Ongoing tale of curiousity & confusion

What do the BIS’s latest report, passages from “Scout Mindset”, & the Cartoon Avatar podcast have in common?

They got me thinking. Even more. About the intersection of disagreement, mandates, incentives & technology adoption.

My usual disclaimer (personal opinion & shocking na?veté). Some thoughts in the ongoing tale of curiousity mixed with confusion….

A brilliant “canopy of monetary ecosystems”

The latest BIS report (part III - The Future Monetary System) is easily one the best reads of the year. I particularly enjoyed their nature analogies: CBs = tree trunk & canopy supporting global monetary ecosystem. The listed goals of the monetary system are also robust, & I believe the upcoming debate will focus on the execution & key actors, with particular focus on privacy.

Given the BIS’s mandate to “support CBs pursuit of monetary and financial stability”, it wasn’t surprising that this edition took a lot of shots at crypto-land. Searching for a nominal anchor. Structural limitations. Scalability trilemma. Illusion of decentralisation. More on this later.

My colleagues & I are privileged to be engaged in a host of the initiatives listed below, and strongly believe that we are in some of the most exciting (and stressful) times in the recent history of payments / money. Yes, we obviously suffer from recency bias and I attempt to occasionally refer back to Dalio's writings on various cycles. Nonetheless, the current situation presents great opportunities to influence meaningful outcomes, and endeavour to separate the hype from reality. Expect some formal publications in the coming months.

Mutual distrust & executing on one’s mandate

Is it rational for certain quarters to have concern on their government’s potential abuse of power, and this being extended more comprehensively into the realm of money?

Can’t claim to have concerns on this front personally, but wouldn’t discount the need for check & balances, and being empathetic.?

Going back to BIS’s role as the CB to CBs, their position seems pretty rational. Also recommend the media briefing by their Research Head, where privacy was discussed (jigsaw puzzle principle). Having listened a fair amount to the other side of the aisle though, there are broader fundamental disputes & this will be an area to watch.

On a related note, it’s intriguing to see progressive governments (Singapore & Switzerland) taking experimentation more seriously, including native web3 options. The recent Point Zero forum’s attendees / agenda are case in point, & eagerly waiting highlights to be publicly available.?

Specific to Singapore, elaborated on my view on MAS's adventures in this space earlier here, post SFF2021. From conversations with industry folks & news in the public domain, direction of travel seems positive, and the Digital Payment Token framework within the Payment Services Act still seems to be the most developed within Asia-Pac. That said, there have been some mixed signals recently, and certainly the fallout from 3AC and Terraform Labs being Singapore-registered haven't helped.

Overall, I continue to applaud MAS's approach, with open engagement and being "adaptive" (read on below), as articulated in Ravi Menon's speech in late April.

Web3 use cases

The debate on Web3’s utility has ratcheted up. Cynics are sitting pretty as prices have imploded and the industry faces a new scandal / blow-up almost weekly. The oft-cited position of builders: “it’s just like the early days of the internet” & “tourists & speculators are gone, best time to build is in the bear market”.

There have been many one-sided articles written on this recently. Which is why the debate approach taken in the Cartoon Avatars podcast has been pretty illuminating. The web3 use case debates in episodes 19-22 are amazing. Ouch Packy and way to go Jon Wu! Note to self: To reach good outcomes, asking uncomfortable questions repeatedly is a useful tool in the armoury. Listen to Zac Weinberg's constant probing as an example.

I think it’s way too early to pass judgement, and my earlier articles should spell out my position. That said, with steer from “Scout Mindset”, will adopt a more evidence based approach & concur it’s wise to adapt when presented with new information. In the words of the author, Julia Galef: “the idea of being intellectually honourable”.

A friend recently asked me, why do I care about the web3 conversations? I’d like to say that this will help inform the future environment my kids grow up in (some truth in that), but it’s more likely that I’m just personally fascinated and that our clients increasingly seek informed perspective in this space.

My friends and colleagues know that I feel blessed to have the role that I do, and there is a sense of responsibility to bridge different views. It's not about being pro-CBDC, pro-web3 or pro-status quo, but rather to be curious yet technology-neutral, and instead adopt a pro-consumer, pro-interoperability view.

Why can’t we all play nicely (remember the disclaimer of na?veté !)

Consensus & coordination are things I grapple with constantly. Professionally and personally (wait til you meet my kids).?

It’s basic hygiene, but we still gloss over the key step of aligning on problem statement. Compound the situation with parties who have to strictly enforce their mandate and are not incentivised to change the status quo.?

It’s not easy striking a balance between harnessing the energy to change things and not stressing over things you can’t control. I welcome tips and advice!!

In the quest to stay sane, I take some comfort from Galef again: “At the end of the day, we’re a bunch of apes whose brains were optimised for defending ourselves and our tribes, not for doing unbiased evaluations of scientific evidence. So why get angry at humanity for not being uniformly great at something we didn’t evolve to be great at?”

PS: FWIW, if you haven’t already gotten the hint, highly recommend the book “Scout Mindset” by Julia Galef!