Dr. Eswar Prasad

that private payment systems, digital payment systems that is, are taking over and retail CBDCs might be rolled out, but there isn't huge demand for them.

It's a big concern, Dan.

You're right that physical currency does give us privacy, although it has some negative implications as well.

It does facilitate, as you said, illicit activities, and it's also a hassle for businesses, consumers to deal with.

It's vulnerable to loss, theft, and so on.

A lot of these can be avoided with digital payment systems, but you're right.

If I were to buy you a cup of coffee, Dan,

either a payment provider like a commercial bank or a credit card company or the government, if there was digital money, might know about it.

And I think we really need to think hard about whether that's the sort of world we want to live in, but that's certainly the sort of world we seem to be moving towards very quickly.

There was the sense that fintech companies, including online banks, e-banks and so on, might essentially become very serious competition for existing commercial banks.

But what we've seen is actually something quite different, that large commercial banks are

co-opting the new technologies to improve their scale, to improve their efficiency.

So I think about fintechs, especially in an advanced economy like the United States, as basically giving the commercial banks a kick in the backside to become more efficient, make it easier for anybody, no matter what their customer's income level or net worth, to get those services.

In some countries around the world where the banking systems are not working very well,

FinTechs are of course playing a very big role in broadening the access that common people have to even basic banking products and services.

But in the US and many advanced economies, certainly what we are seeing is even more concentration in the banking system rather than more competition.

It's going to have a lot of implications in terms of improving access, in terms of making payment systems, both at the front end and the back end, much more efficient.

So for businesses operating across national borders, this is going to be a huge benefit.

I think one of the problems with cross-border payments for exporters, importers,

uh economic migrants sending remittances back to their home countries and so on you know the cost the slow speed um and the overall inefficiency of cross-border payments has been a major deterrent to commercial transactions that's all changing uh costs are dropping things are becoming much more efficient and in this day and age the fact that it takes you know days for cross-border payments to be uh settled doesn't make sense at all so if you're going to move to more efficiency there