LIVE: The Future of Finance

[Music] [Music] welcome to this yahoo finance special the future of finance we are breaking down the unique dynamics that make up the financial system as we know it today our special guests will examine the way financial services are intersecting with technology and digital assets and how it affects our lives today and in the future we'll also have an exclusive look at the newly launched bloomberg grayscale future of finance index which tracks the rapidly evolving digital economy join us as we explore the market forces that are shaping our financial future welcome to our special the future of finance brought to you by greyskill i'm akiko fujita over the next hour we are taking a closer look examining and defining the many dynamics that are shaping our financial future we've got a long list of guests lined up for you over the next hour but we are kicking things off with a discussion about the current state of finance joining us now is celebrated author and academic vikram manchester umani vikram it's great to talk to you today the show is focused on the future but i want to start on the present and the current environment we are seeing in the financial markets it kind of feels like there's a bit of a reckoning that's playing out especially among the tech companies that have been able to sell the story of you know huge growth profitability at all costs in exchange for some pretty lofty valuations what do you see when you look at the investor today yeah well first of all thanks for having me i'm thrilled to be with you and to share some of my thoughts here uh look i think what's very simply happening is economic disruptions have created an environment with inflation inflation is leading to fears of higher rates higher rates and sort of more appropriately priced money equals less liquidity and greater discount rates so the longest duration assets if you've got tech companies with earnings way in the future those future earnings are worth less in an npv basis if you discount them back with a higher rate so that's part of what's happening right now in the market so let's talk about that number two we've had i believe a passive investing bubble that's been brewing and may in fact start showing some signs of cracking and bursting here i don't know we need more time to see it validate but what do i mean by the passive investing bubble we've had flows driving prices more than fundamentals in many sectors and part of that's being driven by just the mat you know the massive amounts of money flowing into some of these you know indexes if you will so take the esg phenomenon a lot of money went into esg related funds those funds didn't have many places that they could park as much money as they were receiving and so those flows drove stocks to levels perhaps that they might not have had they not had this esg style mania bubble if you will that was brewing on the side so the desperate desire to own green assets through lots of funds flowing in profits in the future but discounted at very low rates so therefore worth a lot in today's terms i think that's part of the story we're talking about here you mentioned esg let's talk about the biggest esg player one of the biggest and that's tesla and i like what you wrote about a year ago specifically on tesla in an op-ed you said the faith and market efficiency the focus on being green the fear of missing out and the increasing power of storytelling by celebrity leaders have created fertile ground in which the tesla bubble took root and grew i believe it's about to burst that was over a year ago how much of that story what what you lay out there is happening with tesla can be applied to other companies sure well first of all i was way early i think on the tesla thing and so maybe that's wrong it's conceivable um but what we had happened in a situation like that market efficiency let's talk about each of those points you just raised marketing we have faith that prices are right right that's the reason the passive investing bubble grew why bother paying for active management it doesn't make sense if you're an investor why pay those fees why bother to have people to reason prices are right buy the index and so of course tesla's a big component of certain indices esg indices for sure therefore the price is right don't question it and so you saw as that happened fewer people shorting it that some of them got squeezed out et cetera and so that definitely took place in terms of the market efficiency this fear of missing out that's a classic bubble dynamic right when higher prices result in more demand not supply that's really interesting right because higher prices more demand equaling higher prices equaling more demand you get a self-fulfilling cycle going up by the way that can happen going down as well right so lower prices less demand lower prices less so you can see that dynamic in reverse celebrity ceo i mean come on elon musk is the celebrity ceo of celebrity ceos the controversy the style the sort of everything about them sort of sort of smacks of that celebrity ceo who gets a big pass on governance on other past other topics um in ways that maybe the non-celebrity ceo doesn't get and so maybe has to explain more um further there's this visionary logic which is it's all in the future it's all coming we've got full self driving we've got robo taxis we've got solar cell we've got batteries we've got you name we're going to mars send a car into mars whatever it is it all is believable to those who want to believe and so the minute sentiment shifts you can see sentiment shift quickly and for a stock that's i don't know what its valuation is at this point that we're we're talking a trillion dollars somewhere around there um and yet you know i think if you got rid of some of these pressures that has been supporting the stock that maybe the stock wouldn't be where it is um so but yes to answer your question explicitly i do think the same dynamic is visible in other securities let's talk about what what some would say is the future of money and that's cryptocurrencies you know we're coming off of a banner year in the space crypto assets totaling at some point at the highs um three trillion dollars we're talking with the t where do you think crypto fits in to the broader financial system not currently but when you think five years ten years down the line sure well i think we need to see and pay attention to what's happening with central banks and if the political motivation is to constantly print money and debase currencies keep going what investors should do to hedge from that risk is by currencies that cannot be printed right things that will be forever scarce and historically that was gold silver precious metals and for those that wanted levered exposure to it perhaps gold mining silver mining companies etc but in a more modern era in a digital era one that may appeal to millennials and sort of younger folks that are more digitally native you might think that well cryptocurrencies and bitcoin might be a digital version of that non-printable currency and so you know i'd go back to something jim grant has said in describing how to think about gold he said you should think about gold and precious metals as not assets but almost anti-assets one divided by confidence in central banks and so if you have rising confidence that central banks will raise rates stop printing money etc well then that denominator is going to go up and your ratio will fall and by the way as the fed talk has entered the sort of equation of raising raise four or five times this year's we're gonna stop printing money surprise surprise we've seen a headwind uh if not you know a downdraft in cryptocurrencies and bitcoin specifically so i think that's a decent framework for thinking about it now i do think that political motivations for printing money having less priced you know lower priced money etc will continue to be persistent and so in the long run i got to imagine things like cryptocurrency bitcoin specifically likely have a good future further there's more adoption and as it gets more stable and less volatile it's going to be adopted for different uses i can't claim to understand all the uses that it may have i was talking to someone who said you know the number of the dollars of remittances that are being sent back and the fees that are charged and remittances from like middle east to the philippines i forget exactly what it was but think of the democratization of money transfers that become enabled this way uh so i think there's gonna be a lot of activity and decentralized finance and and cryptocurrencies uh and that world's gonna be really exciting on a five plus year view there'll be a lot of volatility people need to buckle up and go on the ride but it is going to likely work out well yeah on something like remittances we've already seen the use cases especially in emerging economies um you're a lecturer at harvard and i know you speak to students your class specifically humanity and its challenges which is a very broad topic what are you teaching the next generation of business financial leaders what do you tell them yeah so look the big sort of lesson of my class is that we should all try to be more systems oriented in our thinking and our approaches to problem solving what we're trying to do and what i try to do with my students is teach them to think broader to focus more on connecting dots rather than generating dots that to balance breadth with depth and fundamentally to learn to think for themselves which is hey this may sound like it makes sense but when i connect the dots and i look at the feedback loops in fact this may produce the very opposite conclusion that we were thinking we were seeking right and so one of the examples uh a lot of people have used is you know seat belts do seat belts make drivers safer well if it didn't change their behavior the answer would be yes but when you put a seatbelt on you feel safer and you drive with a little more aggression and possibly even more risk and does that offset the benefit of putting on the seatbelt same thing we saw with helmets and football players concussions and so there's there's this feedback loop logic that crosses silos and asks questions about assumptions and forces a connection uh focus uh sort of asks you to focus more on connections than than generating the actual components or dots and that's ultimately what i'm teaching and we do it across a bunch of cases inequality in capitalism technology and jobs the future of space um etc etc it's a it's a lesson that we can all take i think take away not just your students vikram manchurimani it's great to talk to you today really appreciate the time great thanks for having me coming up how to keep up with rapidly evolving digital economy we have an exclusive look into the newly launched bloomberg grayscale future of finance index that's coming up after the break yahoo finance's presentation of the future of finance is brought to you by grayscale [Music] [Music] [Music] [Music] welcome back to this special look at the future of finance and joining us now is dave lavelle grayscales global head of ets and david getty and bloomberg's head of multi-asset index and guys i we bring you here today because you're launching an index in an etf you just did that last week the bloomberg grayscale future find it finance index and it's corresponding excuse me etf and david gideon i want to we got two days here to david so i'm gonna have to use your last name so we don't get confused but david gediyon i want to throw this to you just in terms of the constituency i'm looking at some of the uh components here paypal square coin desk robin hood those are some of the big names we got some smaller players too i'm just wondering where you're going with this what is the theme you're trying to represent yeah uh thanks a lot for the question and and thanks for having us as we celebrate this uh great accomplishment for bloomberg and grayscale and you know what we are what we are trying to do and trying to accomplish is really be able to benchmark out what is the future of finance and be able to find and identify the companies who are most involved within the digital economy and so what bloomberg you know set out to do uh you know through our through our independent research through our bloomberg intelligence team is to be able to go through and develop out the theme so define out what we mean by future of finance and then define the names who are part of that when we think about the financial foundations digital asset infrastructure and technology solutions and then through the bi process they're able to go through a quantitative and qualitative review over those names assign the companies into those respective categories based off of their exposure to that to the to the theme and then end up building out the index off of this and so you know when we look at it of what the index is trying to do the index is benchmarking what we believe to be the future of finance so the membership today uh can change it can change in next quarter and the quarter after as we go through that process each quarter and so really as an index uh provider and and you know in leveraging the research that we have here at bloomberg we're really trying to create the framework for the ongoing benchmarking of you know really the revolution in finance and what is the next stage of the digital digital economy and dave lavelle let me get your take on this because we've seen a number of products from your company grayscale uh probably the most famous of which is the bitcoin extreme exchange traded product notably not an etf um but this index right here this etf is not just trying to track crypto or be some kind of proxy it's really about the future of finance which i understand is in the name but it's kind of a bigger picture would you agree with that and then what was some of the development process that you went through here with bloomberg and um perhaps the other dave and some of his colleagues yeah so you hit the nail on the head this really is not a bitcoin replication product as dave gideon mentioned this is about defining the digital economy and we believe the future of finance and the greyscale future of finance etf and partnership with bloomberg is really accomplishing that this is about defining a new investment theme it's not you know dissimilar to you know themes that have been defined in the past that at the time of their launch really weren't household themes or household names think cloud computing 5g robotics and automation right the the digital economy is a theme that we're defining and we believe is going to be the future of you know how investors really have the opportunity to experience the digital economy and so you know we had a lot of conviction around the notion of the digital economy in this theme and really being at the bleeding edge of the digital economy ecosystem and the digital asset ecosystem as a member of you know digital currency groups um you know broader portfolio of companies we came to bloomberg and you know with strong conviction and worked with them to build out the methodology and dave gideon um i was i was looking at the list of companies a list of components here and one of the things that stood out to me was the the lack of certain companies in other words there's no microstrategy in there there's no tesla both of those companies have huge bitcoin holdings in the vein of you're not trying to replicate a bitcoin strategy is that the reason why that these companies aren't represented or is there some kind of other criteria yeah and this is one of the things that we we set out to accomplish with the index is almost have a hallmark of what's not in it because it is not a bitcoin replication it is not a crypto basket it is a basket that's meant to represent the the future of finance and and what is going on with the digitalization of financial transactions financial management uh asset management and to do so and to include companies who are i think we want to call them crypto adjacent uh like microstrategy who continues to acquire bitcoin tesla who noted they hadn't transacted any further at their last earnings call overstock is another traditional name in this space even some of the semiconductors who are you know obviously very you know correlated in terms of crypto demand from mining we really wanted an index that avoided those names because we're not trying to have a correlation to one for bitcoin to provide that proxy we're really trying to create exposure and be able to benchmark exposure across the financial ecosystem but as that financial ecosystem digitizes modernizes and evolves we want a basket that has become an index that can track that evolution going forward mastercard recently announced that they're going to give crypto access to a bunch of their customers i'm wondering if mastercard or a company like it would be under consideration for inclusion in this index noting that you also have paypal as well yeah look i mean i i can't comment in terms on you know on future inclusions um you know but as our methodology of um you know looks at the changing dynamics of companies and as companies get more involved in in embrace and invest further into the into the digital economy then it's very possible that they can start to become part of this ecosystem you know exchanges would fall into that category other asset managers uh can also fall into that category of potential future ads but you know there's still more development in those business lines to get pure into the theme in order for them to be to be part of it but that's one of the things that we're doing here at bloomberg from the thematic perspective is to be really transparent about that and so you know on the terminal you're able to go and run a function and actually see those quarterly results see the analysts reviews on these names each quarter in terms of why they were included or excluded and we think that will be a really important differentiator going forward uh for the thematic offering so that way people can track almost in real time the future of finance so is this going to be like the kathy wood arc innovation fund she sends an email to me every night saying what she bought and sold but maybe with a little bit more commentary is that what you're talking about uh you know it would be great if uh it's able to be as successful as miss wood has been but no it is not active in that regard you know once a quarter uh the the index membership will change you'll be able to see the ads and deletes off of that index membership via the terminal it is still very much a rules-based you know objective and transparent index uh that is tracking this theme coming up we're gonna take a look at the regulatory structure of bitcoin are we gonna get that spot bitcoin etf after this [Music] [Music] [Music] [Music] [Music] [Music] welcome back to this special look at the future of finance and joining us now is dave lavelle grayscales global head of ets and david getty and bloomberg's head of multi-asset index i just want to talk about some of the regulatory aspects with the sec we have uh chair gensler gary gensler in there he's been there for about a year i've seen your commentary on shows about the bitcoin futures etf and some of the hurdles that we've had getting uh those approved and then the bitcoin etf conversion process for grayscale bitcoin trust in general how has it been like working with the sec over the last year as opposed to some of the prior uh administrations well look this is you know um a story that we have been seeing for the past you know 25 plus years with etf innovation you know when um you know spy came to market in 1993 it was a really innovative and really bleeding edge cutting edge you know investment theme which was s p 500 with market cap you know waiting and as the etf marketplaces continued to evolve different exposures that were novel at the time have required regulatory review and regulatory approval and so this is really no different than anything that we've seen in the history of the etf marketplace we're sympathetic to the job that the sec has to do and we've been really you know fortunate to have a very strong working dialogue with the sec and are happy to have a 19b4 rule filing in front of them that will allow them to review you know the opportunity to convert gbtc into an etf and we think now is the right time with the approval of you know the bitcoin futures product we believe now is the opportune time to have a spot product approved by the sec and available for all of our investors yeah it's interesting that you uh mentioned the spy etf it's part of my twitter handle at spy jared but also we've at yahoo finance we've entered we've interviewed spiderwoman she was the lawyer who created the framework for the spider etf trust her name is kathleen moriarty and during the conversation i think this was a several years ago but she remarked that in the interim so much has changed in the world but not a lot has changed in the legal and the regulatory structure and a lot of it is just a little bit antiquated i'm wondering are there more is there more of a drive to innovate nowadays and to finally shed some of the structures and achieve some new ones that uh investors can really gain from look the etf wrapper is really battle tested i know kathleen quite well and she you know is as good as anybody on trust law um and she certainly was at the forefront of bringing the etf to the marketplace in conjunction with the american stock exchange and a number of other members of the the etf ecosystem we don't see any problem with you know the etf structure of the etf wrapper in fact it's quite battle tested and has really stood the test of time a number of really volatile markets since its inception and so you know we believe that we're really actually just talking about you know when not if which is really exciting in terms of a bitcoin spot etf coming to market and additionally for a long time in etf's kind of you know innovation and evolution there's been a question around the etf wrapper and a question around the underlying asset we've gotten to the point where the etf has been you know battle tested and really has stood the test of time in a way that no one's really talking about the etf in terms of its you know viability to to hold the asset it's really talking about you know the bitcoin as being held by the etf and and that's really something that's exciting that the etf rapper is actually you know a vote of confidence for the underlying asset and david gideon uh we just have about a minute or two left want to get your thoughts on everything we've just been talking about give you the floor any comments or commentary in that regard yeah you know i i think the the wonderful thing that we have seen over the last you know history now going back to 94 or 93 with with the etf is is the evolution in constant uh evolution of new products and whether that's new exposures in terms of bringing international securities into uh domestic investors for the first time fixed income uh futures-based commodities physical based commodities uh thematics uh factor strategies you know there's been so much evolution and it's it's resulted in just massive revolution within the asset management industry and within the investing industry if you think about the amount of money saved for the common investor in terms of what they're able to access now with broad-based index funds compared to the traditional active side you know it becomes a very natural step for new product to be introduced and for the rapper to be able to as as dave laval has said you know for that rapper to be able to handle this because it's handled so much uh you know over the last several decades it's just a very natural step for us to see and it's one that as an index provider we're excited to continue to partner with you know very dynamic firms and bring our indices out into the marketplace in conjunction well we have to leave it there but really appreciate both of you dave stopping by here and congratulations on the launch of your products the index and the etf dave lavelle grace kells global head of etfs as well as david getty and bloomberg's head of multi-asset index thanks for having me thank you very much coming up next a closer look at the companies making up this new index and how they are redefining the future of finance we have two special guests coinbase cfo alicia haas and silvergate ceo alan lane stay tuned [Music] [Music] [Music] do [Music] [Music] [Music] [Music] welcome back to this special look at the future of finance sponsored by grayscale i'm brad smith and it's great to have you with us joining us now we've got alan lane who is the ceo of silvergate alan great to have you here with us we know silvergate to be an innovator in the fintech and cryptocurrency space and we got to get your perspective when you think back about the pandemic and how it's accelerated the adoption of digital currency what sticks out to you the most about that period of time and the acceleration yeah brad thank you it's great to be with you today and you know one of the things that that we experienced and i'm sure it's not unique to silvergate but the um anybody any company that was focusing on a digital strategy likely saw that strategy accelerate significantly through through the pandemic and um you know we we've experienced just a tremendous amount of growth through the pandemic and one of the things that um that we did early on was we went to a virtual excuse me a remote first work environment and i can honestly tell you that we would not have been able to keep up with the growth that we experienced if we were forced to to hire folks in san diego as opposed to hiring them essentially all over the country when the pandemic started we had almost all of our 200 employees working at silvergate's headquarters in la jolla california today we have a little over 300 employees and we have employees in 32 different states wow and so considering that acceleration in the adoption of digital currency this has also prompted even more discussion around what regulation may look like or some of these central bank digital currencies cbdc's and as that conversation accelerates as well what does that signal for the utilization of existing coins that have been out there for years and either utilized or held as an asset yeah so clearly the the um bitcoin and ethereum assets you know which have been kind of the granddaddies of of them all have have um certainly experienced a lot of adoption uh the central bank digital currency kind of um jumps the curb and goes all the way to the concept of central banks issuing their own currencies on a blockchain um we're kind of thinking about that right in the middle between a cbdc on the one end and decentralized tokens such as as bitcoin and ethereum on the other and we're more focused on u.s dollar-backed stable coins which um there are currently um existing stable coins in the market that are primarily used for cryptocurrency trading where we see an opportunity to br is to bring dollars on the blockchain for usage in payments and cross-border remittance how has what we've seen in terms of the adoption and the acceptance how has that also prompted industry-wide prioritization of wallet or asset security yeah so um digital wallets um are really becoming kind of the way most people interact whether you know it started with just having a mobile app you know mobile banking app on your phone but these days um whether you're shopping for something on amazon whether you're paying for something um you know coffee at starbucks um you know we're all using some form of digital wallet and um this gets back to this integration where we see that um taking the concept of a digital wallet um where you're carrying this this wallet around on your phone and it's with you essentially 24 hours a day seven days a week and the ability to have us dollars tokenized um and resident in your wallet so that you can pay for things without actually having to use a credit card or a debit card now at silvergate it's also been a big time for you as you've acquired diem assets from meta platforms consolidation in crypto and the acquire to grow methodology historically seen in tech do you believe that's something that we're going to see going forward from here and what particularly can silvergate bring to those assets that were required that meta platforms was not able to bring to the market yeah so just just a a quick distinction there so um you know meta um had had previously kind of spun off that technology to the dm association um we in turn have purchased the technology um from the dm association so so we weren't working directly with meta but rather with the dm association and and what what we believe is that the dm protocol is a purpose-built blockchain specifically built for payments some of the other existing blockchains that are out there that stablecoins are running on were not specifically built for payments for a payments use case and specifically um with some of the proprietary regulatory compliance features that are built into the protocol things that we were working on with dm last year um and we believe that the combination of the open source dm protocol with the proprietary elements that we've acquired combining that then to issue a u.s dollar-backed stablecoin issued by silvergate run on that blockchain we think that that will bring this into the regulated framework that the u.s banking regulators are looking

for what do you believe the reality is for the future of finance and perhaps the road map to get there i think we're all very accustomed to using our phones and using the apps on our phones to pay for things to hail a ride from uber you know to to um buy things online to to use the digital wallets when we're at the store etc but a lot of that is running on rails um the existing um credit card rails the ach system etc which which um in many um cases you know adds a lot of cost um and we're and and then that in turn essentially keeps folks outside of the system because they can't afford to kind of enter and um but yet almost everybody has a phone and so if we can get to the point where we're just tokenizing dollars and allowing folks to use them in these apps um so that they are transacting 24 7 using their phones spending dollars or fractional payments this is one of the other things is doing micro payments which becomes cost prohibitive when you're using the traditional layers um you know i i think it's it's revolutionary and we're really looking forward to being a part of it alan lane ceo of silvergate joining us today thanks so much for the time alan and everyone we'll be right back with another company leading us to a bright new future of finance alicia haas from coinbase is here next [Music] [Music] so [Music] um [Music] [Music] [Music] welcome back to this yahoo finance special the future of finance brought to you by grayscale i'm brian sazzy joining us now is the cfo of coinbase alicia haas alicia nice to see you again good to get some time with you here uh this whole special is really focused on the future of finance what what role do you see crypto playing in that future brian so nice to see you again thanks for having me this morning so we believe that crypto presents an opportunity for a new financial ecosystem essentially we think that any financial asset can become a tokenized form of value and that enables us to see a world with faster payments cheaper payments global payments that operate at the speed of sending an email sending a text and that we think that it will have new financial infrastructure built you've seen the growth of decentralized finance which we call defy now enabling peer-to-peer lending peer-to-peer insurance and i think that we're going to see continued growth and innovation in this space built on this new technology yeah though to your point there there seems as if there's so much going on in this space i mean there has been an explosion all things cryptos and platforms you know if someone is new to the space how should they approach uh investing in it or even or even thinking about the the growth trajectory of this industry over the next decade oh wow so i think that people should think about crypto the same way that coinbase does which is that it's just a tremendous technology innovation and we're just getting started this is the earliest days and so it's going to enable new ways that we have our financial system as i mentioned through decentralized finance a new way that we engage with applications through the development of what we call decentralized applications or adapts and the internet and so i think that what 2021 brought us is this promise now of an advent and growth of what we call web3 and what this is is bringing together now content which we've had on the web but merging that with payments and identity and that is going to create this new ecosystem of innovation and growth that i think will be really exciting for consumers in the decade ahead we aren't few uh we're not very far removed from 2021 we're about a month and a half in or so i know time moves fast but you know as someone leading uh coinbase as cfo what were some of your biggest moments for last year and how might you use them to help inform what you do in 2022 so 2021 was a huge year for crypto and for coinbase across the board so i think what we saw in 2021 thematically was just huge institutional interest in the crypto space they came in in huge unprecedented numbers we also saw defy gain tremendous traction we saw nfts explode i mean we had a headline of a 69 million dollar nft trade we also saw the industry focus on scaling and and regulation which i think are really important foundational elements and so ethe computer completed a major upgrade preparing for the merge of eth2 we saw regulators and lawmakers across the globe start to focus on crypto and i think that that will create a level playing field and so for coinbase what we're doing is we're continuing to just build a platform to enable easy to use products for our customers to gain access for all of the innovation that's happening in crypto and we want to expand that globally you mentioned regulation and you if i'm correct you you did testify in front of lawmakers uh and i think the industry agrees that some form of regulation is is good but when do you see it coming in and what would quantify is good we did testify and we were really thankful for the house making that an opportunity for us we're very optimistic that regulators and lawmakers in the u.s and globally will make the right decision when it comes to smart crypto regulation we've seen significant engagement across a variety of lawmakers over the last couple months and we think that there's going to be action soon quite candidly um what we've seen though is that we're starting to have meaningful dialogue with the industry and that's what we really value we wanted to ensure that there was conversation that this is a transparent process so that we harness the good of this innovation but also do it in a safe way for for the consumer so we have a long way to go we're in the very early innings but i think that people are starting to see the potential and i think that we'll get to a good place being that this is still a new company it's a new technology i imagine the skills of being a cfo uh at a coinbase are a lot different than let's say leading a packaged good company so i think what we all learn here is to live with volatility live with a variety of outcomes so we plan in scenarios we plan for ups we plan for it downs we plan for sideways and i think you just have to be a little bit more flexible and dynamic in your thinking and the industry moves at such a fast pace that we're constantly reevaluating what our roadmap looks like where our resources go what we should be focused on and so you have to be a little bit more nimble to be operating in crypto i think coinbase cfo alicia haas always nice to see you thank you for giving us some time we'll talk to you soon thank you all right coming up next seeing around corners matthew blake from the world economic forum joins us next [Music] yahoo finance's presentation of the future of finance is brought to you by greyscale [Music] so [Music] [Music] [Music] [Music] new york federal reserve giving him a vantage point into what the future may hold for the global financial system and finance matthew thanks so much for being here it's great to see you pleasure to be here with you again matthew i want to start with a macroeconomic question what's your sense of outlook for the global economic economy here uh we're dealing with omicron the pandemic is continuing how do you see that impacting global growth what do you see is the biggest risks to global growth this year we had the imf last week uh issue some guidance uh to the downside for global growth i think that's a telling that was a telling print for 4.4 percent um down about half a percentage point there's no that doubt that omikrom has uh yet again thrown a curveball at us from the standpoint of the pandemic you know people being forced to stay at home either sick or working from home aggregate demand therefore getting hit so it's been a tricky period here supply chains also have been impacted so not all that surprising that we've seen a bit of a revision we will also see what the future holds i think as a global population we're coming to the difficult realization that we're dealing with an endemic here this is not a transitory thing we will be confronted with future scenarios where different variants crop up and it's really about being resilient and prepared for that process which is not going away anytime soon unfortunately to your point you mentioned the supply chain issues and obviously part of that has been govid the pandemic um so do you see that kind of becoming a permanent basis for inflation and creating a scenario where inflation could be sticky leading to that upward wage uh spiral inflation or do you see inflation coming back down later this year and also given that the u.s federal

reserve is said to raise interest rates to combat inflation how do you see that rippling through global markets it's a very tricky period i think it's the multi-trillion dollar question on whether or not uh inflation is sticky or transitory there's huge debate on on all sides um i you know my sense is again like as we work through the pandemic we get better at dealing with these different waves things will settle down um but it's a matter of acculturation and familiarization with being resilient and putting up with this there's no doubt when we take a step back and look at inflationary trends that we are essentially in a new paradigm here i think we heard that loud and clear from the fed last week that this is nothing like 2015-1617 we are in a new place um the tone was very hawkish and you know the fed has the tools both in terms of communication which they've already started and also in the ability of raising interest rates be it 50 basis points or 25 on a number of different occasions over the months to come to try and take some of that excess out of of markets out of the economy and it also has obviously the balance sheet um you know you'd mentioned that i'd worked at the fed uh that was back in the 2010 time frame the balance sheet of the fed at that point was one trillion dollars in february 2020 at the outset of um covid period we that balance sheet was at 4 trillion and as of recent times we're up to 9 trillion there so tapering that no longer being a consistent buyer in markets is going to have an influence on asset prices there's no doubt about it and it will take a little bit of time for markets to digest that we've already seen volatility in some of the more liquidity sensitive sectors be attack or crypto and um you know the market will work through those um those uh changes so shifting more to a longer futuristic outlook right where you're you're in your title it says you look at the future of finance and financial systems what are the secular trends matthew that you see impacting the future of finance uh it seems like a blockchain technology digital assets could be one but if you look out 10 20 years consumers investors going to interface with financial products yeah we do try to take a a futuristic view i think 10 to 20 years is very far up you know if you look back over what has transpired over the past decade and certainly over 20 years it's quite remarkable difficult to make predictions that far out but i think certainly the the push towards digitalization more broadly was a trend already well established but accelerated significantly during the covet period technologies like artificial intelligence machine learning some of the the chat bots and robots they were critical technologies as we went you know the global population pivoted toward working and living essentially out of their homes and the six billion smartphones that are out there became our portal to all things uh in life including financial services so firms had to adjust very rapidly for onboarding and also for risk mitigation so looking at fraud nefarious transactions aml kyc so and doing that um with the benefit of technology supporting those processes um was was huge so we saw a major uptick in adoption we took saw a major uptick in a migration toward cloud cloud computing and multi-cloud strategies so i think in terms of operational forces those are here to stay and we can talk a little bit more about blockchain technology i i just wanted to share perhaps before we go there a more of a boardroom observation as well you know this notion of um an institution thinking beyond its profit profile so this notion of stakeholder capitalism so how well are you doing in financial terms certainly critical but also how are you dealing with the people around you the communities the planet and what is the essence and the purpose of your institutional mission the ability to maintain that one social license in an operating environment became much more critical and having a narrative and the substantiating data to support that narrative is a fundamental shift i think that has been yet again accelerated as a result of the covet environment so you know one piece is operational the other piece is strategic they're both obviously intertwined um but there are some reflections for you you mentioned blockchain technology curious to as to how you think that specifically is going to impact how banking is done and how we interface we know that right now when we trade stocks for the most part humans are not involved in that right blockchain seeking to essentially extract that middleman uh something that's core to wall street and financial transactions tell us a little bit more of how you see that manifesting and being adopted say even within the next five years the overall trend is absolutely toward greater automation in markets you know we had the privilege of working with over 200 stakeholders public and private sectors across eight different workshops and a survey and we put forward a report it's in the public domain you can find it on our website called dlt and the future of capital markets and it really went to look at how well dlt the pickup of dlt across different use cases it made an attempt i mean there's a lot of hyperbole around blockchain like so we tried to really focus on where the applicability where are these use cases and what do they look like and we saw a number of really interesting examples be it with fx netting some of the securitized products being digitized across their life cycle we saw repo certain repo functions and transactions being repurposed on on dlt so a lot of very specific use cases either by uh idiosyncratic institutions so one institution but increasingly a number of institutions coming together to deploy that technology i think that is telling um one of the key learnings from this work was not that we are entering into a complete disintermediation of middlemen i think that that's not where we're heading in the near term but we do see increased adoption and that the critical decision point on whether or not uh dlt is adopted is really the use the use case that's in question and really looking at that very concertedly and seeing whether or not dlt is the right fit so bottom line increased adoption uh no wholesale disintermediation seen at this point in time it's a set of building blocks as we move forward matthew blake of the world economic forum thank you so much for your insight so appreciate it good to see you again thank you very much and that'll do it for this special on the future of finance stay with us at yahoo finance for the very best in economic and business news [Music] [Music] [Music] [Music] welcome everyone to a time for change i'm alexis christophers along with marquise francis as the nfl gears up for super bowl 56 this sunday the league continues to deal with fallout from the explosive class action lawsuit filed by former miami dolphins head coach brian flores now flores was fired last month despite posting two straight winning seasons he is suing the league and three teams the miami dolphins the new york giants and the denver broncos alleging discrimination and racism in hiring practices and that's despite the nfl's long-standing rooney rule requiring teams to interview candidates of color for head coaching and senior positions and after initially rebutting the claims saying

2022-02-09 22:16

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