The following are the outputs of the captioning taken during an IGF intervention. Although it is largely accurate, in some cases it may be incomplete or inaccurate due to inaudible passages or transcription errors. It is posted as an aid, but should not be treated as an authoritative record.
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>> MODERATOR: Good evening, depending where the region where you are. It is a great privilege to be here at the Internal Governance Forum here online and reaching out to more people to discuss one of the most ‑‑ the things that may be us as Civil Society feel more afraid of or distant from our daily activism. My name is Renata and CEO of Open Knowledge Foundation and co‑founded platform for experts, and I have been round in the Internet rights community for almost two decades, and one of the issues that we never, never, never activated in our community of finance and now more than ever with the promises that we hear, like usually empty promises we hear we're going to connect the final services in the next million and we are going to do truly democratize with assistance of digitalization and we will just lift out of poverty and lots of people with e‑banking and all of that.
I think that it is still missing the part of us taking an empowered stance on that on being really able to use our data or banking data to imagine better financial futures to really be participants and not just whatever on the other side of the financial institution, whatever the other side dictates.
We lost a lot of confidence if we think of money, and the crisis of 2008, and as we are like it seems heading to yet another crisis, but we are the most connected generation ever in the planet, even if we have to recognize that a lot are not connected. We are facing new opportunities that we need to be prepared to seize, and but as roadblocks that keep us away from seizing the opportunities and one is the money and CEO of Open Knowledge Foundation, I face that there is no more ‑‑ there is basically not entity richer in data than banks, they're not only rich in money but they're very rich in data and granular data about everything that we do. Just tracing your credit card will tell a lot of things about your life, and there has been over the decades, there has been this separation of ‑‑ it's a deliberate opaque system because it has its own regulations, its own standards, its own procedures
I mean you don't personally feel the moment I feel distant from an institution is the moment I have to deal with my bank. It is the distance, the complexity and when you read the financial news, you feel the same distance, and the purpose of this panel is to combat many problems we have seen in the last 10 years, economic inequality, financial inequality, democratic deficit, deficit on transparency, and the urgent need to be actors in shaping the future that we want and not just passive recipients of whatever is dictated by big institutions
It also explores in a new twist what we can do with technology and what we can do as self‑society or even as multistakeholder group, organize to break the monopolies of finance and to really incorporate the power of technology, our power, our technologies in what we do.
I'm joined by two wonderful speakers and wonderful moderator that is remote with Andres Arauz an economist who did PhD on this precise topic and also Advisor of New techs and Harry Halpin an academic and activist, been to how many IGFs, so many, use in different roles, activists, academic, and funder and new CEO of new technologies. As online moderator, Amelia was one of the youngest in parliament and one standing for the possibilities of the democratic future. So, after this very long Preamble, let's go to the core of the discussion and let's listen to what Andres are has to say and how to unlock the power of money and unlock the opportunities of the finance future for all.
>> ANDRES ARAUZ: Thank you, Renata and to everyone here both online and in person. I would like to tell you a story and end up with a proposal, which is what we should do about perhaps one of the richest datasets that we'll find about our lives, which is the data of money, the data of our financial transactions.
To begin with, I would like to make a really, really brief presentation on how a payment system works and all the data that is incorporated into it. So, when you do a financial transaction, and I don't know if you can help me project the slides on the screen for everyone here if person, we have a person that is a sender that has an account at their own bank, and then the person at that bank, if the receiver is at the same bank, it will be a very easy transaction and all you need is one bank for two people. We share the same bank and the bank will be in charge of settling that transaction and can probably happen in realtime. It becomes a bit more difficult when you have two banks, I have my account at one bank and then another bank, and we're going to need a third bank, a correspondent bank, and that correspondent bank, usually it's a central bank if we are within the domestic system, and because of the deregulation of capital flows around the world, when it's an international transaction, that correspondent bank is usually a foreign financial institution.
Now, when you order the transaction, you have to accompany a lot of data, the account number, address, identifying information, and so on. And that becomes part of a database, right, that there is a storage of that information that gets kept in one of these correspondent banks and also in the local banks.
So, this increase of information due to the financial transactions, it becomes a huge database that the bank and banks can see for everybody involved and for other account holders and non‑account holders, but each of us can only see our own transactions. There is a similarity that derives into asymmetry of power. I can only see my accounts and my information about my transactions, but the bank, they can see the accounts, information, transactions of millions of other people. If you think about this internationally, there are only very few correspondent banks around the world and they have been especially grouped into the world's group 13 largest correspondent banks in the world, and they have the information for, you know, billions of people of legal entities of corporations and so on.
So, we have a great problem in terms of information asymmetry, and what is done with that information. Well, we have seen that there is a way where people can avoid having all of this information be sucked into the large financial system, and it's dealing with cash. With cash, the transaction is bilateral and not triangular, you don't have an intermediatory, it's a simultaneous transaction with a physical paper. And, of course, there are many institutions that have been grouped into if in this case an alliance you may have heard, a cash alliance, foundational members, founding partners are the institutions that you see on the screen. They have tried to influence policy around the world so that cash is basically pushed aside and that international transactions, be it electronic payments and financial institutions come to the forefront. One of their objectives as stated by the MasterCard foundation is how to convert not just in a sense of facilitating the life of people, but how to convert all of that data around financial transactions into new profit‑making businesses, okay, and into a useful tool for surveillance purposes.
This is what I'm going to go into next. You can imagine the scale of the data derived from each of our transactions, and the thing is that it's not stored in some imaginary cloud somewhere. The big providers of the data of money, so financial transactions, their data servers are not in each of our individual countries, I'm talking from the perspective of the Global South. Visa, for example, has a data center exclusively in the U.S. Only very, very recently did they open another data center in Europe, but the entire world's transactions, you may be in Singapore making a purchase in Ethiopia, but the data center for where that transaction is stored is in the United States. This is a very key example that I'm showing you on screen because in 2005, so a long time ago, a Canadian consumer that was buying medicinal marijuana in Canada but using visa, which is a United States company that stores their data in the United States, was concerned that they may be red flagged because they were doing something legal in Canada, paying legally, but would be illegal in the United States.
So, Canada started an inquiry into why the data of Canadian citizens using Canadian banking providers and purchasing at Canadian business store the data in the United States. But that doesn't end there. Sure, maybe it's in a corporate data center, but the Patriot Act, the United States Patriot Act allows the government to have direct access to the visa data center for their purposes, national security purposes.
This didn't end there. A few years later, this revolution, the German magazine, newspaper, published that the NSA, National Security Agency of the United States had direct access to the credit card networks and to the swift international transfer network, okay. So, the problem that we saw on the fir slide, which is that banks have this asymmetry of information and therefore power over all of us, doesn't end there. It so happens that one government in the world can also tap into that information. I haven't heard of the central Bank of Ethiopia tapping the visa card networks or you know the national security agency of Peru and Latin America having access to the Swift network. It is only one country that legally or illegally through these backdoors has access to the entire world's credit card transaction networks and international transaction networks. The evidence doesn't stop there.
You can see the documents that were leaked by Snowden where they explain with a lot of detail how they retain the bulking and transactional data and how they use it for intelligence purposes. In this case, they have access to data from financial institutions in the Middle East, Pakistan, Zimbabwe, Kenya, the entire credit card network from around the world. They use the lingo in the intelligence community is FININT for financial intelligence. They explain that, you know, with the software that the NSA developed and the GHCQ also developed with them, you can put in a phone number and then it links to your financial account data or can you just put in your credit card number or even your traveler code, and it reveals all of that information. Okay.
So, as can you see, these are documents from the NSA and the TRACFIN databases have basically all of this information, of not only citizens of the U.S. but the entire planet. Now, this doesn't end there. A few months ago, actually, a bit more than a year ago, you had protests in Canada against some of the COVID policies, organized by truckers, and in Canada an emergency decree was issued, an Executive Order was issued that basically allowed for the freezing of the accounts of the protesters. So, you can see the power that surveillance over the data of money can have over popular mobilization.
Now, I'm not judging whether the reason to protest is correct or not, but ignore that for a second. The fact that they can freeze the accounts as a way of threatening mobilization of people is extremely dangerous, I think, and this is an analysis most recently published actually this month by the Canadian Public Order Emergency Commission sent by Canadian parliament where they analyzed how much they got to freeze and it's the top two pink and orange rows there or flows that they were able to freeze basically most of the money that was destine to be at the crowdfunding campaigns by the protesters.
Doesn't end there. The technology is available to do surveillance on the Blockchain, different kinds of Crypto currency of course transparent and available on the Blockchain, and for example there is a private firm called chainalysis that specializes not only in microanalysis of the money that is moved around in Blockchain and different Crypto currencies, but basically they can do reverse engineering and analyze with sophisticated tools which are not too difficult to arrive to, the degree of the movement of money within the Blockchains as well.
And this is the most recent revolution by the United States senate that it is not only the NSA that had access to the credit card and Swift and other networks but as the Central Intelligence Agency and now this is ‑‑ this is a huge power asymmetry, where sometimes people in Civil Society have concerns over government surveillance, but here we have to make sure that we understand that it's not just any government or small government or local government that's doing surveillance. The asymmetry of information is such that it is basically one government, the U.S. government that has surveillance over the data of money of the entire planet's population, and this was ‑‑ this was basically sanctified by the European Union when they allowed a special directive to allow only that government to have access to the Swift database. So, the European Union approved a specific legislation to allow that specific government to have access to a very powerful database, which is all of the international transactions in the world. They haven't shared that database with the government in Africa or in Latin America or anywhere in the Global South, but only with one government, which is the U.S. Now this is very important.
Now, how is this done? Well, because when you message, when you do a financial transaction, you have to attach some important data. This data, these data elements have been undergoing a process of standardization, and most recently the ISO‑222 is required where they issue what data or requirements should be when a transaction is ordered, standardized and shared in the large systems that I have already explained.
Now, this is important because there are standards and there is a standardization of surveillance and that's also something that we have to be concerned about and look at.
This is also aided by a huge portion, especially in the 21st Century, especially since 2001 by this very unaccountable, undemocratic and ineffective organism which isn't even created by an international treaty, and only an informal mechanism called the FATF, which is the Financial Action Task Force which issues recommendations that are called anti‑money laundering terrorist financing regulations or standards, and they say that basically, they are concerned that CBDCs, central bank digital currencies that are being promoted in national governments and central banks more recently may pose a risk in they resemble cash because cash cannot be surveilled. Right. So, they're saying that we have to really think about this if we want to allow anonymous transactions just like cash.
Well, we think that privacy is a human right and it's important that there is data protection and privacy and if FATF does leave a little bit of ground saying that we still have to think about CBDCs, and if they're going to resemble cash, if they're going to resemble physical bills and coins, how do we design it in such a way that it preserves the characteristics as well.
The ITU has said that we have this issue as well, and they can be designed with the complete AML/FATF standards just like the bank account or we can make them more like physical cash. What should we do? Technologically speaking, how should we design CBDCs? How should the hardware and software be designed so that it more closely resembles physical cash rather than a conventional bank account?
The IMF issued a paper a few months ago explaining what happened to the Bahamas, which was on the gray list of the FATF, and they said that you have to improve your monitoring and they came up with a CBDC in the Bahamas but with very strict AML controls following FATF regulations, and after they did that, they were removed from the gray list. It's not a trivial issue.
And the BIS, the Bank of international settlements has also said that this is a major issue that has to be dealt with in the design of a sent Centrally‑banked Digital Currency and how should the architecture be designed so that it is more closely resembling physical cash.
The central ‑‑ the European Central Bank has also said they are very worried about the issue of privacy because it's the prime concern of European society, and it's an ongoing discussion there as well. This is a very important point. There is already a technical discussion ongoing in the world. The Global South countries are not included in that discussion. It is only a discussion of the European Central Bank, the Federal Reserve in the United States, and maybe some other few actors, but of course the large private transnational banks, but they're doing it in an international framework which is the ISO. We all know that the ISO sets the standards after large deliberations, but the Global South countries are absent from that discussion.
The technical committee of financial services, the ISO is discussing central bank digital currencies without the presence of Global South countries. We need a wake‑up call. We need Global South countries to join the ISO Working Group on central bank digital currencies to put their concerns about mass surveillance, about unilateral mass surveillance and also to protect and defend the rights of their citizens.
Right. So, they're very active on discussing the CBDC but no Global South country is present there, and for example, can you see one of the standards that's being developed right now, the 23‑5‑26 security aspect for digital currency which is precisely dealing with trust, the binding liability issue and privacy. Okay, for what? For FIAT digital currencies, so that means for central bank digital currencies that will replace physical cash perhaps in a decade or two. We have to have a perspective vision and this is something that perhaps deserves attention. CBDC should be carved out from the FATF standards and privacy and sovereignty should be embedded in the CBDC technology and a law is not enough. A regulation is not enough, a promise from a politician is not enough. We need the technology to make sure that the technological standard covers this issue and we need the Global South, Civil Society, privacy activists, Crypto currency community, everybody who has a stake in the evolution of central bank digital currencies to join and actively participate in the ISO Technical Committee 68. This is what I wanted to share with you.
>> Thank you. Before that we have a quick announcement from a remote moderator and I'll give the floor to Amelia.
>> AMELIA ANDERSDOTTER: Thank you so much, Renata. I will keep video turned off for now. I won't put it into the video chat. But if you are a remote‑only participant and you would like to pose a question to one of the panelists, you can either put Q in the meeting chat or raise your Zoom hand and me and Renata will coordinate to ensure that you are given the right time to speak.
I also see immediately deviants from the system. I have one comment in the chat and one raised hand, so Renata?
>> MODERATOR: Yeah. Let's clear that question if that's okay.
>> AMELIA ANDERSDOTTER: Chris raised his hand before the question was posted so I think this is the correct order.
>> MODERATOR: Go ahead with the question. Yeah.
>> AUDIENCE MEMBER: Thank you very much. Can you hear me?
>> RENATA: We can hear you.
>> AUDIENCE MEMBER: My name is Chris and I am ISOC future ambassador and I thank you very much for the presentation and going through it, I see that we are still having a lot of issues whereby developing countries are not given input into the conversation. I would like to know how are developing countries start having this conversation and giving our own input because it's solely more European countries and even north American region that's actually having such dominance, so how could do we come into the conversation and come into the space? That's the first thing.
The second thing I would like to make a comment on is also I think that we're still having issues also surrounding the education on Blockchain itself. A lot of people still think Blockchain is only Cryptocurrencies whereas that's not the case. Blockchain there is a lot of use cases, and solves issues of trust so I think we still lack on the education side of Blockchain which I think could be a conversation also which we should be having on how to educate people more on Blockchain itself. That's my only input. Thank you very much.
>> MODERATOR: Thank you so much. I give the space for Andres to answer, and I guess that Harry can also include the response in his interventions. Over to you, Andres.
>> ANDRES ARAUZ: Thank you. Very briefly, can you join the discussion with, you know, spreading the mission that we're trying to convey here at the IGF, but in the technical discussion, I invite you to join the ISO technical committee 68 Working Group and technical committee itself through your national standard setting body, which is a member of the ISO. It's usually the standard's agency in each of the countries, and they have to allow you to go in. It's a very nominally open process. It's supposed to be democratic, but the problem is that it's opaque. So here we want to get rid of this opaqueness and make it transparent and show you that there is an open door. The problem is they have never told us that the door is open. The door is open, and we have to go and we have to participate, and of course we're going to start trying to activate some people in different countries of the world, the Global South, developing countries, to join that initiative.
On the Blockchain question, I'll defer to Harry and have him explain.
>> HARRY HALPIN: Yeah. So, I'll take the Blockchain question really quickly, which is, you know, Blockchain technologies, all they are fundamentally are Crypto graphically timestamped records where you cannot remove a record or fake a record. That's of course very useful for financial data, but could be useful for many other things, and I do think that the most interesting thing about Blockchain technologies, as opposed to let's say traditional Silicon Valley big tech, you know, if you look at Silicon Valley, big tech, Google, Microsoft, Amazon, Facebook, they are mostly controlled by people, particularly White men from the United States. If you look at Cryptocurrency, people working in that field, there is still a lot of control, but you see CZ, you see huge amounts of activity in Africa, Paxful and it's much more diverse globally, and so I do think there is some hope it there that one thing we've never seen happen, which I hope could come from this, is that we bring together some of these Crypto currency technologists and Blockchain technologists together with governments and the activists from the Global South in order to make sure that they have sovereignty over their financial system.
I think that may answer your question. Is there another question or ‑‑
>> MODERATOR: There is just a question and I guess you can address it as well. From Dr. Milton Miller. Isn't it a contradiction in terms to talk about sovereignty in global technical standards? Is it contradictory?
>> HARRY HALPIN: You need interoperability, but sovereignty doesn't mean no one can talk to each other. That would be useless. You know, for the French standards, if I couldn't use a website because I'm only allowed to access let's say French websites in France, websites that are in French, I couldn't access English‑language websites, that would be ridiculous. The same with financial technologies. You know, the wonderful thing about the Internet is that I can, in theory, doesn't matter if I want to access Wikipedia, I should be able to do it from Ethiopia, Syria, should be able to do it from the United States, and we all get the same level of access, the same content. That's immensely empowering. This is done through standardizing the minimum necessary technical configurations in order to empower people and spread their capabilities, so I don't think there is a contradiction there. The contradiction only happens when you have what's called imperialism, when you have countries, for example, the United States or companies, let's say Google, and I left the World Wide Web Consortium over digital rights management, force people to obey their particular standards. So, for example, everyone here probably went through COVID, probably tried to watch movies, and it was very hard to prevent people from watching movies over the Internet until the DRM got baked and digital rights management which forces you to pay for the movie won't play the movie without that, got baked into the HTML itself via the monopoly of Netflix and Google in terms of web standards.
So, you know, that is I think functionally just imperialism and should be resisted. And I want to talk a little bit ‑‑ comment on what Andres said. I come from a technical standards background, used to work at W3C and MIT and Internet task force and discussing Andres proposal with and what's called the Security Area Applications Group and the IUTF the organization that Vint Cerf co‑founded and worked on when they were young and people are also interested in reviewing the standards and there is another way to get involved, but ultimately the problem that IUTF is that it is a good‑old‑boys club, a network of individuals, often somewhat old, often from the global north, and it is probably more useful at this moment to try to get people in the Global South involved via the ISO and ITU.
I do want to look really quickly at what is that ‑‑ what is it that the FATF and CBDCs are trying to abolish? Let's grab Ethiopia and you can tell what's important to a country by looking at what's on their money. Looks like pretty happy group of people, I guess maybe different tribes or a family. You look at slightly larger denominations, nature, bird of peace, obviously not having a good time right now in Ethiopia, but if you look at the U.S. dollar, which is where I'm from, you know we claim, you know to, have abolished slavery, but we have slave masters on the dollar, we have people on the dollar.
Now, I move to Europe, I work for the French government, and if you look at what's on the Euro, what is the picture of the thing on the Euro? It's interesting, it's infrastructure. There is no people on the Euro. You have bridges, right, you have bridges and other kinds of kind of public works. This is what the European Union believed brings together Europe. The future of what will bring together and empower people in the world is probably financial technology and not the control over bodies, not the control over the Domain Name System which is a big topic here and has been for a very long time, but the control over finances. We're faced, you know, in a world where cash will be abolished, that's the plan, and it's either going to be abolished in such a way that there is essentially no privacy, that we have essentially a global surveillance apparatus and political dissidence, you know, are what brings society forward for hundreds of years, can have their cash and access to finances turned off. And it doesn't matter, and the way that the standards are currently set up, the U.S. would turn the finances off and doesn't matter if you're the President of Ecuador or doesn't matter if you're an activist and lawyer from Guatemala or normal person in Ethiopia. That's a very dangerous future and very few people are paying attention to it. Despite all the talk about privacy from Europe, it's mostly nonsense. Can you see the European governments themselves gave access to all financial data to the United States, rather on purpose. So the only way forward I see would be that if people, in order to basically have control over their own lives, need to have control over their own money, over democratic control over the creation and management of their own money, and people should not probably be held hostage to the Fed, Federal Reserve or FATF, as long as, you know, you may have a country with Armies leaving a country, like U.S. leaving Iraq or may have formal colonialists like France leaving countries in Africa, but as long as the financial system is still controlled by these few powers, the people will never have freedom. So, in order to have freedom, we will have to control our own currencies that will involve political struggle which will take place in the realm of standards bodies, so we need people involved, and also in the realm of people just being active, refusing to use CBDCs if they violate privacy, pressuring their own governments and getting into the streets. I don't think there is any other way that we'll survive the next hundred years without that. Thanks a lot.
>> MODERATOR: Thank you. Any follow‑up comment on this discussion?
>> ANDRES ARAUZ: Yeah. I mean I think it's very important to perhaps hear from everyone as well, but the issue of money, increasingly in the 21st Century is more and more tied to technology, and we're seeing a tendency of emerging, basically, the fact emerging of big finance, big tech, and big government simultaneously. Okay. If we don't have an overarching solution that can deal with these issues from a democratic perspective of basically liberation that can sustain the progress of humanity, we will be much closer to the Lebiatan.
Now, I do want to make a very key distinction here. The problem is not what little or big or medium‑size surveillance that a small developing country can exert, right. One because it doesn't necessarily have all the tools to do that. Second, because it's not of systemic importance in terms of the world. It is important in terms of human rights of people and population, but we're talking about something many times bigger, that de facto is heading an extra territorial mega surveillance of the entire planet's population that has access to money, that has access to money, which in the 21st Century is access to basically electronic accounts and systems.
Now, small developing countries could design a system where the money that goes through the banking system and the electronic version of money can be taken advantage of with big data analytics and so on for policymaking, and I think that's an opportunity that has to be taken advantage of, that has not been done because the data centers and the information is not even stored in our national countries, right, so data localization becomes an important issue as well.
But that's very different from the legal tender type of money which is physical cash, and which will increasingly become central‑bank digital currency, which on the other hand, requires protections embedded in the technology itself so that the human rights to privacy and individual sovereignty can be guaranteed. That's something that I wanted to add as well.
>> MODERATOR: Thank you. We'll go ahead with questions from the audience because we already gave space to the remote audience, I would like to give an opportunity to anyone here, if you would like to raise a question or comment? It would be great if you could raise your hand? Anyone else?
>> AUDIENCE MEMBER: I'm here now. Thank you. First of all, I would like to appreciate especially having United Nations to host Ethiopia in the 17th Internet Government Forum, this is a historical event. As I see from the lecture and presentation, the currently the world is in currency war. Current Swift system has to be changed. I just want to mention one question. How can we move from using physical FIAT currency to digital currency in there are three problems. I'm doing research in Australia at the moment. The first problem is the government continues printing physical paper currency, and banks are not able to control those moneys, which is physical.
The second problem is increasing activities of money laundering and illegal printing of fake money, and also this is worldwide and nationwide. Based on these two problems, there is another problem. The third problem is the rapid advanced technologies such as Blockchain, as you said before, and NFC, NFT, AI, and quantum computing.
Based on this problem, we need to further analyze what we know and what we don't know.
So for me, there is a problem in the current system as we see from the lecture, and that the United Nations has a plan to either modify the current system of the Swift, the current Swift, which is society worldwide interbank financial telecommunication. That's the system at the moment working there, which is 857 national bank association at the current level. For the current system, what we see now after the Ukraine War and after the establishment of the breaks in other organizations are list for you here. There is a group of countries such as Africa aligned economy, Kenya, Ethiopia, Nigeria, Ghana, so how we approach to change or modify the current system, and I'm not talking about the (?) and all of that, but how the countries to include the current system which is driving by the north and western countries.
We need to put this into safe Internet for all of us and not giant company and developing countries. Thank you very much.
>> MODERATOR: Thank you so much. Please, who wants to respond to this one?
>> ANDRES ARAUZ: I can take it. It is a global monopoly. It's a cooperative but it's owned by the banks, and it's established in Brussels, and works under European Union regulation and information is exclusively shared with the United States. So, it's clearly what you would call a digital colonialism institution, and with an additional level, which is that there is a money issue involved.
Now, Swift used to be known before 2011, approximately, as a neutral global public good. Right. It was almost as good as the International Postal Service, right, so you would just send an email or send a letter, and it would get there. Right. It was an international protocol for sending information, just like email.
Now, starting with the U.S. influence over European Union, Swift was threatened to be sanctioned if they didn't pull out Iran from the Swift system and that's how it started, and most recently after the Ukraine War against several institutions of the Russian Federation, but that's probably going to increase and not decrease, right. So weaponizing a global public good against different or specific entities when they were supposed to be a neutral institution.
So, what we need is a resilient design that allows for international true global public good that can be governed, for example, in a multistakeholder framework, hopefully within the auspices of the United Nations that can guarantee this neutrality, just like the international postal union which guarantees that if you send a letter, even if the countries that are at war between each other, that protocol, that physical protocol of sending a letter and arriving to the other place will occur.
That is an issue more of politics than technology, but we can design in this international truly existing framework of technology, the protocols for that to happen as well.
>> MODERATOR: Thank you. Let's go now online and then in the room. It there any other questions online? If no questions online, we'll go to the room. Please?
>> AUDIENCE MEMBER: Hi. First of all, I'm sorry I joined the session a little late. This is something that may have already been addressed. Historically, something we've seen with technology and CBDC itself essentially being a technology is that there is an often an efficiency/scalability versus privacy tradeoff that's involved, so for example if you look at search engines or what we've seen is that Google even though it's not the most private search engine, continues to be the most popular among general citizens because it's able to deliver certain results, so do you see a similar efficiency privacy tradeoff being prevalent in the domain of CBDCs as well? And if that is the case, then how do we get the general populous to care about things like surveillance and privacy, which at least in emerging countries seem to be mostly at the back of an individuals a mind when considering what sort of technology apply from the use.
>> HARRY HALPIN: Yeah, I'm just going to do a little bit from the privacy aspect or scalability aspect first. But before doing that, I want to remind people why Cryptocurrency as such are kind of useful. So, if I want to send money to someone in China, Cryptocurrencies due to somewhat the peer‑to‑peer nature that have broadcast are really hard to sensor, so I can send money to someone in China today. I do it all the time. Same with and people typically back off to things like USD tether for transactions and the reason to the U.S. due to imperialism and has a large Army is considered a stable, basically, currency. There are alternatives as you can imagine, where is the real wealth of a nation, it's in things like commodities, in for example, food, wood, and I used to work at MIT with Sandy Pentland, and a proposal called trade coin which talked about how we could have commodity‑backed currency, so CBDC unfortunately tends to combine the worst of both worlds. You combine unhindered money printing, tied to a national currency, that can be easily censored. So unlike bit coin easily censored, unlike a commodity‑backed thing, purely national. I teach Cryptocurrency in bay route, it's a mess, as soon as the government starts overprinting and being opaque in the bank, the savings are wiped out, at least if you're middle class or poor and rich people can pay back debts earlier. This is a huge topic. Technically though, it's not that complicated. Technically, what you need is you need a distributed ledger with an agreement on how the money is printed, ideally democratically, an agreement on what that money is, maybe it's purely FIAT or commodity backed and maybe a mixture, proposals and other things out there, XDRs for years, and in terms of privacy, privacy is actually, there is somewhat of a scaling issue, but the scaling issue is only encountered when you try to store every transaction in the Blockchain itself, slightly better design, so I would look for example at the Blockstream liquid design, but basically to say the whole point of the Blockchain is to keep it transparent, so everyone knows who is getting money and printing money and some of that information should be public. That's what you might want to stair on the Blockchain. Then side chains that could share public data and better offline e‑cash that's the design that Switzerland is going with, some of the CBDC work, and my company is working on I can print, happy to share, offline e‑cash but effectively it works like cash, you use the Blockchain simply to monitor transfers between the central bank and other banks in the country, but when it gets down to a level of individuals, it doesn't make sense to put your transactions on the Blockchain but it makes sense that you get essentially some form much e‑cash that's completely private that can be stored on your phone, and that, those transactions take milliseconds and happy to share the exact stats with you afterwards, but we think that the technology exists to do this work properly. What does not exist currently is the political will, and the political will doesn't exist because no one knows all of the stuff at FATF is happening except, Andres, basically.
>> MODERATOR: Any other questions from remote or the audience? No? If there is no questions, I would like to ask a question not only to the speakers but as to the audience. Obviously, one of the issues that we saw here is that these spaces are not in our imagination in the Internet Governance community, it's not something that we're looking up, not that a room that we are entering. It's complex, technical, it's tricky, so the question that I have both for the speakers and the audience is, how can we open this process? How can we be more alert of what's going on in this organism? How can we fund it and elevate the skills and capacities? How can we get up to speed to be a critical community and watching the process so we make sure that it's not only serving the interests of a few companies and funders, but it is serving people. Open to comments and also people who spoke and opals to comments from the speakers.
>> AUDIENCE MEMBER: I think there are many spaces, right, where we have to try to monitor what is going on and then translate, right. Because the first step is engaging the people and the communities to gain interest in these issues, and trust me, for engagement purposes, there are enough scandalous items to grab the attention, so I think there are enough attention grabbers here that we can share with the community.
But primarily in the duty of understanding that this is an area of absolutely strategic interest to not only sovereign governments in the Global South and developing world, but as in communities that in general are concerned about their economic future and their human rights. But I'd love to hear from people in the audience too, yeah.
>> AUDIENCE MEMBER: I'm sorry. If anyone can add or to listen. As I said before, we need to make peace global society. The global society has to connect it together by the Internet inclusiveness. To do this, we need to equip the human resource. All what we do now is as we hear, most of the developed countries and private investors are doing what they're doing. Three weeks ago, they pulled 150‑billion dollars to put Cryptocurrency down. I'm sure you heard all of that. Now they pull again tomorrow, we don't know what happened. What are the intrinsic value of the FIAT currency and digital currency? We need to equip each government in the south or the north or the west or the east, actually, the global community has to advocate for the advanced countries, they created these advanced technologies, they invest huge amount of money for the technology and tools, so they have to deliver and give to the benefit of the south. At the end of the day, we live together in the world, so no one will be winner. We saw in the last two months what happened in the Ukraine. So, what we need to do, we need to cooperate with each other, we need to help each other and take lessons learned, give and take for the benefit and globalization of Internet for peaceful and stable and accurate and sustainable development. Thank you.
>> MODERATOR: Thank you so much. Last question. Great. Another question. We have still time for two questions.
>> AUDIENCE MEMBER: Thank you. I'm Lucifer from Brazil. I've been a former member of Brazilian Internet Steering Committee. Now I'm a lawyer, and I'm responsible to the represent the CGI in University of San Palo in special chair to listen to the issues. I'm surprised to listen to this small event, such an interesting subject that I cannot follow it completely because there are many information, many names that I don't know. But when I go to the main session and listen to the same principles, the same ideas, the same desires, I feel frustrated to come to the IGF. But what I listen to such an interesting point like this with very, very objective and important and relevant consequences, I ask to myself, I will talk to you to try to go further in this discussion, maybe in the university with the steering committee because I think that that's the point. I regret that most of the time we discuss in European or north American ambiance and we don't go straight to the point. We're just discussing like a theater when the main things are discussed in other places. You talked about Snowden and we all know what happened to him when he brought this information for the society.
Well, I will thank you and congratulate your initiative, and I will contact with you to try to get further information or to propose any discussion in the place of the university with the CGI. Thank you.
>> MODERATOR: Thank you so much. Do you have also a comment? Please, go ahead.
>> AUDIENCE MEMBER: Yes, my name is Johannes from Germany, and maybe my lack of knowledge and context of the discussion might actually point to something because I'm wondering ‑‑ I want to make a distinction between the political and technical ‑‑ so the political problems and discussions and the technical solutions and the design of how to proceed with maybe more just financial system.
So, I'm wondering, should the technical solution and maybe I was actually hesitant going here because of the word Blockchain and because of what I have in mind when I hear the word Blockchain, so what should proceed? Should the political, how to ‑‑ how do we design the political forum for this discussion, or should we have the technical solution at hand to show to political leaders?
>> HARRY HALPIN: So, again, technical discussions are actually political. Right. When, and let's think about this, let's say a build a CBDC, the U.S. has what's called an open CBDC, different designs, but they have at least one. They have one piece of software, and Russia, I was there a few years ago, they have another piece of software. China has a third. Countries like Ethiopia, it's going to be a classic situation of cyber colonialism. Whose software do you choose? Are you going to choose the American, Chinese, Russian software in why can't you build your own software? Ethiopia has great universities, great programmers, probably could. But again, the point of going through an open process, based on standards where the politics are kind of on the table is that the goal would be that countries can build their own software, and that if they do so they will not be exiles from the financial system and countries can have, as I think you mentioned, south‑to‑south money transfers without everything being routed through like a database, (Laughing), in North America which is completely crazy from if you just think about it for a second. There was a famous joke by Juliane L that said Putin can't buy a Coca Cola without the United States knowing, and that's true for all of us unfortunately.
>> MODERATOR: We still have one question and we really need it to close because we have like one minute or zero minutes almost left. We go ahead with quickly the online question and then wrap up. And then we are available outside for follow‑up comments. Over to you.
>> AMELIA ANDERSDOTTER: We have one question from Mahdi. Please go ahead.
>> AUDIENCE MEMBER: Hello? Can you hear me?
>> AMELIA ANDERSDOTTER: We can hear you just fine.
>> AUDIENCE MEMBER: Thank you. Good morning, good afternoon, good evening to every participant. Thank you for giving me follow‑up. Thank you for the interesting and helpful discussion on this topic. My name is Hahdi from private sector of Iran and researcher of new technology. When we recollect the central bank currency or central bank Cryptocurrency internationally the monitoring of this financial institute of country at the international level, okay, so when there are fewer note in the list of development country, it means that more control in with the people and group that have more at stake, in case such as proof of state mechanisms.
You know, access to the financial data can be given to legal or national person with the argument of the network member in Blockchain. When most of the members of the network are from developing country and powerful country, how are the right of developing country or less developed countries respecting the Blockchain? How can we have further in our financing system and have protection of financial sovereignty. Thank you for giving me the floor.
>> MODERATOR: Thank you so much. Who wants to answer the question?
>> HARRY HALPIN: I can answer the sovereignty. Again, I don't think people are imagining like a single giant Blockchain running everyone's financial transactions. That might be the only possible system that would be worse than the system that we have today.
What I think people are hoping for who want like a sovereign system is that effectively different countries, regions, even cities or individuals could each all have their own kind of financial Blockchain or e‑cash system that doesn't involve a Blockchain and these could interoperate with each other, so that you could for example, in bit coin if minors don't vote for their transaction, it gets put in the pool, and if it's not put in the chain, it gets kicked out, that's some form of censorship. Similarly, in a kind of financial system, you wouldn't want like a majority of countries to have to vote on every transaction. That's crazy. You should be able to do your transactions and then record as needed and share as needed using open standard perhaps produced by ISO.
>> ANDRES ARAUZ: I mean I think that the fact that you can have open standards, Open Source technology is an opportunity for sovereignty because it allows a society to modify it, update it make more adequate for your own needs and preserving interoperable aspects deemed necessary to talk of with the rest of the world. So, yeah, I think in the case of money, it's no different. We have a huge opportunity here, and just another point of emphasis, which is where the data is located. Right, do not forget that when you use one of the international credit cards, that data of that transaction is not stored if local data centers in servers in your own country. It is by default, stored in the data centers that are in one country in the world, which is the ISO. The huge influence of those credit card networks around the world allows for non-sovereignty, but rather digital colonialism, mega surveillance of the entire planet financial transactions, which can be easily, very easily derived into behavioral surveillance as Renata said earlier. Right. So, if you know how much I spend, where I spend, and what sort of stuff I'm buying, you know basically everything about me. So, we have to be very aware about data localization and the fact that data is being harvested and being used with big data analytics, but not by your bank or your country or your government, but one government, one intelligence agency around the world that has access to all of that.
>> MODERATOR: Thank you so much for your time. I hope to see you in Japan next year as we continue the conversation. Hopefully we will have advanced participation and make the process more open and make the technology more ours in this challenge of changing and transforming the finance system. Thank you to the speakers, and thank you to the online moderator. See you in the next sessions. See you around.