Ravi Menon: Decentralised finance and the future of money Panel remarks by Mr Ravi Menon, Managing Director of the Monetary Authority of Singapore, at the Andrew Crockett Memorial Lecture by Mark Carney, via Video Conference, 28 June 2021. * * * Thank you for the opportunity to engage on Mark Carney’s deeply thoughtful lecture. Mark has given us a powerful rendition of the transformation taking place that will “re-wire” our monetary and financial systems. Centrifugal forces are driving financial functions away from the traditional core. These forces are not just affecting money, but all aspects of the monetary system. Mark also reminds us that, amid this transformation, money has to be anchored on “values of trust, resilience, dynamism, solidarity and sustainability”. I cannot agree more. I’d like to focus on: the decentralisation of finance across the three ‘I’s of the monetary stack — intermediaries, infrastructure, and instruments; and how central banks and regulators can potentially shape this decentralisation in a way that upholds the critical values of money that Mark has highlighted. Let me begin with Intermediaries, at the top of the monetary stack. The delivery of retail financial services is being decentralised. This is happening in two ways. First, finance by non-financial players. There is now a much broader range of non-traditional – and often unregulated intermediaries in the retail finance space. This is not just BigTechs, but also FinTechs and smaller technology firms. These players provide payments, lending, savings and investments as complements to their core digital service.
And you have asked me, particularly, as Deputy Governor of the Bank to talk about Economic and Monetary Union, and the way it will impact on your business. Let us, therefore, move quickly on to that point. Whenever I have accepted an invitation to speak about EMU over the last couple of years, I have done so with the hope that when the day came to speak, the clouds of uncertainty surrounding the project would have cleared - both in terms of developments among the countries committed to going ahead, and in terms of the UK’s position. But my hopes have so far been confounded, and indeed the events of the last couple of weeks have complicated matters even further. This is not the time or place to talk in detail about the Bundesbank’s little local difficulty with Herr Waigel. And it is too early to assess the consequences for the project of the results of the French election. But it is clear that new elements of uncertainty have entered the scene, making it harder than ever to forecast the outcome next year. Looking at the markets’ own assessment, our interpretation of movements in the forward FX markets since the autumn is that the markets have become more persuaded that the euro will begin, but that it will be a broader, and possibly weaker euro. Until last summer the assumption appeared to be that only seven or eight countries would make up the hard core.