna share our work product with some members of the community who will either be able to help or maybe be able to, you know, either as a lawyer apply some of this work in their practice. Also, you know, we've got a lot of businesses that are interested in using the technology to kind of get this stuff started, so. Amen. That's where we're going. Well, so you know, of course, I guess in closing, I should do a kind of a plug. But you know, we're doing the MIT Legal Forum on AI and block chain at the end of the month on October 30 and 31. And we're fixing with our friends and colleagues at Legal Hackers, who's gonna be a chair by then, and a whole bunch of other folks across the law and your policy and, you know, technology and some scholars to convene and look at, you know, deliberate transition in the law to a digital footing. Part of that is understanding how to re-statute and how to compose, like, you know, code, like you're doing literally with a state crowdfunding statute, which hopefully be a template that other people in other states could do and your processes template. I wonder if one of the breakout groups that we do, we're doing a sort of bankruptcy thing, we're doing a mass torts, we're doing a, I think we're gonna do a thing involving a signature on a bill of sale, like that one, we're doing three or four scenarios where breakouts will talk about a case that we understand how to do in the old way. And now what happens when you add blockchain or when you add AI and we do it in the new way? Have it express itself as a service and, you know, in its scale and so forth. And my hope is that by doing scenarios that people can have a better conversation and, you know, talking apples to apples and so forth, but also looking ahead. Maybe if it's far enough ahead and made sense and people are into it, we can mean one of those breakout groups around like a state crowdfunding law. So it's, because a number of people will know that's in the practice area of a number of folks that are coming. It's interesting and it's such a poignant example, so current.  So if you're interested in that, I guess let me know. I don't want to kind of push it too soon or the wrong thing or the wrong place, but it'll be useful to have people think about that. Like we just, we're just doing it. My only concern is getting to Boston on Halloween, but. Yeah. I was doing a robot lawyer costume party competition. So that's fun. Boston party competition. You know, I'm just putting all the work people think again. I'll see what I can. Yeah, that sound actually does. I'd love to do that if you can find a way. I'd love to appreciate it. It might just be one of those many, many, many people with Halloween pleasure slash duty that it's coming on the first day and not the second day. But if that's something that you'd be interested in, if you could do it, it might be able to hook it up remotely. You're like, we're experimenting with that. So you wouldn't have to travel necessarily. Let me know. And then we can put it out there from people that are attending. If enough people are into it, why not? Like I would love to see what people thought about this and use it as another vignette to kind of elicit, you know, the best ideas of people that want to convene and co-think how to transform the law, to refactor the law for digital age. That's what you're doing right now. Yeah, it's fun and love to do it. Well, thank you guys for talking us through because I think we're moving on to the next stages here. I think we've made a lot of progress. Launch. Outstanding. Well, great, keep on, keep on on, keep being you, Nina. New legal hacker on the scene in North Carolina. And it's like, I'm so, so, so glad. So never to have a good big thing and invite me down. So I can come down to one of your hackathon, one of your legal hacker meetings and, you know, we can open up our laptops and get busy. That's great, you all have fun, have a good night. Thanks so much. Ciao.


So in this section, let's start looking at fluid shifts. Now before we look into what happens in microgravity, let's just consider what happens to us here on Earth. We stand up straight and we know that due to gravity a lot of the blood pulls into the dependent parts and especially in the lower extremities. So much that at the level of the heart, let's just say if the pressures there are an average 100 millimetres of mercury in the head, it can be a lot less, let's just say about 80 and it can definitely be a lot more down in the feet. And we have mechanisms in the capillary bed and in the arterioles to maintain tone and to keep the blood flowing so that all of it at least doesn't pull and just distains the vessels until they rupture. So that certainly doesn't happen under normal circumstances. Now we go lie supine and we are now lying down. What happens now? And we think well the same sort of thing should now happen when we go into microgravity. So what's going to happen there? This is an enormous pool of blood which now gets redistributed and what we would net immediately if for a 70 kilogram man if you had about 75 millilitres per beat ejection fraction as the ventricles contract that's the ejection fraction that is the volume of blood that gets ejected it will now go up to about 95 millilitres per beat. Okay because that heart distains and what is going to happen? Well there's better receptors and we spoke about the better receptors they can to notice. Well there's more. There's more pressure and there's more distention. So what are we going to have with those better receptors? Well first of all there's going to be some sympathetic effects and the first thing you'll notice is that the heart rate goes down because we're going to have some form of cardiac output and remember that will be my beats per minute my millilitres per beat and my beats per minute so that will give me millilitres per minute so it's actually going to be liters because it goes over over a thousand. Okay let's just do that mathematics so cardiac output is going to be the strength volume times the heart rate if you think about that just a bit of simple mathematics strength volume so that's going to be millilitres per beat per beat times beats per minute so those two are going to cancel and I'm left with millilitres per minute with cardiac output so it can't just increase out of bounds with cardiac output so as this goes up this is going to tend to fall and do that for yourself if you're in a treadmill or you've just jumped or you've just been on a training bike and you've got a heart rate monitor on you'll have certain beats per minute now just as it's quite high 130, 140, 150 go lying down to do some push-ups or sit-ups and look on your heart rate monitor you'll notice that your heart rate comes down quite a bit you are lowering this part just to compensate so the cardiac output doesn't go it doesn't go too high so you can see this decrease in heart rate and then through the other sympathetic pathways specifically to the kidneys you're going to have suppression of your renal angiotensin-aldosterone system definitely going to have the renal levels go down and the downstream effects of that as you try and compensate for this volume that is now pushed into the central section you're also going to have a decrease in your antidiuretic hormone central antidiuretic hormone through reflex pathways antidiuretic hormone that's going to keep volume back but now you lower that and because of the tension in the heart itself you're going to increase your ANP ANF depending on where you live anti-natriuretic peptide so that's going to increase and all of this together will give you a higher urinary output as you now try and get rid of this excess volume that is now being pushed central as you lie down you're going to have to get this sodium and water as water follows it is going to be excreted due to all at least to these mechanisms so that's what happens when you lie down for a while and it's tested for you to simulate on earth have people bed bound for some considerable time and you notice all these things but does this indeed happen in microgravity? that's the question